Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
Ester Baiget, President & CEO:
“After a strong end to the first quarter, partly supported by some timing
of orders, we delivered solid 5% organic sales growth, well within the guided 4-7% full-year range.
Novozymes capitalizes on its broad portfolio of sustainable solutions and diverse end-market exposure,
with an increasingly positive impact from pricing. We continue to execute in line with our strategy, and
with the recently gained shareholder approval of the Chr. Hansen combination, we are now working
diligently towards obtaining regulatory approval and closing the combination with Chr. Hansen.”
Sales and financial performance
• Sales growth in DKK at 6% (5% organic, 1% currency, 0% M&A).
• Growth was supported by solid pricing as well as underlying volume growth.
o Bioenergy 28%: Strong demand across geographies and broad, differentiated portfolio of
solutions for multiple end-markets, with support from the timing of orders.
o Agriculture, Animal Health & Nutrition 19%: Strong growth driven by performance in Animal
Health & Nutrition along with continued strong demand for sustainable yield and health
solutions as well as support from the timing of orders. Performance in Agriculture more
muted.
o Household Care 2%: Growth driven by developed markets from increased penetration and
despite declining in-market detergent volumes.
o Food, Beverages & Human Health -8%: Negatively impacted by challenging comparator as
well as supply-chain constraints and soft North American probiotic market in Human Health.
Adjusted for the large comparator one-off, performance in the business area was close to
flat.
o Grain & Tech Processing -9%: Solid grain performance offset by expected softness in tech
from lower sales of solutions for Covid-19 test kits and lower sales of solutions for textile
production.
• Organic sales growth in developed markets 7%; emerging markets 1%.
• EBIT margin before special items (b.s.i.) at 26.0% (Q1 2022 26.1%). Underlying EBIT margin b.s.i.
of just below 25.0% adjusted for income from the divestment of certain waste-water treatment
solutions (communicated in the third quarter of 2022) and one-off costs related to resource
alignment of the commercial organization. Sequential improvement over Q4 2022 in both gross
margin and EBIT Margin.
• ROIC incl. goodwill, b.s.i. at 17.7% and FCF bef. acq. at DKK 0.1 billion outflow mainly following
timing effects from a drop in trade payables.
• Net profit at DKK 801 million including special items and 23% ETR (effective tax rate).
• Solid balance sheet at 1.2x NIBD/EBITDA.
Key events
• The proposed combination of Novozymes and Chr. Hansen was approved on March 30 with strong
support from the respective shareholders of each company. Work continues diligently towards
closing the combination in the fourth quarter of 2023 or in the first quarter of 2024.
• Three product launches of which one was public in the human health supplement market
• Closing of the divestment of certain waste-water treatment solutions
2023 outlook maintained
• Solid organic sales growth outlook maintained at 4-7% driven by pricing as well as volume growth.
Pricing is expected to contribute more than half of the organic sales growth.
• EBIT margin b.s.i. expected at 25-26% and ROIC incl. goodwill b.s.i. at 16-17%.
Q1 2023
Q1 2022
2023 outlook
Sales performance, organic
%
5
10
4 to 7
EBIT margin, before special items*
%
26.0
26.1
25 to 26
ROIC incl. goodwill, before special items*
%
17.7
18.1
16 to 17
*Special items include costs related to proposed combination with Chr. Hansen
Q1 2023
5%
Organic sales
growth
26.0%
EBIT margin,
before special items
17.7%
ROIC, incl. goodwill,
before special items
Stronger than expected start to the year; 5% organic sales
growth and 26% EBIT margin before special items
Conference call
April 26, 2023
9.00 CEST
Please pre-register
for the call here
Webcast
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
2/24
Selected key data
Q1 2023
Q1 2022
Sales performance, organic
%
5
10
Household Care
%
2
(4)
Food, Beverages & Human Health
%
(8)
18
Bioenergy
%
28
27
Grain & Tech Processing
%
(9)
8
Agriculture, Animal Health & Nutrition
%
19
12
Sales
DKKm
4,623
4,371
Sales performance, DKK
%
6
16
Gross margin
%
54.1
55.5
EBITDA
DKKm
1,491
1,503
EBIT before special items*
DKKm
1,200
1,142
EBIT margin before special items*
%
26.0
26.1
EBIT
DKKm
1,134
1,142
EBIT margin
%
24.5
26.1
Net profit
DKKm
801
839
Net profit performance
%
(5)
(4)
Net investments excl. acquisitions
DKKm
427
389
Free cash flow before acquisitions
DKKm
(113)
386
NIBD/EBITDA
x
1.2
1.1
ROIC, incl. goodwill, before special items*
%
17.7
18.1
ROIC, incl. goodwill
%
17.1
18.1
Special items*
DKKm
(66)
0
EPS
2.83
3.00
EPS (diluted)
2.82
2.98
Avg. USD/DKK
694
664
*Special items include costs related to the proposed combination with Chr. Hansen
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
3/24
Sales by business area
Distribution of sales by business area, Q1 2023
Household Care
In the first quarter of 2023, Household Care sales grew 2% organically and 2% in reported DKK.
Performance was solid in developed markets across most subareas, despite the industry volume
softness. Emerging markets were flat in the first quarter, negatively impacted by the war in Ukraine,
and the Freshness platform performed in line with expectations. Pricing had a positive impact on
growth, more than offsetting the slightly reduced volumes.
