Novozymes A/S CVR number: 10 00 71 27 LEI: 529900T6WNZXD2R3JW38
1H 2021
Strong Q2 with 9% organic sales growth. Full-year outlook for organic sales and EBIT
margin narrowed to high ends of ranges; ROIC incl. goodwill raised.
Organic sales growth of 6% (Q2: 9%) in 1H 2021: Household Care -2% (Q2: -6%); Food, Beverages & Human
Health 14% (Q2: 18%); Bioenergy 16% (Q2: 54%); Grain & Tech Processing 17% (Q2: 18%); Agriculture, Animal
Health & Nutrition -9% (Q2: -19%). EBIT margin at 28.6% (Q2: 27.7%). ROIC incl. goodwill at 22.2% (Q2: 20.3%).
FCF bef. acq. at DKK 1.8 billion (Q2: DKK 1.1 billion).
Ester Baiget, President & CEO: "We delivered a very satisfactory set of results for the first half of 2021. Although
uncertainty related to the pandemic remains and some destocking is still expected in the second half, we narrow
the outlook range for organic sales growth upwards to 4% to 6% and for the EBIT margin to ~26%. We continue
to execute on our strategic direction and today, we reached yet another significant milestone by advancing the
strategic opportunity area of Advanced Protein Solutions. We look forward to the upcoming capital markets day
in September where we will follow up on our progress and outline strategic priorities to continue driving
profitable and sustainable growth.”
In summary:
• Strong growth in Food, Beverages & Human Health across all subareas. Household Care declined as
expected against a high comparator. The Freshness platform and emerging markets contributed positively
• Strong growth in Bioenergy mainly due to the recovery of the U.S. ethanol production and capacity
expansion in Latin America. Strong growth in Grain & Tech Processing led by strong demand for solutions
in grain and gradual recovery in textile. Decline in Agriculture, Animal Health & Nutrition mainly due to
difficult comparator, BioAg one-off and an expected decline in animal nutrition
• Strong organic sales growth of 17% in emerging markets; developed markets flat
• Six products launched in the first half, including second quarter launches of yeast and fiber solutions in
biofuels and a probiotic solution with immune benefits in human health
• Strong EBIT margin at 28.6% despite higher operating costs, currency headwinds and effects of the two
recent acquisitions. Strong performance mainly driven by gross margin expansion from operational
leverage, supported by timing and one-offs. Free cash flow before acquisitions solid at DKK 1.8 billion and
ROIC incl. goodwill was strong at 22.2%
• Solid balance sheet with NIBD/EBITDA leverage of 0.9x
• Novozymes reach a significant milestone by advancing the strategic opportunity area of Advanced Protein
Solutions (ann. no. 40, Aug. 12, 2021) with no financial implications for 2021 other than DKK ~300m capex
• Capital markets day to be held virtually on September 28, 2021
2021 outlook: Organic sales growth of 4% to 6%, with sales in reported DKK slightly less than 1p.p. lower. EBIT
margin at ~26%, net supported by one-offs but including negative y/y impacts from currency, as well as M&A-
related effects of around 1p.p. each. ROIC incl. goodwill between 19% to 20%. FCF bef. acq. at DKK 2.5 to 2.9bn
now including DKK ~300m investment in the new production line in Blair, Nebraska.
1H 2021
1H 2020
2021 outlook
August 12
2021 outlook
April 27
Sales performance, organic
%
6
4
4 to 6
2 to 6
EBIT margin
%
28.6
27.5
~26
25 to 26
ROIC, incl. goodwill
%
22.2
19.3
19 to 20
~19
Free cash flow before acquisitions
DKKbn
1.8
2.1
2.5 to 2.9*
2.7 to 3.1
* Includes DKK ~300m of additional CAPEX relating to the new production line in Blair, Nebraska.
August 12, 2021
Interim report for 1H 2021.
Company announcement
no. 41
Novozymes A/S
Krogshoejvej 36
2880 Bagsvaerd
Denmark
Phone: +45 4446 0000
Interim report for 1H 2021. Company announcement No. 41
2/24
Selected key data
1H 2021
1H 2020
Q2 2021
Q2 2020
Sales performance, organic
%
6
4
9
-2
Household Care
%
-2
11
-6
11
Food, Beverages & Human Health
%
14
7
18
3
Bioenergy
%
16
-14
54
-36
Grain & Tech Processing
%
17
-3
18
-9
Agriculture, Animal Health & Nutrition
%
-9
17
-19
27
Sales
DKKm
7,356
7,135
3,580
3,349
Sales performance, DKK
%
3
3
7
-3
Gross margin
%
58.4
56.3
58.7
55.4
EBITDA
DKKm
2,825
2,566
1,368
1,172
EBIT
DKKm
2,107
1,962
990
867
EBIT margin
%
28.6
27.5
27.7
25.9
Net profit
DKKm
1,679
1,461
794
646
Net profit performance
%
15
-8
23
-28
Net investments excl. acquisitions
DKKm
411
364
217
226
Free cash flow before acquisitions
DKKm
1,846
2,051
1,142
1,226
NIBD/EBITDA (x)
0.9
0.9
1.0
1.0
ROIC, incl. goodwill
%
22.2
19.3
20.3
17.2
EPS
DKK
6.02
5.19
2.85
2.30
EPS (diluted)
DKK
5.98
5.16
2.83
2.28
Avg. USD/DKK
617
678
617
677
Interim report for 1H 2021. Company announcement No. 41
3/24
Sales by business area
Distribution of sales by business area, 1H 2021
Household Care
Sales in Household Care declined 2% organically in the first half of 2021 compared to the same period last year.
Sales in reported DKK declined 5% in the first half of the year. The performance was in line with expectations
and came on top of a high comparator following last year´s COVID-19 related sales surge. Sales of enzymes for
laundry and dishwashing detergents in developed markets declined while increased enzymatic penetration in
emerging markets and the Freshness platform contributed to growth.
The second-quarter sales declined 6% organically and 8% in reported DKK year-on-year. The decline was due to
destocking on top of a high comparator from the second quarter last year. The continued rollout of the
Freshness technology in Europe and enzymatic penetration in emerging markets contributed to growth as
expected.
