Continued innovation in an ever-changing world


2011 was an eventful year for Novozymes. The world proved once again to be a challenging environment in which to operate, but a continued focus on innovation enabled us to leverage our technology platform and deliver solid improvement in sales, earnings, and sustainability performance.

Being an innovation-focused solution provider is challenging – it requires insight into and a thorough understanding of the needs and requirements of customers and other stakeholders. It also requires close collaborations, and systems and structures in place to support this demanding task. At Novozymes, this work takes place every day together with customers across more than 40 different industries around the world. Continuously improving all aspects of this complex, global, and highly diversified process is, and will remain, key to our success.

By leveraging our unique technology platform and mastering the innovation process, we can create increased revenue opportunities and make the business more efficient and the world more sustainable. As a result, we can deliver on shorter-term targets while keeping our minds set on long-term value creation, despite the ever-changing world in which we operate.

An eventful year

Macroeconomic and geopolitical events dominated the headlines in 2011 in a world characterized by concerns about growth, uncertainty, and volatility. Although Novozymes was not immune to the uncertainty, we were able to grow sales by 8% while attaining an EBIT margin of slightly more than 22%, well above our long-term ambition. Productivity improvements continued in 2011, and our operational flexibility proved its worth, with Novozymes able to offset higher raw material prices, a lower USD, and a negative impact from acquisitions.

Turning to sustainability, Novozymes’ products and solutions continued to help customers address their environmental footprint in 2011. Customers achieved emission savings of 45 million tons of CO2 during the year – about three-quarters of Denmark’s total annual CO2 emissions – by applying our solutions in their products and processes, and Novozymes reached almost all operational targets for environmental and social performance.

Investing in growth

Novozymes continued to invest in the future in 2011. We invested DKK 1.3 billion in new plants, machinery, and intellectual property, most of which was allocated to building our new enzyme facility in the US and finalizing our new hyaluronic acid plant in China. We also invested DKK 1.5 billion in developing our global bioagriculture business through the acquisition of EMD/Merck Crop BioScience, and close to DKK 150 million in new R&D projects and business-building activities.

On the competitive front, Novozymes retained our 47% share of the global industrial enzyme market. The competitive landscape was largely unchanged during the year, although Danisco, Novozymes’ largest competitor, was acquired by US chemical group DuPont. Competition helps us remain alert and avoid complacency, and we expect Danisco’s enzyme business to remain a strong competitor under its new ownership.

Valued employees and new board members

We have a global team of close to 6,000 employees. Their skills and dedication are what has built Novozymes and what will continue to build Novozymes in the future. We strive constantly to ensure that Novozymes operates and grows in a responsible manner, with our unwavering business ethics always a top priority irrespective of any turbulence in global markets.

2011 brought three new faces on the Board of Directors: Lena Olving, Deputy CEO and COO of Saab AB; Agnete Raaschou-Nielsen, Chairman of the Board of Brdr. Hartmann A/S; and Jørgen Buhl Rasmussen, President & CEO of Carlsberg A/S. The selection of our three new members was the result of a continuous review of Board competencies with the aim of building a strong bridge between innovation and the marketplace, which is essential to Novozymes’ success. 

Rewarding shareholders

Over the years, Novozymes’ technology has brought strong growth in revenue, earnings, and cash flow. With the expectation of continued healthy cash flow, we are again able to increase the return to shareholders without eroding our capital strength. We plan to increase the dividend payout ratio from around 30% to around 35% over the next 2–3 years, while at the same time initiating a 2-year DKK 2 billion share buyback program in 2012.

In 2011, we executed a stock split both to give private shareholders better access to the stock and to ensure liquidity. It is also worth mentioning that with a 14% increase in share price during the year, Novozymes generated a return to shareholders that outperformed the NASDAQ OMXC20 by roughly 29 %-points.

Innovation shapes our future

With a 2012 sales growth expectation of 7–11% and an EBIT margin expectation of 22–23% in what we anticipate will be a challenging economic climate, we feel confident that Novozymes remains on the right track. In an uncertain environment such as the current one, we keep our eyes on long-term value creation without being naive; we are respectful of what we see out there. Flexibility and vigilance are our best tools for weathering potential storms, and thanks to continuous investments in our business and the efforts of our employees, we have every confidence in the long-term prospects for Novozymes’ unique business.

January 2012

The Board of Directors
Novozymes A/S

"Innovation enabled us to leverage our technology platform and deliver solid improvement in sales, earnings, and sustainability performance."
"Novozymes retained a 47% share of the global industrial enzyme market."
"In an uncertain environment such as the current one, we keep our eyes on long-term value creation without being naive."
Highlights of 2011
The integration of EMD Crop BioScience is one of the big achievements of 2011.
Growth despite challenges
Novozymes delivered a result within the range promised to the stock market and expects satisfactory growth also in 2012.
Perspectives from Executive Management
Novozymes' Executive Management reflect on the past year and what lies ahead.