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

So it is now 4 p.m., and we are ready to start this year's Annual General Meeting. So welcome to Novozymes 2022 Annual Shareholders Meeting. The Board of Directors is thrilled to be able to host you here at the [ Komarov ] Sports Arena after more than 2 years of many virtual events. We look forward to spending the afternoon with you and will join us for some refreshments and an individual snack box, when the meeting concludes. It's a pleasure for me to talk to you today and present the great work and progress we made in 2021 on our path to finding biological answers for better lives in a growing world with more and more people. I also look forward to presenting where Novozymes is headed in the coming year and how we plan to increase the positive impact of our work towards a healthier planet at -- all while creating strong, stable growth and an attractive return to our investors. So I am Jorgen Rasmussen. I'm Chairman of the Board of Novozymes, and the other members of the Board are ], he's the Vice Chair. We have [indiscernible], Sharon James, Kasim Kutay, Kim Stratton and Mathias Olen. So here we are, at 7 members inducted by the AGM. As announced in December, Mathias Olen will not see reelection here at this AGM to replace him. The Board proposes to elect Morten as a new member of the Board. With a PhD in Biophysics from Harvard University and more than 10 years' experience in the biotechnology research and as a professor at the Technical University of Denmark, Morten brings extensive knowledge in the areas about technology, the human microbiome pipeline management and [ intellectual ] property rights. Morten also has strong business acumen as a cofounder of several biotech businesses. I'll come back to all of that, when we come to the election of board members a little bit later. And then we have the employee representatives. They were [ elated ] on the on the 2nd of February, 2021 for a full-year term. 3 of them were newly elected. Here, we have them ] Anders Hentze Knudsen, he is the Senior Operator; Preben Nielsen, he is the Manager; and Jens Obro, he is the Senior Quality Professional. So these are the 4 employee representatives on the Board. And here, we have the full Board of Directors. We have in the following, registered members of the executive leadership team, Ester Baiget, President and CEO; and Lars Green, he is the CFO. They are registered with the Danish Business Authority. Ester will talk to you a bit later about the business strategy and the review in global science. So in addition to that, the other Executive Vice President are Amy Byrick. She is the Executive Vice President for Strategy and Business Transformation. We have Tina Fanoe, Executive Vice President Agriculture and Industrial Biosolutions, we have Claus Fuglsang as Executive Vice President for Research and Development. Then we have Anders Lund, Executive Vice President for Consumer Biosolutions. We have Graziela Malucelli, Executive Vice President Operations, Supply and Quality; and finally, Morten Rasmussen, Executive Vice President for People, Sustainability and Brand. So in April 2021, we welcomed two of the Executive Vice Presidents. We welcomed two, and that was Amy Byrick and Morten Rasmussen that we welcome to the executive leadership team. They both contributed a lot and a good match to the executive leadership team. We look forward to seeing what this team can do together, going forward. The company's auditor is PwC. And in pursuant of Article 8-1 of the company's Articles of Association, the Board of Directors has once again appointed Niels Kornerup, Attorney of Law [ of Affairs ] the Annual Shareholders' Meeting. Over to you, Niels Kornerup.

