Benny D. Loft, CFO - s21.q4cdn.com · Benny D. Loft, CFO Peder Holk Nielsen, President & CEO Novozymes Capital Markets Day, October 31, 2013 Welcome & 9M, 2013 performance . BASIC

Benny D. Loft, CFO

Peder Holk Nielsen, President & CEO

Novozymes Capital Markets Day, October 31, 2013

Welcome & 9M, 2013 performance

BASIC LAYOUT

Use: This is the basic slide with no extra Novozymes graphics added. Edit Layout: Click Layout in the top menu Home. And choose between +30 different layouts. Edit Header and footer: In the top left corner you find Slide no., Date and Header. Change settings in the menu: > Insert > Header and Footer

guide

This presentation and its related comments contain forward-looking statements, including financial expectations. Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations. The uncertainties may include unexpected developments in the international currency exchange and securities markets, market-driven price decreases for Novozymes’ products and the introduction of competing products in Novozymes’ core areas.

Safe Harbor Statement

3

9M 2013 PERFORMANCE • STRATEGIC UPDATE • BUSINESS DEVELOPMENT • BIOAG • BIOMASS CONVERSION • BETA RENEWABLES

BASIC LAYOUT


guide 4

Agenda


BASIC LAYOUT


guide 5

9M 2013 Summary

New collaboration agreement with Raízen within biomass conversion in Brazil

FY sales outlook adjusted for currency developments, EBIT margin increased

• Underlying sales performance in line with expectations and full year outlook narrowed

• Negative impact on sales in DKK from broad basket of currencies

• Expectation to EBIT margin increased due to productivity improvements, product mix and favorable cost development

9M performance in line with expectations

• 6% organic sales growth after 9M (7% in Q3) driven by all industries, spearheaded by Household Care

• Significant headwind from currencies

• EBIT margin up by 0.4 percentage point 0%

2%

4%

6%

8%

Q1 Q2 Q3 Q4

Accumulated organic sales growth and guidance, 2012 & 2013

2013

2012

Key financials Realized 9M 2013

Outlook October 25

Sales growth, DKK +5% 3-5%

Sales growth, LCY +7% 6-8%

Sales growth, org. +6% 5-7%

EBIT growth +6% 4-5%

EBIT margin 25.0% 24-25%

Net profit growth 8% 7-8%

Net investments excl. acq., DKKm

558 ~900

Free cash flow bef. acq., DKKm

1,235 1,600-1,700

ROIC incl. goodwill 19.8% 19-20%


BASIC LAYOUT


guide 6

Sales & Markets

First 9M sales in line with expectations

9M 2013 sales: DKK +5%, LCY +7%, org: +6%

Q3 2013 sales: DKK +3%, LCY +8%, org: +7%

551

1.187

1.308

2.380

2.997

601

1.286

1.369

2.394

3.156

Technical

& Pharma

Agriculture

& Feed

Bioenergy

Food &

Beverages

Household

Care

Sales by industry, DKKm

9M 2013 9M 2012

• Household Care continued on growth track, as strong performance in emerging markets and Europe/MEA made up for slower US market

• Food & Beverages delivered moderate growth driven by strong performance of healthy concepts, offsetting lower Baking sales. Starch also slightly positive

• Bioenergy sales showed strong momentum due to good progress with Avantec® sales and early adoption of Spirizyme® Achieve®

• Agriculture & Feed up due to strong BioAg performance across markets. Animal feed slightly up driven by protein segment

• Technical & Pharma up on higher sales to the textile and pharma industries

+5%/+8% Q3: +24%

+1%/+3% Q3: +2%

+5%/+8% Q3: +8%

DKK growth/LCY growth

+9%/+12% Q3: +12%

+8%/+12% Q3: +4%


BASIC LAYOUT


guide 7

In Detail: Corn Ethanol Customers Adopt New Enzyme Technology

-20%

-10%

0%

10%

20%

30%

Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

Quarterly growth rates, 2012-2013

US ethanol production

Bioenergy organic sales growth

Benefits from technology package

• Up to 5% more ethanol yield

• Up to 8% energy savings

• Up to 13% more corn oil extraction

New technology has been well received by customers and we are outperforming the market: • Avantec® has now been one year in the

market place and is 20% into the market

• Spirizyme® Achieve has been more rapidly adopted by customers than expected and is already 10% into the market.

• Olexa® doing fine, but market is smaller

than for he other two enzymes systems Current penetration and converted customers represent the ”low-hanging fruits”

Olexa® Spirizyme® Achieve

Avantec®


BASIC LAYOUT


guide 8

Innovation - New Evity® Platform for Household Care

The Evity® Platform:

• New stability technology for Household Care aiming at taking stability to next level

• Relevant for both granulate and liquid formulations and many products will be added Evity technology

• Improves storage times &

increases the possibility of including more enzymes in the harshest formulations Film coating for color

preservation and dust reduction

Improved Granulate Illustration

Protective layer

High-strength enzyme-containing

core with stabilizing technology


BASIC LAYOUT


guide 9

9M 2013 Financial Performance & FY 2013 Outlook

Satisfactory earnings development in dynamic currency environment

• Increase of both gross and EBIT

margin despite currency headwinds

and higher cost base

• Free cash flow improved throughout

the period as expected

2013 outlook

• Organic sales growth outlook

narrowed

• Significant headwinds from

currencies take its toll on sales

growth in DKK

(USD, JPY, BRL, INR, ARS)

• Better than expected earnings

development and favorable cost

development lead to higher EBIT

margin expectation

Key financials Realized 9M 2013

Outlook October 25

Outlook August 9

Sales growth, DKK

+5% 3-5% 5-7%

Sales growth, LCY

+7% 6-8% 5-8%

Sales growth, org.

+6% 5-7% 5-8%

EBIT growth +6% 4-5% 4-6%

EBIT margin 25.0% 24-25% ~24%

Net profit growth 8% 7-8% 7-9%

Net investments excl. acq., DKKm

558 ~900 900-1,000

Free cash flow bef. acq., DKKm,

1,235 1,600-1,700 ~1,700

ROIC incl. goodwill

19.8% 19-20% 19-20%


Peder Holk Nielsen, President & CEO


Strategic update

BASIC LAYOUT


guide 12

Setting the scene

Management wishes to provide an update on strategy and targets to emphasize Novozymes' strategic priorities for the years ahead

Agenda

Outline

• Long-term targets

• Strategic priorities

• Innovation

• Earnings capacity

• Priorities for cash use

• Q&A


BASIC LAYOUT


guide 13

Long-Term Targets, Updated January 2013

Long-term financial targets for the next 5 years:

Average organic sales growth of more than 10% (from 2015)

EBIT margin of more than 24%

Return on invested capital of more than 22%

Targets are based on the assumptions that:

The global economy stabilizes

The biofuel market in the U.S. moves toward E15

Novozymes will sell enzymes to at least 15 biomass conversion plants by 2017

The targets are contingent upon no major acquisitions being made


BASIC LAYOUT


guide 14

Novozymes’ vision: We envision a future where our biological solutions create the necessary balance between better business, cleaner environment and better lives.

• Use industrial biotechnology to address

society's biggest challenges: • Energy efficiency • Waste reduction • Scarce raw materials • Replacing chemicals • Climate change • Population growth • Etc.

• Diversified growth from core technology platform is pivotal

• Biological solutions for B2B, not just enzymes

• Innovation is the epicenter

Strategic Foundation Unchanged – Evolution, Not Revolution, for New Leadership Team


BASIC LAYOUT


guide 15

1. Deliver significantly more innovation to the market faster

• The value of our innovation must increase in order to sustain 10% organic growth

• Technology and innovation processes must decrease time to market

2. Ensure success in growth platforms

• 4 key platforms defined today within business development. Nurse, develop and execute

• Keep room (and resources) for exploring the next big thing to ensure long-term growth

3. Cultivate great leadership and develop people

• Without the right leaders we will get nowhere

3 Focus Areas to Drive Performance and Reach Long-Term Targets

Biomass Conversion

BioAg Animal Health

& Nutrition Biopharma


BASIC LAYOUT


guide 16

Driving Innovation Is All About Striking the Right Balance with Your Expertise

Pull Push

Pipeline management is no simple task

Our innovation depends on the insight and involvement of the more than 1,500 Zymers engaged

in product development. Reducing complexity and bringing innovation straight to market are key.

Customer-driven innovation is not a one size fits all

With the foundation of our core technologies, we can customize solutions that fit the customer and

application. Partners are critical for success, but in some areas, more value is generated by delivering

the unexpected. We need both push and pull.

