Novozymes A/S (NSISB) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome here from Denmark to Novozymes's fully virtual and live Capital Markets Day 2021. My name is Tobias Bjorklund, and I'm the Head of Investor Relations. On behalf of all of us, I'd like to thank you for joining us here today. We are very much looking forward to share Novozymes' strategic priorities and ambitions with you here today. Shifting to the next slide here, you can see the program for the day. We have the full management team available and the session will last for approximately 2.5 hours. Apart from the presenters, that you see here on the agenda. We are also joined by 2 additional executive members. They are Graziela Malucelli, Executive Vice President, Operations, Supply and Quality, and Morten Rasmussen, who is our Executive Vice President, People Sustainability and Brand. Let me briefly go through a few of the practicalities for the next 2.5 hours. We have 2 Q&A sessions. And the lines for those will open roughly 30 minutes prior to each of those and you have to call in separately for each of them. [Operator Instructions] If you don't intend to ask a question online, you can actually unclick the questionnaire box to get a better vision of the event. So please do that if you don't intend to ask any questions. [Operator Instructions] Finally, I'd like to inform you that all presentation material has been made available on our website today. And following this event, there will be a replay of this session today. By this, I now leave the word to Ester Baiget, our President and CEO, who will start today by sharing how we intend to unlock growth powered by biotech. Ester, please.

Thank you. Thank you. Thank you, Tobias, and welcome today to Novozymes Capital Markets Day. Thank you for joining us today and hearing from us our journey of growth. Our journey to unlock Novozymes potential, growth potential and to do that with the power of biotech, the power of what we have in-house -- at home. When purpose and strategy -- when your purpose and your personal values do match, everything becomes so much easier. And here at Novozymes, we live through our purpose. Together, we find biological answers for better life in a growing world. Our purpose has been with us for more than a decade, close to a decade, and it's as strong as it is today as it was when it was formed. It speaks about biology. It speaks about micros, about enzymes, about proteins. It speaks of our commitment to making the world a better place and to enable solutions to our customers that will lead to a healthy planet, to healthier lives. It speaks to our commitment of growth, it speaks to the value of partnerships and collaborations. In a nutshell, it prefers -- it [indiscernible] where we had it. And it is that power of our biosolutions, the ones that give us the right to dream. The right to imagine a world where biosolutions would be the natural answer for society's most pressing needs. Imagine a world where the food systems would be transformed, and only if 10% of the protein animal needs of the society would be fulfilled by novel protein that would lead to close to 700 million tons CO2 emission savings that would lead to freeing up 2% of the arable land. That's the equivalent of freeing up space such as big Pakistan, Nigeria or Venezuela. We live in a society, in an ever-changing role, in a world with an urgent need of more sustainable solutions, in an increasing commitment to the Paris Agreement, in a growing population with growing needs with increasing nutritional needs and leading to more than 40% increase of protein demand and needs that can simply not be fulfilled by the heritage predict. And our customers, they feel those challenges, they face those challenges, I would call it, opportunities. And that sets biotech at the epicenter of what the world can do. It's at the epicenter of connecting those society needs on the answers to our customers. Very few companies have the key to unlock that center, and we at Novozymes, we are best positioned to unlock it. We are best positioned to enable those answers for our customers and also for the world. If we looked -- if we pause for a second and we look at our journey at about 20 years generally, we're very proud of who we are and what we've done. Through our 20 years of history, we have delivered sustainable growth, fantastic financial results. So a very, very good and solid returns for our shareholders. And more importantly, impressive innovation that leads the world to a more sustainable place. And when we can be, and we are very proud of our 20-year journey, that's not necessarily the case for the last 6 years and 6 years is a long time. 1 year is a dot, 2 dots make a line, 3 dots make trend. We, in the leadership team, we have been reflecting on this. And although -- I mean I'm sure we could find and bring many, many reasons, external arguments that would justify our performance, why we did not deliver up to expectations. We could link it to changing and volatile demands in the key segments such as Agricultural, we could link it to pricing pressure in key segments such as Household Care. But we've done a little bit more than that. We've moved a step ahead. And in our reflection, as a team, we believe that our efforts were diluted that we invested -- we didn't invest enough on the areas that would drive growth, we invested relatively in areas that will lead to incremental growth. And even the innovation did deliver theoretically on the target, we could not harvest the fruits of that work, fantastic work through the growth that we were expecting for. And here's where we, collectively, this team, in 2019 with better business with biology has started to set the direction for shifting that trend, and putting Novozymes back on the right direction. And the right direction for Novozymes is the direction of growth. That's where we belong. That's what our history talks about. That's the space that we deserve, that's the space that we need to be to generate value for our shareholders, but also that's the way that we contribute the most to the world. We have taken since 2019, and we started the journey many, many, many steps, and we've been sharing them -- each of them very proudly with you. Some of them bolder, some of them are more incremental, but they are all moving us in the right direction. I'm proud, we are proud, we are pleased with all the milestones that we have taken from the streaming line of R&D pipeline to the centralizing of the centers to the reorganization, making us more a market-driven customer-oriented organization from the steps and milestone we've taken in our 2 strategic SOAs in both on the protein and on the Human Health space. All steps that moving is in the right direction, but we're not stopping here. And the reason why we're not stopping here is because there is a tremendous space of opportunities ahead of us, and we need to continue to do more. If we -- I mean I know, we know that Novozymes is seen as an enzyme company and that's probably fair. If you look at the at the majority of our sales still now they have been through enzymes. So it's a logic observation to be made. But that's not how we see ourselves. That's not how we feel who we are. We have a heritage of our -- on our back of more than 100 years of history. We have a deep, deep science expertise. We are mastering the art of fermentation -- of protein fermentation. At the end, enzymes, they are catalytic proteins. So with that, we master the science, the art of fermentation, novel, high-value high-purity proteins. We have 1 of the largest libraries of microorganisms in our books. We have a unique capability from bringing in this science and prototype solutions into scale, and making them commercially available, at global reach at industrial way at reliable way for our customers. And when we look at ourselves on the way we are then we see a tremendous opportunity of growth for us. When we look at ourselves as we are as a biotech powerhouse, then the addressable market share that we have the right to participate, it becomes DKK 100 billion. And that's a market that is going to continue an addressable opportunity that is going to continue to grow, and it's going to continue to grow for a very simple reason because biosolutions will continue to penetrate and replace fossil-based solution, will continue to grow and emerge and also biosolutions, they will be the natural player, the natural response for new emerging needs that they're coming -- they are raising from the society. Thus plant-based nutrients or plastic recycling and CO2 emission reduction. So it's not by the lack of opportunities, the one that we have for us. The need for us, the opportunity for us is to unleash the true growth potential, to unlock that growth potential inside us. And when it comes to our strategy, unlocking growth powered by biotech. A strategy that starts with our commitment to the planet, a strategy that is focused on prioritizing our resources and allocating resources in the area that will drive accelerated growth, by focusing our efforts on solutions that will enable CO2 emission reductions, higher yield, lower [indiscernible], lower chemical use, high productivity. Solutions that will transform the food systems, the food value chain from agricultural to plant-based protein, and they will do that in a sustainable way. Solutions that will enable healthier life. And here, we're building on the same momentum on the momentum of prioritization and we're building on a strong home, a home build from a biotech powerhouse, a home build from our strong culture, a home build from the [indiscernible], that's what we call it. So when we look at the pillars of growth, evolve, which is -- expand in biohealth and in nutrition and explore. Here is where we are mastering and we are bringing in a forward level of energy and prioritization. Let me look -- let me go a little bit -- lets go little bit more deeper into each of them. It will start first with evolve. In evolve, is where we see today the majority of our sales and this is the space that offers very attractive and solid growth. Growth that is going to be unleashed through innovation. We have extraordinary, very, very attractive opportunities of innovation and differentiation here such as biodegradable detergents, such as processing [ of foods ], such as biodiesel. Growth that is going to be untapped by continuing the penetration of biosolutions in emerging geographies. Growth that is going to come by collecting the foods that we've already been selling and commercial excellence on pricing, on digitalization, and also on productivity. Anders and Tina are going to cover this in more detail later on. In expand, is where we hold the promising areas of biohealth and human nutrition. Here is what we're aggressively investing, building on a very strong home with the aim to collect the right to be in these fast-growing markets where our solutions as a natural answer from what the society needs. And here, we expect to invest by being closer to the customers, by being the right of the partner customers that they need, more than -- close to DKK 300 million through the period to 2025. And also, we're going to invest on CapEx to continue to build the capabilities to support that growth and capture attractive growth. This part of the business is expected to deliver high growth. In explore, it's where we embrace our obligation to dream, is where we have the right to be bold, the need to be ambitious and keep a very tight portfolio with a tremendous potential, but also with a higher risk. And that combination of very high potential, but also risk is what drives our ventures approach. We're applying a very strong venture approach in this segment where we only move forward, we only continue to invest by delivering on the milestones, not only technical but also on the checks and balances of the opportunities and the market assumptions that we made when we start in those efforts. Amy is going to cover it in more detail and share with you a couple of the areas that we are considering and we're working on such as carbon capture, such as maturation fixation, such as plastics degradation. All in all, in evolve, in expand, and in explore, they all have something -- same in common, our strong bio house. Our strong expertise on fermentation, our deep understanding of microorganism, our capability to scale up our global reach, our history on how we know how to deliver. And strategy is about making choices. It is as much as doing and defining what we want to do more, as also stating what we're going to do less. That's what strategy is about. It's giving clarity on prioritization, but also in the areas that we're going to do less. We mentioned we're going to invest and expand on building the capabilities for be a better listener, a better partner of our customers in health and in nutrition. Important to mention that while we're doing that, we will do that through M&A as well as organically, bolt-on M&As to bring home capabilities that we would -- if do it organically, it will take longer or less competitively. We will continue to invest in science. We are a science company. And that's going -- and our investments in science, in R&D are going to continue to stay. You should expect for us to stay within the 13% of revenue allocated to R&D. That's going to continue to be in that space. But also you should expect from us to continue to do a very diligent work on ensuring the maximum return of those investments and translating them into growth. So we're going a bit stronger on the prioritization and Claus is going to talk also about that deeper. And we're going to also be more scrutiny on sunset, the areas of new product development where we see the edge of innovation had been diminishing. And focusing on those areas that we see a higher level of matureness not on innovation for new products, but through productivity. Being productivity the way to continue to stay close to our customers and master the areas and stay next to us. We are becoming much, much better at the agility of innovate. We're becoming and improving the machine, it's all about selling faster. It is all about prioritizing our resources. It is all about delivering growth. And when you translate all that, all those milestones, all that run rate into how success looks like, that's how it looks like. That's how we account -- we set ourselves accounted by. That's how we define success. It's only through the triple bottom line. It's the finance but also through the impact and the contribution we give back to the society. We're committing to deliver 5% plus aggregated growth through the period for the 5-year period. We're committing to deliver at least 26% EBIT margin in 2025, and we commit to continue to focus strongly on earnings and returns. And Lars is going to guide through us in more detail, I just being brief. As an innovation leading company that we are, we choose to include. It's only through inclusion where we own the right to attract the best talent. It's only through inclusion where those voices are heard and they nurturing a trustful environment, and they bring back and they exploit and then share the results of innovation and continue to move us ahead. And even we are very proud and pleased of the trajectory for inclusion, we're taking one step bolder here. We're moving bolder, lead us also in inclusion and in diversity, and we're making the commitment of at least reaching 45% female, 45% male across all layers by 2030, including senior leadership. As leaders, we are on sustainability, we're also taking a bolder move here. We're very proud of our trajectory towards climate neutrality from 2015. We have reduced already so far 46% of our CO2 emissions operations. Here, we're also taking a bolder target where we're committing to 50% reduction of Scope 1, 2 and 3 emissions, of CO2 emissions by 2030 because that's what leaders do. We don't drive -- we don't wait for change. We drive change, we lead change. We influence others, and we set the tone of how good looks like. And if we just run fast forward and we bottle up everything we've said on 2025 and then the even further looking ahead is what today we feel we're willing to share with you our ambition for 2030. An ambition that sets Novozymes with double sales as it was in [ 2013 ]. A growth that is going to come not only organically but also from bolt-ons and M&A. We're willing to share with you our ambition and commitment to make the world a better place, our commitment to a healthier planet. And for that, we're committing to allocate the majority of our sales in the areas that lead an enabler, a healthy planet. Solutions that will help to reach the climate neutrality; solutions that will lead to CO2 emissions, that will look to lower waste, to lower chemical use, to lower energy intensity to higher yield; from solutions that will lead to sustainable -- transforming the food systems, from agricultural replacing chemicals, from animal feeding in a sustainable way, from plant-based proteins and functionalization of those plant-based proteins, but also giving novel proteins through fermentation; from solutions that boost proactive health and increase the quality life of the consumers. That's what we commit to. I hope you feel, as we go in today for the rest of the session, the excitement and you get the details on the milestones and leaving [indiscernible] of all the areas as we -- we deep dive. As you going and hear from our -- from my colleagues on the presentation, I will ask you for 3 things. I would ask you to seek for the power of biotech, why we're going to win on the areas that we expand? To seek for the commitment to growth, growth that's going to continue to come to prioritization and to seek for our commitment to a better planet, to a healthier planet. And with that, I now hand over to Amy Byrick, our Head of Strategy and Transformation. Amy?

