Novozymes Conference Call 9M 2017...9 9 9M performance and 2017 outlook 9M 2017: Continued good...

Novozymes Conference Call9M 2017

October 25, 2017

27,7% 27,7%27,9%

9M'15 9M'16 9M'17

2

9M 2017Highlights

Continued good momentum• Organic sales growth +4% (Q3: +8%)

• Large segments growing organically:

‒ Household Care +2% (Q3: +4%)‒ Food & Beverages +9% (Q3: +11%)‒ Bioenergy +10% (Q3: +16%)

• Improving relative to after first-half year:

‒ Agriculture & Feed -2% (Q3: +8%)‒ Technical & Pharma -3% (Q3: -1%)

• Emerging and developed markets +4% resp. (org. 9M y/y)

• 9M EBIT margin 27.9%. Q3 EBIT margin 29.6%

• Solid cash flow generation at DKK 2.1bn

• Uncertainty regarding agriculture-related markets for Q4

• Full-year outlook adjusted:

• Organic revenue growth now 3-5% (2-5%)

• EBIT growth now 2-4% (1-4%) and EBIT margin ~28%

• Net profit growth 2-5% (2-5%) incl. DKK 60m financial item write-down (DKK 47m post-tax) in Q3

9M EBIT margin

9M y/y organic sales growth per segment

2%

9%10%

-2%-3%

HouseholdCare

Food& Bev

Bioenergy Ag &Feed

Tech &Pharma

3

Organic sales growth by geography

33%of sales

10%of sales

9M y/y organic sales growthEmerging markets: +4% (Q3 y/y +9%)Developed markets:+4% (Q3 y/y +8%)

+3%9M y/y

+10%Q3 y/y

+4%9M y/y

+12%Q3 y/y

20%of sales

+6%9M y/y

+6%Q3 y/y37%

of sales

+4%9M y/y

+5%Q3 y/y

First nine months in line with expectations

• Organic growth y/y: 9M +2%. Q3 +4%

• Growth in both developed and emerging markets

• Enzyme technology for liquid formulations supporting growth in Asia Pacific, in particular China

• Top-20 customer focus supports sales growth

• Continued good performance for dishwash segment

• Full-year Household Care organic growth expected to be modest

Quarterly y/y organic sales growth

Household Care

Innovation and emerging markets in focus

• Freshness and hygiene platform on track for launch in Q4

• Market presence in emerging markets increasing according to plan and new technology support growth

• Continued focus on new innovation to enable detergent differentiation in the marketplace

4

9M y/y organic sales growth

8%

5%

1% 1%2%

9M'13 9M´14 9M'15 9M'16 9M'17

-5%

5%

1% 1%

4%

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

33%of sales

Growing interest in recent launches. Emerging market push moves ahead

• Frontia® gaining interest with our established customers in the starch-processing segment

• Palmora® for vegetable oil processing generating solid interest

• Market presence in emerging markets increasing according to plan

Food & Beverages Solid performance also nine months into the year


• Nutrition continues good momentum, driven by both lactose reduction in dairy and infant nutrition

• Starch continues strong performance, driven mainly by China

• Continued strong uptake of baking solutions outside US freshkeeping market, and North America stable

• Beverages post good growth

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3%

5% 5%

1%

9%

9M'13 9M´14 9M'15 9M'16 9M'17

-2%

4%

6%

10%11%

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

28%of sales

Solid growth in enzymes for conventional biofuels


• US ethanol production estimated to be up ~2% in first 9M y/y (Q3 y/y estimated flat). US ethanol inventories remain elevated

• Growth in conventional biofuels driven across geographies by increased penetration of new technology and less trialing in customer base

• Biomass conversion contributing but small part of overall sales

• US ethanol production expected to post slight growth for 2017

Bioenergy

Update on recent country-specific biofuel news

• Increased Brazilian import tariffs likely to have little impact on US ethanol – depends partly on local Brazilian supply/demand

• US EPA discussions ongoing: Removal of RVP restriction (to allow E15+ all year round), ethanol exports included in RIN credit calculation, 2018 RVO blend mandate, RFS point of obligation