Take full advantage of technology

Technology is developing incredibly quickly. We have the right know-how to take advantage of the

unprecedented opportunities this development is providing. Mastering complexity and data to develop

new solutions is critical, as well as utilizing our production strength to an even larger degree.

New lead Discovery Development


BASIC LAYOUT


guide 17

Novozymes Has a Proven Ability to Outgrow the Global Economy through Economic Cycles

-5,0%

-2,5%

0,0%

2,5%

5,0%

7,5%

10,0%

12,5%

15,0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Novozymes organic sales growth Global avg. GDP growth Novozymes' avg. sales growth

Source: The World Bank/Internal Analysis

Novozymes' organic sales growth vs. global GDP growth, 2003-2012

7,6%

2,7%


http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=D5eJBgy_TmXFSM&tbnid=panR6hJEKr9NuM:&ved=0CAUQjRw&url=http://www.adpic.de/lizenzfreie_bilder/Laender _und_ Regionen/Sonstiges/globus___planet_erde_262717.html&ei=b80xUraIJsqz0QXhuYC4CQ&bvm=bv.52109249,d.ZG4&psig=AFQjCNHWMv4nbiwNbtNSYyIzILL3X-yBtA&ust=1379081957352924

BASIC LAYOUT


guide 18

• History shows potential to grow 10% from a diversified set of industries, but not consistently

• Consistent performance in existing business will lay foundation for +10%

• Growth platforms will add layers of growth to enable +10%

• All 5 sales areas have the potential to deliver +10% growth within the 5-year period

How Do We Get To +10% from 2015?

Historic performance & size of areas, 2012 DKKm Future growth to come from

720

1.617

1.748

3.186

3.973

Technical &

Pharma

Agriculture &

Feed

Bioenergy

Food &

Beverages

Household Care

Established businesses • Household Care • 1G bioenergy • Food & Beverages + Technical

+

(2)%

7%

11%

4%

9%

2008-2012 org. sales CAGR:

Gro

wth

pla

tform

s

Transformational opportunities

Biomass Conversion

BioAg

Growth contributors

Animal Health & Nutrition

Biopharma


BASIC LAYOUT


guide 19

Historical Performance Demonstrates Track Record of Delivery

Since IPO: +5.2 %-points gross margin +7.7 %-points EBIT margin +9.9 %-points ROIC improvement

• Historical margin expansion through productivity

improvements and operational leverage

• Earnings capacity is believed to be intact, as productivity improvements are expected to continue

• From 2015, success is +10% growth with high EBIT margin of +24% and ROIC >22%. Higher margins not a priority in themselves

• Leadership decision to allocate resources to drive innovation instead of margins, emphasizing absolute returns

16%

18%

20%

22%

24%

26%

0

1.000

2.000

3.000EBIT

EBIT DKKm EBIT margin

52,0%

52,4%

51,8%

51,8%

52,6%

53,3%

53,7%

53,1%

53,5%

55,6%

55,7%

56,2% 57,2%

50%

52%

54%

56%

58% Gross margin

0

3.000

6.000

9.000

12.000

8%

12%

16%

20%

24%

28%

ROIC

Inv.Cap. DKKm ROIC, incl. goodwill


BASIC LAYOUT


guide

2005-2008 2009-2012

0

1

2

3

0

1

2

3

0

1

2

3

0

1

2

3

2002-2004

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

Cash for growth and shareholders

Dividends Capex Acquisitions Buybacks

20

Cash Generation, Use, Capex and Future Priorities – DKK billion

CAPEX 2002-2012; DK & new facilities

2013-2017; DKK +15bn* in operational cash flow to be invested in:

1. Innovation

2. Business development

3. Acquisitions

4. CAPEX as needed

5. Return to shareholders

0,0

0,5

1,0

1,5

2,0

2,5

3,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cash generation has tracked EBIT

EBIT Operational cash flow1 2

3 4

* Estimated as a simple progression of current operational cash flow with 10% growth p.a.


Thomas Videbæk, Executive Vice President, BD


Business Development – Creating tomorrow’s business

BASIC LAYOUT


guide 23

Setting the scene

Business Development as an organizational unit was created in connection with the reorganization that Novozymes carried out in Q1 2013. This presentation aims at providing an overview of the business development, the rationale and the role of the current functional setup.

Agenda

Outline

• Ambition

• Historical perspectives

• Overview & role

• Individual introduction to growth platforms

• Recap

• Q&A


BASIC LAYOUT


guide 24

Business Development

BUSINESS DEVELOPMENT CREATES TOMORROW’S BUSINESS FOR NOVOZYMES MATURING PLATFORMS,

DEVELOPING BETS AND TESTING IDEAS BY MATCHING MARKET NEEDS WITH NOVOZYMES' TECHNOLOGY


BASIC LAYOUT


guide 25

Early exploration

2000-2006

BioBusiness

2007-2012


2013

The Road to Business Development

Roots Acquisition

Philom Bios Acquisition

Gamlen France Acquisition

2004 2006 2008 2010 2012

Turfal Acquisition

EMD Acquisition

Delta Biotechnology Acquisition

GroPep Ltd Acquisition

2013

Natural Industries Acquisition

T.J. Technologies Acquisition

Lund + peptides Divestment

Aim: Technology acquisitions to explore adjacent business opportunities

- Biopharma

- Biologicals

Aim:

• Streamline & consolidate acquired businesses

• Build BioAg • Identify growth platforms

Aim:

• Ensure success in growth platforms

• Integrated support from regional public affairs and sustainability

• Acquisitions to support platforms and bets

• Prioritize Group pipeline EBS Acquisition

Roots Divestment


BASIC LAYOUT


guide

Innovation clusters

• Customers

• Academia

• Radical ideas

• Internal ideas

Emerging platforms

• Undisclosed projects

Growth platforms

• Biomass conversion

• BioAg

• Animal Health & Nutrition

• Biopharma

• Responsible for new business areas and Novozymes’ entire pipeline prioritization • Close coordination on pipeline, resource allocation and customers • Business development organization to cater for alternative business models and new business areas • Innovation & business development crucial in all industries Novozymes serves

Business Development Nurtures Tomorrow’s Business for Novozymes

Established businesses: • HHC • F&B • 1G fuel • Technical


Business Operations

M&A + partnerships

26


BASIC LAYOUT


guide

Case: Animal Health & Nutrition – A Growth Platform with a Strong Core

Business today • Feed enzymes are important for Novozymes

• CAGR of +10% from 2000 to 2012

• High single-digit percentage of Group sales

• Novozymes–DSM alliance offers innovative solutions

that improve the nutritive value of the raw materials

Rationale for the future • Fundamental macrodrivers + Novozymes’

capabilities and presence in adjacent industries

(Agriculture, Bioenergy and Food processing) offer

a strong platform for driving growth opportunities

across the broader animal production value chain

Animal farming

Feed production

Feed ingredients

Animal Health & Nutrition

0

50

100

150

200

250

300

350

'00 '02 '04 '06 '08 '10 '12

Sale

s i

nd

ex

27


BASIC LAYOUT


guide 28

Novozymes’ Growth Strategy for Animal Health & Nutrition

Strengthen core in feed enzymes • Invest in strengthening the feed enzymes core in

the DSM NP Alliance.