Thank you, Ester. Thank you. It's truly a pleasure to have the opportunity today to share with you some of the key strategic initiatives, which we'll be driving and focusing on to deliver on this ambitious growth agenda. It's been a really rewarding experience for me on a personal level, joining the company 6 months ago to have been able to engage with this team to take a step back, evaluate the strategy and make real decisions on where we want to take the company going forward. And even more than that, to take a step back and reflect honesty and also with humility on where we have really strong routes to build on and where that core biotech capability that we want at the core, but also to look at where we need to redirect our efforts and where we believe we have additional capabilities that we don't have enough of today that we need to accelerate, to build and invest in order to make sure that we can deliver on the true potential of that biotech powerhouse. I'd like to take you through now some of these expand and explore areas really key as we walk through these, is to realizing that all of these areas, while they open up the opportunity for us to grow into higher growth markets, they're fundamentally grounded in core biotech capabilities of Novozymes. And on top of that, they stay very true to our vision and our purpose and our commitments to a healthy planet. So I'll take you through the expand areas, our ambitions in biohealth and human nutrition and also some of those capabilities that I alluded to earlier that we don't necessarily think we have broad and deep enough today that we will invest in to derisk that growth. And then looking longer term, beyond the 2025 horizon, the commitments that we're making to develop the business cases of the future and investments in how we are running our venture approach to identify new longer-term growth opportunities. When we look at this chart, I don't think any of us are surprised to see these challenges that face the planet, that faces as humanity and some of the key issues driving macro trends of growth in our environment. We live them as business people, as investors, but I think also very personally day-to-day in our lives as consumers. And the last 18 months for all of us living with COVID has only served to accentuate the focus on making healthier choices, taking control of both our environment and our impact that we have on the environment and in our health. And it's these fundamental macro trends and global challenges where we are focusing our expand and explore efforts to realize what the business models of the future could be where Novozymes can play a role in addressing these businesses going forward. So let me dive into the biohealth area. The identified markets that we're targeting in this area of biohealth form an addressable market of DKK 40 billion, each one of those segments growing at high single-digit growth rates. Based on the core of the business, which we've built and acquired over the last number of years, we feel we have a differentiated and unique building blocks that should enable us to outperform on those market growth rates. How will we do this? First and foremost, continued innovation. Our innovation in this space is heavily driven by market and consumer needs by identifying target health outcomes and working the science backwards. Being prognostic, technology agnostic, whether the solution comes from enzymes or probiotics or whether it's some combination thereof in different ingredients being formulated, the target is not to sell a product, but to be able to deliver that targeted specific health outcome. So we have a core product base today. We have this new product development pipeline through innovation. And then the idea is how can we grow this by leveraging the scope of Novozymes. We do that in a number of ways. We have in our core OneHealth business, which we've acquired. We have 3 different channels already established, B2B channels, B2C as well as selling directly through health care practitioners. We'll continue to cross-sell across those channels. And then we'll also amplify the potential growth of these businesses geographically, leveraging Novozymes' global footprint. And thirdly, leveraging beyond simply our core area where we focus today on dietary supplements, but expanding into functional foods, and Anders will speak more about that later today. And ultimately, looking even further forward, how can we amplify further, moving beyond our focus -- current focus on human health, but expanding also and leveraging the exposure and the market access that we have for animal health and nutrition as well. So we have a high-growth DKK 40 billion addressable market, and we are very confident that we have the right to outperform and outgrow in this space. Let's turn now to our other expand area of human nutrition. The global retail demand for proteins is estimated to be USD 1.8 trillion today. The estimate for that growth, driven by the growing population in emerging middle classes is estimated to grow to USD 2.1 trillion by 2030. What that underlies is growth in traditional protein sources, but also the increasing demand for alternative protein opportunities. The retail market for plant-based proteins today is estimated to be $30 billion, largely focused on alternatives to traditional dairy products where penetration has been faster. You can do an Internet search and you'll find all sorts of growth potentials, of where this is growing. But consensus is that this should -- market should grow to at least $150 billion retail demand by 2030. What will be driving this, ultimately, this is about food. It's about how pleasurable the experience is, it's about the nutrition we derive from it. And the ultimate driver of that growth will be the quality and the appeal of the products which are brought to market. This is exactly where we think Novozymes can play a key role in building and developing and accelerating the growth of this marketplace working with our customers. We do this in 3 different ways. First of all, we have a very established business in protein extraction, and we continue to develop enzymes, which enable us to extract more efficiently proteins from a variety of different plant-based substrates. Secondly, protein functionalization. This is where we use core enzyme technology to be able to modify plant-based proteins, making them more easily digestible, having better sensory properties, better taste, better texture. And thirdly, our newest area of advanced protein solutions, and this is backed by the announcement we made last month about our DKK 2 billion investment in our plant, expanding our plant and capabilities in Blair, Nebraska. The target of this investment in the advanced protein solutions space is producing novel proteins, high-value proteins, which enable us to target specific either nutritional or sensorial outcomes. What's important to success in this space, it's not only that we're able to apply that core science capabilities of the biotech powerhouse to identify, express and produce these proteins, but it's also very critically our ability to scale. It's our ability to ferment at scale and drive economically viable business models where we can actually bring these proteins to market. So we feel really confident looking both at biohealth and the human nutrition space. We have the production capability, we have the scientific know-how to be a leader in this space. But this is where we've taken a step back. And we've asked ourselves, is that enough? And we've identified a gap. We've identified a need to both broaden and deepen our ability to work with customers and understand where this market is going. This -- the innovation in this space is dramatic. We have seen new products coming to market every week, if not every day, being launched into the space. And we believe we need to be closer to that to be able to drive and work with customers to meet this evolving and very rapidly developing need. For that reason, we will invest up to a run rate of DKK 300 million annually to build customer co-creation platforms. These are specifically focused on strengthening again, both broadening and deepening our capabilities specifically targeted towards the nutrition and health areas. What does this mean, really? So it's expanding upstream to broaden our consumer understanding, our market understanding to really be able to work with customers on understanding mechanistic health outcomes, understanding nutritional values and claims and understanding where we can create products, which will have more appeal to the market. And then it's extending and broadening our capabilities downstream, not just on traditional applications in terms of the ability to prototype and develop end products, but also working with our customers, increasing our capabilities to support them in making claims, and passing regulatory hurdles and actually bringing products to market. Maybe it's worth taking a little pause here just to reflect on what we have actively chosen not to do in this space. We will not become a one-stop shop, a full solution provider and food formulator, that will remain our customers' area of expertise. What we want to do is to stay true to that core science and capability, the biotech to be able to bring biosolutions to the market again, product agnostic, whether those are enzymes or microbes, we will use our proteins, the full range of capabilities. But what we do need to do is be able to work with our customers, to be able to co-create and codevelop the best products of the future. Where does this investment actually go? And what does it actually mean? First and foremost, it's bringing on teams, new people with new capabilities, able to strengthen and complement what we have in the core. Secondly, we'll invest in regional co-creation centers. Regional is important here. We recognize the fact that food ultimately is a very local, very regional experience, and we recognize the fact that we need to be close, have that customer proximity in the regions, but also the market in the consumer proximity to make sure that we truly understand the needs of this evolving, rapidly expanding area. So we've already started to build these capabilities, and we'll start bringing these new capabilities on board already in 2021. So in summary, these expand areas focus on our growth in biohealth and human nutrition, but also expanding these capabilities to be able to derisk and accelerate growth. Let's switch now looking a bit longer term towards the 2025 to 2030 horizon. This area of explore is fundamentally the commitment that we're making to unlock the potential of this biotech powerhouse. It's to focus on these areas true to our core purpose and our commitment to healthier people, healthier planet to look towards areas that can create the business models for the future. As Ester referred to, our approach here is not one of placing big bets. It's rather one of applying an agile venture methodology, looking very much to develop up to 15 ventures a year. Not with the ambition of bringing them all to market, but rather with the ambition of challenging ourselves to explore the full potential of the biotech powerhouse that we sit on. To be able to identify 2 or 3 business models that can create that long-term growth to drive sustainable growth in the mid- to long term. Just a bit of a step back to say, how do we choose these ventures. So first and foremost, it's the fit with the purpose, the ability to drive healthier plant and people, but also giving us a minimum hurdle of a potentially viable business model to drive DKK 500 million to DKK 1 billion of sales annually, realizing that potential sometime in the 2025 to 2030 horizon. And finally, an important criteria is the concept of one-step adjacencies. This is not about blue sky thinking far away from where we are. We want to be focusing on opportunities where we have the right to play and the right to win, either because we have market access or we have technology capabilities that allow us to derisk and bring these businesses to market. Maybe just to put a bit of color on what this actually means. I'll just run through very quickly 3 examples of some of the ventures that we're running in this space. Keeping in mind, these aren't the only 3 this is part of a portfolio which is much broader. The first example is the use of biological alternatives to synthetic fertilizers. Over half of the world's population relies on the use of nitrogen fertilizers, as an example to feed and build and drive agriculture. The issue with these synthetic fertilizers is that they're spread on the surface of the soil, making them very susceptible to runoff, and we're all aware of the impact that this is having on our water ways, driving dead zones in our oceans. We see Novozymes as having the opportunity to create a future, if you envision a different approach to fertilizers, where you have micro organisms embedded in the soil who can fix atmospheric nitrogen, and then release it next to the crop's roots to make it easily accessible and more viable. We believe that the solutions that we're working on today can potentially reduce the nitrogen runoff and impact on our water ways by 25% to 30%. So an exciting opportunity. But again, we're not getting carried away with the excitement of the science. We are running through this venture process to assess the scientific capability as well as the commercial and the business model viability to bring such businesses forward. The second example is one of plastic recyclability. More than 50 million tons of PET from both bottles and fibers goes into landfill or incineration every year. And only 13% of the PET produce actually makes it through recycling. We're looking at addressing this challenge through a number of areas across the life cycle of plastics. A few examples using enzyme technology to modify polymers to make them more easily degradable at end of life. Also working on enzyme-based recycling opportunities to degrade and break those polymers back down to their initial monomers, allowing to reuse into -- and reprocessing into high value-added products. We believe that this technology that Novozymes could develop could release the opportunity to make 100% of the PET stream and eventually other plastic value streams accessible for recycling in the future. A significant opportunity. And again, one that we need to rigorously evaluate from a technical, business and commercial viability. And the third example is carbon capture. Over the past century, industrial emissions of carbon dioxide into the atmosphere have increased from 2 billion tons to 37 billion tonnes of emissions which actually represents 75% of the greenhouse gas emissions today. If we look towards the ambitions that we have a society towards a carbon-neutral future, addressing this issue, enabling carbon capture from industrial sources is absolutely critical. Novozymes is looking to address this in a number of different ways. First of all, using enzymes to enhance and make more efficient, traditional and existing state-of-the-art carbon capture technologies but also working on enzyme-specific enzyme-based carbon-capture systems. We're clearly excited about the potential of these technologies. But we also recognize the fact that it's too early in the assessment and the development of these ventures to place all of our bets in one place. So this is, again, the structured, rigorous venture mindset to have rigorous due diligence, pass stage gates and assess these opportunities to identify which ones will create those growth drivers in the future. So we've set ourselves the ambition to double sales by 2030, and these explore and expand areas will be key to unlocking that growth. Expanding into biohealth and human nutrition, expanding our capabilities in food and health to derisk and accelerate that growth. And making a commitment to look at that core biotech foundation and understand how can we unlock its true potential in longer-term business development. We look at this how it all piles today, and we're excited about the growth rates. But I have to admit we're maybe even more excited about the direction in which this takes Novozymes, expanding our reach, unlocking the true potential of the power of the biotech powerhouse beneath us, and unlocking the growth so that we can fulfill our possibility to commitments to driving a healthier people and a healthier planet. And with that, I'll pass to Lars, our CFO.