• Chinese bioethanol announcement supportive of global industry, but more visibility needed. Novozymes well established in China

6



8%

23%

-1%

-7%

10%

9M'13 9M´14 9M'15 9M'16 9M'17

-8%

7% 6%8%

16%

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

18%of sales

Growth picking up after -6% in 1H y/y

• Organic growth y/y: 9M -2%. Q3 +8%

• Sales increased due to expected sales cycle change in Agriculture from first to second half of the year

• Feed enzymes sales lower in Q3 due to volatile inventories and soft end-market demand

• Probiotics continue good growth from a low base. Approval for Alterion® in China supports this growth

• Full-year performance includes uncertainty regarding both Agriculture and Feed for Q4. Farmers still challenged

Agriculture & Feed

Focus on innovation and market expansion

• Acceleron® B-300 SAT expected to see a step up in acre penetration relative to last year

• New products and expansion into new regions will support and drive long-term growth in Agriculture

7



9% 8%

19%

0%

-2%9M'13 9M´14 9M'15 9M'16 9M'17

-3%

22%

2%

-16%

8%

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

14%of sales

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Innovation and science-based culture

Hello Science

Spirizyme® T

Acceleron®

B-200 SATMedley® Progress®

Excel

Palmora® Frontia®

Freshness andHygiene (Q4e)

2017

Q1 Q2 Q3 Q4

Progress® In

”World’s 2nd best science employer”

according to Science Magazine

99

9M performance and 2017 outlook 9M 2017: Continued good momentum, better than expected

• Continued growth in the large segments: Household Care, Food & Beverages, Bioenergy

• Agriculture & Feed improving

• EBIT margin solid at 27.9% (Q3: 29.6%)

• Net profit growth 4%, including DKK 60m write-down of financial asset in Q3 (DKK 47m post-tax)

• Solid free cash flow generation of DKK 2.1bn, including close to DKK 1bn in net investments

• DKK 1.7bn worth of shares bought back within the DKK 2.0bn framework for 2017

• Emerging market investments to support growth moving ahead

2017 outlook adjusted

• Organic revenue growth now 3-5% (2-5%)

• EBIT growth now 2-4% (1-4%) and EBIT margin ~28%

• Net profit growth 2-5% (2-5%), including financial item write-down in Q3

• Uncertainty regarding volatile agriculture-related markets for Q4

Key financials

(DKKm)

Realized

9M 2017

2017 outlook

October 25

Organic sales growth +4% 3-5%

DKK sales growth +4% 2-4%

EBIT growth +5% 2-4%

EBIT margin 27.9% ~28%

Net profit growth +4% 2-5%

Net investmentsexcl. M&A

978 1,600-1,800

Free cash flow excl. M&A

2,113 2,100-2,300

ROIC incl. goodwill

25.8% ~25%

Forward-looking statements

This presentation and its related comments contain forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words such as, but not limited to, "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "could," "may," "might" and other words of similar meaning.

Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations, both positively and negatively. The risks and uncertainties may, among other things, include unexpected developments in i) the ability to develop and market new products; ii) the demand for Novozymes’ products, market-driven price decreases, industry consolidation, and launches of competing products or disruptive technologies in Novozymes’ core areas; iii) the ability to protect and enforce the company’s intellectual property rights; iv) significant litigation or breaches of contract; v) the materialization of the company’s growth platforms, notably the opportunity for marketing biomass conversion technologies or the development of microbial solutions for broad-acre crops; vi) the political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) the global economic and capital market conditions, including, but not limited to, currency exchange rates (USD/DKK and EUR/DKK in particular, but not exclusively), interest rates and inflation; viii)significant price decreases on inputs and materials that compete with Novozymes’ biological solutions. The company undertakes no obligation to update any forward-looking statements as a result of future developments or new information.

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• Continued good momentum, better than expected

• Full-year outlook adjusted after better-than-expected 9M performance

• Stronger connection between application R&D and commercial organization enables more impactful innovation

• Our business is about turning amazing science into sustainable biological answers in a growing world, and our focus is on creating long-term value

Q&A

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