Food, Beverages & Human Health
Food, Beverages & Human Health reported very strong 14% organic sales growth in the first half of 2021
compared to the same period last year. Sales in reported DKK grew 23% in the first half of the year, supported
by the two recent Human Health acquisitions. Growth was broad-based across subareas and regions, and it
exceeded expectations partly due to higher-than-expected consumer demand and stock building. Performance
was particularly strong in the food business with health-focused categories such as dairy and plant-based
protein doing very well. Outside of food, beverages performed well, driven by customer raw material
optimization and increased demand following relaxed COVID-19 lockdown measures. Human Health grew and
performed well, in line with expectations.
In the second quarter of 2021, Food, Beverages & Human Health grew 18% organically year-on-year. Sales in
reported DKK grew 29%. The performance was better than expected and especially strong for the food and
beverage businesses, driven by health-focused solutions and tailwinds from customer raw material
optimization. All major regions grew in the second quarter, with emerging markets outgrowing developed
markets. The business benefitted from positive timing effects due to higher-than-expected consumer demand
and stock building. Human Health performed well and according to expectations.
Bioenergy
Sales in Bioenergy grew 16% organically and 5% in reported DKK in the first half of the year compared to the
same period last year. The strong performance was mainly driven by recovering U.S. ethanol production and
capacity expansion of corn-based ethanol production in Latin America. U.S. ethanol production was significantly
higher in the first half of 2021 than in the first half of 2020 but still below pre-pandemic levels. Sales of solutions
for Biodiesel contributed positively to the strong performance although from a small base.
32%
24%
17%
15%
12%
Household Care
Food, Beverages & Human Health
Bioenergy
Grain & Tech Processing
Agriculture, Animal Health & Nutrition
Organic performance / Performance in DKK
-9% / -14%
-2% / -5%
17% / 11%
14% / 23%
16% / 5%
Total sales 1H y/y
Organic: 6%
DKK: 3%
Household Care 1H y/y
Organic: -2%
DKK: -5%
Food, Beverages & Human Health
1H y/y
Organic: 14%
DKK: 23%
Bioenergy 1H y/y
Organic: 16%
DKK: 5%
Interim report for 1H 2021. Company announcement No. 41
4/24
Second-quarter sales grew 54% organically and 41% in reported DKK year-on-year. The very strong performance
was mainly driven by high volume growth in the U.S. ethanol industry on top of the low production levels seen
in the second quarter of 2020, which were severely impacted by the first wave of COVID-19 restrictions. Sales
outside the U.S. also contributed positively, led by strong growth in Latin America.
Grain & Tech Processing
Grain & Tech Processing sales grew 17% organically in the first half and 11% in reported DKK year-on-year, which
was better than expected and due to customer stock building. The strong performance was based on growth
across most subareas in both grain and tech. The strong growth in grain was driven by starch processing and
market penetration in vegetable oil processing. Continued recovery in the global textile industry and sales of
diagnostic enzymes for COVID-19 test kits were the main drivers behind the strong growth in tech.
Grain & Tech Processing sales grew 18% organically and 13% in reported DKK in the second quarter compared
to the same period last year. The strong performance was mainly driven by stock building, increased market
penetration in vegetable oil processing and growth in textile.
Agriculture, Animal Health & Nutrition
Sales in Agriculture, Animal Health & Nutrition declined 9% organically and 14% in reported DKK in the first half
compared to the first half last year. The decline was expected and mainly due to negative base effects from a
DKK ~60 million one-off related to the former BioAg setup and a stockpiling-inflated first half of 2020 in animal
nutrition.
Second-quarter sales declined 19% organically and 22% in reported DKK compared to the second quarter last
year. The decline was mainly driven by the aforementioned base effect in BioAg. Sales in animal health and
nutrition declined against a tough comparator, but by less than expected due to improved in-market demand.
Sales by geography
Distribution of sales by geography, 1H 2021
Novozymes’ organic sales grew 6% year-on-year in the first half of 2021. Sales in emerging markets grew 17%
while developed markets were flat. The strong performance in emerging markets was broad-based, with all five
business areas contributing to growth. Sales in developed markets were mixed with Food, Beverages & Human
Health, Bioenergy and Grain & Tech Processing doing well, while Agriculture, Animal Health & Nutrition and
Household Care declined.
In the second quarter, emerging markets grew by 17% and developed markets grew by 5%. All five business
areas delivered growth in emerging markets, while Agriculture, Animal Health & Nutrition and Household Care
declined in developed markets against high comparators from the second quarter last year.
39%
30%
21%
10%
Europe, the Middle East & Africa
North America
Asia Pacific
Latin America
Grain & Tech Processing 1H y/y
Organic: 17%
DKK: 11%
Agriculture, Animal Health &
Nutrition 1H y/y
Organic: -9%
DKK: -14%
27% / 11%
Organic performance / Performance in DKK
1% / 2%
13% / 8%
2% / -1%
Interim report for 1H 2021. Company announcement No. 41
5/24
Europe, the Middle East & Africa
Sales grew 1% organically in the first half of the year compared to the same period last year. The performance
was mixed with growth in Food, Beverages & Human Health while Household Care and Agriculture, Animal
Health & Nutrition declined.
Second-quarter sales grew 3% with the same mix across business areas as seen during the first six months. Food,
Beverages & Human Health was the main positive while Agriculture, Animal Health & Nutrition declined.
North America
North America grew 2% organically in the first half of 2021 compared to the same period last year. Bioenergy
was the primary growth driver following last year’s significant second-quarter decline in U.S. ethanol production
volumes.
In the second quarter, North America grew 10%, mainly due to a strong performance in Bioenergy following the
recovery of U.S. ethanol production from last year’s significant second-quarter decline. Food, Beverages &
Human Health and Grain & Tech Processing also grew in the second quarter while Agriculture, Animal Health &
Nutrition and Household Care declined.
Asia Pacific
Sales grew 13% organically in the first half of 2020, driven by broad growth with all business areas except
Agriculture, Animal Health & Nutrition contributing. Growth in Grain & Tech Processing was particularly strong
following last year’s weak performance in textile.