Food, Beverages & Human Health
In the first three months of 2023, Food, Beverages & Human Health declined 8% both organically and
in reported DKK. The performance was soft as the comparator from last year included very strong sales
across subareas, as well as a positive timing effect of a specific solution that added roughly 5
percentage points to the organic sales growth. As the first quarter of 2023 did not include any sales
from this specific solution, the comparator had a greater impact than the 5 percentage points and
adjusted for this factor the performance in the business area would have been close to flat. The decline
in volumes was partly offset by positive pricing, as expected. Also as expected, Food delivered the best
underlying performance while Human Health was softer, impacted by supply chain issues affecting the
ability to accommodate demand. Additionally, there is a general softness in demand for probiotic
solutions in North America, although partly offset by Novozymes’ exposure to a more robust
healthcare practitioner channel. Underlying growth trends across subareas remained intact with good
progress on recent launches as well as the innovation pipeline with customers.
Bioenergy
Bioenergy sales grew 28% organically and 31% in reported DKK in the first three months of 2023.
Growth was strong and came in well ahead of expectations after a very strong ending to the quarter,
partly driven by timing of orders and more supportive market conditions. The strong underlying
performance was driven by the continued penetration of the broad and innovative solution toolbox
allowing for higher yields, throughput, and byproduct value-capture for producers in a market
environment that turned more favorable towards the end of the quarter. The North American market
in particular experienced strong developments despite a roughly 2% decrease in U.S. ethanol
production in the first quarter reported by the EIA. Performance was also strong outside of North
America, driven by innovation, capacity expansion of corn-based ethanol production in Latin America
and supported by growth in solutions for biodiesel production. In addition, sales of enzymes used in
second-generation biofuels, commonly referred to as biomass conversion, contributed. Overall, growth
was positively impacted by pricing.
27%
22%
23%
13%
15%
Household Care
Food, Beverages & Human Health
Bioenergy
Grain & Tech Processing
Agriculture, Animal Health & Nutrition
Organic performance / Performance in DKK
19% / 22%
2% / 2%
-9% / -10%
-8% / -8%
28% / 31%
Total sales Q1 y/y
Organic: 5%
DKK: 6%
Household Care Q1 y/y
Organic: 2%
DKK: 2%
Food, Beverages & Human
Health Q1 y/y
Organic: -8%
DKK: -8%
Bioenergy Q1 y/y
Organic: 28%
DKK: 31%
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
4/24
Grain & Tech Processing
In the first three months of 2023, Grain & Tech Processing sales declined 9% organically and 10% in
reported DKK. Positive pricing and growth in Grain driven by increased market penetration, especially
in vegetable oil processing, was unable to offset the decline in Tech. The negative developments in
Tech were mainly due to significantly lower sales of enzymes used for Covid-19 test kits, as expected,
and a softer than expected textile market.
Agriculture, Animal Health & Nutrition
Sales in Agriculture, Animal Health & Nutrition grew 19% organically and 22% in reported DKK in the
first quarter of 2023. Pricing had a positive impact and innovation and supportive market conditions,
partly linked to higher soft commodity prices, led to increased demand for yield-enhancing solutions
across subareas. The strong performance was driven by Animal Health & Nutrition, especially in
developed markets, and was supported by the positive timing of orders. Performance in Agriculture
was more muted following a volatile end-market.
Sales by geography
Distribution of sales by geography, Q1 2023
Novozymes grew sales 5% organically in the first quarter of 2023, driven by 7% growth in developed
markets and 1% growth in emerging markets. Bioenergy was the main driver of growth in developed
markets with Agriculture, Animal Health & Nutrition also delivering double-digit growth. Household
care produced solid growth despite declining industry volumes in developed markets, while Food,
Beverages & Human Health as well as Grain & Tech Processing declined. In emerging markets, growth
was driven by solid double-digit growth in Agriculture, Animal Health & Nutrition and Bioenergy,
whereas Household Care was flat. Food, Beverages & Human Health as well as Grain & Tech
Processing declined. Pricing was solid in both developed and emerging markets.
Europe, the Middle East & Africa
Organic sales for the first quarter of 2023 grew 2% driven by Agriculture, Animal Health & Nutrition
and Bioenergy. Household Care was flat despite the negative impact from the war in Ukraine, while
Food, Beverages & Human Health and Grain & Tech Processing declined.
North America
First-quarter organic sales in North America grew 7% in 2023, driven by Bioenergy and supported by
Food, Beverage & Human Health and Household Care, while Agriculture, Animal Health & Nutrition
and Grain & Tech Processing declined.
36%
33%
19%
12%
Europe, the Middle East & Africa
North America
Asia Pacific
Latin America
Grain & Tech Processing
Q1 y/y
Organic: -9%
DKK: -10%
Agriculture, Animal Health &
Nutrition Q1 y/y
Organic: 19%
DKK: 22%
Europe, the Middle East &
Africa Q1 y/y
Organic: 2%
DKK: 2%
North America Q1 y/y
Organic: 7%
DKK: 11%
21% / 22%
Organic performance / Performance in DKK
2% / 2%
7% / 11%
-2% / -4%
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
5/24
Asia Pacific
Organic sales for the first quarter of 2023 declined 2%, driven by declines in Food, Beverages & Human
Health, Bioenergy and Grain & Tech Procession, partly offset by growth in Agriculture, Animal Health
& Nutrition and Household Care.
Latin America
Organic sales in Latin America grew 21% in the first quarter of 2023 with growth across all business
areas except Food, Beverage & Human Health.