• Reinforce leadership through continued investment

in innovation

• Drive customized & regional approach to offerings

in order to create more value for customers

Beyond feed enzymes • Leverage microbial and enzymatic technologies to

expand beyond feed enzymes (with partners)

Health/non-nutritional feed additives:

• Non-nutritional feed additives targeting a growing

need for performance improvement of animals

Feed ingredient processing:

• Rethink our customers' processes and increase the

feed value of their co-products or residual materials

Feed enzymes for nutritional enhancement

+ Health/non-nutritional feed

additives

+ Feed ingredient processing

2

1

Customer familiarity

Technolo

gy fam

ilia

rity


BASIC LAYOUT


guide 29

Biopharma Overview & Status

• Existing business, leveraging one of the most comprehensive biocatalyst enzyme portfolios

• New focus aiming at exploring potential to become an important player for cost-effective & sustainable manufacturing of fine chemicals & APIs

Hyaluronic acid •Superior safety, consistency and performance

•Cost savings and minimized risk

•Ingredient in medical devices and pharmaceuticals

Recombinant albumin USP-NF* •High-quality animal-free recombinant albumins

•A safe and consistent regulatory-compliant product

•Stabilizes drug and vaccine products + use in medical devices

Half-life extension technology •Albumin-based technology

•Albumin fusion or chemical conjugation with APIs

•Improved dosing regimes for increased patient compliance

•Next-gen. patented technology: Albufuse® Flex

Pharma enzymes •Proteases and lipases for biocatalysis and diagnostic use

•rTrypsin cell culture applications

•Novel proprietary enzymes being explored

• Dedicated cGMP ICH Q7 plant in Tianjin, China • Samples for in vitro and preclinical trials available • First sales are ticking in; +100 customers have trialed • Potential intact, but delayed according to early

ambitions – triple-digit sales in 2-3 years still the aim

• Running business to grow with new supply deals

• Some partners for first Albufuse®:


http://www.rtechueno.com/en/index.html

http://www.hgsi.com/

http://www.gsk.com/index.htm

http://www.cslbehring.com/s1/cs/enco/1151443990667/content/1151443991017/home.htm

BASIC LAYOUT


guide 30

• A transformational opportunity for Novozymes • Turning renewable low-value carbon into high-value product is revolutionary • Enzymes poised to be a leading conversion technology • Entire field to be the focus of significant innovation once commercialization has caught on

Biomass Conversion; Food, Feed, Fuel, Chemicals and Materials Made from Biomass and Waste

Potential offered by biorefining by 2030:

• ~8.2 million man-years employment

• 475 million tons CO2 reductions/year

• $3,000 billion in accrued revenue for a $500 billion investment

Source: ”Moving Towards a Next-Generation Ethanol Economy,” Bloomberg New Energy Finance, 2012


BASIC LAYOUT


guide

31

BioAg is at the Convergence of Structural Drivers

BioAg 9bn people

by 2050

Increasing weed & pest resistance

Increasing consumer focus on

sustainbility in

agriculture

Increased regulatory scrutiny of chemicals High &

volatile input prices

Microbial technology

development

Big established Ag players moving in


BASIC LAYOUT


guide

• Business Development is tasked with creating tomorrow’s business for Novozymes

• Business Development drives pipeline prioritization and management for the entire company

• Business Development is tasked with ensuring success in the 4 well-defined growth platforms, while developing earlier-stage ideas and bets

Recap

32


Trevor Thiessen, Vice President, BioAg


BioAgriculture – Market & Priorities

BASIC LAYOUT


guide 35

Setting the scene

Over the last 7 years Novozymes has built a leading position within Agricultural Biologicals (BioAg) This presentation aims at explaining Novozymes' view of the market and its priorities with a view to driving the business forward

Agenda

Outline

• Executive summary

• Novozymes’ BioAg business – history and present

• The BioAg market – technologies and opportunities

• Strategic priorities

• Recap

• Q&A


BASIC LAYOUT


guide 36

Executive Summary

What are Ag Biologicals?

Ag Biologicals are microbial-based solutions that work to

naturally produce healthier crops and improve yields

• Provide farmers with effective and more sustainable, “low-chem” alternatives for their agricultural practice

• A cost-efficient tool for the farmer to safeguard the high investment of seeds and other Ag chemicals

Novozymes’ strategic priorities Increase penetration in existing markets

Grow global markets

Develop science and R&D pipeline


BASIC LAYOUT


guide 37

Why Are Ag Biologicals Interesting to Novozymes?

Higher demand for agricultural produce from growing population

Regulatory and consumer focus on sustainable agriculture

Increasing chemical and fertilizer input scarcity and price volatility

Technology advancements that provide path for developing science and new products


BASIC LAYOUT


guide

Biotech R&D

Molecular biology, bioinformatics & systems biology, and screening systems

Industrial- scale

fermentation

Large-scale production of microorganisms; continuous optimization

Experience from

partnering & joint

developments

Why acquisitions & what have they given us?

• Window of opportunity to consolidate the BioAg space and become a major player

• Size and footprint to make a difference • Product leverage across crops and geography

Leverage Novozymes' core competencies

• Scale advantage by applying competencies within R&D, fermentation and relationships across business areas

Novozymes BioAg

+

38

Our BioAg Platform Was Built through Acquisitions and Application of Novozymes' Core Competencies

2013 TJ Technologies

2012 Natural Industries

2011 EMD Crop BioScience

2010 Turfal

2009

2008

2007 Philom Bios

2006 Earth BioScience

Relative size

= Transformational = Bolt-on = Tech


http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=1KHfXkoIBzlHzM&tbnid=N_8pwSquyAX9lM:&ved=0CAUQjRw&url=http://www.forbes.com/companies/syngenta/&ei=SGxIUomQOcuQ4ATAnYCYCA&bvm=bv.53217764,d.bGE&psig=AFQjCNGie5lH6pn-e0ESLWROgOGX-35sAA&ust=1380564397464919

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=hIq6qAspUudm7M&tbnid=qzU-j3Kf3h04OM:&ved=0CAUQjRw&url=http://www.machinesitalia.org/en/itcnews/full/italy_invests_in_us_italys_mg_group_to_construct_its_pet_pta_plants_in_corp&ei=52dJUtnNMcboswbjs4HYCQ&bvm=bv.53217764,d.Yms&psig=AFQjCNEw9uEtHRkhv5fDrtZSFAaZxb1dog&ust=1380628835709644

BASIC LAYOUT


guide 39

Novozymes BioAg Is Early Part of Value Chain

Technology provider

BioAg manufacturer

Distributor

(wholesalers, seed

companies, etc.)

Retailer Farmer

Retailer: Plays the most important role in determining if a farmer will use seed treatment inoculants and what brand

Distributor: Most distributors have only a small amount of influence on farmers' decision process

Tech provider/BioAg manufacturer: Will in most cases be the same company within the BioAg space Buying criteria for farmer: *

1. Past experience 2. Retailer advice 3. Agronomist input 4. Peer recommendation 5. Brand

• Majority of sales go through distributor channels – some through seed companies

• Distributors (e.g. Cargill, Winfield, Agrium/Loveland)

• Seed companies (e.g. Bayer)

• Products sold through regional seed and crop input retailers

* Novozymes & markets 2010


BASIC LAYOUT


guide

0

50

100

150

200

250

300

350

400

450

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Index

40

• Annual revenue around USD 120 million (2012) • North America accounts for roughly 2/3 of sales • Inoculants for nitrogen fixation for soy and other pulse crops the single biggest application

Historical Results Build Confidence in Our Future

Source: Internal analysis. Combined sales development from the combined business of EMD/Merck Crop Bioscience, Philom Bios, EBS and Turfal. Natural Industries and TJ Technology not included as they were acquired just recently

Novozymes BioAg's combined sales development, 2003 = 100


BASIC LAYOUT


guide 41

Novozymes’ Competitive Advantages Are Three-Pronged

Largest producer and marketer of inoculants with vast experience in

large-scale production of microorganisms

Global leader in innovation/ microbial R&D with a strong IP base and commitment to

sound scientific principles

”First to market” position in phosphate solubilization & signal molecules and market-leading brands and partnerships within soybean and canola


BASIC LAYOUT


guide

Biofertility increases the supply

of nutrients to crops

Bioyield enhancers stimulate crop stress resistance

Biocontrol controls insects, disease,

and weed crop pests

~$2

$9

$11

$18

$28

$110

42

Fertilizer and Seeds Are the Biggest Crop Inputs, Biologicals Are the Fastest Growing

• Novozymes holds ~1/3 of the combined biofertility & bioyield enhancer market

• In biocontrol we are still a small player, but segment offers large opportunities

• AgChems have in recent years been very active in the Ag Biologicals space

Ag Biologicals market

Crop input and market size

USDbn & 3Y CAGR 2010-2012

USDm

$1.8-$2

2%

6%

6%

7%

4%

11%

15%

Note: Not shown are nematicides, a type of chemical pesticide used to kill plant-parasitic nematodes Source: External market research (e.g. marketresearch.com, fertilizers.org)

~$1.500m

~$100m

~$225m

Fertilizers Nitrogen, phosphorus &

potassium

Seeds

Corn, soy, canola, etc.

Herbicides Weed control

Fungicides control fungus diseases

Insecticides control insect diseases

Seed treatment coating, coloring, vaccines,

etc.