Sales in the second quarter grew 10% organically year-on-year. Like the first-half performance, growth was
broad-based with all business areas except Agriculture, Animal Health & Nutrition contributing.
Latin America
Organic sales grew 27% year-on-year in Latin America in the first half of the year. Growth was broad-based and
led by Bioenergy and the continued capacity expansion of corn-based ethanol production and a strong
performance in Agriculture, Animal Health & Nutrition.
In the second quarter, sales to Latin America grew 33% organically compared to the same quarter of last year,
mainly driven by Bioenergy, while Household Care declined slightly.
Europe, the Middle East & Africa
1H y/y
Organic: 1%
DKK: 2%
North America 1H y/y
Organic: 2%
DKK: -1%
Asia Pacific 1H y/y
Organic: 13%
DKK: 8%
Latin America 1H y/y
Organic: 27%
DKK: 11%
Interim report for 1H 2021. Company announcement No. 41
6/24
Income statement
Total costs excluding net other operating income, net financials, share of results in associates and taxes
amounted to DKK 5,389 million in the first half and DKK 2,609 million in the second quarter of 2021. This was
DKK 171 million (+3%) and DKK 105 million (+4%) higher, respectively, than in the corresponding periods of
2020.
The gross margin ended at 58.4% in the first half and at 58.7% in the second quarter of 2021, corresponding to
increases of 2.1 and 3.3 percentage points respectively compared to the same periods of 2020. Production
efficiencies from stronger sales and productivity improvements were the main drivers of the margin
improvement in both the first half and the second quarter. The strong performance was also supported by
timing related to capitalization and leverage effects due to inventory build-ups. The net impact from price and
mix was neutral while currencies provided headwinds, both in the first half of the year and in the second
quarter. Higher raw material costs had only a minor negative effect towards the end of the second quarter.
Operating costs totaled DKK 2,330 million in the first half and DKK 1,130 million in the second quarter of 2021,
increasing by DKK 230 million (+11%) and DKK 118 million (+12%) respectively compared to the same periods
of 2020. The increase in operating costs was due to increased commercial activities, a one-off cost following the
consolidation of R&D activities in the first quarter and the inclusion of acquisitions. In addition, the increased
operating costs in the first half and in the second quarter came on top of a low COVID-19 impacted comparator.
• Sales and distribution costs increased by 8% and made up 12% of sales during the first half of the year
and were up by 16% and made up 12% of sales in the second quarter
• Research and development costs increased by 14%, making up 14% of first-half sales and were up by
6%, corresponding to 14% of sales in the second quarter
• Administrative costs were up by 8%, accounting for 5% of first-half sales, and were up by 18% and
made up 6% of sales in the second quarter.
Other operating income amounted to DKK 140 million in the first half of 2021. This was DKK 95 million more
than in the corresponding period of 2020. The increase in other operating income was partly due to a realized
gain from the sale of a non-core administration building and partly due to contingent income from the divested
pharma-related royalty, both recognized in the first quarter of 2021. Other operating income amounted to DKK
19 million in the second quarter. This was DKK 3 million less than in the corresponding period of 2020.
Depreciation and amortization amounted to DKK 718 million in the first half and DKK 378 million in the second
quarter of 2021. This was 19% and 24% higher, respectively, than in the corresponding periods of 2020 and
mainly due to amortization related to the PrecisionBiotics Group and the Microbiome Labs acquisitions.
EBIT amounted to DKK 2,107 million in the first half and DKK 990 million in the second quarter of 2021 for EBIT
margins of 28.6% and 27.7%, respectively. This marked an increase in EBIT of DKK 145 million (+7%) with 1.1
percentage points higher EBIT margin in the first half compared to the same period of 2020. In the second
quarter EBIT grew by DKK 123 million (+14%) and the EBIT margin increased by 1.8 percentage points, compared
to the same period of 2020. Higher operating costs mainly due to the aforementioned R&D one-off and the
inclusion of acquisitions were more than offset by higher gross profit and the increase in other operating
income. Currencies provided headwinds, mainly from a weakening of the average USD/DKK exchange rate.
Adjusting for the 2021 first-half one-offs with a net positive impact of close to 1 percentage point, as well as
adjusting for currency developments and M&A-related effects, the EBIT margin for the first half of 2021 was
~29%. This was roughly 2 percentage points above the ~27% adjusted EBIT margin for the first half of 2020. The
adjusted EBIT margin in the second quarter of 2021 was ~28%, roughly 3 percentage points above the adjusted
~25% EBIT margin for the second quarter of 2020. The adjusted developments in the first half and in the second
quarter were driven by an improved gross margin and positive timing effects, partially offset by higher operating
costs.
Total costs
+3%
Gross margin
58.4%
Operating costs
+11%
Depreciation and amortization
DKK 718 million
EBIT
DKK 2,107 million
EBIT margin
28.6%
Interim report for 1H 2021. Company announcement No. 41
7/24
Net financial costs and share of results in associates totaled DKK 8 million in the first half and amounted to an
income of DKK 3 million in the second quarter of 2021. Net financial costs in the first half were DKK 127 million
lower and the second quarter income was DKK 62 million higher respectively than in the corresponding periods
of 2020. The favorable developments in the first half and in the second quarter were mainly due to gains on
USD cash flow hedges.
Profit before tax amounted to DKK 2,099 million in the first half and DKK 993 million in the second quarter of
2021. This was DKK 272 million (+15%) and DKK 185 million (+23%) higher than in the same periods of 2020 and
driven by the higher operating profit and lower net financial costs.
The effective tax rate was 20.0% in both the first half and the second quarter of 2021. This was roughly on par
with the respective periods of 2020.
Net profit amounted to DKK 1,679 million in the first half and DKK 794 million in the second quarter of 2021.
These equaled increases of DKK 218 million (+15%) and DKK 148 million (+23%) respectively compared to the
same periods of 2020 and due to the higher profit before tax.
