Financial results Q1 2008 Conference call 04/ 24/ 2008 1Q 2008 - PowerPoint PPT Presentation

Financial results Q1 2008 Conference call 04/ 24/ 2008

1Q 2008 highlights Key financials 1 Q Est. 2 0 0 8 2 0 0 8 � Strong organic sales growth across Sales growth, LCY 11% 12-15% the business Sales growth, DKK 5% 6-9% � Increased sales guidance for 2008 to 12-15% from 11-14% in LCY EBIT growth* , DKK 4% 1-4% � Challenging currency development EBIT margin 18.4% ~ 18% affects results in DKK * 2007 basis excl. one-offs � EBIT growth 4% , if excluding currency then ~ 13% � EBIT margin 18.4% , if excluding currency then ~ 20.0% � Dividend payment of DKK 5.00 per share approved at AGM 2

1Q 2008 sales overview 1 3 % 1 1 % 1 5 % 4 % • Sales up 11% 1 1 % LCY and 5% DKK 6 % • 7% LCY growth excl. acquisition effect 636 • Double-digit growth 1 0 % 572 542 563 in 5 out of 6 business 3 % 6 9 % 458 -5 1 % 434 5 7 % areas in LCY -5 6 % • 2008 sales expectation 179 184 132 12-15% LCY and 134 84 53 6-9% DKK Detergent Technical Food Feed Microorganisms BPI 1Q 2007 1Q 2008 LCY grow th DKK grow th 3

Detergent enzymes – business update � 1Q 2008 sales up 13% in LCY and 11% in DKK � Continued support for higher enzyme dosages driven by penetration from new enzymes and marginal substitution of other detergent ingredients � Strong global growth from branded and private-label detergent producers � 1Q launch of Celluclean for improved whiteness & anti-greying effect � 2008 sales growth upward adjusted to 8-10% LCY and 6-8% DKK � Long-term growth expectation 3-5% p.a. Sales CAGR 2003-2007 at 2% in DKK and 3% in LCY 2,239 2,052 2,040 2,038 2,014 636 572 573 555 539 1Q07 2Q07 3Q07 4Q07 1Q08 2003 2004 2005 2006 2007 4

Technical enzymes – business update � 1Q 2008 sales up 15% in LCY and 4% in DKK � Growth of enzyme sales to ethanol production of more than 30% � Multiple factors affect growth in fuel ethanol production � Textile enzyme sales challenged by adverse fashion trends � 2008 sales growth now expected at 22-27% LCY and 12-17% DKK � Long-term growth expectation 15-18% p.a. Sales CAGR 2003-2007 at 13% in DKK and 16% in LCY 2,263 1,977 1,645 636 603 581 1,461 1,411 542 537 1Q07 2Q07 3Q07 4Q07 1Q08 2003 2004 2005 2006 2007 5

Food enzymes – business update � 1Q 2008 sales up 11% in LCY and 6% in DKK � Satisfying growth within sales of enzymes to the baking industry from continued penetration across all application areas � Continued strong growth within brewing enzymes for quality and yield improvement driven by increasing raw material prices � 2008 sales growth maintained at 5-10% LCY and 0-5% DKK � Long-term growth expectation at ~ 10% p.a. Sales CAGR 2003-2007 at 5% in DKK and 6% in LCY 1,699 1,603 1,491 1,439 1,413 458 434 435 428 402 2003 2004 2005 2006 2007 1Q07 2Q07 3Q07 4Q07 1Q08 6

Feed enzymes – business update � 1Q 2008 sales up 10% in LCY and up 3% in DKK � Increasing global demand for inorganic phosphate impacts phytase volumes positively � Continued competitive environment within sales of phytase products � 2008 sales growth upward adjusted to ~ 10% in LCY and ~ 5% in DKK � Long-term growth expectation at 5-10% p.a. Sales CAGR 2003-2007 at 4% in DKK and 6% in LCY 748 698 700 705 608 189 184 179 167 170 1Q07 2Q07 3Q07 4Q07 1Q08 2003 2004 2005 2006 2007 7

Microorganisms – business update � 1Q 2008 sales up by 69% in LCY and 57% in DKK � The inclusion of BioAg sales, from 2007 acquisition Philom Bios, impacts growth by ~ 60% -points � Excluding the acquisition effect, organic growth of 9% in 1Q 2008 � 2008 sales growth retained at 20-30% LCY and reduced to 5-15% DKK � Long-term growth expectation ~ 10% p.a. Sales CAGR 2003-2007 at 4% in DKK and 9% in LCY 1 3 2 348 308 308 298 261 9 1 8 4 7 1 6 2 2003 2004 2005 2006 2007 1Q07 2Q07 3Q07 4Q07 1Q08 8