Ag Biologicals


BASIC LAYOUT


guide 43

Top 10 Ag Companies – Combined Revenue of USD +65bn

Source: Partner estimates

Fertilizer majors:

AgChem

Seed

Other, incl. Ag Biologicals

$8,9

$14,2

$13,5

$10,4

$6,4

$4,7

$2,2

$1,8

$1,6

$2,8

2012 revenue, excl. fertilizers, USDbn


http://www.monsanto.ca/

http://www.syngenta.com/global/corporate/en

http://www.dow.com/

http://www.nufarm.com/US

http://www.ma-industries.com/

http://www.ma-industries.com/

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=uu2LUhzrxVPpBM&tbnid=U4NT_SkSHdo1tM:&ved=0CAUQjRw&url=http://northernprospector.ca/potashcorp-posts-2012-economic-environmental-and-social-performance-results/&ei=48STUfrnHqSl4AS35ICgAQ&bvm=bv.46471029,d.bGE&psig=AFQjCNGFk33eLGmGCmeMjnt6_XGiriZIBw&ust=1368725088344360

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=bKTKTYHgIbcHvM&tbnid=TxjrnXNAiahfbM:&ved=0CAUQjRw&url=http://www.agrostatus.com.ua/en/partnery/&ei=OMWTUZiTFqT34QTV9oDoAw&bvm=bv.46471029,d.bGE&psig=AFQjCNFyhux8t1Bos5fvuRm7ZSZXNMo9jA&ust=1368725171694068

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=xht3kNkO4GiJ7M&tbnid=DfplgLDb_U0k7M:&ved=0CAUQjRw&url=http://www.livetradingnews.com/cf-industries-holdings-inc-nysecf-on-corn-43070.htm&ei=oMWTUbnANrCk4ASnl4BQ&bvm=bv.46471029,d.bGE&psig=AFQjCNGBJClJ5aKc3L0lyUGOnaRuORIk7A&ust=1368725275364346

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=m9fzycCF6UdA3M&tbnid=RLlkbcGK6PcIqM:&ved=0CAUQjRw&url=http://www.forbes.com/companies/uralkali/&ei=GMaTUaupM4Oo4AT-loGICg&bvm=bv.46471029,d.bGE&psig=AFQjCNGG9-HWM_Q4u5uk2eeKhcfKIQUidA&ust=1368725394301639

BASIC LAYOUT


guide

BioAg has Gained Attention – Tough Competitors Provide Proof of Value

AgraQuest USD 500m

Becker Underwood

USD 1bn

Pasteuria USD 110m

Prophyta USD Xm

Agradis USD Xm

IPO

Alliance

2012 2013


http://www.monsanto.ca/

BASIC LAYOUT


guide

2

5

%

2

5

%

2

5

%

n/a n/a n/a n/a

45

Our Current Biologicals Offer Ample Opportunities for Growth

Biofertility

Bioyield enhancers

Biocontrol

Phosphate solubilization

Nitrogen fixation

Biofungicide

Plant growth promoters

Bioinsecticides

Soy Pulses Fruit & veg. Canola Corn Wheat Novozymes' relative market penetration

2

5

%

Just launched

Just launched

= Market close to full penetration

= Market less penetrated – still significant potential

= Unpursued market opportunity with existing products and technololgies

JumpStart®

TagTeam®, Cell-Tech® & Optimize®

Torque®, Proventus®, Ratchet® & QuickRoots®

Taegro® & Actinovate®

MET52®


http://www.google.com/url?sa=i&source=images&cd=&cad=rja&docid=1fNX72JGggxjVM&tbnid=Unp0MPTQuARrnM:&ved=0CAgQjRwwAA&url=http://www.hsph.harvard.edu/nutritionsource/vegetables-and-fruits/&ei=Z42BUbXHAsOttAbsxIG4Cg&psig=AFQjCNGpoRh7eqBWCDBUbhmAOim0yL6VpA&ust=1367531239072552

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=HqmHqPZz2ly0LM&tbnid=EAXLITzsr0FJiM:&ved=0CAUQjRw&url=http://americanpreppersnetwork.com/2012/06/preserving-corn-canning-freezing-and-recipes.html&ei=B3VKUrjgB4LmswbSsIHoAw&bvm=bv.53371865,d.d2k&psig=AFQjCNGY4atHu1j4pW4sccJ4NA4QXQqRyA&ust=1380697703634404

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=f1L0Yriw-nPI8M&tbnid=DTtMlHB74_XTIM:&ved=0CAUQjRw&url=http://www.agricorner.com/violating-free-market-principle-provinces-being-provided-rs-244-billion-for-wheat-procurement/&ei=VnZKUrbvO8GhtAa6yIH4BQ&bvm=bv.53371865,d.d2k&psig=AFQjCNHPugcdVgqVnfpvkrhhyBuQ7pyn6Q&ust=1380698063696219

BASIC LAYOUT


guide 46

Key Markets and Future Opportunities: Americas Are Key – the World Is Open

• Broad-acre crops

• High-value crops








• Broad-acre crops • Broad-acre crops


Main markets Developing markets New opportunities (unexplored)


BASIC LAYOUT


guide

The Scientific Challenge in BioAg – a Lot of Moving Parts …

Key to understanding the entire scientific environment

• Plant microbiome, incl. mode of

action of microbes

• Genomic potential of bacteria and

fungi

• Bacteria: ~4,000 genes/genome

• Fungi: ~20,000/genome

• Performance in field based on

interplay between many factors

• Microbes interact with plants,

insects, on leaves, in a variety of

different field/soil and climate

conditions

• Regulatory aspects

• Regulatory requirements different

from region to region, incl.

registrations and time for approval,

toxicology testing, efficacy studies

and product label claims

Agriculture is very complex

Predictive assays field performance

Microbial diversity

Competition in microbiome Inhibitors

Beneficials Products

Formulations (spray, seed …)

Robust performance

Approvals & regulations

Plants

Wind, solar, soil, water …

Leaves, roots …

Insects, nematodes …

Field trials

47


BASIC LAYOUT


guide

Novozymes Is Well Positioned to Find Answers to the Complex Challenges in BioAg

Novozymes' capabilities are the foundation… …Partners/Academia are critical for understanding

Molecular biology

Strain development using protein engineering, genetic modification, DNA sequencing, etc.

Bioinformatics & systems biology

Application of computer algorithms in discovery of enzymes in DNA databases

Screening systems

Assay development, application of high-throughput robotics

Industrial- scale fermentation

Continuously optimizing and improving yields for 60 years

Microbiology Bacteria, fungi, culture collection, biochemistry, taxonomy

Microbial physiology

Linking growth to production Fast & predictive scale-up

48


http://www.international.inra.fr/

http://www.kuleuven.be/english/

BASIC LAYOUT


guide 49

Novozymes' Priorities: Drive Long-Term Growth

Increase penetration in existing markets 1.Add regional distributor collaborations 2.Make bolt-on acquisitions 3. Build further field trial data on key crops

Grow global markets 1.Add distribution partnerships 2.Make bolt-on acquisitions 3. Build required minimum presence (regulatory)

Develop science and R&D pipeline 1.Add capabilities in R&D 2. Collaborate with academia and corporations 3. Scout for technology acquisitions


BASIC LAYOUT


guide 50

• BioAg fits Novozymes’ vision of producing more with less

• Novozymes has built a leading position over 7 years

• Interest in industry is growing, providing proof of value

• Novozymes believes in its competitive advantages and its ability to leverage these through partnerships in a changing competitive environment

• Science is key to unlock potential

• BioAg is poised to grow in importance in global agriculture

Recap

50


BASIC LAYOUT


guide 51


BASIC LAYOUT


guide 52

Novozymes BioAg Has Applications within All 3 Subsegments of the BioAg Market

Nitrogen fixation

Biofertility products

Bioyield enhancers

Biocontrol products

Biofungicides Bioinsecticides

Novozymes BioAg

Phosphate solubilization

• A phosphate inoculant that grows along the roots, making more soil and fertilizer phosphate available to the plant

• Nitrogen-fixating inoculants

• Combined products utilize a combination of traditional nitrogen inoculant with LCO (lipochitooligo-saccharide) & JumpStart

• Unique LCO molecule enhances nutritional capabilities, driving natural growth processes, which enhances plant health and crop performance

• Microbial seed inoculant for increased yield

• Slows down the resistance of current spray chemicals, thereby extending the life of those chemicals, within high-value fruits and vegetables

• Bacterial-based biofungicide for disease control

• Wide mode of action to help break resistance in current chemical products within high-value fruits and vegetables as well as turf and ornamentals