Cash flows and balance sheet
Cash flow from operating activities amounted to DKK 2,257 million in the first half and DKK 1,359 million in the
second quarter of 2021. These were decreases of DKK 158 million and DKK 93 million respectively compared to
the same periods of 2020, which were mainly due to a change in net working capital following last year’s second
quarter positive one-offs from the settlement related to the former BioAg setup and the COVID-19-related
postponement of certain tax payments in Denmark. The change in net working capital was partly offset by
higher net profit.
Net investments excluding acquisitions totaled DKK 411 million in the first half and DKK 217 million in the second
quarter of 2021, which was DKK 47 million more and DKK 9 million less respectively than in the same periods of
2020.
Free cash flow before acquisitions amounted to DKK 1,846 million in the first half and DKK 1,142 million in the
second quarter of 2021. These were decreases of DKK 205 million and DKK 84 million respectively compared to
the same periods of 2020. In both the first half and the second quarter, the decrease was driven by lower cash
flows from operating activities and the change in net working capital. In addition to the aforementioned one-
offs from last year, the net working capital was also impacted by a planned inventory buildup during the second
quarter of 2021.
Shareholders’ equity including minority interests was DKK 10,914 million at June 30, 2021, corresponding to an
equity ratio of 50.5%. This was an increase of DKK 98 million and a decrease of 1.7 percentage points
respectively compared to the shareholders’ equity of DKK 10,816 million and the 52.2% equity ratio reported
at June 30, 2020.
Net interest-bearing debt (NIBD) and the NIBD-to-EBITDA ratio were DKK 5,270 million and 0.9 respectively at
June 30, 2021. This was an increase of DKK 492 million compared to the net interest-bearing debt at June 30,
2020. The NIBD-to-EBITDA ratio was flat.
Return on invested capital (ROIC) including goodwill was 22.2% in the first half and 20.3% in the second quarter
of 2021. This was 2.9 and 3.1 percentage points higher respectively than in the same periods of 2020. The
improvement in ROIC, both in the first half and in the second quarter compared to the respective periods last
year, was due to the higher net operating profit after tax which more than offset an increase in average invested
capital following the PrecisionBiotics Group and Microbiome Labs acquisitions.
The holding of treasury stock was 4,526,281 B shares at June 30, 2021, equivalent to 1.6% of the common stock.
Net financial costs and share of
results in associates
DKK 8 million
Effective tax rate
20.0%
Net profit
DKK 1,679 million
Operating cash flow
DKK 2,257 million
Net investments excl. acq.
DKK 411 million
Free cash flow before acquisitions
DKK 1,846 million
Equity ratio
50.5%
NIBD/EBITDA
0.9
ROIC
22.2%
Treasury stock
1.6%
Interim report for 1H 2021. Company announcement No. 41
8/24
2021 outlook
2021 outlook
August 12*
2021 outlook
April 27
Sales performance, organic
%
4 to 6
2 to 6
EBIT margin
%
~26
25 to 26
ROIC (incl. goodwill)
%
19 to 20
~19
Free cash flow before acquisitions
DKKbn
2.5 to 2.9**
2.7 to 3.1
For modeling purposes:
Effective tax rate
%
~20
~20
Net financial costs
DKKm
~75
~75
Net investments
DKKbn
1.3 to 1.5**
1.0 to 1.2
Stock buyback program
DKKbn
up to 1.5
up to 1.5
*Assumes constant currencies from the time of this announcement and for the remainder of the year
** Includes DKK ~300m of additional CAPEX relating to the new production line in Blair, Nebraska.
Sales outlook
The full-year sales outlook is narrowed to the upper end of the former range following a solid first half-year
performance. The updated outlook is for organic sales to grow by 4% to 6% in 2021. While the first half was
stronger than expected, we assume some destocking in the second half of the year particularly in Food,
Beverages & Human Health as well as in Grain & Tech Processing. The outlook assumes a continued recovery
from last year’s COVID-19 impact but remains subject to pandemic related uncertainty as infection rates are
increasing. An incremental pick-up or a further slowdown of the recovery, especially in the areas most impacted
by the pandemic in 2020, would imply full-year performance ending at the high or low end, respectively, of the
outlook range. However, the outlook does not consider another extended global lockdown situation. Sales in
reported DKK, net of currency and M&A-related effects, are expected to be slightly less than 1 percentage point
lower than the organic sales growth.
Household Care (organic: -2% in 1H 2021) organic sales growth will be driven by market penetration, particularly
in emerging markets, and the continued rollout of the Freshness technology in Europe, with a broad-market
launch expected in the second half of the year. While the broad-market launch is an important milestone,
expected to become a significant growth contributor in future years, it is not a material growth driver for 2021.
Household Care is expected to grow organically in the low single-digits for the year.
Food, Beverages & Human Health (organic: 14% in 1H 2021) organic sales performance is expected to be
moderate in the second half of the year due to destocking after a better-than-expected start to the year. Growth
is expected to be broad-based across subareas. Innovation, emerging market penetration, and increasing
consumer dietary-health-awareness, are the main drivers of growth in the food business. Beverages is expected
to gradually recover from last year’s COVID-19 impacted performance. Human Health is estimated to grow
organically at solid double-digit rates. Expectations for Food, Beverages & Human Health is increased and now
forecasted to grow by high-single-digits organically.
Bioenergy (organic: 16% in 1H 2021) organic sales growth is expected to be driven by a gradual recovery of U.S.
ethanol production as COVID-19 restrictions are lifted, continued capacity expansion of corn-based ethanol
Interim report for 1H 2021. Company announcement No. 41
9/24
production in Latin America, and market penetration supported by innovation. Bioenergy organic sales are
expected to grow at a mid-to-high-single-digit rate in 2021 with the mid-point of that range roughly
corresponding to mid-single-digit growth in US ethanol production.
Grain & Tech Processing (organic: 17% in 1H 2021) organic sales performance is expected to be moderate in
the second half of the year due to destocking and a more difficult comparator. Full-year growth is expected to
come from a broad base across most subareas in both grain and tech. Growth in the grain business will be driven
by innovation and increased market penetration supported by local presence, whereas a gradual recovery of
the global textile industry will be a key contributor to growth in tech. Grain & Tech Processing is expected to
grow organically by mid-single-digits in 2021.