Asia Pacific Q1 y/y
Organic: -2%
DKK: -4%
Latin America Q1 y/y
Organic: 21%
DKK: 22%
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
6/24
Income statement
Total costs excluding net other operating income, special items, net financials, share of losses in
associates and taxes amounted to DKK 3,527 million in the first quarter. This was DKK 286 million
(9%) higher than in the corresponding period of 2022 and mainly due to higher costs of goods, which
increased with the higher input costs as well as increased capacity costs.
The gross margin was 54.1% for the first three months of 2023, which corresponds to a decrease of
1.4 percentage points compared to the first quarter of 2022. The decrease in the gross margin between
the two periods was driven by higher input and logistics costs. Prices had a positive impact on the
gross margin but not by enough to fully offset the negative development in input costs. Currencies had
a slight positive impact for the period.
Operating costs totaled DKK 1,407 million for the first quarter. This was an increase of DKK 110
million, or 8 percent, compared to the same period of 2022. The increase in operating costs was
primarily driven by higher sales and distribution costs. Additionally, currencies had a slight negative
impact on operating costs. High sales and distribution costs were driven by continued increases in
commercial activities, travel, and investments in customer co-creation centers, as well as one-off costs
related to resource alignment of the commercial organization. Research and development costs
increased in line with expectations, making up a constant ratio to sales compared to the same period
last year.
Total operating costs for the first quarter comprised 30.4% of sales, compared to 29.7% for the same
period last year. For the first quarter of 2023:
• Sales and distribution costs increased by 9% to make up 14% of sales.
• Research and development costs increased by 5% to make up 11% of sales.
• Administrative costs increased by 15% to make up 5% of sales.
Other operating income amounted to DKK 104 million. This was an increase of DKK 92 million
compared to the corresponding period of 2022. The increase was predominantly driven by the gain
from the divestment of selected waste-water treatment solutions, as announced in relation to the Q3
2022 interim report.
Depreciation and amortization amounted to DKK 357 million in the first quarter, corresponding to a
decrease of DKK 4 million compared to the same period of 2022.
EBIT b.s.i. was DKK 1,200 million for the first quarter of 2023, corresponding to an EBIT margin b.s.i.
of 26.0%. This was an increase of DKK 58 million and a decrease of 0.1 percentage point, compared
to the corresponding period last year. The EBIT margin b.s.i. for the first quarter of 2023 was negatively
impacted by a lower gross margin from high input prices. The one-off gain related to the divestment of
selected waste-water treatment solutions had a positive impact on the EBIT margin b.s.i., adding about
2 percentage points in the first quarter, which was recognized under other operating income. Other
one-offs included costs related to resource alignment of the commercial organization with an
approximately 1 percentage point negative impact on the EBIT margin b.s.i. Currencies had a roughly
neutral effect. Adjusted for these effects, the underlying EBIT margin b.s.i. for the first quarter of 2023
was around 2 percentage points lower than the underlying EBIT margin b.s.i. for the first quarter of
the previous year, driven primarily by a lower gross margin due to higher input costs.
Reported EBIT was DKK 1,134 million, corresponding to a reported EBIT margin of 24.5%, for a y/y
decrease of DKK 8 million and 1.6 percentage points respectively. Special items amounted to DKK 66
million in the first quarter and fully involved costs related to the proposed combination with Chr.
Hansen.
Total costs
DKK 3,527 million
Gross margin
54.1%
Operating costs
DKK 1,407 million
Depreciation and amortization
DKK 357 million
EBIT
before special items
DKK 1,200 million
EBIT margin
before special items
26.0%
EBIT
DKK 1,134 million
EBIT margin
24.5%
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
7/24
Net financials including the share of losses in associates was a loss of DKK 94 million, which equals an
increase of DKK 28 million compared to the previous year, predominantly driven by higher interest
costs.
Profit before tax amounted to DKK 1,040 million which was DKK 36 million (3%) lower than in the
corresponding period of 2022, primarily driven by lower EBIT for the period.
The effective tax rate was 23.0%. This was an increase of 1 percentage point compared to the
corresponding period last year, largely driven by merger-related transaction costs, which are not
deductible for tax purposes.
Net profit totaled DKK 801 million. This was DKK 38 million (5%) less than for the corresponding period
of 2022, due to both the lower profit before tax and a higher effective tax rate in the first quarter of
this year.
Net financial and share of
losses in associates
DKK 94 million
Effective tax rate
23.0%
Net profit
DKK 801 million
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
8/24
Cash flows and balance sheet
Cash flow from operating activities amounted to DKK 314 million, DKK 461 million lower than in the
same period of 2022. The decrease was due to changes in net working capital, driven by lower trade
payables for the period due to the timing of payments on CAPEX investments and an increase in trade
receivables from higher sales.
Net investments excluding acquisitions totaled DKK 427 million which was DKK 38 million higher than
for the corresponding period of 2022. The increase was mainly due to the property, plant and
equipment increases related to investment activities and included continued investments in the new
production line in Blair, Nebraska.
Free cash flow before acquisitions was an outflow of DKK 113 million, for a decrease of DKK 499
million relative to the corresponding period last year. The decrease was predominantly due to the
reduced cash flow from operating activities.
Total equity was DKK 13,286 million at March 31, 2023, corresponding to an equity ratio of 47%. This
was an increase of DKK 1,603 million and 0.8 percentage point respectively compared to the total
equity of DKK 11,683 million and the 46.2% equity ratio reported at March 31, 2022.
Net interest-bearing debt (NIBD) and the NIBD-to-EBITDA ratio were DKK 7,179 million and 1.2x
respectively at March 31, 2023, corresponding to an increase of DKK 919 million in NIBD and an
increase in the NIBD-to-EBITDA ratio from 1.1x at March 31, 2022.