Taegro®, Actinovate®

MET52® Torque®, Proventus®, Ratchet®, QuickRoots®

JumpStart® TagTeam®, Cell-Tech®, Optimize®

3 2 1

Plant growth & health


BASIC LAYOUT


guide

Novozymes BioAg Has Global Presence

Saskatoon, Canada Sales, Manufacturing, R&D

Milwaukee, Wisconsin Sales, Manufacturing

Salem, Virginia R&D

Paris, France Sales, Customer Communications

Bagsvaerd, Denmark Sales, Marketing

Bangalore, India Sales, Agrronomy, Toll Manufacturing, Satellite R&D

Melbourne, Australia Sales (joint venture)

Curitiba/Araucária, Brazil Sales, Manufacturing, R&D

Nottingham, UK Agronomy

Kuala Lumpur, Malaysia Sales

Buenos Aires & Pilar, Argentina Sales, Manufacturing

Ho Chi Min City, Vietnam Sales

Houston, Texas Sales, Manufacturing

Watertown, South Dakota Sales, Manufacturing

53


BASIC LAYOUT


guide

Soybean 11%

Corn 17%

Wheat &

Cereals

33%

Oilseed

6%

Pulses

6%

Rice

17%

Other 10%

54

Global acreage can be divided into two main categories: • Broad-acre crops such as corn and soy: high volume, low value

• High-value crops such as strawberries, salads, nuts: low volume, high value

• Farmer dollar spend on high-value crops is significantly higher

The World of Crops – Two Markets of Similar Value

2011 total hectares: ~970 million

Fruits 62%

Vegetables 31%

Tree nuts

7%

2011 total hectares: ~120 million

Broad-acre crops High-value crops

Other crops Cassava, potatoes, cotton, sugarbeet, sugarcane, etc.

Cereals Barley, oats, rye,

sorghum, etc.

Pulses Beans, chick peas, lentils, peas, etc.

Oil seed Canola/rapeseed, sunflower, etc.

Source: UN FAOSTAT 2011


BASIC LAYOUT


guide

• ~24m HA globally in 2012

- 11m HA in NA, of which 85% treated

- 4m HA in LATAM, of which 40% treated

- 9m HA in RoW hereof

• Novozymes' market share

• ~70% in North America

• ~20% in LATAM

• <5% in RoW (5% in Europe; 1% in Asia)


- 8.5m HA in NA 2012, of which 15% treated with a phosphate solubilizer

- 1m HA in LATAM, of which <5% treated

- 26m HA in RoW, of which <5% treated



• ~0% in LATAM

• <5% in RoW (0% in Europe; <5% in Asia)

55

Core Crops for Novozymes BioAg Today

Soybeans

Forage crops (clover, etc.)

Pulses (peas, lentils, beans, etc.)

Canola (oil seed, etc.)


- ~31m HA in NA, of which 50% treated

- ~47m HA in LATAM, of which 70% treated

- ~22m HA in RoW, of which ~10-50% treated



• ~20% in LATAM

• 5-20% in RoW (Eur 20%; Africa 5%; Asia 5%)


- 3m HA in NA, of which 90-95% treated

- 6m HA in LATAM, of which 10% treated

- 53m HA in RoW, of which <10% treated



• ~20% in LATAM

• <3% in RoW (0% in Europe; 3% in Asia)

Source: Internal estimates


Sebastian Soderberg, Vice President, Biomass Conversion

Claus Crone Fuglsang, Vice President, Bioenergy R&D


Biomass Conversion – Driving commercialization

BASIC LAYOUT


guide 57

Setting the scene

Biomass conversion is a transformational opportunity for Novozymes 10+ years in the making, the first commercial-scale plant is now online This presentation aims to provide an overview of the market and how Novozymes is adjusting its enzyme development strategy to serve the market

Agenda

Outline

• Executive summary

• Advanced biofuel markets

• Novozymes’ approach to the market

• Recap

• Q&A


BASIC LAYOUT


guide

External messages: • Beta Renewables to contract 15-25 biomass

conversion facilities with Novozymes as enzyme supplier by 2015-2017

• These facilities to generate turnover up to DKK 1 billion once operational

• Sales to at least 15 commercial-scale biomass conversion plants by 2017

Key objectives:

• Ensure that industry is commercialized and explore means to accelerate this

• Capture large share of first biomass plants to ensure first-mover learnings and market leader image

• Position Novozymes as clear market leader with key global and regional partners

58

Biomass Conversion has the aim to be a significant contributor to Novozymes’ long-term revenue growth target:

10% p.a. from 2015

Business should not negatively impact other NZ financial targets: EBIT of >24%, ROIC >22%

Biomass Conversion Is a Transformational Opportunity for NZ


BASIC LAYOUT


guide

Feedstock Capital Enzyme Other

59

Waste to value: Utilize cheap renewable feedstock to create low-cost, lower-volatility and sustainable biofuels/biochemicals

More with less: Get more out of arable land, existing infrastructure and market presence. For example, Brazilian plant to

increase output by 30-50% from same land, 20-40% in the U.S.

The Business Case for our Customers Rests on Two Desirable Elements (given Economic Viability)

1G ethanol (corn) Assumptions: • Corn @ USD 5.25/bushel • Depreciations

(Plant cost USD 2.00/gal) • Other = energy, water, yeast,

chemicals & labor • Enzymes: USD 0.04/gal

2G ethanol (biomass) Assumptions: • Biomass @ USD 50/ton • Depreciations


chemicals & labor • Enzymes: USD 0.50/gal

Sugarcane ethanol

Assumptions: • Sugar cost equiv. to USD 0.18/lb • Depreciations


chemicals

Illustrative example – Cost distribution by type of ethanol


BASIC LAYOUT


guide 60

• The number of projects choosing enzymatic hydrolysis conversion has increased from 7 in 2008 to 26 in 2013

• In addition to projects publicly announced, there is a significantly larger pipeline of projects in the making

• The market has shifted from a U.S. play to a global opportunity

• Important to note that not all facilities on the drawing board will make it commercially

Many More Potential Customers Are Interested in Biomass Conversion Today than 5 Years Ago

Commercial projects by region, 2013

2 - Crescentino - Maabjerg

2 - MYBiomass - Sabah

9 - Cofco/Sinopec - SQ - Datang - Dacheng - HNTG - Longlive - ZTE - Stategrid - Jilin Fuel

7 - POET-DSM - DuPont - Project Alpha - Fiberight - Abengoa - Canergy - Greenfield

6 - GranBio - Raizen - OAI - Rhodia - TMO - Colbiocel

Commercial projects: Projects either completed, under construction or publicly announced using enzymatic hydrolysis


BASIC LAYOUT


guide 61

Increasing Interest Has Led to Activity in All Segments of the Value Chain

Biomass Technology – pretreatment

Biotechnology* Ethanol

production Ethanol

distribution

Farmer co-ops Palm oil

producers Wood owners Municipalities

.

.

.

Existing chain

* Enzymatic hydrolysis only ** Captive enzyme producer

**

**


http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=tDzddE77pUKD8M&tbnid=yNbnZY-pFGC1eM:&ved=0CAUQjRw&url=http://www.goingwimax.com/sinopec-successfully-deploys-apertos-packetmax-wimax-in-china-11215/&ei=O6NmUtHOGcKNtQaQnoD4Bg&psig=AFQjCNFDIvmCXMpqeXukfVAc3HKlDFtUWw&ust=1382544555313363

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=jhTrIaP5e6C8bM&tbnid=jsxAKftRIYcVMM:&ved=0CAUQjRw&url=http://www.decanter.com/news/wine-news/516783/cofco-to-guard-china-bound-bordeaux-from-production-to-consumption&ei=DZtmUojqJsnStAaKv4GgCg&bvm=bv.55123115,d.Yms&psig=AFQjCNFOMgYS8B7aquI9O2IMIIrbONRRfQ&ust=1382542472436020

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=6pbR0cBLNcLPzM&tbnid=_qEdZ2g3UUjbuM:&ved=0CAUQjRw&url=http://www.topnews.in/buy-praj-industries-dip-nirmal-bang-2162297&ei=PJ9mUpqtC87DswaDkoHwCg&psig=AFQjCNEy0ntsbY9x0ytIz9WhTf8dagSM5w&ust=1382543473307398

https://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=-F9XOhD0TprwCM&tbnid=U1WP0uiAcSZEIM:&ved=0CAUQjRw&url=https://www.glbrc.org/iogen-corporation&ei=jJ1mUpGpMsTJsgbS9IH4CA&psig=AFQjCNEIMHVplMpG5yyv047jBhQPhapZlA&ust=1382543111864801