Agriculture, Animal Health & Nutrition (organic: -9% in 1H 2021) organic sales growth will be led by the
agriculture business with continued expansion across crops and regions. Agriculture is expected to deliver solid
underlying double-digit organic sales growth in 2021 when adjusted for the DKK ~60 million one-off in the
second quarter of 2020. Expectations for Agriculture, Animal Health & Nutrition is slightly increased and now
forecasted to grow by low-single-digits organically.
Profit outlook
For 2021, Novozymes expects a reported EBIT margin of around 26% (2020: 26.1%). This is a narrowed forecast
compared to the April 27 outlook of 25% to 26%, driven by the increased full-year organic sales growth outlook.
The EBIT margin outlook includes a negative year-on-year impact from currencies of ~1 percentage point as well
as a ~1 percentage point negative impact from M&A. The M&A-related effects are attributable to amortization
and integration costs. Supportive margin contributions from sales growth and productivity improvements are
expected to be partly offset by higher raw material and freight costs as well as continued re-investments.
Adjusted for year-on-year currencies and M&A-related effects, the expected margin for 2021 is around 28%,
supported by the net positive one-offs in other operating income recognized in the first quarter.
The outlook for return on invested capital (ROIC) including goodwill is increased from ~19% and is now expected
at 19% to 20% (2020: 18.9%; underlying ~20%). This includes a ~2 percentage point negative effect year-on-
year from currencies and M&A-related effects.
Free cash flow (FCF) before acquisitions is expected to be DKK 2.5-2.9 billion (2020: DKK 3.4 billion), which is
slightly lower than the previous outlook of DKK 2.7-3.1 billion. While the outlook is supported by higher sales
and an improved operating cash flow, it is revised down due to higher net investments related to the recently
announced (stock exchange announcement no. 40, Aug. 12, 2021) investment in Blair, Nebraska, USA.
For modeling purposes, the following is provided:
The effective tax rate for 2021 is expected at ~20% (2020: 19.7%).
Net financial costs are expected to be DKK ~75 million (2020: DKK 127 million), with DKK ~150 million relating
to interest expenses, banking fees, lease and financial costs related to acquisition earn-outs. The DKK ~150
million is expected to be partly offset by a positive effect from USD/DKK currency hedging.
Net investments during 2021 will amount to DKK 1.3-1.5 billion (2020: DKK 0.9 billion) reflecting maintenance,
optimization and expansion investments. As announced earlier today (stock exchange announcement no. 40,
Aug 12, 2021), Novozymes is investing DKK 2 billion to build a new production line on Novozymes’ existing site
in Blair, Nebraska. While the majority of the investment activities are planned for 2022 and 2023, approximately
DKK 300 million is expected to impact 2021 and this amount is included in the net investments for the year.
A stock buyback program of up to DKK 1.5 billion was initiated effective February 8, 2021. As of June 30, a total
of 2,647,829 shares at a total value of DKK 1,132,232,450 had been bought back.
EBIT margin
~26%
ROIC, incl. goodwill
19% to 20%
FCF before acquisitions
DKK 2.5 to 2.9 billion
Effective tax rate
~20%
Net financial costs
DKK ~75 million
Net investments
DKK 1.3 to 1.5 billion
Stock buyback program
up to DKK 1.5 billion
Interim report for 1H 2021. Company announcement No. 41
10/24
Sustainability outlook
In 2021, we will continue to invest in developing solutions that support better lives in a growing world as well
as progress on our 2022 targets on climate, water, production and consumption. We will expand the reach and
benefits of our solutions and expect to deliver an even greater impact by replacing chemicals and enabling CO
2
reductions. We will further develop our employee programs focused on learning, well-being and improving their
engagement towards our sustainability commitment.
2022 targets
World
Save CO
2
emissions by enabling low carbon fuels in the transport sector
60 million tons of CO
2
Reach people by providing laundry solutions that replace chemicals
>4 billion people
Gain food by improving efficiency from farm to table
500,000 tons of food
Operations
Reduce absolute CO
2
emissions from operations
1
40%
Develop context-based water management programs
100% of sites
2
Develop zero waste programs
100% of sites
2
Manage biomass in circular systems
100%
Develop circular management plans for key packaging materials
100%
Employees
Enable learning
3
80
Nurture diversity
4
86
Occupational injuries
5
≤ 1.5
Pledge employee time to local outreach
6
~ 1% of time
Excite employees
3
81
1
Compared to 2018 baseline
2
The target does not include sites with activities considered not to have a significant environmental impact, e.g sales offices, R&D labs, etc
3
Measured by score to relevant questions in annual survey
4
Index calculated based on gender and national representation at various professional levels
5
Defined as the three-year rolling average of lost time injuries per million working hours
6
Qualitative reporting only
Interim report for 1H 2021. Company announcement No. 41
11/24
Currency exposure
Sales by currency, 1H 2021
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
2021
2022
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
USD
100% hedged via forward contracts
at average USD/DKK 6.38
38% hedged via forward contracts
at average USD/DKK 6.11
The expected USD currency exposure for 2021 is 100% hedged at an average of USD/DKK 6.38. The 2021 outlook
is based on expected exchange rates for the company's key currencies remaining at the closing rates on August
11 for the full year.
