Novonesis B Unsp/Adr

Welcome to the NovoScience conference call regarding the first half 2022 results. Throughout, all participants will be in listen-only mode, and afterward, there will be a question-and-answer session. Today, I am pleased to announce Tobias Cornelius Bocklund, Head of Investor Relations. Please begin your meeting.

Thank you, operator, and good morning, everyone, and welcome to Novozymes conference call for the first half of 2022. My name is Tobias Björklund, as mentioned. I'm the head of investor relations here at Novozymes. At this call, our CEO, Esther Bajé, and our CFO, Lars Green, will review our performance and key events in the second quarter and for the first half year, as well as the outlook for the full year. Also attending today's call are Tina Ferner, EVP Agriculture and Industrial Biosolutions, Amy Byrick, EVP Strategy and Business Transformation, Anders Lund, EVP Consumer Biosolutions, and also Klaus Fuglsang, CSO and EVP of Research and Development. The entire call will take about 45 minutes, including time for questions at the end. As always, I would like to remind you that the information presented during the call is unaudited and that management may make forward-looking statements. These statements are based on current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in any forward-looking statement. With that introduction, I now hand you over to our CEO, Esther Bache. Esther, please.

Thank you. Thank you, Tobias. And welcome, everyone. Please turn to slide number two. Thank you. The first six months started strong, and we delivered very satisfactory organic sales growth of 10% both for the half year as well as for the second quarter. Four of our five business areas grew by 10% or more, and both emerging and developed markets delivered growth of 10%. All business areas perform at least in line with expectations in the second quarter. with bioenergy and grain and tech processing coming in stronger. Turning to our financials, we delivered a solid EBIT margin, ROIC including goodwill, and free cash flow. The unprecedented effect of higher input and logistics costs is clearly visible, and in Q2 we started to see the effects of more positive pricing, coupled with continued positive effects from productivity improvements and operating leverage. Regarding innovation, we introduced six new products in the first half year, including four in the second quarter, covering yeast solutions in bioenergy, growth stimulators for broad acre crops in agriculture, and a solution for soap bars in household care, enabling further penetration in emerging markets, as the product allows for longer storage times. We continue to see good progress on our key activities across the venture portfolio. We have entered partnerships in the agricultural area, focusing on biocontrol and post-harvest solutions, and we clearly feel a growing need for our sustainable solutions in our various markets, as well as on the world scene, as we attended and discussed sustainability at the World Economic Forum in Davos. For the full year, we have increased our organic sales outlook to the upper end of the previous range of 4% to 8% to now 6% to 8%. Our well-diversified business and agile and flexible solution toolbox are the main enablers for the upper organic sales growth outlook. And bioenergy and grain and tech processing now look to the end of the year on a higher note than previously indicated. The indicators for the other areas are maintained. We had two non-recurring events after the interim period, and as a result, the EBIT margin and ROIC, including goodwill, are increased by around one percentage point each. Lars is going to tell you more about it later in the presentation, and how we capitalise additional value for our intangible assets. Our work on pricing continues in close collaboration with customers, and we expect these efforts to provide a stronger support as the year progresses, leading to a slightly positive effect for the full year. And with that overview, let's now look at each of the five business areas in more detail, starting with household care. Could you please turn to slide number three? Thank you. Household care delivered a solid first half in line with our expectations. Organic sales were flat and grew 4% in reported currencies. Emergent markets performance was solid, mainly driven by Latin America and Asia-Pacific. Developed markets declined slightly, as expected, and mainly due to the anticipated reduction in European market volumes. Sales in the second quarter grew 4% organically and 9% in reported Danish kroner. This was very much in line with our expectations and included a negative impact from the war in Ukraine. Similar to the first half development, sales in emerging markets performed well, driven by a strong performance in Latin America and Asia-Pacific. In developed markets, second quarter organic sales grew as the weakness in the European laundry market eased somewhat compared to the first quarter. The full georganic sales indication for household care is maintained at flat to 2% growth. As previously announced, this includes around 2 percentage point negative impact from the war in Ukraine. We expect performance to be driven by enzymatic