Biopharmaceutical ingredients – business update � 1Q 2008 sales DKK 53m compared with DKK 120m in 1Q 2007 � Quarterly development in line with expectations � Growth unfavorably impacted by non-repeated sales in 1Q 2007 � High variation in sales pattern across periods � 2008 sales retained at negative ~ 15% LCY and negative ~ 20% DKK � Long-term growth expectation at 10-15% p.a. Sales in DKKm 224 134 120 75 54 51 53 30 30 23 1Q07 2Q07 3Q07 4Q07 1Q08 2003 2004 2005 2006 2007 9

Profit & Loss key figures 1Q 2008 � Gross margin at 52.4% for the quarter, affected negatively by currencies � EBIT up 4% , supported by productivity gains. Adjusted for currency, EBIT growth was ~ 13% � EBIT margin at 18.4% . Adjusted for currency, EBIT margin was ~ 20.0% � Net profit up 4% , positively affected by currency gains on hedging 16.5 1,400 22.0 1,000 21.5 16.0 900 1,200 21.0 800 14.0 14.1 12.8 20.5 1,000 700 20.0 10.4 10.9 19.7 12.0 19.5 800 600 19.9 9.0 19.2 1.042 10.0 19.0 500 911 18.4 861 1,481 600 1,206 1,340 18.5 775 18.2 400 8.0 998 746 1,089 964 656 18.6 18.0 300 400 17.3 6.0 17.5 200 17.1 17.0 254 372 359 264 200 4.0 100 16.5 0 2.0 0 16.0 2002 2003 2004 2005 2006 2007 1Q07 1Q08 2002 2003 2004 2005 2006 2007 1Q07 1Q08 Net profit EPS (diluted) EBIT Ebit M argin 10

Cost of goods sold – brief overview � Gross margin 52.4% vs. 52.0% Q1 2007 � Operates with high input price level � Expects high price level for remainder of 2008 Split of COGS � Q1 2008 development in prices, and current forecast, are within expectations Carbonhydrates ~ 50% of raw material input (e.g., sucrose, � Factors impacting COGS development: maltose, glucose, starch) � Productivity improvements, Input prices, Currency … … 30% � Note: accounting practice implies that there is a time lag between current price levels and COGS � Factors impacting Novozymes’ input prices: 50% � Geographical location, e.g., differences in input … � Contractual agreements, e.g., timing, duration … � Substitution possibilities, i.e., flexibility in use of 20% different inputs, not dependent upon one source � Price development on other products produced by our suppliers from the same input Raw materials Energy/ utilities Indirect production cost � … … 11

Cash flow and CAPEX � Operating cash flow down 11% � Increased investment level compared to Q1 2007, mainly from the China expansion � Equity ratio at 39% Q1 2008 from slightly increased debt � ROIC 19.3% , slightly down, primarily due to acquisition effect Capex (DKKm) / capex to sales (% ) 10 9 1.080 1.058 7 7 991 982 963 7 5 716 5 735 477 179 476 141 308 392 333 335 221 182 2003 2004 2005 2006 2007 1Q 1Q 2003 2004 2005 2006 2007 1Q 2007 1Q 2008 2007 2008 FCF bef. acq. Acquisitions 12

Outlook FY 2008 DKK LCY DKK LCY April 2 4 January 2 5 excl. 2 0 0 7 non-recurring item s excl. 2 0 0 7 non-recurring item s 6-9 12-15 Sales grow th % 8-11 11-14 Grow th in EBI T % 1-4 11-14 2-5 9-12 ~ 18 EBI T m argin % ~ 18 4-7 Grow th in net profit % 4-7 Free cash flow before 750-900 750-900 acquisitions, DKK m illion CAPEX, DKK m illion 800-950 800-950 ~ 20 ~ 20 ROI C % 6-8 Num ber of products, # 6-8 Note: Non-recurring items in 2007 amounted to DKK 75m of EBIT and DKK 56m of net profit. Non- recurring items comprise damages for a 2007 patent settlement in favor of Novozymes. 13

Strong growth in sales earnings • Expects highest organic growth ever in 2008 • Challenging currency development, impacting results in DKK • Strong growth in earnings on a true comparable basis • Recent acquisitions are performing well 14

Forward-looking statements 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 within Novozymes’ core areas. 15

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