DKK
EUR
USD
BRL
CNY
Average exchange rate 1H 2021
744
617
115
95
Average exchange rate 1H 2020
746
678
140
96
Average exchange rate 1H 2021 compared to 1H 2020
0%
-9%
-18%
-1%
Rate on August 11, 2021
635
744
98
122
Estimated average exchange rate 2021
*
626
744
97
118
Estimated average exchange rate 2021 compared to 2020
-4%
0%
2%
-8%
* Estimated average exchange rate on August 11, 2021
~37%
~34%
~9%
~7%
~13%
EUR
USD
CNY
DKK
Others
Interim report for 1H 2021. Company announcement No. 41
12/24
Accounting policies
The interim report for the first half of 2021 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
half of 2021 follows the same accounting policies as the annual report for 2020, 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, 2021. 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, including
statements about future events, future financial performance, plans, strategies and expectations. Forward-
looking statements are associated with words such as, but not limited to, "believe," "anticipate," "expect,"
"estimate," "intend," "plan," "project," "could," "may," "might" and other words of similar meaning. Forward-
looking statements are by their very nature associated with risks and uncertainties that may cause actual results
to differ materially from expectations, both positively and negatively. The risks and uncertainties may, among
other things, include unexpected developments in i) the ability to develop and market new products; ii) the
demand for Novozymes' products, market-driven price decreases, industry consolidation, and launches of
competing products or disruptive technologies in Novozymes' core business 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 market-expanding growth platforms, notably 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; viii)
significant price decreases for inputs and materials that compete with Novozymes' biological solutions. The
company undertakes no obligation to update any forward-looking statements as a result of future
developments or new information.
Contact information
Investor Relations
Tobias Bjorklund
+45 3077 8682
Ulrik Wu Svare
+45 3077 3187
Carl Ahlgren (U.S.)
+1 919 702 6144
Media Relations
Lina Danstrup
+45 3077 0552
lind@novozymes.com
Interim report for 1H 2021. Company announcement No. 41
13/24
Statement of the Board of Directors and the Executive
Management
Bagsværd, August 12, 2021
EXECUTIVE MANAGEMENT
Ester Baiget
President & CEO
Lars Green
CFO
BOARD OF DIRECTORS
Jørgen Buhl Rasmussen
Chair
Cornelis (Cees) de Jong
Vice Chair
Anne Breum
Heine Dalsgaard
Sharon James
Anders Hentze Knudsen
Kasim Kutay
Preben Nielsen
Kim Stratton
Mathias Uhlén
Jens Øbro
Interim report for 1H 2021. Company announcement No. 41
14/24
Appendices
Appendix 1 Main items and key figures 15
Key figures 15
Income statement 16
Statement of comprehensive income 17
Appendix 2 Distribution of revenue 18
Business areas 18
Geography 18
Appendix 3 Statement of cash flows 20
Statement of cash flows 20
Appendix 4 Balance sheet and Statement of shareholders' equity 21
Balance sheet, Assets 21
Balance sheet, Liabilities 22
Statement of shareholders' equity 23
Appendix 5 Miscellaneous 24
Public product launches in 2021 24
Company announcements and news in the 2021 financial year 24
Interim report for 1H 2021. Company announcement No. 41
15/24
Appendix 1 Main items and key figures
Key figures
DKK million 1H 2021 1H 2020 % change Q2 2021 Q2 2020 % change
Revenue 7,356 7,135 3% 3,580 3,349 7%
Gross profit 4,297 4,017 7% 2,101 1,857 13%
Gross margin 58.4% 56.3% 58.7% 55.4%
EBITDA 2,825 2,566 10% 1,368 1,172 17%
EBITDA margin 38.4% 36.0% 38.2% 35.0%
Operating profit / EBIT 2,107 1,962 7% 990 867 14%
EBIT margin 28.6% 27.5% 27.7% 25.9%
Share of result in associates (2) (1) (1) (1)
Net financials (6) (134) 4 (58)
Profit before tax 2,099 1,827 15% 993 808 23%
Tax (420) (366) 15% (199) (162) 23%
Net profit 1,679 1,461 15% 794 646 23%
Earnings per DKK 2 share 6.02 5.19 16% 2.85 2.30 24%
Earnings per DKK 2 share (diluted) 5.98 5.16 16% 2.83 2.28 24%
Net investments excl. acq. 411 364
Free cash flow before net acq. and purchase of
financial assets
1,846 2,051
Return on invested capital (ROIC) incl. goodwill 22.2% 19.3%
Net interest-bearing debt 5,270 4,778
Equity ratio 50.5% 52.2%
Return on equity 30.3% 26.2%
Debt-to-equity 48.3% 44.2%
NIBD / EBITDA 0.9 0.9
Number of employees 6,290 6,115
Novozymes' stock
Jun. 30,
2021
Jun. 30,
2020
Common stock (million)
282.0 285.0
Net worth per share (DKK)
38.66 37.91
Denomination of share (DKK)
2.00 2.00
Nominal value of common stock (DKK million)
564.0 570.0
Treasury stock (million)
4.5 4.8
Interim report for 1H 2021. Company announcement No. 41
16/24
Income statement
DKK million 1H 2021 1H 2020 Q2 2021 Q2 2020
Revenue 7,356 7,135 3,580 3,349
Cost of goods sold (3,059 ) (3,118 ) (1,479) (1,492)
Gross profit 4,297 4,017 2,101 1,857
Sales and distribution costs (871 ) (804 ) (432) (374)
Research and development costs (1,062 ) (930 ) (499) (470)
Administrative costs (397 ) (366 ) (199) (168)
Other operating income, net 140 45 19 22
Operating profit / EBIT 2,107 1,962 990 867
Share of result in associates (2 ) (1 ) (1) (1)
Net financials (6 ) (134 ) 4 (58)
Profit before tax 2,099 1,827 993 808
Tax (420 ) (366 ) (199) (162)
Net profit 1,679 1,461 794 646
Attributable to
Shareholders in Novozymes A/S 1,679 1,460 794 645
Non-controlling interests - 1 - 1