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=PyonrS7GVeNioM&tbnid=PQRHsRZOLfVADM:&ved=0CAUQjRw&url=http://www.ecoseed.org/renewables/bioenergy/ethanol/11982-inbicon-introduces-20-mmgy-biomass-demonstration-model&ei=yJxmUvjVC4HNtAaMsIGwCA&psig=AFQjCNGIVG-o02sM7x1GFZYIcFwkvroGzw&ust=1382542702609479

http://www.google.dk/url?sa=i&source=images&cd=&cad=rja&docid=hZGsV0wbSkMunM&tbnid=iBifaayv8ARK2M:&ved=0CAgQjRwwAA&url=http://www.tecnolambiental.com.br/eng/index.php?NOT=8&ei=jJlmUui_HMidtQaQmoHIAQ&psig=AFQjCNEDuifZ5yjzu3UNciBBY1jV11zSpg&ust=1382542092519922



https://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=Stonwli-BjgynM&tbnid=vAJLoplgH8twCM:&ved=0CAUQjRw&url=https://twitter.com/POETDSM&ei=XppmUsvrNo_Dswa58ICoCw&bvm=bv.55123115,d.Yms&psig=AFQjCNEB32YlpE_7YkwLzCfB008iW1SxAw&ust=1382542299004049



http://www.google.dk/url?sa=i&source=images&cd=&cad=rja&docid=UEJBSORtaYOd5M&tbnid=YAhS0UkxMS5LxM:&ved=0CAgQjRwwAA&url=http://www.cctinstitute.com/counsel.htm&ei=x5pmUqH6MIbJtAb-hoHQDA&psig=AFQjCNFVRmKZJbXMiqH_4v5olkwzd4OT5Q&ust=1382542407846846

http://www.google.dk/url?sa=i&source=images&cd=&cad=rja&docid=UEJBSORtaYOd5M&tbnid=YAhS0UkxMS5LxM:&ved=0CAgQjRwwAA&url=http://www.cctinstitute.com/counsel.htm&ei=x5pmUqH6MIbJtAb-hoHQDA&psig=AFQjCNFVRmKZJbXMiqH_4v5olkwzd4OT5Q&ust=1382542407846846

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=jhTrIaP5e6C8bM&tbnid=jsxAKftRIYcVMM:&ved=0CAUQjRw&url=http://www.decanter.com/news/wine-news/516783/cofco-to-guard-china-bound-bordeaux-from-production-to-consumption&ei=DZtmUojqJsnStAaKv4GgCg&bvm=bv.55123115,d.Yms&psig=AFQjCNFOMgYS8B7aquI9O2IMIIrbONRRfQ&ust=1382542472436020

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=x14WWOf1KgEd8M&tbnid=ELf7CwZNuUFVsM:&ved=0CAUQjRw&url=http://www.bioenergy.novozymes.com/en/cellulosic-ethanol/our-partners-paths/Cofco-Sinopec/Pages/default.aspx&ei=V5tmUo2_I4OytAag2YG4Bg&psig=AFQjCNFaf5kmcY-ED2mPCoKnfty5k94Ssw&ust=1382542527641518

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=Vn0tIMCA9eBPPM&tbnid=IjQGLoRx70NOKM:&ved=0CAUQjRw&url=http://commons.wikimedia.org/wiki/File:LogoAbengoa.jpg&ei=kptmUpmYA4XatAbIi4CoAw&psig=AFQjCNHSzU68wtcvj4vVJq2elGx2dpiAtA&ust=1382542605267997



http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=yqquby3lTIgEqM&tbnid=Pdq0PK0Er6aKRM:&ved=0CAUQjRw&url=http://domesticfuel.com/2010/07/09/danish-company-claims-worlds-largest-cellulosic-ethanol-plant/&ei=c5xmUrfWNpGWswbdzYCACg&psig=AFQjCNGIVG-o02sM7x1GFZYIcFwkvroGzw&ust=1382542702609479

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=yqquby3lTIgEqM&tbnid=Pdq0PK0Er6aKRM:&ved=0CAUQjRw&url=http://domesticfuel.com/2010/07/09/danish-company-claims-worlds-largest-cellulosic-ethanol-plant/&ei=c5xmUrfWNpGWswbdzYCACg&psig=AFQjCNGIVG-o02sM7x1GFZYIcFwkvroGzw&ust=1382542702609479

http://www.google.dk/url?sa=i&source=images&cd=&cad=rja&docid=G9d80da9yUB5-M&tbnid=8iB39GEUElf3lM:&ved=0CAgQjRwwADhk&url=http://directory.biomassmagazine.com/listings/view/50f880e2-69b0-42fe-a5da-2eff40cfb0f6&ei=aKBmUtnuEcjKswaO44CQBA&psig=AFQjCNEKXl2l32M_RI2RPIxYIOrYbRVUqg&ust=1382543848347541

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=A8dqfyd4c6Y8ZM&tbnid=F3Tvo-AGeeNgMM:&ved=0CAUQjRw&url=http://www.recyclingtoday.com/international-paper-fiberight-ethanol.aspx&ei=9aBmUvP7GomRtQa71YB4&psig=AFQjCNHeuNJYJXdPp0s7rOhGxIysq0fGSA&ust=1382543988566758

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=A8dqfyd4c6Y8ZM&tbnid=F3Tvo-AGeeNgMM:&ved=0CAUQjRw&url=http://www.recyclingtoday.com/international-paper-fiberight-ethanol.aspx&ei=9aBmUvP7GomRtQa71YB4&psig=AFQjCNHeuNJYJXdPp0s7rOhGxIysq0fGSA&ust=1382543988566758

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=-AcpHMMaIKkzqM&tbnid=5RuPVPYr-W5kCM:&ved=0CAUQjRw&url=http://www.crunchvictims.com/2009/01/27/swiss-chemicals-firm-clariant-slashing-1000-jobs-worldwide/&ei=UqFmUvKKF8fKtAa1iIHwAg&bvm=bv.55123115,d.Yms&psig=AFQjCNHMDcwUSRSYc5vRTDJJtqf7cUBwnA&ust=1382544076597123



https://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=uC0lL28HDcP-xM&tbnid=q-dXQRB_fviTIM:&ved=0CAUQjRw&url=https://twitter.com/BP_America&ei=nqFmUrWsNoTJsgaC7oGwAw&bvm=bv.55123115,d.Yms&psig=AFQjCNGUJxbdrkC0Pv8Fz3R57boYPT184A&ust=1382544144523858

https://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=uC0lL28HDcP-xM&tbnid=q-dXQRB_fviTIM:&ved=0CAUQjRw&url=https://twitter.com/BP_America&ei=nqFmUrWsNoTJsgaC7oGwAw&bvm=bv.55123115,d.Yms&psig=AFQjCNGUJxbdrkC0Pv8Fz3R57boYPT184A&ust=1382544144523858

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=pyl15skYKskwHM&tbnid=ItFgcsrEViDfRM:&ved=0CAUQjRw&url=http://www.debbieschlussel.com/2704/valero-gas-stations-citgo-venezuela-chavez/&ei=5aFmUundOcbesgaxyYHgAg&bvm=bv.55123115,d.Yms&psig=AFQjCNH_chXF6Mp5ssIkA-LdRyQcv7F8nQ&ust=1382544213324407

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=pyl15skYKskwHM&tbnid=ItFgcsrEViDfRM:&ved=0CAUQjRw&url=http://www.debbieschlussel.com/2704/valero-gas-stations-citgo-venezuela-chavez/&ei=5aFmUundOcbesgaxyYHgAg&bvm=bv.55123115,d.Yms&psig=AFQjCNH_chXF6Mp5ssIkA-LdRyQcv7F8nQ&ust=1382544213324407

http://domesticfuel.com/wp-content/uploads/2013/04/Screen-Shot-2013-04-26-at-10.13.42-AM.png

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=WbnO0UgaEOvOmM&tbnid=GbsqLwxb79HRHM:&ved=0CAUQjRw&url=http://www.shellnews.net/blog/shellnewsnet-original-news-stories.htm&ei=7aJmUoSJHYraswa-oIGIDQ&psig=AFQjCNELwmcbtPg6rF8jz5yyOiVN6Y6Mbw&ust=1382544480646602