Return on invested capital (ROIC) b.s.i. and including goodwill, was 17.7%. This was 0.4 percentage
point lower than for the corresponding period of 2022. Return on invested capital (ROIC) including
goodwill and special items, was at 17.1% and 1 percentage point lower than for the same period last
year.
The holding of treasury stock at March 31, 2023 was 4,002,586 B shares, which was equivalent to
1.4% of the common stock.
Operating cash flow
DKK 314 million
Net investments excluding
acquisitions
DKK 427 million
Free cash flow before
acquisitions
DKK (113) million
Equity ratio
47%
NIBD/EBITDA
1.2x
ROIC incl. goodwill,
before special items
17.7%
Treasury stock
1.4%
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
9/24
Sales Outlook
The organic sales growth outlook is maintained in the range of 4-7%. Full-year growth is expected to
be driven by a combination of stronger pricing relative to 2022 as well as volume growth. Positive
pricing across all business areas is expected to contribute more than half of total organic sales growth,
whereas innovation and increased market penetration will be the main components of volume growth.
Despite the stronger than expected performance in the first quarter, partly benefitting from timing, we
still expect more modest growth in the first half of the year. The outlook assumes no major changes to
the current state of the global economic situation. Sales in reported DKK including currencies are
forecasted to be roughly 3 percentage points lower than the expected organic sales growth range for
2023.
Household Care (organic 2% in Q1 2023) organic sales growth is expected to be supported by a
combination of pricing and increased penetration in emerging markets. As commodity prices continue
to fluctuate and consumers adapt their buying habits to the rising inflation, the outlook includes
expectations for consumer-trading as well as for volume contraction in North America and Europe,
particularly for the first half of the year. Emerging markets are expected to continue to grow, while the
market penetration with solutions from the Freshness platform will continue. The full-year indication
for organic sales in Household Care is for growth in the low single digits.
Food, Beverages & Human Health (organic -8% in Q1 2023) organic sales growth is expected across
all subareas, driven by Food and Human Health. Solutions focused on health and increased quality as
well as clean label will continue to be the main drivers while market conditions favoring industrial
bread consumptions, demand for locally sourced products and raw material optimization are expected
to support growth. Human Health is estimated to grow organically in the double digits, driven by
innovation, cross-selling, and segment expansion. While a soft North America probiotic market as well
as supply-chain-related issues in Human Health impacted the first quarter, we still expect to deliver
double-digit growth for the full year. Pricing will be a strong component of growth across all sub-areas.
The outlook for organic sales growth is maintained and indicated to grow in the high single digits for
the business area.
Bioenergy (organic 28% in Q1 2023) organic sales growth is expected to be supported by pricing,
market penetration enabled by innovation, capacity expansion of corn-based ethanol production in
Latin America, and market penetration with enzymatic solutions for biodiesel production. Organic
growth will also be supported to a degree by growing sales of solutions for 2G ethanol production.
Bioenergy is now indicated to grow at a high single digit rate (previously mid-to-high single digit). The
mid-point of the range assumes flat to slightly declining U.S. ethanol production.
Grain & Tech Processing (organic -9% in Q1 2023) organic sales growth is expected to be supported
by pricing and growth in Grain led by market penetration in vegetable oil processing, and innovation
in starch. Tech is expected to decline, driven by significantly lower sales of enzymes for Covid-19 test
kits and a soft textile market. Sales in Grain & Tech Processing are indicated to grow at a low-to-mid
single digit rate.
Agriculture, Animal Health & Nutrition (organic 19% in Q1 2023) organic sales growth is expected to
be driven mainly by Animal Health & Nutrition, with growth supported by pricing, innovation, and
higher end-market demand. For Agriculture, pricing will support growth, while innovation and a more
diversified commercial model are enablers of increased market penetration of sustainable BioAg
solutions. The indication for Agriculture, Animal Health & Nutrition is for growth at a rate in the mid-
to-high single digits.
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
10/24
Financial outlook
For 2023, Novozymes expects a solid EBIT margin b.s.i. of 25% to 26% (2022: 26.4%, and additionally
excluding one-offs, at roughly 1p.p below the 26.4%). Compared to 2022, the EBIT margin will benefit
from price increases, sales growth, and productivity improvements. Significantly higher input costs,
especially those that are energy-related, currency headwinds, and continued investments in the
business as well as lower other operating income are expected to have a negative year-on-year impact.
The gross margin is expected to be at a level similar to 2022, as the positive impact from price increases
and productivity improvements are expected to be offset by higher input costs.
Return on invested capital (ROIC), including goodwill, b.s.i. is maintained at 16% to 17% (2022: 17.9%).
Lower NOPAT and higher invested capital, mainly from acquisitions, are the main drivers of the
expected year-on-year development.
Free cash flow (FCF) before acquisitions is expected at DKK 1.8 to 2.4 billion (2022: DKK 1.1 billion),
mainly impacted by lower net investments.
The following is provided for modeling purposes:
The effective tax rate is expected at around 23% for 2023 (2022: 19%).
Net financial costs are now expected to be around DKK 200 million (2022: DKK 2 million income)
mainly driven by hedging costs and primarily related to USD forward contracts, as well as somewhat
higher interest expenses.
Net investments are expected at DKK 2.1 to 2.4 billion (2022: DKK 2.9 billion). This reflects
maintenance, optimization and expansion investments, including in new food and health-related
customer co-creation centers, as well as roughly DKK 0.4 billion related to the investment in a new
state-of-the-art production line for Advanced Protein Solutions in Blair, Nebraska, U.S.