Specification of net financials
Foreign exchange gain/(loss), net 61 (89 ) 34 (30)
Interest income/(costs) (22 ) (25 ) (12) (12)
Other financial items (45 ) (20 ) (18) (16)
Net financials (6 ) (134 ) 4 (58)
Earnings per DKK 2 share 6.02 5.19 2.85 2.30
Average no. of A/B shares outstanding (million) 278.8 281.5 278.3 281.0
Earnings per DKK 2 share (diluted) 5.98 5.16 2.83 2.28
Average no. of A/B shares, diluted (million) 280.8 282.9 280.7 282.5
Interim report for 1H 2021. Company announcement No. 41
17/24
Statement of comprehensive income
DKK million 1H 2021 1H 2020 Q2 2021 Q2 2020
Net profit
Currency translation of subsidiaries and non-controlling
interests
Currency translation adjustments
Fair value adjustments
(79 ) (23 ) 23 33
Tax on fair value adjustments
Cash flow hedges reclassified to financial costs (70 ) 46 (28) 20
Tax on reclassified fair value adjustments
Cash flow hedges
(116 ) 18 (3) 41
Other comprehensive income
Comprehensive income
Attributable to
Shareholders in Novozymes A/S 1,857 1,279 747 474
Non-controlling interests 1 1 - 1
Interim report for 1H 2021. Company announcement No. 41
18/24
Appendix 2 Distribution of revenue
Business areas
Geography
2021 2020 % change % currency % M&A % organic
DKK million 1H 1H impact impact growth
Consumer Biosolutions
Household Care
2,366 2,498 (5) (3) 0 (2)
Food, Beverages & Human Health
1,743 1,417 23 (4) 13 14
Agriculture & Industrial Biosolutions
Bioenergy
1,239 1,182 5 (11) 0 16
Grain & Tech Processing
1,118 1,005 11 (6) 0 17
Agriculture, Animal Health & Nutrition
890 1,033 (14) (5) 0 (9)
Sales 7,356 7,135 3 (5) 2 6
2021 2020 % change % currency % M&A % organic
DKK million Q2 Q2 impact impact growth
Consumer Biosolutions
Household Care
1,125 1,227 (8) (2) 0 (6)
Food, Beverages & Human Health
878 680 29 (4) 15 18
Agriculture & Industrial Biosolutions
Bioenergy
651 463 41 (13) 0 54
Grain & Tech Processing
529 467 13 (5) 0 18
Agriculture, Animal Health & Nutrition
397 512 (22) (3) 0 (19)
Sales 3,580 3,349 7 (5) 3 9
% change
DKK million Q2 Q1 Q4 Q3 Q2 Q1 Q2/Q2
Consumer Biosolutions
Household Care
1,125 1,241 1,173 1,211 1,227 1,271 (8)
Food, Beverages & Human Health
878 865 666 684 680 737 29
Agriculture & Industrial Biosolutions
Bioenergy
651 588 693 647 463 719 41
Grain & Tech Processing
529 589 487 515 467 538 13
Agriculture, Animal Health & Nutrition
397 493 427 374 512 521 (22)
Sales 3,580 3,776 3,446 3,431 3,349 3,786 7
2020
2021
2021 2020
% change % currency % M&A % organic
DKK million 1H 1H impact impact growth
Europe, Middle East & Africa 2,866 2,801 2 (1) 2 1
North America 2,242 2,275 (1) (8) 5 2
Asia Pacific 1,519 1,405 8 (5) 0 13
Latin America 729 654 11 (16) 0 27
Sales 7,356 7,135 3 (5) 2 6
Developed markets 4,706 4,738 (1) (6) 5 0
Emerging markets 2,650 2,397 11 (6) 0 17
Sales 7,356 7,135 3 (5) 2 6
2021 2020 % change % currency % M&A % organic
DKK million Q2 Q2 impact impact growth
Europe, Middle East & Africa 1,409 1,347 5 (1) 3 3
North America 1,076 1,011 6 (9) 5 10
Asia Pacific 733 697 5 (5) 0 10
Latin America 362 294 23 (10) 0 33
Sales 3,580 3,349 7 (5) 3 9
Developed markets 2,289 2,201 4 (6) 5 5
Emerging markets 1,291 1,148 12 (4) (1) 17
Sales 3,580 3,349 7 (5) 3 9
Interim report for 1H 2021. Company announcement No. 41
19/24
% change
DKK million Q2 Q1 Q4 Q3 Q2 Q1 Q2/Q2
Europe, Middle East & Africa 1,409 1,457 1,332 1,403 1,347 1,454 5
North America 1,076 1,166 1,106 1,060 1,011 1,264 6
Asia Pacific 733 786 708 642 697 708 5
Latin America 362 367 300 326 294 360 23
Sales 3,580 3,776 3,446 3,431 3,349 3,786 7
Developed markets 2,289 2,417 2,280 2,283 2,201 2,537 4
Emerging markets 1,291 1,359 1,166 1,148 1,148 1,249 12
Sales 3,580 3,776 3,446 3,431 3,349 3,786 7
2020
2021
Interim report for 1H 2021. Company announcement No. 41
20/24
Appendix 3 Statement of cash flows
Statement of cash flows
DKK million 1H 2021 1H 2020 Q2 2021 Q2 2020
Net profit
Reversals of non-cash items
Tax paid
(220 ) (315 ) (25) (25)
Interest received
Interest paid
(25 ) (28 ) (12) (12)
Cash flow before change in working capital
Change in working capital
(Increase)/decrease in receivables and contract assets
(157 ) 267 185 316
(Increase)/decrease in inventories
(297 ) (37 ) (256) (77)
Increase/(decrease) in payables, deferred income and
contract liabilities
Currency translation adjustments
Cash flow from operating activities
Investments
Purchase of intangible assets
(73 ) (62 ) (28) (32)
Sale of property, plant and equipment
Purchase of property, plant and equipment
(340 ) (303 ) (190) (195)
(411 ) (364 ) (217) (226)
Business acquisitions, divestments and purchase of financial
assets
(761 ) (584 ) (8) (584)
Free cash flow
Financing
Borrowings
Repayment of borrowings
(533 ) (67 ) (467) (39)
Overdraft facilities, net
Repayment of lease liabilities
(52 ) (59 ) (29) (29)
Shareholders:
Purchase of treasury stock
(1,132 ) (927 ) (848) (646)
Sale of treasury stock
Dividend paid
(1,466 ) (1,483 ) (1) (1)
Withheld dividend tax
Cash flow from financing activities
(1,290 ) (1,139 ) (1,216) (532)
Net cash flow
(205 ) 328 (82) 110
Unrealized gain/(loss) on currencies and financial assets,
included in cash and cash equivalents
(7 ) (15 ) (12) (12)
Change in cash and cash equivalents, net
(212 ) 313 (94) 98
Cash and cash equivalents - Beginning of period
Cash and cash equivalents at June 30
Undrawn committed credit facilities at June 30, 2021 were DKK 3,904 million.