Thank you, Amy. And before turning to financials, I just wanted to say that if anyone is experiencing a lag between your audio and the video, then please refresh your browser that should solve the problem. So in the following, I'm going to review our recent financial results. I'm also going to outline how our refresh strategy, unlocking growth powered by biotech, how that will generate attractive growth, profitability and cash in the new strategy period out to 2025 and beyond. So unlocking growth is all about delivering shareholder value. And the starting point for everything we do is our purpose, our promise to rethink tomorrow, finding biological answers for better lives in a growing world. That's where it all starts and then as to introduce our growth pillars, evolving our core business, making sure that we continue to grow and capture the value in our existing business, expanding into new growth opportunities, new attractive growth opportunities in biohealth and also in human nutrition. And then explore new growth opportunities in new areas that will enable us to grow also in the long term. And for me as the CFO and for us as a leadership team, making sure that all this comes together to create shareholder value is really, really important. So we will have a strong focus on ensuring that we allocate the capital and the resources to where they matter the most, that we follow up on the execution and that we also anchor this in a rigorous performance management system, where we align the interest of shareholders with that of management. So if we look at the recent financial performance, then Novozymes has delivered robust results in the past 10 years. But as Ester said, we have not been happy with the organic sales growth that we have delivered in the last handful of years. Nevertheless, throughout that period, we have seen strong earnings, strong profitability with EBIT margins in the high 20s and we have seen robust and strong return on invested capital, also at or above the 20% level. As you can see on these charts here, in 2014, we had a significant cash inflow when we had -- when we created the alliance with Monsanto in BioAg. Basically, we took in there the cash that was recognized in future sales that Montanto was going to take over, and therefore, Novozymes recorded a deferred income on the balance sheet. This deferred income was then depleted over the following 5 years until we dissolved the alliance in 2019. But in the meantime, this had a positive impact both on our EBIT margin, on our return on invested capital, while of course, we had get or gotten the cash already in 2014. What is worth noting on this slide is that we see the first encouraging signs of an improved performance in the last couple of years since we launched our Better business with biology in 2019. So we've been focusing in the last couple of years, 2020 was a very special year for the entire world with a pandemic that is going on. Novozymes managed to maintain our organic sales, but at the same time, we also managed to advance our strategic agenda. We acquired 2 companies in the space of human health. And this way, we enabled basically a platform for future growth. At the same time, we saw our EBIT margin continue at the high level of 26% that we have guided for this year. And when we adjust for the impact of currencies and also from the impact of M&A, which we announced in 2019 were the assumptions behind our long-term target of 28%. Then we're actually well aligned or went on our way to deliver on the EBIT margin already now in '21. And the same for return on invested capital. Adjusting for currencies and M&A, we are well on our way to deliver on the long-term target of 23% adjusted for those 2 factors, with our guidance of 19% to 20% in the current year. So focusing in on cash. Here, you clearly see also the inflow of cash in 2014 that significantly improved with the deferred income liability on our balance sheet, the net working capital on the graph at the left and the depletion over the following 5 years as we gradually took that income into our P&L. What you also see is that with our focus on improving the net working capital and bringing back the net investments to a more normal level, then we see a significant improvement in our cash flow over the last couple of years, which is what we said we would do in 2019. So how to use the cash that we generate. Well, we continue to return with discipline and diligence the excess cash to our shareholders, DKK 26 billion in total over the last 10 years. We have gradually brought up the payout ratio to around 50%, and we have used our share buybacks as a flexible tool to return residual cash to our shareholders. So how do we define residual cash? Well, we have out of this [indiscernible] where we are targeting a debt to EBITDA ratio of around 1. And we believe this puts us in a good place. This means that we have a conservative balance sheet that allows us to pursue strategic opportunities and acquisitions when we see that they can accelerate our strategic journey. And at the same time, having a bit of cash on the balance sheet also means that we recognize cash as a precious resource and make sure that we're disciplined around it. Going forward, we're also going to have a target with a capital strategy and a debt of around 1. But we are not going to have a ratio of 1 every single day. If we see an opportunity at target that will further accelerate our strategic journey, we may have periods where we will be above. But we are committed to return that back to 1 with an adjustment of our share buyback programs, so that we, over time, will go back to 1 where we have the same balance sheet and with an opportunity to continue to pursue strategic targets. We will also continue to have a 50% payout, and therefore, secure a solid return to our shareholders of the cash that we generate. So we do have a very clear allocation of our capital. First and foremost, we are investing for growth, investing in people, investing in innovation and investing in capacity. That is in our evolving, in our core business, but it's also in the area of expanding into new areas into biohealth and into human nutrition. Doing that organically is the first and foremost priority of the capital that we allocate. We will be considerate about it, so do we invest where the opportunities are the greatest, and we will also reallocate where we see less opportunity with less growth coming. We are also going to allocate cash to acquisitions, and we see acquisitions as a supporting tool to build new business areas and acquire adjacent technologies and capabilities. So what types of acquisitions are we thinking about? Consider Microbiome Labs and PrecisionBiotics Group, the 2 companies we acquired in the last year so, as good examples of what we're looking at, where we can accelerate our growth, we can establish a platform in new areas, and we can acquire capabilities that allows us to move forward faster. And then we're going to continue to return cash to shareholders through dividends as a first priority and through share buyback programs as a flexible resource or as a flexible alternative. We will adjust those share buyback programs, as I said, depending on how much cash is left when the other priorities have been fulfilled. What we will not do is to expand outside of our core capabilities. And we are also not going to pursue short-term optimization at the expense of long-term growth. We're also not going to sacrifice dividends in favor of maintaining a leverage. So let me try to summarize what this is that we will do with our capital allocation. We are going to invest that in long-term growth at attractive margins. And we believe this creates an attractive value proposition for our shareholders. So when we look at our established business, our core. We have a diversified portfolio of broad-based growth coming from a lot of different areas. Now where do we see the growth coming from going forward? Well, some areas will grow faster, some will grows slower than the average. Where we see the faster growth is in the area of Food, Beverages & Human Health. And in that space, that is also where we recognize our 2 new strategic opportunity areas where in Human Health and Advanced Protein Solutions. And we're already speaking about Human Health delivering double-digit growth this year, and we see that continue also going forward. We have also announced the establishment of Advanced Protein Solutions as a new area where we're building the facility in Blair, Nebraska and where we see that area grow to around 1 billion of sales within the first 5 years on the market after the factory is operational. So this is going to further the growth in this area. And therefore, we believe that this area here will grow faster than company average. In agriculture, we believe that we will see an underlying growth of double digits. And therefore, we also see the business area of Agriculture, Animal Health & Nutrition growing faster than average. There also areas that will grow slower as we see it right now. Household Care is one such example. We see the potential of Household Care continue like we said historically. And so moving forward, we also see -- or we still see a growth opportunity of 3% to 4% on average in Household Care, driven by bio detergents, Freshness and the continued expansion in emerging markets. Bioenergy, grain and tech, we also see opportunities exactly where that plays out. I think it's difficult to say at this point in time, but we have innovation that will further the growth. And we do see growth across all segments of our business. When you look at profitability, we have a very good starting point at 26% as the outlook for 2021. We will continue to see expansions and productivity improvements that will improve our margin also moving forward. However, we do believe that we can offer attractive growth opportunities in the long term. If we reinvest some of that opportunity or some of that improvement into customer co-creation centers, into some of the new spaces in biohealth and in human nutrition. And therefore, we are saying that at the end of this strategy period in 2025, we are targeting an EBIT margin of 26% or above. We could deliver more if we wanted to, but we believe the best value proposition is to make sure that we also are set up to drive future growth also in the period after 2025. So how does this all translate? Well, it translates into these targets. All of them are important for us because we have been driving our business according to the triple bottom line ever since Novozymes was separately listed 20 years ago. So our targets are and organic sales growth of 5% or more until 2025 on an average, an EBIT margin of 26% or above, and a return on invested capital, including goodwill, of 20% or above at the end of the period. The EBIT margin is not going to go below 25% in any of the years in between. The assumptions we use to also make this plan for the future is that we are going to see our net working capital as a percent of sales improved over the period. We're also going to invest in some of the new businesses in CapEx to ensure that we have a production setup that can secure the growth also in the long term, and therefore, we do see CapEx increase to around 10% throughout this period. And this is excluding the DKK 2 billion of investment we are making in the new advanced protein facility in Blair, Nebraska. The tax rate we believe, will be around 22% to 23%. That is a return to a more normal level after a period where we have benefited from a transfer of IP within the company. Zymers and society is also important for us and so is operations. And Ester spoke to the ambitious target we have set for an inclusive and diverse workforce. We also have targets for a thriving workplace where Zymers will continue to grow and thrive and be safe when they go to work, and we are aiming for an inspiring culture of changemakers where all of our colleagues in the company will contribute to making the world a better place. We take also an aspiration on our own operations, making sure that we step up our commitment to the climate. So we have already secured an improvement in our CO2 emission by more than 40% last year. And now we're stepping up to say that not only our own operations but also that of the supply chain will improve by 50% by 2030 and to become net neutral by 2015. Making sure that we manage water and waste according to the surroundings, so that we also contribute to a circular economy with 0 waste from our operations by 2030. And by continuing to invest in the future growth, we believe that we can set an ambition to double our sales by 2030. Novozymes is going to make a significant impact on the world, accelerating towards a climate-neutral society, transforming food systems and also enabling healthier lives. Today, we are launching our new strategy, our refresh strategy of unlocking growth powered by biotech. We are building on Better business with biology that we launched 2 years ago. And I hope that you are as excited as we are about the journey that lies ahead of us. So with this, we are ready to start the Q&A. So Tobias, back to you.

Thank you, Lars. We are ready to start the first 20-minute Q&A session now. And operator, I leave the word to you.

[Operator Instructions] Our first question comes from the line of Charles Eden from UBS.

I'll limit it to 2. Firstly, just on the EBIT margin guidance, specifically on the [ flow ] of 25%. Can I just ask, is that a sort of soft guide for next year given the concerns around raw material inflation at this stage? So that would be my first question. And then my second one is on the organic sales growth CAGR of at least 5%. Can you just talk about how much of that you anticipate to come from volume versus pricing? That would be perfect.

Thank you, Charles. I will answer a little bit the first question and then I'll pass it to Lars to build on it. So the way that Novozymes delivers or accelerate growth, it's through share gain through volume growth. In an environment of an unconstrained supply, which is the one that we have, in an environment of a need of sustainable solutions, the way that we maximize our commitment or accelerate our commitment to growth is through volume growth. Then having said that, it is also true that price is important. Historically, we have shared with you a price erosion around 1% to 2%. We have gone in the last couple of years, the whole leadership team, in a journey of improving our commercial excellence and the discipline regarding prices. And we're pleased to share that, that number that the erosion has decreased. Today, with the environment that we're living with increasing economic prices, economic commodity prices, we see an opportunity to refresh the share value split that our solutions bring in, and we're going to continue to work on setting the right prices, not from a volatility of the price, but to get our right share of the value that our solutions bring in. So answering your question, majority of the growth is going to come through volume growth. And then we're going to continue to drive our efforts on ensuring we get the value that we deserve. Lars?

Yes. Thank you, Ester. Answer the question on margin for next year. You should not see our flow of 25% as a specific guidance on '22. It's a bit too early to guide on '22. But maybe some of the factors you can think of around '22 is that with this strategy, we obviously also preparing for a plan that has a 5% growth organically as the starting point. So we will continue to see scale. We continue to also see the opportunity to create productivity improvements in our production like we've seen historically. So those will be sort of supportive to the growth on the EBIT margin. On the other hand, we will see some tailwinds. We will see increasing input prices, transportation costs as we see it right now. And as we also talked about at the Q2 results, this will impact the second half of 2021 negatively. And as we see it right now, it will also have a full year impact in '22. Then we talked about today that we are going to invest and start the investments in our co-creation centers for our customers. So we are also going to see some investments in our future business. And finally, I would sort of point to a hopefully gradual return to a more normal way of doing our business. We still this year have a lot less travel costs and also costs associated with seeing and meeting our customers than we would hope to have in a normal setting even if a normal setting may not return to what we knew before the pandemic in 2019. So how that all pan up? I think it's too early to say. But you should not see the 25% in isolation as a guidance for '22. We're just saying we don't see it come below.