Special items are expected in the DKK 0.3-0.7 billion range and include costs related to the proposed
combination with Chr. Hansen.
2023
Outlook ***
Sales performance, organic
%
4-7
EBIT margin before special items*
%
25-26
ROIC** before special items*
%
16-17
For modeling purposes:
Special items*
DKKbn
0.3-0.7
Net financial costs
DKKm
~200
Effective tax rate
%
~23
Free cash flow before acquisitions
DKKbn
1.8-2.4
Net investments
DKKbn
2.1-2.4
*Special items include costs related to the proposed combination with Chr. Hansen.
**Including goodwill.
***Assumes constant currencies from the date of this announcement and for the remainder of the year.
EBIT margin,
before special items
25% to 26%
ROIC, incl. goodwill,
before special items
16% to 17%
FCF before acquisitions
DKK 1.8 to 2.4 billion
Effective tax rate
~23%
Net financial costs
DKK ~200 million
Net investments
DKK 2.1 to 2.4 billion
Special items
DKK 0.3 to 0.7 billion
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
11/24
Long-term financial targets
Novozymes is fully committed to its long-term targets to 2025 as they were introduced in 2021. These
are: Organic sales CAGR of 5% or higher, an EBIT margin of 26% or higher, and ROIC including goodwill
of 20% or higher. Following the announcement of the proposed combination with Chr. Hansen,
Novozymes has recognized costs related to the combination as special items to enable transparent
reporting of Novozymes’ recurring activities. As such, the financial targets will exclude these costs,
which will be specified separately.
2021
2022
2023 outlook
2025 target*
Organic sales growth
6%
9%
4-7%
Grow our sales organically by a
compounded annual growth rate
(CAGR) of 5% or higher.
EBIT margin, before special
items**
26.8%
26.4%
25-26%
26% or higher, and not below 25% in
any individual year.
ROIC***, before special items**
19.3%
17.9%
16-17%
20% or higher by 2025.
* All targets assume constant currencies, no additional acquisitions or divestments beyond what has already been communicated/proposed, no major
unusual items, a gradual normalization of the global economy and supply chain, and no new severe disruptions of the global economy or
geopolitical environment.
** Special items include costs related to the proposed combination with Chr. Hansen
*** Including goodwill
Nonfinancial milestones, commitments, and targets
As a guide to Novozymes’ journey towards achieving its long-term commitments, new nonfinancial
milestones and targets have been set for 2025 on Operations and on Employees & society. Novozymes
is committed to high standards and ambitious actions to improve its climate, water and waste
footprint.
The nonfinancial aspect of the company combines integrated shorter-term milestones and
commitments leading towards clearly defined long-term targets until 2030 as well as 2050. The net-
zero target covers scopes 1, 2 and 3 emissions and has been validated by the Science Based Targets
initiative
1
.
Additionally, focus will be on the continued promotion of an inclusive and diverse workplace where
employees can stay safe, thrive and grow.
Targets & commitments
2025 Milestones
Long-term
Operations
Climate
Reduce absolute CO
2
emissions
1
65% from operations
75% from operations by 2030
35% from supply chain by 2030
Net-zero by 2050
Purchase renewable electricity
100%
Water
Restore water in basins close to our production
sites where WASH is a challenge
2
10 billion liters
30 billion liters by 2030
Improve freshwater withdrawal by recycling
more water
2
10%
15% by 2030
20% by 2035
Circular
Zero waste to landfill from operations
3
Two key circular projects
in pilots with
demonstrated benefits
Achieve by 2030
Key circular projects
Three key circular projects
successfully implemented by
2030
Employees
& society
Include
Women and men in senior management
4
> 35% women
> 45% women and 45% men by
2030
Women and men across all professionals
5
> 45% women
> 45% women and 45% men by
2030
Thrive &
Inspire
Three-year rolling average of occupational
injuries with absence
6
≤ 1.5
A workplace where employees
stay safe, thrive and grow
Pledge 1% of our time to
community outreach
Thrive index
7
Achieve same score as
benchmark
1
Novozymes commits to reach net-zero GHG emissions across the value chain by 2050. Near-Term Targets: Novozymes commits to reduce absolute
scopes 1 and 2 GHG emissions by 75% by 2030 from a 2018 base year. Novozymes also commits to increase annual sourcing of renewable electricity
from 37% in 2018 to 100% by 2025. Novozymes further commits to reduce absolute scope 3 GHG emissions from purchased goods and services, fuel
and energy related activities, upstream transportation and distribution, waste generated in operations and business travel by 35% by 2030 from a 2018
base year. Long-Term Targets: Novozymes commits to reduce absolute scopes 1 and 2 GHG emissions by 90% by 2050 from a 2018 base year.
Novozymes also commits to reduce absolute scope 3 GHG emissions from purchased goods and services, fuel and energy related activities, upstream
transportation and distribution, waste generated in operations and business travel by 90% within the same timeframe. The target boundary includes
biogenic emissions and removals associated with the use of bioenergy.
2
From a 2021 baseline.
3
The targets do not include sites with activities not considered to have a significant environmental impact, e.g. sales offices, R&D labs, etc.
4
Percentage of women and men in director positions or higher (i.e. director, vice president or executive vice president).
5
Percentage of women and men across professional, manager and senior leadership levels.
6
Lost-time injuries per million working hours.
7
Developed from specific questions in our annual employee survey.