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=L4dGVB-e0SCmbM&tbnid=q4nNDNzT2ANjVM:&ved=0CAUQjRw&url=http://futurefortified.org/blog/march-for-nutrition-nutrition-for-a-rich-tomorrow&ei=jqNmUs7eNIjdsgaBy4GwDQ&psig=AFQjCNE8r5f4QHGNnBwRHTEkJEboPqIXBw&ust=1382544611760525

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=AX3NVRL5NWvquM&tbnid=iBjMA4aS93k08M:&ved=0CAUQjRw&url=http://domesticfuel.com/2012/07/16/dyadic-unveils-biofuels-enzyme-product/&ei=M6ZmUsyOAsGStQaE9YCYBg&psig=AFQjCNFnJXWh6hieDgm--TaWYqC10KpeRw&ust=1382545303401956

http://www.google.dk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=F9E4X4FEc73cdM&tbnid=IL4Z2oge45hT4M:&ved=0CAUQjRw&url=http://domesticfuel.com/2011/07/13/codexis-scales-up-cellulosic-enzyme-production/&ei=cqZmUvmQEMfdswbz54DIBA&psig=AFQjCNG3nR-GUeC1oTN-T9SkJi_e2hzZag&ust=1382545374721312

BASIC LAYOUT


guide 62

Demand for Renewable Low-Emission Liquid Fuels Remains a Structural Growth Story

Source: ExxonMobil: The outlook for energy: A view to 2040, 2013 OECD/IEA world energy outlook, 2009 IEA: Key World Energy statistics, 2013

International transport forum, key data and trends, 2010

0%10%20%30%40%50%60%70%80%90%

100%

2007 2020 2030

100% 93%96%

Global passenger vehicles sales split by technology

* Passenger Light Duty Vehicles | Source: OECD/IEA World Energy Outlook 2009

770 million 1400 millionTotal size of global passenger vehicle fleet

Full electrical

Plug-in hybrid

Hybrid

Conventional ICE

Share needingliquid fuel(in full or partially)

Transportation energy demand by sector and region (millions of oil-equivalent barrels per day)

Global passenger vehicle sales by technology

Global oil use by sector

Projected world energy-related CO2 emissions (Mt)


BASIC LAYOUT


guide

Starch

Cellulose

Sugar

Enzyme techno-

logy

Enzyme techno-

logy

Bio-ethanol

Bio-chemicals

Pre-treatment

• Biotechnology is unique in its ability to be part of many different processes

• The sugar platform is key for biofuels and biochemicals

• Many technologies converting sugar to chemicals exist today, others are under development

• Ethanol can be fuel and a platform chemical

Biotechnology Can Be Used to Produce More than Ethanol – The Sugar Platform Is Key

Petro-based

feedstock

Ferment-able

sugar

Chemicals (bulk, fine, specialty)

Enzyme bio-

catalysis

Fermen-tation

Advanced fermen-tation

Chemical catalysis

Enzyme techno-

logy


http://intranet.nzcorp.net/sites/sustainability_toolbox/SustainabilityatNovozymes/Forms/Examples of sustainability integration.aspx

BASIC LAYOUT


guide 64

• Today 50+ countries have adopted blending mandates or targets

• From region to region, business cases factor in political incentives to a varying degree, depending on

certainty, level of longevity and enforcement of support mechanisms

Mandates and Political Support Have Been a Strong Driver of Current Market Status

Major global support mechanisms for biofuels


BASIC LAYOUT


guide

There Is Plenty of Biomass Available Globally

• Significant potential for sustainable biomass from agricultural residues

• Good global distribution of resources

• Potential to replace half of global gasoline demand by 2030

16

20

39

110

151

177

180

221

Australia

Mexico

Argentina

India

EU-27

Brazil

United States

China

Estimated agricultural residues available for biorefining by 2030, million dry tons

Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy”, 2012


BASIC LAYOUT


guide 66

• Numbers vary with degree of belief in mandates and targets

• Scenarios reflect poor visibility, as cellulosic biofuels is just now proving technical and commercial viability

A Snapshot of Global Demand Scenarios for Cellulosic Biofuels Shows Potential and Uncertainty

*2022 *2022

0

2

4

6

8

10

12

14

16

18

2015 2020 2025 2030

Bn g

al

Goldman Sachs

Boston Consulting Group

Bloomberg New Energy Finance

Renewable Fuel Standard

The potential is there! Average scenario volume (excl. RFS):

2015: 0.5bn gal in 2015

2030: 7bn gal in 2030, CAGR of +20%!


BASIC LAYOUT


guide 67

Novozymes Has Clear Strategic Priorities in Biomass Conversion

Priorities:

1. Ensure first-mover advantage 2. De-risk technology 3. Adapt and utilize strengths

to enable customers

Target:

Serve 15 commercial- scale plants by 2017

Be the preferred supplier of enzyme technology for biomass sugar, fuel and chemical producers worldwide


BASIC LAYOUT


guide

• A changing customer landscape has created a need for multiple market access points

• A global business development team and regional R&D competencies support potential customers outside Beta Renewables

• The global BD team drives co-marketing agreement with Beta to attract new customers globally

1. Ensure First-Mover Advantage

68

Non-Beta partners

(e.g. Raízen, Cofco/Sinopec,

etc.)

Cellulosic biofuels/

biochemicals producers

Cellulosic biofuels/

biochemicals producers


BASIC LAYOUT


guide 69

• Beta Renewables is a leader in biomass conversion with the PROESA technology and owner of the world’s

first commercial-scale plant. As preferred enzyme supplier, Novozymes will gain access to significant new

business opportunities

• Beta Renewables to have contracted 15-25 new cellulosic biofuel facilities by 2015-2017

Partnership with Beta: To De-Risk Technology and Projects and Access Customers Worldwide

Cellulosic customer

BR/NZ joint hydrolysis cost guarantee AND accelerate large-scale commercialization of the industry

Enzyme supply Basic engineering & key equipment

PROESA license


BASIC LAYOUT


guide 70

2. De-risk Technology: Novozymes Has Been a Key Enabler of the Commercialization

0

100

200

300

400

500

600

700

800

900

1000

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Novozymes' enzyme cost-efficiency development, 2000-2012

• 10X improvement over 12 years

• From main inhibitor to valuable tool

• Now other cost items hit the steep part of customers' development curves

Feedstock

Capital

Enzyme

other


BASIC LAYOUT


guide

CTec1 CTec2 CTec3

CTec A CTec A1

CTec A2

CTec B CTec B1

CTec B2 CTec C

71

3. Adapt and Utilize Strengths to Enable Customers

The game is changing, and Novozymes must stay ahead of the curve • From demo to commercial

• From breakthrough innovation to process and product optimizations

• From enzyme performance at lab bench to enzyme cost/performance at plant

Leverage premier position • Use global presence and experience to

guarantee enzyme delivery at scale • Develop individualized delivery models with

customers • Default is hub-and-spoke. Looking to add

capacity in Brazil

Customize • Total production cost will be further

reduced through customization • Enzymes will be developed to fit the

needs of specific cellulosic technology, customers, processes and feedstock

20 L 160,000 L

NZ


BASIC LAYOUT


guide 72

• Enzyme efficacy – a measure of the amount of enzyme needed to achieve a given level of conversion of

biomass to sugars – has been dramatically improved

• Average relative ”fold improvement” in enzyme performance over time on a range of industrially relevant

pretreated substrates is shown below

A Strong and Optimized Technology Backbone Will Guide Customization

0

2

4

6

8

10

12

14

16

18

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Rela

tive e

nzym

e p

erf

orm

ance

CTec2

CTec

T. reesei baseline

T. reesei + BG

CTec3

Next-gen. lab prototype


BASIC LAYOUT


guide 73

Drivers of Enzyme Cost Reductions: Enzyme Discovery, Engineering and Production Economy

Protein engineering case: Design of an inhibitor-tolerant BG

Discovery case: GH61 is boosting hydrolysis

Production economy case: T. reesei expression

Recombinant CBH I Expressed in T. reesei where native CBH I has been deleted

“If it doesn’t express, it doesn’t exist”

+ recombinant GH61

No GH61 added

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0 10 20 30 40 50 60 70

[Cel

lob

iose

]

Glu

cose

Rel

ease

(g/L

)

BG Loading (nM)

BG Titrations onto Celluclast 1.5L + GH61 + GH10 Xylanase + 40g/L Glucose

A. fumigatus Mutant

A.fumigatus

BG titration BG Variant

BG WT


BASIC LAYOUT


guide 74

First-wave commercial-scale ethanol plants will

initiate the realization of further cost-saving

potential in most cost elements through:

• Combined enzyme, yeast and process

optimization

• Design experience

• Operating experience

First-wave Commercialization … and Innovation Continues (a Game We Know)

Enzyme cost-efficiency development

2012 = index 100

Total production cost estimate

2012 = index 100

0

100

200

300

400

500

600

700

800

900

1000

1995 2000 2005 2010 2015 2020

History

Projection

40

60

80

100

120

140

160

2005 2010 2015 2020

Enzyme Developments

Enzyme Developments

Enzyme and Process

Developments


BASIC LAYOUT


guide 75

• Different pretreatment technologies produce different hydrolysates and inhibitors

• Hemicellulose mix (C5 sugar types) also vary. Enzyme components must be tailored to match

As Industrialized Processes Are Locked into Place, Highly Customized Technologies Are Needed

Biomass Pretreatment Hydrolysate (biomass after pretreatment)

Cellulose Hemicellulose Lignin

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

Steam

Acid

Alkali

Org. solvents


BASIC LAYOUT


guide

Feedstock pretreatment

•Physical treatment

•Chemical intensity

Cellulosic hydrolysis

•Solids level

•Sugar composition

•Separation and side streams

Further processing

•Yeast

•Fermentation

•Catalysis

76

• Diverging processes are being established at industrial scale

• For every process, there will be an optimal enzyme blend

• Every blend will require further optimization work

• Current CTecX blends contain over 8 separate, unique enzymes

Now the Time Has Come to Benefit from Customization for the Individual Process

Optimization opportunities, many are enzyme related


BASIC LAYOUT


guide

• Biomass conversion projects are firming up globally and interest is on the rise due to early-stage commercialization

• Novozymes has first-mover position today and will do its utmost to strengthen and leverage this position

• Enzymes are important for further total cost reductions

• Going forward, enzymes will be tailored to process and plant to give customers the best possible technology package – every time!

• Production know-how and scale are key competitive parameters

Recap


77

Beta Renewables Strategy & Status

Beta Renewables: Sustainable Chemistry

Beta Renewables is a joint venture, created

in October 2011, between Chemtex and the

investment firm TPG (Texas Pacific Group)

Novozymes, Denmark-based world-class

biotech company acquired 10% share of Beta

Renewables in October 2012

Beta Renewables owns and licenses the

Proesa® technology

1st commercial-scale 2GE biofuels plant in

Crescentino (Italy)

Our Partners:

Beta Renewables – JV Structure

M&G Finanziaria

Chemtex Agro Srl

Italian Bio Products

SpA

Chemtex Italia 100%

100%

67.5%

22.5%

10.0%

Bio Chemtex

100%

Non-Bio

Business Bio Business

http://www.novozymes.com/

Owns the PROESA ® technology

Invests in the R&D for continuous process

improvement

Licenses the technology worldwide

Provides performance guarantees

Supports licensees on biomass supply chain,

off-take, financing

Will own/operate the commercial site in

Crescentino, Italy

Engineering

& R&D

Technology

Provider

Exclusive engineering partner

Supplies, at a minimum, a basic engineering and key

equipment package

Provides mechanical guarantees

Qualifies EPC contractors

Conducts R&D activities on behalf of Beta

Support in commissioning, start-up and training

Our Business Model

Beta Renewables and Novozymes have both a

co-marketing and a joint development agreement

in place

Long-standing collaboration has led to substantial

reduction in cost of enzymes per unit of cellulosic

ethanol

Partnership of two industry leaders boosts

confidence in the technology

Guarantees on enzyme performance and cost

incidence de-risks the technology

Parties are committed to ongoing improvements

in enzymes and process

Ensuring secure and most competitive enzyme

supply to our customers

+

To Jointly Develop &Market

PROESA ® and CTEC ®

83

Beta Renewables + Novozymes

To de-risk the technology, enabling profitable deployment and bankable projects

PROESA® Licensee

Process

Guarantees

Enzyme

Guarantees

Engineering

84

Our Joint Value Proposition: a Solid

Foundation

PROESA®

Know-how

Enzyme

Supply

Mechanical

Guarantees

Support throughout a PROESA® Project’s Lifecycle

Enable Deploy Empower

• Project feasibility study and investment estimates

• Qualify feedstock in pilot plant

• Optimize process parameters and enzymes for feedstock

• Support in the development of a biomass supply chain (Chemtex Agro)

• Support in financing

• Basic engineering package

• Qualify EPC contractors

• Permitting support and procurement of critical equipment

• Support in the construction and start-up of the plant

• Start-up and training

• Support in establishing product off-takes

• Ensure joint performance guarantees hold

• Provide ongoing customer support

• Supply of enzymes and yeast (through our biotech partners)

Engineering Construction Start-up Operations Development

86

Strategic Partnerships

PROESA Technology

PROESA Core

Bio Chemtex –

Engineering

Expanded PROESA Core

Novozymes Enzymes

Technology

Yeast Ethanol

Technology

Bio Chemtex – Agronomy

Downstream Non-

Ethanol Product

Partnerships:

• Gevo

• Genomatica

• Codexis

• TBD

Critical Equipment

Manufacturers

Project Developers

& Investors

Regional R&D

Partnerships:

• GraanBio

• Southeast Asia

Product Off-takers

EPC

Contractors

Beta Renewables is continuing to establish partnerships across the entire

technology and deployment value chain to capitalize on its’ 1st mover advantage

Feedstock Developers

and Suppliers

Licensees

Ethanol

Non-Food Cellulosic Biomass

PROESA®

C5-DERIVED CHEMICALS

C6-DERIVED CHEMICALS

(C5+C6)-DERIVED CHEMICALS

NOW

N-Butanol

Iso-Butanol

Butanediol

Fatty Alcohols

Ethylene Glycol

Lactid Acid

Green Diesel

Succinic Acid

Acrylic Acid

Adipic Acid

Green Gasoline

Aromatics

Terephatalic Acid

Phenols NEXT Later

CRESCENTINO

Power

Cellulosic Sugars

Lignin

Heat / Steam

LIGNIN-DERIVED CHEMICALS

ENERGY

PROESA®: A Platform Technology

The PROESA® Process in a Nutshell

Steam Enzymes MO

Biomass

Lignin Fermentation & Distillation

Distillation & Drying

Lignin Separation

Ethanol

The Key Benefits of the PROESA® Technology :

Feedstock flexibility

No chemical addition, optimal trade-off between high sugar extraction and low enzyme dosage

Fully integrated process design using commercially established equipment

Industry leadeing capex and opex backed by performance guarantees

Smart Cooking

Viscosity Reduction & Hydrolysis

Economics of 2G ethanol production

Validate the numbers! Financial analysts!

No interest expenses!

• Biomass ($20-60/dry ton)

• Enzymes

• Energy**

• Labor

• Other

USD/MT ethanol

$100

$150

$0

• Ethanol value

• CAPEX*

• Debt

$40

$40

80%

$1500

$700

$300

$200

$125

$60

$60

20%

$2500

$1100

Base case line

15-20%

$500-570/ton (1.5-1.7/gal)

IRR before tax

Cash costs

USD/MT ethanol

REVENUE

INVESTMENT

CASH COSTS

LEVERAGE

* USD/MT of yearly capacity. >20 years of operating life ** 2G ethanol production is energy self-sufficient

It is no longer technology that needs to be solved

Validate the numbers! Financial analysts!

No interest expenses!

Funding

• Bankability will come as first projects have proven successful

• Until then; equity and government support

Biomass supply

• Biomass cost • Preferably < $50/dry ton • Fixed biomass supply

10-15 years

Off-take

• Market price of ethanol

• Uncertainty on subsidy levels and blending mandates (policy risk)

• Export market opportunities

Technology

• Proof of concept at scale • Conversion guarantees

Crescentino plant is ramping up according to plan; Confirmation of “base case line” expected in 2014

Cash

co

st

(U

SD

/Ton E

tOH

)

Time

Phase I Phase II Phase III

Ramp-up biomass

throughput

Technical refinement

Steady State optimization

2013 2014 Constant

Crescentino plant October 2013

Status of continuous optimization at Crescentino plant (@ biomass cost: USD 50/tdw)

1,100

1,000

900

800

700

600

500

Confirmation of base case operation as seen in Beta pilot plant

Documents

Benny D. Loft, CFO - s21.q4cdn.com · Benny D. Loft, CFO Peder Holk Nielsen, President & CEO Novozymes Capital Markets Day, October 31, 2013 Welcome & 9M, 2013 performance . BASIC