And the next question comes from the line of Sebastian Bray from Berenberg.

I would have 2, please. The first is on the new Nebraska plant. What is the logic in excluding this from underlying CapEx? Is it possible that there is going to be a second such plant over the period 2025 to 2030? And just to clarify, the 5% plus organic growth target includes any benefits from this type of plant? I'll pause there.

So you can say our long-term target of organic sales growth of 5-plus percent. That includes everything that we generate, including what's coming online also from our new facility in Blair in 2024 or so when the facility has finished or has been completed. So whether or not there will be new investments later on. I think that is too early to say. I mean, hopefully, there will be opportunities to continue to expand in this field. whether or not that will require more capacity, I guess, depends on how successful we are. So more to come. But at this point in time, it's too early to call if that will be needed in the last half of this decade.

[indiscernible] within the scope [indiscernible] CapEx as a percentage of sales?

Well, so you should see that the DKK 2 billion investment that we are making in our new facility here that is sort of, you could say, the entry ticket to start operating in this field of alternative protein solutions. And of course, when you start a new area, there is a start-up investments and in the beginning, that, of course, comes at a relatively low top line. And in this case, also a top line and only starts to generate value when we are approximately 2 to 3 years out. So that's, of course, the nature when you're engaging in a new business area in a new field. And so as we move forward, as we establish ourselves in this field, then obviously, over time, we would see it become more and more part of the core. And therefore, over time, we would also see associated CapEx to be more and more part of the core. But that's not how we see it in this 5-year period, and that's why we call it out as a separate item.

That is helpful. One more topic more generally. If I look at the margins on the press release in my [indiscernible] to imply that the reason this doesn't rise further is due to increased investments in sales and distribution, I'm referring to the 26-plus percent. Is it possible that we end up at, let's say, 28% to 29%, given that Novozymes seems to have underestimated its own margin potential in the past? Or is this mathematically just a case of taking incremental gains and fully reinvesting them into sales and distribution?

So I think you point to a fact which is quite important to stress here today, which is that we will not optimize the short-term margin at the expense of long-term growth. And that's why we call out the 26% or above at the end of '25. It doesn't mean that 26% is the maximum, but it means that this is a commitment we have at the end of the period. We will not predict here today whether or not we will be above or not. I think 26% is our commitment. That's our target. And we -- when we see opportunities to ensure a good platform for future growth, we would also take the liberty to make the investments so that we can keep the growth going. And that's also why we pointed to our ambition to double our sales by 2030. Because we also realize that, of course, that investment and future opportunities come with a commitment to see a return over time. So those 2 numbers fit together. At 26% or above at the end of the period and our ambition to double sales by 2030.

The way that we look at the allocation of our resources, we will do it with the aim of optimizing and prioritizing the growth. That's our main priority: to accelerate growth. And of course, we are responsible on the profitability and on the margins, on affordability, but the main priority when we seek on how we're making the cash allocation and the investment allocation, it's to lead not only to near-term growth, to long-term sustainable growth. And we're not compromising long-term growth at the expenses of short-term maximizing the profitability at the near term. It is not a rule as your hearing that we're going to constantly be investing our earnings into resources. We invest as much as we need to deliver the growth. And that was the logic that Amy was talking about. We have what we need to play to win on those markets. We have the technology. We have the scale up. We need to put the capabilities to be a better partner of our customers, and that means investment. And this is the logic that I would like you to see, but we're very, very diligent on the way that we allocate cash. We are very responsible, but we also do that with a mindset of long-term growth.

And the next question comes from the line of Lars Topholm Hall from Carnegie.

I will also just make 2 questions for now. So the first one is on alternative proteins and you have announced your entry into extraction protein from soybean. You also sent out a press release last week saying you're looking at micro protein. So in that context, I wonder if you can comment on the potential for mycoprotein, but maybe also some other ways to play this market such as cultivated meat, which needs lots of growth [ meter ]. Is that a playing field for you guys? And there's also a cross field between CO2 capture and alternative protein because you can make CO2 by gas fermentation. Is that an area you have decided to look at or not look at? And then my second question goes to the ventures because it seems you will be looking at some of the same start-ups as your main shareholder does. So how do you figure out if you invest or the Novo Foundation invest? And can you acquire promising ventures would be a LanzaTech from the Novo Foundation. How do you handle that situation?

Very, very good, Lars. Thank you very much for the question. And I love the way you're thinking because you already see the line, right? You already see the connection line between what -- the strength of what we have home and then how we interconnect. Product agnostic science is the one who makes the connection and who drives the prioritization. That's exactly the way we're thinking. Then going into the -- I will let Amy build up on the mycoprotein and also Lars and maybe answering first on your question on how we're thinking acquisitions. We're going to continue to use bolt-ons. We're going to continue to use the capability of M&A to bring in home assets, features, innovation, market access that we don't have in home or that it will take us longer and more costly to develop. And for that, I would say that the sky is the limit on where are we that we should be looking for. It's a competitive market, and that's what's going to drive our capability to bring those options home. Amy?

I think specifically looking at the areas we're looking at in proteins. This is -- again, it fits into the venture logic that we were looking at. It's again, looking at sort of where are the different portfolio options where we can assess and develop and also looking to where we can leverage external innovation and that was exactly the innovation call that we launched last week on mycoproteins. How we can tap into, whether it's startups or universities, different areas, which are looking at development in this space given how rapidly the whole space is evolving. So the mycoprotein, again, this in particular, it's in an early venture phase. So we don't have a specific number we would put out there. But again, it's meeting our minimum hurdles of what that potential business model could translate into.

So you're rightfully calling out some very interesting areas, Lars, talking about the CO2, so carbon capture and then combining that with hydrogen to form higher products or even protein, as you said. We think it's still early days. We think that, yes, you will get a cheap electrical energy, which will allow you to produce the hydrogen that you can then use in a catalytic process together with CO2, but we probably more see it as an endeavor further downstream from when you have the solid or the methanol that you can really truly use as a fermentation substrate to really either produce protein or other high-end or higher-value compounds from then on. You had a very specific question on the cultured-rated meats that is also early technology. It is -- you would say, less suited for an Novozymes in terms of the fermentation capabilities as this is a different set of capabilities to run very sort of structured solid-state fermentations. You also alluded to the extraction. You mentioned soy as one, it's actually a broad array of protein sources or plant protein sources that we both can work on the extraction site for yield, but certainly also for the taste and the texture properties, which become incredibly important, not only for soy but including pea or all based plant-based proteins into alternative dairies, into fortified breads or whatever you put it.

Plenty of options. And if anything, you see the need of pea utilization, the need of focus, the need of the venture mindset, the need of allocating resources when we will talk and only when we see the opportunities with the right of becoming a reality. Next question.

Before we take the next question online, sorry for that. Let's take one from online here. So this is from Orlaith O'Connor from GuardCap Asset Management. Could you please talk a bit about the competitive landscape in advanced protein solutions? How that differs from your traditional competitor set?

So I can start there and then maybe, Claus, you can comment a bit as well. I think what we see in this space is an enormous amount of activity, both from bio companies developing in the space, with retail companies developing concepts and looking for partnerships of how they can develop into advanced proteins solutions and then also more established players which have the ability like Novozymes to work across the breadth of the manufacturing channel. I mentioned it earlier, and I think it's really important to recognize the importance of not only the ability to identify, ferment and isolate a specific compound but also the ability to scale and bring these things to market. And I think that's where we're really focused, not only choices of investing in these areas, which is maybe a bit differentiated than many of the other players in the space of where we believe we can develop proteins that have the ability to be scaled and that we can invest behind to commercialize. And, Claus, if you want to add to that?

Yes, It's a very -- it's a space with a lot of innovation happening. And I think you have to take note of what we said with advanced protein. What we are seeking here is high-value functional protein, something that really contributes an extra rather than being the bulk nutrition part of a protein alternative. You will see companies out there that are seeking also the bulk part. Novozymes is really trying to functionalize even as features to plant protein or provide the nutritional aspects of fermented protein in its own right.

[ More than ] trying, right. There's also other parts of our business where we are focusing on the extraction, but that's not alternative protein.

So I think we have time for one more question from the phone lines. Please, operator.

We have a question from the line of Gunther Zechmann from Bernstein.

Just coming back to the pricing, please. Can you just tell us where you've seen a slowdown of erosion? And where you see that going over your strategic period out to 2025? Any reason why pricing shouldn't be flat or up? Where do you feel you are not extracting the value share that you feel entitled to across your business? And then if I can sneak in a second one. It looks like on the R&D side, you've moved away from the slides that you gave every half year with a summary of the mega projects, let's call them. Is this something how you will communicate going forward with the market? How can we best track your progress on commercialization of those potentially large projects place?

I'll let you, Claus, answer the first one. And maybe Tina and Anders, please support me on the price. On a very short answer on your question on price, we do an extraordinary job on when we're setting the price at launch. And when we -- every time we develop a product, when we come with the price at lunch, we do get our fair share of the value that we're bring in. The erosion that we're talking about, it is through the life cycle of the product. And here is where we have a step-up through commercial excellence, through the work then in this last month or year on minimizing and compressing at the typical price erosion that we're saying 1% to 2%. It is true also that there are some segments that we see a higher level of matureness of our portfolio, where we sense -- where we then seeing also exposure on price. And here, where we choose to invest again through innovation, it's on productivity. That's the best way to continue to be close to our customers as the best way to continue to be profitable and continue to be growing with the market. Anders and Tina?

Maybe just building on that, it's right at assays, we have seen historically price decreases of 1% to 2% that has improved with the efforts that we have done on commercial excellence and gradually is improving. I think what we have of an outlook is that we expect that to be able to sustain that improvement that we see right now on the pricing side. And more importantly, maybe short term, we need to take bolder actions right now in the developments that we're seeing, especially on our raw materials because that is impacting our business. And obviously, it also calls for an opportunity. And while I don't think any buyer that at least among our buyers will appreciate that, I do think that they understand that things are changing these years, and the outlook is calling -- is a call for action. So we do believe that there is an opportunity to improve from the 1% to 2%.

And also adding to it in terms of a lot of the benefits we are delivering is value, is yield benefits, and yield benefits becomes more valuable in a high commodity environment. So that's also one of the reasons.

Just a short note on the R&D portfolio and pipeline. So what's really important is that the entire pipeline contributes significantly to growth, of course. You will see in the presentations coming the areas called out of a major innovation thrust, both when it comes to biological detergent, when it comes to VOP, when it comes to plant-based protein extraction, modification. And even when Amy was talking about the alternative proteins as a space for growth, human health, animal health. So we are calling out the areas, but we are not pointing it to specific products or launches upcoming. We will be informing you on that, of course, as we move forward and as we do launch products in the categories.

Thank you. Thanks for the answers. We're moving on to the next session. So this Q&A is over. You have to call in again for the next Q&A session in 45 minutes. I'll leave the word to Tina Fano, who is our Executive Vice President for Agriculture & Industrial Biosolutions. So Tina, please?