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
12/24
Currency exposure
Sales by currency, Q1 2023
Other things being equal, a 5% movement in USD/DKK is expected to have an annual positive/negative
impact on EBIT of around DKK 130-160 million, and a 5% movement in EUR/DKK is expected to have
an annual positive/negative impact on EBIT of DKK ~200 million.
Hedging of net currency exposure and currency exchange rates
In 2022, the full currency exposure was hedged at an average rate of USD/DKK 6.29. For 2023, the
exposure is fully hedged at an average rate of USD/DKK 6.97.
The 2023 outlook is based on exchange rates for the company’s key currencies remaining at the closing
rates on April 25 for the full year.
DKK
EUR
USD
BRL
CNY
Average exchange rate, Q1 2023
744
694
134
101
Average exchange rate, Q1 2022
744
664
127
105
Estimated average exchange rate 2023*
745
681
134
99
Estimated average exchange rate 2023
compared to 2022
0%
(4)%
(2)%
(6)%
*On April 25, 2023.
~34%
~38%
~7%
~6%
~15%
EUR
USD
CNY
DKK
Others
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
13/24
Accounting policies
The interim report for the first three months of 2023 has been prepared in accordance with IAS 34 and
additional Danish regulations for the presentation of quarterly interim reports by listed companies.
The interim report for the first three months of 2023 follows the same accounting policies as the annual
report for 2022 except for all new, amended or revised accounting standards and interpretations
(IFRSs) endorsed by the EU effective for the accounting period beginning on January 1, 2023. These
IFRSs have not had any impact on the Group’s interim report.
Forward-looking statements
This company announcement and its related comments contain forward-looking statements, 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 a 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. Such risks and uncertainties may 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) political
conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) 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; and viii)
significant price decreases for inputs and materials that compete with Novozymes’ biological solutions.
The company undertakes no duty to update any forward-looking statements as a result of future
developments or new information.
Contact information
Investor Relations
Tobias Bjorklund (U.S.)
+45 3077 8682
tobb@novozymes.com
Ludmila Cebanov
+45 3077 0554
ldnv@novozymes.com
Anders Enevoldsen
+45 5350 1453
adev@novozymes.com
Media Relations
Lina Danstrup
+45 3077 0552
lind@novozymes.com
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
14/24
Statement of the Board of Directors and the Executive
Management
Bagsvaerd, April 26, 2023
EXECUTIVE MANAGEMENT
Ester Baiget
President & CEO
Lars Green
CFO
BOARD OF DIRECTORS
Cornelis (Cees) de Jong
Chair
Kim Stratton
Vice Chair
Anne Breum
Heine Dalsgaard
Sharon James
Anders Hentze Knudsen
Kasim Kutay
Preben Nielsen
Morten Alexander Sommer
Jens Øbro
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
15/24
Appendices
Appendix 1 Main items and key figures 16
Key figures 16
Income statement 17
Statement of comprehensive income 18
Appendix 2 Distribution of sales 19
Business areas 19
Geography 19
Appendix 3 Statement of cash flows 20
Statement of cash flows 20
Appendix 4 Balance sheet and Statement of equity 21
Balance sheet, Assets 21
Balance sheet, Liabilities 22
Statement of shareholders’ equity 23
Appendix 5 Miscellaneous 24
Publicly announced product launches in 2023 24
Company announcements made in the 2023 financial year 24
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
16/24
Appendix 1 Main items and key figures
Key figures
DKK million Q1 2023 Q1 2022 % change
Revenue 4,623 4,371 6%
Gross profit 2,503 2,427 3%
Gross margin 54.1% 55.5%
EBITDA 1,491 1,503 (1)%
EBITDA margin 32.3% 34.4%
Operating profit (EBIT) before special items* 1,200 1,142 5%
EBIT margin before special items* 26.0% 26.1%
Operating profit (EBIT) 1,134 1,142 (1)%
EBIT margin 24.5% 26.1%
Share of result in associates (5) (1)
Net financials (89) (65)
Profit before tax 1,040 1,076 (3)%
Tax (239) (237) 1%
Net profit 801 839 (5)%
Earnings per DKK 2 share 2.83 3.00 (6)%
Earnings per DKK 2 share (diluted) 2.82 2.98 (5)%
Net investments excl. acq. 427 389 10%
Free cash flow before net acq. and purchase of
financial assets
(113) 386 (129)%
ROIC** before special items* 17.7% 18.1%
ROIC** 17.1% 18.1%
Net interest-bearing debt 7,179 6,260
Equity ratio 47.0% 46.2%
Return on equity 30.0% 28.0%
Debt-to-equity 54.0% 53.6%
NIBD / EBITDA 1.2 1.1
Number of employees 6,790 6,641
* Special items include costs related to the proposed combination of Novozymes and Chr. Hansen.