penetration in emerging markets, the freshness platform, and including expectations of a roughly flat development in European laundry detergent volumes. Please turn to slide number four. Thank you. Food, beverages, and human health reported a strong first half at 10% organic growth. The performance was mainly driven by the food and beverages sub-areas, which benefited from favorable market conditions and high consumer demand. As also highlighted in the first quarter results, the performance was impacted by a positive timing effect. The growth in food was broad-braced across soup areas and supported by innovation, by ingredient substitution and raw material optimization. Beverages also delivered very solid numbers in the first half, especially in the low-calorie brewing segment. Human health performed well with strong underlying demand, and we are very excited about the opportunities that the recent acquisition of Synergia Life Science is bringing. Looking at the second quarter, food, beverages and human health grew 3% organically. The performance was in line with expectations and driven by growth in food and beverages. Human health performed well against a strong competitor from last year, with continued solid underlying demand for our solutions. For the full year, we maintain the indication of organic sales growth in the low teens, with food and human health being the key drivers. We expect solid double-digit growth in human health, driven by innovation, cross-selling, and regional expansion. In food and beverages, growth will be driven by healthy, focused solutions, while also benefiting from raw material optimization and ingredient substitution. Please turn into slide number five. Bioenergy sales grew 23% organically in the first half. The performance continued to be driven by multiple factors. According to EAA, US ethanol production was up by 6-7% in the first six months, partially driven by a recovery in ethanol volumes. In addition, there was a strong demand following solid producer margins and continued corn-based capacity expansion in Latin America. Our innovative and broad solution toolbox, such as Fibrex, continues to be well received by customers and penetrate markets where the demand for efficiency and higher value products is critical. Lastly, growth continues to be supported by market penetration with enzymatic solutions for biodiesel. The second quarter organic sales growth of 19% was driven by similar factors as those ones for the first quarter, and the EIA estimate for the U.S. ethanol production was up by 1-2% year-on-year. Looking at the full year, we expect growth to be supported by higher U.S. ethanol production approaching pre-COVID levels, continued capacity expansion in Latin America, innovation, and a strong focus on yield and optimization. As a result of the strong first half performance and continued favorable market conditions, coupled with an increased penetration enabled by innovation, we raised our full year organic sales growth indication to mid-teens. Could you please turn to slide number six? Thank you. Sales in grain and tech processing grew 13% organically in the first six months, with double-digit growth in both grain and tech. The strong performance was driven by higher demand for our broad and innovative toolbook solutions, especially in starch and vegetable oils, as well as the favourable market conditions where customers focus on yield and throughput-enhancing solutions. Technical processing grew very well across most subsegments and was further boosted by higher sales of diagnostic enzymes. Second quarter organic sales growth was 19%, with grain driven by similar factors as those for the first quarter. Sales in tech were driven by growth across most subsegments and boosted by the strong sales on diagnostic enzymes. Looking at the full year, we expect growth to be broad-based with good performance across multiple areas in growth in grain and tech. The performance after the first six months and the favourable market conditions, especially in grain, increases our full year sales growth indication for grain and tech processing to high single-digit growth. Please turn to slide number seven. Thank you. Agricultural animal health and nutrition sales grew 14% organically in the first half, led by double digit growth in both animal health and nutrition as well as agriculture. The strong growth in animal health and nutrition continued from innovation and end market driven demand. Additionally, the current market conditions with higher soft commodity prices supported demand for high yield optimising solutions. agricultural grew double-digit in the first six months as customers increasingly focused on innovation and yield. The second quarter organic sales growth was broad-based and in line with expectations on the backdrop of a relatively soft comparator from Q2 last year. For the full year, the indication is maintained at high single-digit to low teens, with double-digit growth in agricultural and solid growth in animal health and nutrition. Innovation and solid end market demand are key growth drivers, coupled with a more diversified commercial model in agriculture. And with that, I'll hand over to Lars for a review on the financial. Lars, please.