Thanks a lot, Tobias. Thank you. Yes. So now over to one of our divisions, the Agriculture and Industrial Biosolutions. And we work across fields, farms and factories and what our customers have in common is that they care about and they focus on producing more food, more feed, more fuels and getting more products out of their operations by having less input costs. And with that, they secure that we -- or they support us getting a better planet as well as a better performance. Our customers in a Novozymes sense is split on 3 different areas. We have Bioenergy, we have grain and technology -- Grain & Tech, and we have Agricultural, Animal Health & Nutrition. And I'll go through all 3 of these. And let us start with looking at Bioenergy, and this is all about clean energy. There is a very strong trend with needs for more and more and more clean energy, and this business is supported by that trend. It is mostly a North American business, as you can see on the chart and we see more and more geographical expansion in the area mostly towards Latin America. In more mature areas, we see our customers wanting to diversify more and more and get more and more different value streams to get value from. So let's start to look at how it is that diversification has happened over the lifeline or for lifetime of that industry. Started roughly 15 years ago. And at that point of time, the focus was on ethanol. That was the product that customers care about. They were even called their waste product for slop because it didn't have any value to them. This has changed to date, where some of the customers, they in fact, almost think they are more feed producer, which is the waste product compared to an ethanol producer. Also, some of our customers, they put a lot of focus and a lot of value on the oil component, which they can get out of this. And that's because they can use it for biodiesel, which I'll come back to later on in the presentation. So this evolution of corn cracking, we expect that's going to continue as we move ahead because this is an industry which evolves. In the future, it might be aviation fuels. It might be maritime fuels or it might be into carbon capture, as Amy has already alluded to. There are many different options. Others might look at using ethanol for more high value-added derivatives or bias of factors. But Novozymes is very, very well positioned in order to support our customers on this journey. We have been at historically because every day, day in and day out, we have people out in their factories, working with our customers to start up new plants, to troubleshoot, to secure their operations, the most optimal for the conditions they have. So that evolution is going to continue, and we are there to support them. But now let's look at even today, I mean 70% of the output for an ethanol producer today is still ethanol. So this is still a major products. So let's look at how that is expected to evolve as we move ahead. So the volume growth in ethanol will grow with low growth CAGR. But the geographical differences are quite significant. In mature markets like the U.S. or Europe, we expect that it's going to be flattish more growth in the beginning and list towards the end of the 5- to 10-year period, we look ahead. And why that? Well, that's because we have electrical vehicles coming in. So the more aggressive estimates indicates in Europe, for example, that 15% to 20% of the fleet in 2030 will be electrical vehicles. So that growth on electrical vehicles will outbalance the increasing transportation need. So that's why we lead to roughly flattish growth in these markets. However, a place like Latin America, we expect significant growth. We have seen that in the former years, and we expect that's going to continue. The growth is coming from capital expansions because there is a significant fuel gap, population growth, GDP growth leads to that they simply need more fuel. And their answer in Brazil is to build more ethanol plants. So that new capacity will help us drive growth. Also, they have strong regulatory frameworks supporting that evolution. I promised to look also back into the biodiesel area, which is another area where -- which is part of this reporting segment. It is an area where there is quite significant volume growth, as you can see on the chart, in the area of sustainable diesel. To date, only 300 million gallons out of the 13 billion gallons is made enzymatically. So there's a huge potential for penetration. The enzymatic solutions we have, they work at the pretreatment of the oils and then they also help in the biodiesel area where they're expanding the use of waste oils so that more and more waste can be turned into something valuable. So to sum up on the bioenergy area. It is an area where we do expect growth and we expect it to contribute to the growth of Novozymes. This is an area which is way broader than just ethanol for gasoline. It is more about corn cracking. So now let's look at the second area, which I promised to talk to on Grain & Tech. So on the area of Grain & Tech, we see this is about getting a lot of productivity, getting improvements in your operation and that is also linked to getting more sustainability into your operations. And we see that need for sustainability going deeper and deeper into the value chains at our customers or into our customers' processes. This goes both for the technical side as well as for the grains and oil side. Also in this area, we have a large footprint of customers in the emerging market, and there was also a solid underlying demand for grains and oils in this area. The way we approach this area is with 2 themes. And the first theme deals with sharpening our commercial approach. Here, there is most value in being close to customers and work closely with them in their operations. They value the productivity improvements. So this is about digitally give them a better -- work with them on creating a better full customer experience. For example, it can be via remote monitoring of their operations and then also secure that we have a lower cost to serve. The second theme we have in this area is that we have selected areas where we see there is a need for innovation-driven growth. That can be in the oil space where we work with our customers on getting more high-value oils out, fish oil, more mega 3 rich oils or it can be in an area of avoiding trans fats in interesterification. As one of the questions was alluding to before, it can also be in the area where we in grain milling support our customers get more valuable protein out of their extractions or in the green chemistry area, it can be where COVID testing kits where we have been selling an enzyme to it, talked about it in some of the conference calls earlier, and we're looking into what other opportunities are there in the field of diagnostics. And last, there is also the plastic degradation, which Amy has alluded to earlier. So in this area of grain and tech, we have 2 approaches starting the commercial approach. And then we have selected a few areas where there is a need for innovation-driven growth. And's that's by, you could say, executing on these priorities that it will support the growth of Novozymes. The last area I'll talk to is Agricultural, Animal Health & Nutrition. And this is an area where it is a huge need for sustainable solutions. I mean we only have this one world, and we meet with increasing population growth to secure that the arable land doesn't expand into the untouched forests. Also, farmers, and that's being a crop production farm or it can be an animal production farm, [indiscernible] under a lot of pressure because they need to get more yield out. It can be more yield in the sense of animal protein or it can be in the sense of having more crops being produced from their fields, and they have less and less tools in order to get to that result. Simply because there's less fertilizers, they can use those less pesticides, those less antibiotics. So that is driven by both regulatory as well as consumer wishes for having more sustainable agriculture. So there is a lot of trends supporting this area and therefore, creates a lot of opportunities for us. But let's start with looking at crop production because in the area of crop production, biological solutions is only a very small part of the whole agriculture inputs. We have a strong position in the area of bio yield, and I'm sure you remember that we were the first company who launched that solution, which was stable and could enhance the yield for farmers. That was supplementing the downstream solutions, which we already have there. We expect to continue that evolution where we expand geographically and add more geographies to our BioYield portfolio and then as well work with more near-to-market solutions. And also, we are adding increased focus on fertilizer replacement, as Amy has already alluded to, as well as the area of biocontrol because this is areas where there a lot of trends supporting these areas. However, all of that is all well and fine if we secure to create a big impact out in the market. And therefore, we have also, over the last years, optimized how we go to market. In this area, we work with partners, depending on geography, depending on crop, and we have here lately also added a direct route to market. Then in the area of animal production. Also here, enzymes and probiotics is only a small part of the full input cost going into the industry. In this area, we have a stronghold position in the area of animal nutrition, and we have just recently launched a new offering. This is ProAct 360, which helps producers get more of their protein to the animals, and therefore, they can utilize less and still get the same amount of product getting out. We have, over the last years, adding more and more focus on the area of animal health. So I'm sure you all remember, we launched Balancius a couple of years back. That has been growing double digit, and we expect that will continue to grow double digit. Also in these areas, we need to get the products out and make a difference out in the market. And here, we work with partners who help drive that forward. These partners differ depending on area, depending on geography and depending on species we work in. So to sum up on the area of agriculture and animal health and nutrition, it is an area where there is a tremendous need in order to secure that we feed the world the most sustainable way. And we have a lot of science-based solutions, which can help tackle these solutions. Sum up and conclude on the full division, agriculture and industrial biosolutions. In this area, we work across farm, fields and factories. And we focus on feeding the world more sustainably. That means that we, with our customers, support them in getting more yield, getting less waste, getting more fuel, getting more products out there. And that's -- and by doing that, we support them in their productivity improvements and better business for them goes hand-in-hand together with sustainability benefits. And that's why all of these 3 areas I've been talking to, bioenergy, grain and tech processing as well as agriculture and animal health and nutrition, they're going to be supporting the growth of Novozymes as we move forward. So with that, I would like to hand over to Anders Lund, who will talk about consumer biosolutions.