** Including goodwill.
Novozymes' stock
Mar. 31,
2023
Mar. 31,
2022
Common stock (million)
281.0 282.0
Net worth per share (DKK)
45.83 40.06
Denomination of share (DKK)
2.00 2.00
Nominal value of common stock (DKK million) 562.0 564.0
Treasury stock (million) 4.0 5.0
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
17/24
Income statement
DKK million Q1 2023 Q1 2022
Revenue 4,623 4,371
Cost of goods sold (2,120 ) (1,944 )
Gross profit 2,503 2,427
Sales and distribution costs (639 ) (585 )
Research and development costs (517 ) (493 )
Administrative costs (251 ) (219 )
Other operating income, net 104 12
Operating profit (EBIT) before special items 1,200 1,142
Special items (66 ) -
Operating profit (EBIT) 1,134 1,142
Share of result in associates (5 ) (1 )
Net financials (89 ) (65 )
Profit before tax 1,040 1,076
Tax (239 ) (237 )
Net profit 801 839
Attributable to
Shareholders in Novozymes A/S 784 832
Non-controlling interests 17 7
Specification of net financials
Foreign exchange gain/(loss), net (36 ) (46 )
Interest income/(costs) (26 ) (10 )
Other financial items (27 ) (9 )
Net financials (89 ) (65 )
Earnings per DKK 2 share 2.83 3.00
Average no. of A/B shares outstanding (million) 276.9 277.1
Earnings per DKK 2 share (diluted) 2.82 2.98
Average no. of A/B shares, diluted (million) 277.8 279.5
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
18/24
Statement of comprehensive income
DKK million Q1 2023 Q1 2022
Net profit
Currency translation of subsidiaries and non-controlling
interests
(201 ) 271
Currency translation adjustments (201 ) 271
Fair value adjustments
(21 ) (23 )
Tax on fair value adjustments
Cash flow hedges reclassified to cost of good sold
Cash flow hedges reclassified to financial costs 27 48
Tax on reclassified fair value adjustments
(11 ) (11 )
Cash flow hedges
Other comprehensive income
(179 ) 290
Comprehensive income
Attributable to
Shareholders in Novozymes A/S 606 1,122
Non-controlling interests 16 7
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
19/24
Appendix 2 Distribution of sales
Business areas
Geography
2023
2022 % change % currency % M&A % organic
DKK million Q1 Q1 impact impact growth
Consumer Biosolutions
Household Care 1,257 1,230 2 0 0 2
Food, Beverages & Human Health 1,016 1,099 (8) 0 0 (8)
Agriculture & Industrial Biosolutions
Bioenergy
1,048 797 31 3 0 28
Grain & Tech Processing
599 668 (10) 0 (1) (9)
Agriculture, Animal Health & Nutrition
703 577 22 3 0 19
Sales 4,623 4,371 6 1 0 5
% change
DKK million Q1 Q4 Q3 Q2 Q1 Q1/Q1
Consumer Biosolutions
Household Care
1,257 1,230 1,300 1,228 1,230 2
Food, Beverages & Human Health
1,016 1,051 980 1,004 1,099 (8)
Agriculture & Industrial Biosolutions
Bioenergy
1,048 1,060 1,017 874 797 31
Grain & Tech Processing
599 634 626 679 668 (10)
Agriculture, Animal Health & Nutrition
703 554 444 501 577 22
Sales 4,623 4,529 4,367 4,286 4,371 6
2022
2023
2023
2022
% change % currency % M&A % organic
DKK million Q1 Q1 impact impact g rowth
Europe, Middle E ast & Africa 1,665 1,633 2 0 0 2
North America 1,542 1,386 11 4 0 7
Asia Pacific 859 894 (4) (2) 0 (2)
Latin America 557 458 22 1 0 21
Sales 4,623 4,371 6 1 0 5
Developed markets 3,042 2,794 9 2 0 7
Emerging markets 1,581 1,577 0 (1) 0 1
Sales 4,623 4,371 6 1 0 5
% change
DKK million Q1 Q4 Q3 Q2 Q1 Q1/Q1
Europe, Middle East & Africa 1,665 1,504 1,489 1,469 1,633 2
North America 1,542 1,583 1,465 1,395 1,386 11
Asia Pacific 859 916 843 913 894 (4)
Latin America 557 526 570 509 458 22
Sales 4,623 4,529 4,367 4,286 4,371 6
Developed markets 3,042 2,882 2,748 2,688 2,794 9
Emerging markets 1,581 1,647 1,619 1,598 1,577 0
Sales 4,623 4,529 4,367 4,286 4,371 6
2022
2023
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
20/24
Appendix 3 Statement of cash flows
Statement of cash flows
DKK million Q1 2023 Q1 2022
Net profit
Reversals of non-cash items
Tax paid
(160 ) (285 )
Interest received
Interest etc. paid
(23 ) (15 )
Cash flow before change in working capital
Change in working capital
(Increase)/decrease in receivables and contract assets
(262 ) (276 )
(Increase)/decrease in inventories
(62 ) (59 )
Increase/(decrease) in payables, deferred income and
contract liabilities
(558 ) (159 )
Currency translation adjustments
Cash flow from operating activities
Investments
Purchase of intangible assets
(13 ) (10 )
Sale of intangible assets
Sale of property, plant and equipment
Purchase of property, plant and equipment
(415 ) (380 )
(427 ) (389 )
(113 ) 386
Business acquisitions, divestments and purchase and sale of
financial assets
Free cash flow
(25 ) 331
Financing
Borrowings
Repayment of borrowings
(877 ) (120 )
Overdraft facilities, net
(92 ) 213
Repayment of lease liabilities
(33 ) (28 )
Shareholders:
Purchase of treasury stock
Sale of treasury stock
Dividend paid
(1,662 ) (1,524 )
Withheld dividend tax
Cash flow from financing activities
Net cash flow
Unrealized gain/(loss) on currencies and financial assets,
included in cash and cash equivalents
(15 ) (5 )
Change in cash and cash equivalents, net
Cash and cash equivalents - Beginning of period
Cash and cash equivalents at March 31
Undrawn committed credit facilities at March 31, 2023 were DKK 11,700 million.