Cash flow from investing activities before acquisitions, divestments
and purchase of financial assets
Free cash flow before acquisitions, divestments and purchase of
financial assets
Interim report for 1H 2021. Company announcement No. 41
21/24
Appendix 4 Balance sheet and Statement of shareholders' equity
Balance sheet, Assets
DKK million
Jun. 30,
2021
Jun. 30,
2020
Dec. 31,
2020
Completed IT development projects 185 187 205
Acquired patents, licenses and know-how
Goodwill
IT development projects in progress
Intangible assets 3,573 2,668 2,554
Land and buildings
Plant and machinery
Other equipment 969 949 941
Assets under construction and prepayments
Property, plant and equipment 9,681 9,952 9,612
Deferred tax assets 1,198 1,140 1,339
Other financial assets (non-interest-bearing) 29 22 21
Investment in associate 31 36 33
Other receivables
Non-current assets 14,542 13,848 13,599
Raw materials and consumables 373 395 353
Goods in progress 861 767 720
Finished goods
Inventories 2,701 2,624 2,361
Trade receivables 2,798 2,710 2,549
Contract assets 15 50 6
Tax receivables 292 134 460
Other receivables
Receivables 3,366 3,169 3,227
Other financial assets (non-interest-bearing) 28 22 119
Cash and cash equivalents 969 1,024 1,181
Assets held for sale
Current assets 7,075 6,861 6,911
Assets 21,617 20,709 20,510
Interim report for 1H 2021. Company announcement No. 41
22/24
Balance sheet, Liabilities
DKK million
Jun. 30,
2021
Jun. 30,
2020
Dec. 31,
2020
Common stock 564 570 570
Currency translation adjustments (433 ) (142 ) (727 )
Cash flow hedges 11 37 127
Retained earnings
Equity attributable to shareholders in Novozymes A/S
Non-controlling interests
Shareholders' equity 10,914 10,816 11,244
Deferred tax liabilities 857 881 1,204
Provisions 112 98 115
Contingent consideration 567 146 146
Other financial liabilities (interest-bearing) 3,832 3,527 3,245
Other financial liabilities (non-interest-bearing) 12 12 9
Non-current lease liabilities
Non-current liabilities 5,773 5,093 5,105
Other financial liabilities (interest-bearing) 1,858 1,695 1,285
Other financial liabilities (non-interest-bearing) 44 18 24
Lease liabilities 156 151 136
Provisions 23 111 90
Trade payables 1,144 1,112 1,100
Contract liabilities 145 51 67
Deferred income 32 26 22
Tax payables 346 334 336
Other payables
Current liabilities 4,930 4,800 4,161
Liabilities 10,703 9,893 9,266
Liabilities and shareholders' equity 21,617 20,709 20,510
Interim report for 1H 2021. Company announcement No. 41
23/24
Statement of shareholders' equity
DKK million
Common
stock
Currency
translation
adjustments
Cash flow
hedges
Retained
earnings
Total
Non-
controlling
interests
Total
Shareholders' equity at January 1, 2021
Net profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
Purchase of treasury stock
(1,132 ) (1,132 ) (1,132 )
Sale of treasury stock
Write-down of common stock
(6 ) 6 - -
Dividend
(1,465 ) (1,465 ) (1 ) (1,466 )
Stock-based payment
Tax related to equity items
Changes in shareholders' equity
(6 ) 294 (116 ) (502 ) (330 ) - (330 )
Shareholders' equity at June 30, 2021
Shareholders' equity at January 1, 2020
Net profit for the period
Other comprehensive income for the period
(199 ) 18 (181 ) - (181 )
Total comprehensive income for the period
(199 ) 18 1,460 1,279 1 1,280
Purchase of treasury stock
(927 ) (927 ) (927 )
Sale of treasury stock
Write-down of common stock
(12 ) 12 - -
Dividend
(1,482 ) (1,482 ) (1 ) (1,483 )
Stock-based payment
Tax related to equity items
Changes in shareholders' equity
(12 ) (199 ) 18 (471 ) (664 ) - (664 )
Shareholders' equity at June 30, 2020
Attributable to shareholders in Novozymes A/S
Interim report for 1H 2021. Company announcement No. 41
24/24
Appendix 5 Miscellaneous
Public product launches in 2021
Product
Description
Sustainability benefit*
ProAct 360™
ProAct 360™ is a protease solution helping
poultry producers to achieve sustainable and
profitable production by improving amino
acid digestibility.
ProAct 360™ reduces nitrogen emissions into
the environment via manure by improving the
digestibility of proteins in animal feed.
Innova® Element
Innova® Element targets ethanol plants
seeking the highest level of starch and
glucose conversion for their fermentation
process.
Higher yields reduce the total greenhouse
gas emissions from the ethanol, thereby
increasing the climate benefit from gasoline
displacement.
Fiberex® F2.5
Fiberex® F2.5 is a combination of
hemicellulases and cellulases designed to
efficiently extract and convert the cellulose
found in the corn kernel.
Fiberex F2.5 further improves the feasibility
of turning corn kernel fiber, a low-value feed
component, into a high-value fuel with a low
carbon intensity.
Alflorex® Immune
Alflorex Immune helps support and
maintain a normal immune function. It is
specifically designed to combat viral
infections.
Alflorex Immune is a food supplement that
helps people with an irritable bowel against
bloating, diarrhea and abdominal pain. It is
based on a bacterial culture.
* 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 and news in the 2021 financial year
(Excluding Management's trading in the Novozymes stock, major shareholder announcements and stock buyback status)
February 2, 2021
Group financial statement for 2020
February 2, 2021
Election of employee representatives to the Board of Directors of Novozymes A/S
February 8, 2021
Initiation of stock buyback
March 11, 2021
Novozymes A/S Annual Shareholders' Meeting 2021
April 12, 2021
Reduction of share capital
April 27, 2021
Interim report for Q1 2021
August 12, 2021
Novozymes reaches a strategic milestone in the implementation of its strategy with a significant
entry into Advanced Protein Solutions