Thank you very much, Tina. Now I'll take you into the fascinating world of consumer biosolutions. And our ambition, our focus and our obligation is a big one, it's about improving the quality, the performance, the sustainability, the taste, the texture, the health and the nutrition of everything that most of us consume every day, but also that we buy most of the time in the supermarkets around us. It's a tall order, but it's also a very fascinating world. We have 2 segments in this area. One is Household Care and the other one is Food & Beverages, and I'll review both of them, but I'll start with our Household Care business. And just to take a little bit of a look of what this business is all about. It's still the largest business segment in Novozymes, 35% of our revenues in the company. It's largely a large global laundry business and also a significant automatic dishwash business that's mainly in the developed markets. But also some smaller segments: microbial cleaning, medical cleaning and professional cleaning. I want to spend a little bit of time going back in time. I've been part of this business for quite some years now. And I think there is room to set something straight in terms of our sales performance. It's been disappointing compared to where we had expected it to be. But there are reasons for that. One is pricing where we've had headwinds to the tune of 2% every year in the period that we have here. But in addition to that, in '17, '18 and '19, we had some quite significant down-dosing among our largest customers in Household Care, again, taking away a couple of percentage points in growth every year. Despite of that, we delivered, on average, 2% in the period, driven by innovation, Freshness being one of them, one of the major contributors. But also penetration around the world, especially in the emerging markets. So from that perspective, we have delivered actually good results out of the innovation pipeline, but we've not been able to totally counter some of the headwinds we've had. Turning to the trends in the industry. We are very well aligned to what's happening around us. We see hygienically clean being a very significant driver among consumers and a need in their cleaning products it's been further accentuated with what's happening in the -- with COVID, and we have seen that across the globe everywhere around us. Another major development and trend in this industry is convenience. We've seen the development going from powders to liquids to now unit dose, it also impacts our business, but probably not to the same extent as the last one, which is sustainability. It's truly the biggest driver for our business long term. And I would argue that Novozymes have talked about sustainability for the last 20 years. But finally, people around us are also embracing the concept, not just talking about it, and we see some of our largest customers making really significant strides on this agenda, and we see consumers also wanting technology that can make a difference. So now I'll be going into a few other things I also talked about at the last Capital Markets Day, it's -- I'll start with emerging market being a very significant growth driver for Household Care. And the reason behind we -- our continuous belief is not only what's happening now where we have very strong performance, it's also the fact that this market is just so vast. We talk about volumes, which are 4x the size of those that we see in the developed markets, and we talk about our penetration, which is only 1/6 of what it is in the developed markets. There's a huge opportunity space for the next decades to come in this space when we talk cleaning and laundry detergents. Now I want to talk a little bit about what we have done because we've done quite a few things since 2019 and since we did the last Capital Markets Day. We put much more people on the ground, 50% more than we had before. That's a big driver of the growth that we see. We also opened up new offices, 3 in Southeast Asia and 3 in Africa, again contributing to the growth. It's important to stress that there is no silver bullet for the emerging markets. It is 1 battle, 1 customer at the time, 1 opportunity at the time. And from that perspective, it is about regionalizing our effort and race to being close to the market. And that's what we do with the efforts on the emerging markets in Household Care. Another area that we have discussed at length and in significant detail is what we're doing on Freshness. But before I get to talk about Freshness, I just want to take you a little bit back in time. Novozymes is the company in the world that has opened up every new enzyme segment in the space of cleaning and laundry detergents. It started with proteases in the 60s. We have since then developed a number of different stain removal enzymes. We have added new cleans such as fabric care and whiteness in the period allowing opening up a new dimension of clean, essentially dealing with everything that comes from your body onto your textiles. It's a technology that's unique. And today, there's nothing that actually can deliver what we can. To date, it's being treated with masking technology from perfumes. There's 2 data points I want to highlight for why we remain very excited in the area of freshness. One is when we look to consumers, they say that dealing with odor and dealing with sweat is among some of the largest needs they have, 2/3 of consumers call that out. And then combined with the solutions and their satisfaction with what they see in the market today, which 1/3 of the consumers they claim, they're not satisfied with the solutions, we believe that there is a space. And then when we turn to our technology, the Freshness technologies, then we have, of course, been out asking consumers, what do they think about this? Can they see the difference? And when you wash a product with and one without Freshness, 80% of consumers, they prefer the one that has been washed with Freshness. That's a remarkable result. And at all the years I've been in this category, it's the strongest consumer claim that we have seen in this space. We just launched Pristine, which is our new broad market solution in this space. And the first indications from customers are positive, they clearly see the need. We have more in the pipeline when it comes to broad market solutions in this space, and we have more exclusive technology coming this way. So with that in mind, we remain committed to the DKK 1 billion that we've called out on Freshness and believe that, that's an achievable target within the time frame that we've set out. There's 1 driver I want to highlight, and I talked a little bit at the beginning of this presentation on sustainability. That is if you open up a bottle of detergents and you ask yourself, is this really a sustainable product? The answer is no. It's not. It's not particularly sustainable. And the reason is that most of the ingredients in the product, they're not biodegradable and they're not renewable. Actually, if you think about it, the only technology that is currently being offered in this space that offers both of those 2 dimensions that is enzymes. So whether you talk about surfactants or polymers, builders, perfumes, a lot of them, they are still relying on fossil fuel, and they are often not biodegradable. That's, of course, an enormous opportunity space. And it's only an opportunity space because both consumers and our customers, they are on this journey. So we've taken a look at where is this heading. And we see at least 2 significant steps that's going to happen. One is a relatively sort of midterm, where we're seeing some of our largest customers going out and making commitments to taking all fossil fuel products out of their laundry detergents. That's a major step and a very bold step. And again, we should be really well positioned. They're also saying that they want to reduce the size of the bottles in this same journey. Enzymes are from a weight efficiency, by far, the most important and functional product -- you can put into a product, into laundry detergent. And from that perspective, again, we are really well positioned. I think there is a world beyond what we see now, a world where you will make your products entirely biodegradable and also entirely renewable. But of course, that's a world where we need to rely on other pieces of chemistry. We need to rely on other people in the value chain coming together and driving biodegradable and renewable solutions. That's why we have chosen to partner up with more people in the value chain, not only our customers, but also other ingredient providers in order to help the industry transition towards that world of 100% biological cleaning. The other thing which excites me in this space is the fact that we, in our pipeline, have technologies that actually right now target some of the chemistry that is being used predominantly in areas of polymers where we have technology, and we will be launching technologies that can replace that, and in the area of surfactants where we also have technologies that can replace that. It will never be a one-to-one replacement, but it will be on the right path and on the right journey. So now you may ask yourself, are we doubling down? And are we doing more in household care altogether? No, we're not. And we have made deselections in our pipeline to effectively take out some of the investments that we are doing on incremental innovation, allowing us for doing some of the things I just talked to. But that's actually a big and bold move because we believe that there is a better way to defend ourselves, a way where we optimize, a way where we work closer with customers on application. And in a way where we utilize the power of the strength of our entire portfolio in customer relationships. That's important. I want to conclude on Household Care. There's 3 things to watch out for. Emerging markets continue to be important. Freshness is still high on our agenda. And then mid- and long-term biological detergents is a very significant part of our future. And all of that combined makes us believe that the right place to put our ambition level for Household Care is in the range of 3% to 4% in the strategy period. Now that was Household Care. Now I want to transition to Food & Beverages. And again, just taking a brief look at the business in Food & Beverages. It's 20% of revenues in Novozymes. It's a large food segment where baking is more than half of the business. We have a very long and established business in baking, but it's also a dairy business that we include in this segment. And then there's a big beverage business, which is predominantly our brewing business that is in this space. If we take a look at the sales performance over the last year, as you can see the graph, it's been coming down since '17 and then spiking this year. And the development we saw in '18 and '19 were that we had to take some heat on pricing, some of our very significant Freshness technologies and baking came off patent. And that meant that gradually, prices were coming down that took away quite some of the momentum that we have built in '17. If we look at what happened in '20, then we have a significant business in brewing, and we were severely impacted by the whole lockdowns of concerts and stadiums around the world and the whole social life coming to a stop. So our brewing business as well as the rest of the market took a dip in that. Now we're coming back really, really strong, and it's not only brewing that is sort of annualizing the pain from last year, it's actually every single segment in Food & Beverages and of course, also our Human Health business that are performing really, really well. Now I would argue that we -- as we are in Household Care, we are extremely well aligned to the trends that we see in the food and beverage space. Health and nutrition, we talked about just before, the plant-based revolution we talked about before, and taste and texture remains a very significant driver. I want to take you into a few new things that we are doing in Food & Beverages, while a lot of the things that we currently do remain the same. So 2 new areas that we are sort of really putting more emphasis around. First is on the plant-based agenda. Again, we take a look at what does consumers say about the options they have for plant-based meat and plant-based dairies. And what they complain about for actually making sort of the real transition in this space is taste and texture. And that's something that we can do something about. But the other thing that they want to address is health and nutrition. And if we open up some of these alternative meats, we'll actually realize that some of the components and ingredients are not particularly attractive. And we want to be able to enable consumers to have attractive ingredients in this space. And then finally, there is affordability, which is an issue in order to have the full transition. If you look at our solutions and what we can do, then we have technologies already now that can deal with salt production and umaminous enhancement in alternative meat, sugar reduction in C2 -- in alternative dairy. We have technologies that can deal with delicious taste and texture when it comes to both alternative dairy products and meat. We have extraction technologies that we just talked about before that can extract both soy and pea protein and drive stronger yields in that segment. And when you do some of these investments into our technologies, you can actually eliminate a lot of the numbers and drive clean label claims for your food and beverages. So it's a significant driver. We are probably one of the most significant trends in the world when it comes to food and beverages, and we have something to offer, not only now, but also in the future when we look out to what we have in the pipeline. The other segment is a brand new one. It's a segment where Novozymes take advantage of some of the health benefits and health claims that we have developed in the human health space. We look at significant claims where we have substantial data that indicated our technology, both on enzymes and probiotics can do significant contribution to the health of consumers. And then we combine all of those strong claims with our market access in the space of food and beverages. And here, we are working with some of the largest food companies around the world and marrying these health claims that we have and we have established together with the relationships we have on the other side with food and beverage companies, we believe that there is a significant opportunity space. But this is, of course, a new and emerging one. And it's one where Novozymes, of course, we have to learn how to do this. And that brings me to the customer co-creation centers that Amy also talked about. It's important to understand that when you open up these new segments, it's nascent and it's emerging not only for us, but also for many of our customers. That means that we cannot just send enzyme out into the world or probiotics out into the world and then expect adoption. We need to be able to showcase to consumers -- to our customers, what consumers think about this. And we also need to be able to show how these technologies, they are working in the applications, how they're working on sensory panels and so on. That's why we are investing such significant resources in these customer co-creation centers. So just to conclude, on the segment of Consumer Bio-solutions, emerging markets continue to be key, both in Household Care and in Food & Beverages as we have significant solutions and not the same penetration levels. And then we are on trend when it comes to our technologies on health, nutrition and sustainability, and we believe that we not only have some of the solutions today, we also have a lot in the pipeline that can drive this business to substantial growth. Thank you very much. And with that, I'll pass it on to Claus Fuglsang, our CSO. Claus, please.

So thank you, Anders. It's an absolute pleasure on my part and as a scientist, some will say a passionate scientist, to have been part of the last 30 years of advanced biotech research. To see this research move from -- when you look back was fairly rudimentary understanding of how enzymes and protein function, fairly rudimentary understanding on how to manipulate and work with gene modification. To watch what is happening today in the sense of being able to synthesize entire genes, yes, sometimes entire genomes, being able to map the pathways in there, being able to understand the context in which the enzymes and protein operates and to study that. It's absolutely fascinating what biotechnology can do and we're just getting started. In an innovation-driven company and as Ester so nicely put it, the leading -- the world's leading biotech powerhouse, I want to show you really why this is true and how this is true. Novozymes' successful leadership position in industrial biotech and our right to win in the new areas we're calling out here today is really founded in our ability to stay on the very forefront of biotechnology. Allow me to take you on a short educational journey. Novozymes was the first biotechnology company in our space. You could say we were the first to really embrace synthetic biology as we launched the first GMO-derived enzyme all the way back in 1988 as part of Novo Nordisk at the time. We then moved on to be the first to develop and market protein-engineered enzymes adopted to work in the nonnatural environment. Then moving on in the [ zeros ] to be the early adopters of high-throughput screening system, robotics and bioinformatics, you could say digitalizing our workflows already in the [ zeros ]. Now when you look at us today, being able to move into Big Data, multiomics, the gene editing technologies, taking advantage of cheap DNA sequencing to an extent that we can do metagenomic studies that we apply when we study microorganisms in plants, in animal health and for human probiotics. This is the new biotech reality. This is -- technology is coming together from the IT world, from robotics, from the ability to synthesize read and write, you can say, DNA and then putting on top the biology, forever changing the pace and the ability for early-stage discovery in biotechnology. We expect this fast-paced development to continue. And as DNA synthesis get cheaper and cheaper, the computer-aided design of genes, proteins, enzymes, yes, even entire cells system will benefit. As we look further into the future, the advent of quantum computing, the computer power in that will allow to build digital twins, model entire cells systems and the context they work in to really do the experimentation before taking experiments into the lab. Novozymes will continue to invest, to stay ahead. And we'll keep an open mind as to how we do this, whether we buy, build or borrow our way into new technologies and capabilities needed. You've already seen it exemplified with our recent acquisitions in Human Health, the acquisition of PrecisionBiotics, Microbiome Labs. And here -- earlier this year into the bioinformatics and data science space with Biota, setting us strong on the bioinformatics for probiotics. Another example is the licensing of technology. So licensing yeast technology on which we put on top our knowledge of how to manipulate genomes, genes and build on our enzyme expertise and then adding our understanding of the biofuel space on top to build and achieve a leading position in biofuel yeast. Well, technology alone doesn't cut it. So our claim to be the leading biotech powerhouse is built on these 3 pillars, key pillars. It's linking the application science and understanding through the technology foundation and then further linking it to the ability to scale and manufacture, really creating the end-to-end biotech powerhouse. Let me bring an example. It is our applied science and ability to connect with our customers that really lead us to understand the fundamental problems of poorly tasting, poor texturizing plant-based proteins. To understand that these are peptides solubility, the end amino acids that creates the off flavors that you don't want in a food product. To then design the enzyme solutions that can modify and remove the problem for our customers. It's this ability who have provided us with a leading position in our strongholds, in our core markets like household care, like baking enzymes and bioenergy or biofuels. It's this ability we're now bringing into the new areas of biohealth, nutrition and alternative protein in the form of the customer co-creation center that you just heard Anders and Amy talk about. This ability, together with our world-class bioengineering toolbox and the know-how to scale and produce, this allows us to bring our biotechnology to markets anywhere in the world. This is our competitive advantage. This is what sets us aside from most players in the biotech field. The science is fundamentally the same, whether you apply to enzymes, other proteins or in the understanding and engineering of microbes. It allows us to widen the space we operate in well beyond our current strongholds. We've already seen the examples with the yeast and enzymes, how they play together in biofuels. We've seen that -- we are now seeing it with proteins, with enzymes and probiotics that will complement each other in serving health in crops, in animal health and now in human health as well. In the end, it's about as -- it is about biology. In the end, you will have to produce it by fermentation at the right scale and at the right quality. That is what we do as a biotech powerhouse. Now let's look into how we have set ourselves stronger in R&D. Novozymes is a highly diversified company in the terms of the customers and end markets we serve. It comes, of course, important that we direct the R&D resources where it matters the most for the most impact. It's fair to say that despite a fantastic R&D machinery, which has allowed us 30% of sales from new products launched within 5 years over the last many years, this has not really translated into the top line growth we were seeking. However, we have kept and solidified our leading position and margins in our core markets, but it was evident that something had to change. And in 2019, with better business with biology, we've been reshaping the R&D organization to set up along with our pipeline with a clear ambition to deliver more top line growth from innovation. We refocused the pipeline, removed around 1/3 of the programs, programs with lower contribution to top line, to focus the resources on where it matters for growth on the remainder of the projects with a higher prospect of top line contribution. We streamlined the R&D setup to increase efficiency. So we now leverage scale of 4 global hubs, 1 in Denmark, 2 in the U.S. and 1 in China, while we maintain a few smaller specialized sites. This allowed us to invest more in market presence. You just heard Anders talking about more resources in sales in emerging markets. But it also allowed us to connect with our customers through technical service centers like our formulation center for Household Care in India. We've directed around 80% of R&D spend towards production -- product development, and we spent 20% on technology and optimization. Here, we are seeing huge benefits of the technology advances and the advances of data science. Today, many of the leads that we are seeing for optimization is generated through data analytics. And can then be handled with less resources when it comes to construction of our production streams. This is taking advantage of efficiencies generated on technology. This is how we've maintained a promise of continuing the operational efficiencies in R&D and in our facilities. Of the R&D spend in the pipeline, around 70% have been directed towards more programs with higher growth opportunities, so seeking growth markets. Of course, doing so need to be aligned really with the market pool. Hence, a significant focus in our innovation to have early customer validation and thereby into the opportunities we present to them. It keeps the right priorities, and it keeps a sound level of risk in our pipeline. Likewise, an important element of derisking activities will be -- and to sort of leap forward in innovation would be targeted mergers and acquisition activities. So let's talk a bit about what brings customer -- on how we bring customer centricity into our innovation. I believe the linear approach and thinking around innovation is not fit for purpose in a fast-moving world. We need a more constant continuous learning together with our customers. This customer intimacy and customer-centric mindset is what we are really pushing into our innovation activities. It's with the closes of applied science, customer co-creation centers, along with a continuous and iterative validation or value proposition together with our customers and the design of solutions. So going from, you could say, a very sort of linear stage gate technology push to having these iterative learning loops with our customers. We want to ensure this also in the early stages of the pipeline. This has already allowed for more agility and solution design and a speedier process with higher attrition. We're stopping activities early when there's not sufficient value of buying. In our case, we've been able to repurpose a solution, fitting it for the customer need instead of running a 2-year discovery program. So it's all about accuracy and the value propositions, hitting the needs in the market, customer pull over tech push, all about cadence and speed, bringing solution rather than technology perfection, creating efficiencies. Hence, we create a more robust pipeline, increase our likelihood that our innovation will be met with commercial success and contribute significantly to Novozymes' top line growth. Also here, we are taking the lead as an innovation company. But clearly, not all customers and end markets are the same. They also don't have the same appetite for paying for the new innovation. This is why we need to leverage different innovation models with a market-fit approach. There are certainly markets where there's a demand and a willingness to pay for the very radical and transformative innovation. Consider nitrogen fixation for corn and wheat. Consider health solutions preventive of lifestyle diseases or consider tasty plant protein as a true alternative to meat. In other markets, we create value to our customers by leveraging existing technologies and applying these in new adjacencies. Like when we're buying our fiber solutions for biofuels into the grain milling space in the terms of the frontier product line. Then again, other customers are really looking to have solutions adapt to fit their need. It may simply be extension of blends, it maybe formulation compatibility with their formats. So really what we can base on existing technologies. We call that near-to-market solutions. The new baking enzyme format that we just launched, Novogene, we call it, a good example here of. The different innovation models really allow for a very different complexity in our pipeline and again provides a balance risk reward. It allows us to leverage our science and technology base across our business areas. You've heard Amy, Anders and Tina all exemplify key areas of innovation important for Novozymes businesses. And you now heard me talk about our leading biotech platform. Allow me to finish off by talking to the key value drivers under which we operate the pipeline. These drivers ultimately define Novozymes who we are as an enabler of a more sustainable future for people, for companies and societies and it allows us to achieve our ambition. You will find the majority of our innovation programs to deliver in these 3 key areas: sustainability and chemical replacement. Good examples, you just heard Anders talk about activities in biodetergents to remove or reduce polymers or surfactants. But you also heard him talk about the compaction where enzyme can play a role. Superior performance and customer value, very much exemplified with our recent launches this year on yeast and fiber enzymes and biofuel, but certainly also the earlier ProAct 360 launch in the animal nutrition space. Lastly, the benefits to health and nutrition. These are obvious outcomes of activities in human health and animal health, exemplified by the recent launches of SmartGuard and Alflorex Immune in the Human Health space and Balancius that Tina talked about in Animal Health. Programs also fall in the intersection, of course, of these customer value pools. And obvious examples are the tasty plant protein that will benefit not only health, but certainly also sustainability. All in all, creating a platform for growing Novozymes business sustainably. So as we bring our biotechnology powerhouse into play, I believe in our competitive advantage to keep our lead in enzymes while we exercise our ability and right to win and expand in advanced microbes and advanced proteins. We have the science, we have the technology, and we have the scale to do so. We shaped our R&D for efficiency and the pipeline to support better translation of innovation into growth. We have a clear vision and ambition to bring market-fit innovation and value propositions to really serve our customers and society, allowing Novozymes to achieve our ambition of doubling growth by 2030. So now over to Ester for wrap-up. Ester, please.