Cash flow from investing activities before acquisitions,
divestments and purchase of financial assets
Free cash flow before acquisitions, divestments, purchase
and sale of financial assets
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
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Appendix 4 Balance sheet and Statement of equity
Balance sheet, Assets
DKK million
Mar. 31,
2023
Mar. 31,
2022
Dec. 31,
2022
Goodwill
Acquired patents, licenses and know-how
Completed IT development projects 183 201 204
IT development projects in progress
Intangible assets 4,599 4,972 4,698
Land and buildings
Plant and machinery
Other equipment 987 1,041 1,028
Assets under construction and prepayments
Property, plant and equipment 12,138 10,436 12,074
Deferred tax assets 1,619 1,459 1,623
Other financial assets (non-interest-bearing) 88 32 92
Investment in associates 218 28 223
Other receivables
Non-current assets 18,693 16,956 18,742
Raw materials and consumables 614 491 603
Goods in progress 1,324 941 1,333
Finished goods
Inventories 3,851 3,082 3,803
Trade receivables 3,631 3,365 3,454
Contract assets 208 45 151
Tax receivables 363 210 352
Other receivables
Receivables 4,556 4,045 4,317
Other financial assets (non-interest-bearing) 84 97 80
Cash and cash equivalents 1,100 1,097 1,041
Current assets 9,591 8,321 9,241
Assets 28,284 25,277 27,983
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
22/24
Balance sheet, Liabilities
DKK million
Mar. 31,
2023
Mar. 31,
2022
Dec. 31,
2022
Common stock 562 564 562
Currency translation adjustments (68 ) 263 132
Cash flow hedges 103 (13 ) 81
Retained earnings
Equity attributable to shareholders in Novozymes A/S
Non-controlling interests
Total equity 13,286 11,683 14,228
Share purchase liability 771 750 760
Deferred tax liabilities 1,716 1,200 1,653
Provisions 112 148 119
Contingent consideration 229 214 224
Deferred income 103 101 129
Other financial liabilities (interest-bearing) 4,665 3,900 3,619
Non-current lease liabilities
Non-current liabilities 7,882 6,657 6,792
Other financial liabilities (interest-bearing) 3,202 2,989 2,818
Other financial liabilities (non-interest-bearing) 78 131 101
Lease liabilities 126 124 123
Provisions 11 26 10
Contingent consideration 158 346 158
Trade payables 1,452 1,440 1,869
Contract liabilities 87 145 94
Deferred income 67 33 44
Tax payables 373 328 326
Other payables
Current liabilities 7,116 6,937 6,963
Liabilities 14,998 13,594 13,755
Liabilities and equity 28,284 25,277 27,983
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
23/24
Statement of shareholders’ equity
DKK million
Common
stock
Currency
translation
adjustments
Cash flow
hedges
Retained
earnings
Total
Non-
controlling
interests
Total
Equity at January 1, 2023
Net profit for the period
Other comprehensive income for the period
(200 ) 22 (178 ) (1 ) (179 )
Total comprehensive income for the period
(200 ) 22 784 606 16 622
Purchase of treasury stock
Sale of treasury stock
Dividend
(1,662 ) (1,662 ) - (1,662 )
Stock-based payment
Non-controlling interests and share purchase liability
(11 ) (11 ) - (11 )
Tax related to equity items
(5 ) (5 ) (5 )
Changes in equity
Equity at March 31, 2023
Equity at January 1, 2022
Net profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Purchase of treasury stock
(140 ) (140 ) (140 )
Sale of treasury stock
Dividend
(1,524 ) (1,524 ) - (1,524 )
Stock-based payment
Non-controlling interests and share purchase liability
(34 ) (34 ) - (34 )
Tax related to equity items
(30 ) (30 ) (30 )
Changes in equity
Equity at March 31, 2022
Attributable to shareholders in Novozymes A/S
Interim report for Q1 2023
Company Announcement no. 52 April 26, 2023 Novozymes A/S CVR number: 10 00 71 27 Krogshoejvej 36 2880 Bagsvaerd Phone +45 4446 0000
24/24
Appendix 5 Miscellaneous
Publicly announced product launches in 2023
Product
Description
Sustainability benefit*
MenaquinGold ™
MenaquinGold™ is a natural, fermentation-
based vitamin K2-7 that helps our
customers elevate their product health
potential. Vitamin K2-7 plays a unique role
in transporting calcium from the blood to
bones and is for these reasons, recognized
as supporting bone and cardiovascular
health, amongst other health benefits.
MenaquinGold™ can help customers
leverage these benefits in various formats,
including supplements, food, and beverage
products.
In addition to the providing several key
health benefits, Novozymes’ unique plant-
based fermentation process uses fewer raw
materials, less energy, less water, and fewer
solvents than alternative production
processes.
* The sustainability benefits are based on quantitative and/or qualitative evaluations. Novozymes does not have quantifiable data or
documentation to verify the benefits of all product launches.
Company announcements made in the 2023 financial year
(Excluding Management's trading in the Novozymes stock, major shareholder announcements and stock buyback status)
January 25, 2023
Proposal of candidates to the Board of Directors
January 26, 2023
Group financial statement for 2022
March 2, 2023
Resolutions from Novozymes A/S’ Annual Shareholders' Meeting 2023
March 8, 2023
Publication of exemption document in relation to the proposed combination of
Novozymes and Chr. Hansen, confirmation of outlook for 2023 and proposed candidates
to the Board of Directors of the combined company
March 30, 2023
Combination between Novozymes and Chr. Hansen approved by the Novozymes
shareholders
March 30, 2023
Resolutions from Novozymes A/S’ Extraordinary Shareholders' Meeting 2023