Thank you. Thank you, Claus. By now, you heard about many of our members of our leadership team on the trajectory, on the journey for Novozymes to unlock its growth potential, to unlock the power of our biotech house. And I hope that you feel a new sense through all our individual updates, not only the pride, not only the passion. I hope you felt the trust on our commitment to growth, on our ambition to double our sales sustainably, on our commitment to enable a healthier planet through our solutions. And with that, I will leave it to Tobias for hosting and leading the second round of the Q&A session. Thank you very much. Tobias?

Thank you, Ester, and hello again. We have a 30-minute Q&A session now starting, and we will start with a question from the telephone lines. So operator, please.

[Operator Instructions] We have a question from the line of Søren Samsøe from SEB. Okay. We'll try the next line from Nicola Tang from Exane BNP Paribas.

The first one on Ag & Feed. It's the one division within industrial biosolutions, where you see above average organic growth in your forecast period. If I look back at the past 5 years, I think organic growth has been flat on average, which suggests that you underperformed both in your key markets in ag and animal or that you significantly underperformed in one and that offset the other. So can you just help us understand the dynamics looking back? And then also looking forward, do you expect to grow in line or ahead of your relevant markets? And then the second one was on Household Care. I'm just curious to understand why you don't see a larger step up in organic growth going forward, despite those 3 drivers you're talking about, Anders? And Again, if I look back in the past 5 years, you've had very low single-digit growth, but you talked about pricing erosion and the down trading headwinds being about 2%-ish each, I think. And your earlier comments suggested maybe that the price erosion should be lower going forward. So, yes, perhaps you could just talk a little bit about that 3% to 4% assumption.

Very good. Thank you, Nicola. Thank you very much for the questions. And Tina, if you can take why? What's the difference before and after on Act, and Anders build up on the Household Care question.

So on agriculture, animal health & nutrition, the change which we have made is on both. We have a number of significant innovations getting out and being meaningful out in the market. Then we have adapted our go-to-market models mostly in the in the area of especially agriculture, so crop production. And then in the more longer term, we also have a number of good innovations, which will come out later. But in the next 5 years period, it is a lot about the innovations, which we already, you could say, have launched or are launching or will launch soon, and then the go-to-market model, Nicola. And then over to Anders.

Yes. Thanks for the question, and thanks for the optimism on Household Care. There are days I also share that and where I can see that we can go higher. I think we have to accept that we come from a world where we have been lower than what we guide right now. So this is a step in the right direction. Again, we call out segments that we believe and have the firm belief that will grow, emerging markets being one, freshness being another. And then we start to see the emergence of biological detergents making a difference. If everything plays out and if we see the little competition, a little headwind on down-dosing, if we see these things tick up, of course, there is a path forward for higher growth rates. But we believe that 3% to 4% is the right level to put us also thinking about where we've been in the last years.

May I ask a quick follow-up for biological for Household Care? You talked about how actually you see development across other ingredients as well as enzymes collaborating with partners. I was wondering whether you assume much contribution in your 2025 period? Or is that longer term? And do you think that some of those big ambitions sort of move fossil fuels by some of your big customers, is it actually possible from a technical perspective and commercial, I suppose, prospective?

That's an excellent question. And actually, it's a very good question because it is possible today. Technically, we could do what we ask or what we have as an ambition. We have solutions. The problem is cost. So today, the solutions on the bioalternative, whether it be surfactants, polymers, perfumes and so on, if you combine the total package, it's simply just too expensive. But when we look at the contribution from biological detergents then I think the way to look at it is that the more solid contribution will be emerging market and Freshness. And as we get further out into the plan towards '25, maybe we'll start to see contributions on this agenda. But the reason why we call it out now is it's part of our pipeline focus. And secondly, because there is a future after '25, and we want to make sure that we sit in the right seat when that opens up.

Thank you, Anders. I will -- and thank you, Nicola, for the question. I will take 2 questions now from online. The first one is for Morten. Morten as responsible for people, sustainability and brand, could you share some thoughts on how actively you can -- how you leverage ESG metrics in the dialogue with customers? How do you work with that? And how do you monetize on it?

First of all, thank you for the question. And secondly, yes, we do see an increased focus from our customers on sustainability, as also Anders spoke to in his presentation. As a part of our sustainability effort, we really use our profound deep knowledge to create value for our customers' business, but also as a differentiator against competition. And we do this through sharing transparently our ESG performance, but also our carbon footprint for our products. In that way, we create value both for Novozymes and for our customers. But maybe Anders could put a bit more flavor to...

Yes. Thanks. The way I look at it is that ESG targets and the sustainability agenda is, to a large extent, becoming table stakes, you might even say a license to operate in many cases. Our customers are very interested in what we do and how we measure as a company, I think we are seen and continue to be seen as a sustainability leader, not only because of the actions we take, but also because of the technology offering we have. And customers, of course, look towards us for delivering meaningful biological alternatives through some of the pains that they have. And in that, they actually see that there is a sustainability improvement on their business. And that's why I think we have talked sustainability for more than 20 years and why we are so excited about this because it's so inherent in what we do and what we are as a company.

Thank you, Anders. Thank you, Morten. The next question is from Jeff Zekauskas at JPMorgan. And it sounds like this: which are the areas of business that you wish to structurally deemphasize? How large is the sales pace of these areas that you wish to deemphasize?

Thank you very much for the question. And Lars, if you could also support it with the sizing. What is important to mention here is that there is an opportunity for growth and where we see an increasing demand of our products for the value that they bring in, either by enabling higher yield and higher productivity. Also by clearly answering pressing needs such as how to fulfill the nutrition in a different way and how to bring to solutions more sustainably. Then it is also true, and Anders alluded on that, Tina also alluded on that we see a portfolio of our solutions that they're getting mature and where we're seeing an aggressive presence from competition, and where we're here to investing on the productivity to keep protecting the margins and to keep staying with our customers. And maybe an area to put it in emphasis on where we're seeing that it will be, for example, in the textile area where we see a strong or higher level of aggressiveness from competition. And then here, we play and we -- the way that we reach our customers and the way we optimize this, how we approach the segments, how we use digitalization, how we go, and we continue to be competitive and again, with a stronghold of productivity that keeps us as the right partner of growth. Lars?

Yes. And about the size, it's actually a little difficult to say exactly what is the size of the business that's affected. Because in many ways, you could say it cuts across most of our business areas. Because there are areas of each area -- there are products in each area, which is more mature than others. So I have -- I think you have to think about it in a way that across our businesses, we are making sure that we allocate our resources where they matter the most. And for instance, marginal innovation, which has happened in many different business areas. That is not going to happen to the same extent as we did before. We are instead looking to work with our customers to find out what matters most to them. Is it a digital solution? Is it a way that we can secure a strong supply chain? Is it other means that actually allows us to provide better value and better service for our customers? So there is not sort of a single number that describe that. But I think it's fair to say that across the entire company, we are being much more conscious on where we allocate the resources and making sure that they go to where we see the biggest growth opportunities.

Thank you, Lars. Next question, let's take it from the telephone lines. So please, operator.

Our next question is from Lars Topholm from Carnegie.

Two questions really. So I mean I've covered you for 21 years. There have been many Capital Market Days with a lot of promises and a lot of excitement. And you are good at talking about those who are less good at talking about what doesn't work. So I'm really sorry, Anders, this is going to be a new. But in 2017, Household Care had revenue of DKK 4.7 billion, and given your guidance, it's not going to be much bigger than DKK 5.7 billion by 2025. And if the Freshness platform contains potential for DKK 1 billion and you're growing emerging markets, I think it's pretty clear that there are markets where you don't grow. So I wonder if you can put some words on where exactly do you not grow because it's a market where detergents still grow. And since you guide for 3%, 4% growth from Household Care, what is it that makes you doubt you'll be able to change that? And then I guess a more friendly question for you, Tina. So on biodiesel, I just wonder if you can explain what proportion of revenue it is for bioenergy? And maybe also put some words on the competition because you explained that the enzymatic pathway is a quite small proportion of this market. What is the bigger part and why is enzymes such a small part? And why would it change?

Thank you, Lars, for the 21 years, and thank you for the very good questions. Before I pass it to Tina and Anders to answer your questions, I would like you to hear from us that we cannot change the past. We're not here about changing the past, it's about setting the foundation of the future. And to do that with transparency and to do that diligently and to do that one step after the other. This is what you have seen from this team since at least in the last couple of years. This is also how I started my presentation. And I only wish we could go fast forward 5 years from now and then hear, will hear a different question from but I'll wait until we prove you that that's the space that we're going. Anders, Tina?

Yes. Thanks. So now one more optimistic, one a little bit more pessimistic. And I'll give you some flavor to where we see less growth going forward. The developed markets clearly is not a segment where we expect a lot of growth outside of the innovation that we bring. And maybe even in some segments in the developed markets, we probably see contraction because of the commoditization that's happening. We have some very significant segments which are large and where we're seeing competition they are. They want a big part of what we have today. We take stock in that. And then, of course, as we said, we want to defend that. We want to do it primarily through optimization, so we can sort of remain competitive, but we don't expect that to grow very significantly. And that leads, in some cases, to price pressure that will take some of the growth out of Household Care. But I try to give you at least the reasons why I still believe that there is a path towards the 3% to 4% and why we are committed to that and believe that's the right outlook. Again, it is emerging markets that right now is delivering solid growth. We expect that to continue. It's fair to say it will not be a straight line. There will be sort of swings. We've seen that historically. And then is, of course, Freshness that where we still see a path towards the DKK 1 billion. And when you factor all of those negatives and positives, again, we believe that the best place to be and the most realistic pace to be is in the range of 3% to 4% for Household.

And Anders as a follow up, so what you are seeing in developed markets, is that sort of a playbook of how emerging markets are going to look 5 or 10 years down the road?

I actually want to -- absolutely not. And the reason why that's not the case, that is that if you look at our penetration levels in emerging markets, it's to a very large extent, only with 1 or 2 enzyme classes. And in the developed markets, many, many products especially in Europe, but also high-end products in North America and in Japan, they consist of many, many different enzymes. So from that perspective, our runway of just exploiting what we have in the emerging market is very, very significant. And it comes back to the 4x volumes, 1/6 penetration. That space is huge, and you can even factor in some commoditization, and it will still be huge for Novozymes.

And then on the area of biodiesel. So today, biodiesel is roughly 5% of the bioenergy segment, Lars. And then in terms of competition and how that is evolving, so you can use what is called crude oils, that is not a crude fossil oil but crude vegetable oils or you can use waste oils. And as of today, we have our activities in the area of pretreatment, and that can be no matter whether it's crude or no matter what kind of oil it is. And then in the conversion, and that's mostly in the area of waste oils. So in terms of why it's not more, I also have to say that if you look at the plans for expansion, there is a number of areas for expansion, in both the areas where you do use crude oils and do a more cracking process, which is more the typical, you could say, oil-derived process. Or in the more less CapEx-intensive, more less temperature process where enzymes are used. So it's more a matter of how it is that -- how much CapEx do you want to spend. And then how much -- how access do you have to, for example, waste oils? So it's an area where there is, you could say, relatively low penetration. It's an area where we have seen very strong growth in the last couple of years. And it's an area where we expect more growth to come from. And that's going to be a mix of both, you could say, the areas where enzymatic is being used, is getting more and more -- gaining a larger share and then as well from the underlying growing volume. Does that answer your question?

Yes. But if this is 5% of sales today, it is realistic that biodiesel will add 1 percentage points of growth to bioenergy in the next couple of years?

So I've not said that it will add 1% to growth in the next couple of years. What I've talked to is that in the area of bioenergy, it will grow below company average. And I have said that there's the growth drivers on the underlying demand from more clean energy, which is biodiesel and to a low extent, as you saw with the low CAGR growth, in ethanol volumes and then it's from Latin America and diversification. So not -- I have not quantified that it's going to be 1% moving forward.

Thank you, Lars. Let's take another one from the telephone lines.

We have the question from Søren Samsøe from SEB.

Yes. It's Søren from SEB. I've covered this company for quite a number of years as well. And I do remember when return on invested capital was somewhat higher than today, I think I recall it was high 20s. And last year was 19%, 20%, and now you're guiding for a similar level in 2025. So I was just wondering, is this a sign that your industry has become more competitive? Or do you see it more as a temporary development and we could expect it to come back up when we get a few more years down the road?

Thank you, Søren, for your question. Lars, would you answer, please?

Yes. So I think high 20s, I think, is probably -- that's probably too high also in the history. But you are right, as I also showed in my slide that we were above 20% in the last few years. But again, remember also, why were we above 20%? That was because we had this deferred income on our balance sheet that reduced net working capital, and therefore, improved our return on the invested capital in the period. And so I think just keep that in mind when you compare from where we are now. 20% is still a very attractive level. And what we are doing is to increase the long-term growth. When we start building a facility in Blair for alternative proteins, that will, of course, put CapEx and investments on our balance sheet. But we have also guided that within the foreseeable future, we're actually seeing that facility being accretive to our ROIC. So when we invest in new opportunities, there will be a period of time when we start up, when we invest before we start to see the return on that growth. And likewise, when we start using M&A as a tool to accelerate our strategic journey, there will also be a period of time where the invested capital will be higher until we start to see the return from the growth that we're generating. So therefore, you can say that we are making decisions that will accelerate growth in the long term, and we believe this is what will generate the highest return for our shareholder as the priority #1. And we would have to pay a bit of a price as we invest in different opportunities on the return on invested capital. But in each individual case, we have a long-term favorable return on that investment. And that's what we're looking to do every time we make a decision and make a choice.

Thank you, Lars.

Thank you, Søren. I'll take 1 question from online here before we move to the telephone lines again. This goes to Graziela. Graziela, it's about capacity. It says, do you have enough capacity to cater for 5% or more organic growth and your 2030 ambition? Also if you include the Advanced Protein Solutions investment?

Definitely. Thank you. So as mentioned by Lars, we are targeting it having 10% CapEx-to-sales ratio until 2025, covering our strategy period. And on top of it, we also have the DKK 2 billion facility we have recently announced and we are, as we talk building in our Blair facility in Nebraska U.S. to cover the production of Advanced Protein Solutions. So not all the 10% is actually for capacity expansions. We are also investing on the customer co-creation centers. But within the allocation for the expansions, I feel very confident that we are going to be able to have timely and high-quality and safe capacity to cover for the growth areas. But it's not only about CapEx investments. We have a very strong track record on productivity. And that has been for years, and it is across scale-up, production and supply chain. And we count on very, very important capabilities and broad biotech toolbox that we use. And that being for high-yielding products coming from our fantastic R&D that Claus talked about. But also a very strong technology foundation also including some very important process efficiencies or process development with great people to achieve that. So all in all, if we take the productivity gains plus the investments we are allocating, I'm very confident again that we are going to liberate the capacity needed for the future across our existing global footprint, but also expanding ensuring that we are going to fulfill the growth needed on our ambitions and targets.

Thank you, Graziela. Let's take a question from the phone lines again. So operator, please?

We have a question again from Charles Eden from UBS.

My question is probably to Anders and it's just a quick one. Just on the Freshness program within Household. Can you remind us where we are sort of sales-wise versus that target where we are today? Or maybe if you're not going to quantify where we are, just quantitatively where we are in terms of contracts signed outside of the exclusivity with the customer that you've previously allowed that exclusivity to that would be helpful?

Yes. So thanks for the question. On Freshness, when we look at the sales, as we also said, we have 1 customer that's buying a solution for both our powder and the liquid solutions. It's been launched in a lot of the emerging markets in Europe, and that's where we are sales-wise. When it comes to sort of forward-looking expectations, of course, the fact that we're launching a broad market solution now, brings to that excitement and the plan towards the DKK 1 billion. And then we have also committed deals exclusively both with that customer that we developed this with and also with more exclusive partnerships where we have a solid plan for that contributing to the top line growth. But I'll not give you sort of rough indications or numbers for where we are right now on the journey. We are essentially where we plan to be also when we launched the whole initiative some years back.

Thank you, Charles. I will allow myself to take another question from online. This one comes from Riya Kotecha, Bank of America. The explorer areas, there are already firms making inroads into both biological fertilizer alternatives and PT recycling using microbe enzymes. So should we see this as an area where you are likely to do M&A? Or do you see value in creating your own solutions internally?

I'll take it and then ask Amy to build on it. The answer is both. And the answer is the best one. We will choose the one that drives and accelerates growth for Novozymes in the most effective way. And also, it's important to put it in perspective, when we look at the ambition of growth on 2030 that that's going to come majority from organic growth also M&A and toolbox, but mainly from the expand on the both areas. We're going to start collecting some of the fruits as much as we can from the explorer areas, but that's not part of the ambition of doubling sales. That's setting the foundation of a long, long term, right, to continue to grow. Amy?

Maybe just the only thing I'd add to that, Ester, is just also when we think not just about the business scaling of maybe using inorganic routes to grow businesses, but also how we do innovation. We're also looking at partnerships. We're looking at using external innovation, working throughout the network in order to accelerate some of those venture areas. So fully recognized, we don't have to reinvent the wheel. But I think both looking to what is the best way to commercialize these opportunities both through an R&D and development and scouting phase, but also, as Ester referred to, potentially through an actual business scaling phase if we prove the proof of concept.

Thank you. Another question comes from Sam Perry from Crédit Suisse. Thank you for the presentation. Can you please explain what the recent acquisitions bring to Novozymes as they seem to be dilutive to margins and are also not increasing growth versus prior expectations? You still keep midterm growth that remains at 5%-plus. So what does recent acquisitions bring to Novozymes?

Thank you, Sam Perry, for the question. And I will ask you to build on what the recent acquisitions have brought us in Novozymes. At a very, very, very high level, they enable us to move faster into human health. And to own the right of be first bring innovation, but also get access to a market, to a space, that if we would have to build those capabilities ourselves, it would have taken much longer. And then they have -- they are delivering, double-digit sales growth, and they are providing very profitable margins. But Lars, do you want to build on that, please?

Yes, I can do that. So you can say that when we acquired those 2 companies, we were expecting them to be earnings per share accretive by 2022, both of them, and that's still how we look at it. As Ester said, we are also looking for organic growth contribution from the 2 acquisitions, and we are expecting them to deliver double-digit growth here in 2021. Now obviously, from a relatively low base and therefore, not yet visible on the total growth rate of Novozymes. So the companies we acquired, they are actually very profitable and have attractive margins in their own right. But as I also spoke to before, when we acquired, obviously, we have to pay a price to the former owners, and therefore, have to amortize intangible assets over a period of time. And therefore, during that period of time, they will be dilutive on our margins. But in the long term, with these assets, we are creating the platform for future growth. And we will, over time, amortize the assets that we acquired. And therefore, also in the long term, we also see them as being accretive not only on earnings per share, but also on our margins. So we see it as an acceleration of our strategic journey. We see it as a long-term contributor to growth at attractive margins and that profile we like.

Claus, why don't you just touch that?

Sure. So if you consider the first acquisition of PrecisionBiotics, they really have the leading technology in a very large space in human health called IBS, so irritated bowel syndrome. They had the -- or have the, you could say, qualified in terms of clinical evidence in this space in some countries in Europe, even getting medical device status. So this is really fitting for an approach that we are taking into this human health space. We call it a 1 in a trillion, we do want to find the real -- really address consumer pain points with validated scientific claims. The Microbiome Labs then adds to this in terms of a sales channel, the direct sales channel to health care practitioners. And adds on top a very large pipeline of other types of probiotics small-form based. So all, you could say, adding both to the innovation part of it and certainly also to the sales channel and market access part of it. Then the last one I just mentioned was the Biota acquisition, and that's a technology acquisition. That is to gain the bioinformatics and data science structure to ingest all of this information that you get from meta-genome sequencing. And that allows us to design the trials that we need in order to move this innovation forward to actually identify the targets for new solutions in the human probiotics space.

Thank you, Claus. Let's round off with the final question here from Sebastian Bray from Berenberg. The question goes, is bioethanol demand really just going to remain a function of transport fuel? Can't it be used to make ethylene or oxide as an input feedstock for surfactants and polymers to replace petrochemicals? Does Novozymes think that this will be a growth driver looking forward?

And I can answer it super short, yes. So yes, we do also -- ethanol can also be used for high value-added derivatives, including biosurfactants. This is one of the areas in diversification, which our customer is expected to move into, not the only, but one of them. And given our closeness to the customers, we are very well positioned to support them on that journey. So very well put, yes, it's true. We see that as well.

Thank you, Tina. With this, the Q&A session has come to an end. So thank you from me, and I'll leave the word to Ester for some final remarks from today.

Thank you, Tobias, and thank you all for joining us on the session. Thank you for your questions. Thank you for the dialogue, and please just be with us and see the results of the growth of the seeds of the foundation we're setting to unlock growth at Novozymes, to unlock the power of biotech and to deliver on the strong ambitions that we're setting today here at the table. Thank you.