Thank you very much for appointing each of today's meeting of Novozymes. I look forward to a good and smooth process and a good discussion. Our first job is to make sure that the meeting has been legally and lawfully convened. Pursuant to Article 75 of the Articles of Association, notice convening the meeting to be published on the company's website, not more than 5 weeks and not less than 3 weeks before the meeting. And this was done on the 11th of February 2022. And on that same date, the meeting notes were sent directly to shareholders, which by name who had asked for such meeting notice to be sent to them, and with links to forms for registration, proxies and postal votes. Agenda for proposals and the audited annual report have also been available for shareholders on the company's website since February 11. And I, therefore, find that the meeting has been lawfully and legally convened and in compliance with the company's articles of association, and therefore, it is legally competent to the business on the agenda. With your agreement, I confirm this and will record it in the minutes. So I would also point out that the entire meeting will be broadcast live via webcast on Novozymes' website. So it's possible to follow proceedings or revisit them at a later date. I can explain that just before we started the meeting, it was found that [ 85.46% ] of the votes are represented at the meeting after deduction of treasury shares. And if we look at the share capital, it is 60% of the share capital that is represented on the total share capital, also after deduction of treasury shares. The Board of Directors has received proxies and postal votes, corresponding to 99% of the votes of [ attendants ], and there is already good support to the proposals contained in the agenda. Adoption of Item 10A, 10B, 10E and 10F require the support -- no, sorry, require that shareholders with at least 2/3 of the total number of votes in the companies to be represented at the meeting. And that's the case, as I just stated. However, at least 2/3 of both votes cast and the share capital carrying voting rights represented at the meeting, have to be in favor of the proposal. And I would refer you to Article 9-2 of the Articles of Association, if you wish to see the details of all this. Approvals, adoptions and elections are otherwise by simple majority. Also, as mentioned at previous annual shareholder meetings, I have referred to the provision section 101 5 of the Danish Companies Act, which requires a full account of voting to be provided for each resolution at the meeting, even if the outcome of the voting is reasonably clear. I suggest that we follow the same procedure as in previous years, that we don't ask for a complete account. I hope that with your agreement, I can confirm that we will proceed as in previous years, and therefore, this ends with the need to provide a full account of the voting results. Any shareholders wishing to speak on the items of the agenda, should address the -- approach me. You can then show me your access card, whether it is in hard copy or on your mobile phone, to please come up to the rostrum to speak from up here. We have some chairs reserved for people having us for the floor up here, so please come up here well in time before your turn has come. And in that way, we can have a more smooth process. Here, we have the agenda item 1, report of the Board of Directors; two, presentation and approval of the audited annual report; three, resolution on the distribution of profit in accordance with the approved annual report; four, approval of the remuneration report and also a vote that is only a guidance approval of remuneration of the Board of Directors for 2022; number five, six; election of Chair, seven; election of Vice Chair, eight; election of other Board members, 9; election of auditor. And then we have reached item 10, which includes proposals from the Board of Directors. And there are 7 of them this year; renewal of authorization to the Board of Directors to implement capital increases; b, share capital reduction; c, renewal of our authorization to acquire treasury shares; d, authorization to the Board for distribution of the extraordinary dividends; e, removal of the age limitation for Board members contained in the Articles of Association; f, removal of Article 4-2 in the Article of Association. It has to do with the shareholders register; and g, authorization to the Chairman of the meeting. We can now embark on the business to be transacted today. As always, we deal with items 1, 2, 3 and 4 together. And with these words, I will now hand over first to the Chairman of the Board, [ Jorgen Rasmussen ]. And then we will also hear the CEO, Ester Baiget, who will report on the financial results for 2021 and the outlook for 2022. And then this year, we will complete the report. We are looking at [ remuneration ] and corporate governance conditions. So Mr. Chairman, you have the floor.

Even so before we get into the great things that are happening at Novozymes, I'd like to and reflect on the war in Ukraine. Citizens in Ukraine have our deepest empathy. It's a human strategy that's unfolding right now. Naturally, we hope to see this will end as soon as possible. The war raises many concerns, humanitarian, geopolitical. And for Novozymes, it raises the question of how we can help and who we can help, how we [ can help ] the best. Through the Novo Nordisk Foundation, Novozymes has contributed to donation, totaling DKK 55 million, to emergency relief efforts in response to the war. Novozymes will donate an additional DKK 1 million to support refugees coming to Denmark. the colleagues here at Novozymes have also expressed a strong desire to help. We have a program called Inspire, one of our long-term initiatives, and employees are being mobilized globally to help via Inspire to brainstorm, plan and act on ways that can further support refugees from Ukraine. The war has also led to serious disruptions in the supply chains and trading conditions. Under these conditions of war, Novozymes will not sell or ship to these two countries, Russia and Belarus. We must never take peace for granted. It's only during times of peace that people and societies can thrive. So here's this said background. I hope -- I'll now turn to Novozymes and our biotech business. This past year, the world was, again, greatly impacted by the COVID pandemic. In addition, businesses and global [ trade ] were impacted by supply chain disruptions and increasing raw material and energy cost. Novozymes has done very well during these tricky conditions. We made great strides in showing the endless potential of the [indiscernible] holds in creating better lives in a world with more and more people. Novozymes has delivered very strong financial and nonfinancial results. We finished 2021 with 6% organic growth. That was at the other end of our full-year guidance and [indiscernible]. We also delivered strong earnings with an EBIT margin of 26.8%, and we are well on track to reach 12 out of 13 net nonfinancial targets here in 2022. We launched a total of 14 new solutions. And the under review, we entered into strategic partnerships, completed important investments and acquisitions in line with our strategic direction. We live in a dynamic world, a rapidly changing world with growing populations, increased interest in health, growing demand for chemical replacement, changes to nutritional needs and alternative [ proteins ] and solutions that can reduce CO2 emissions. Consumers increasingly have opinions about how products are made and the overall environmental and health impact of their purchasing decisions. So these types of developments have led to an increase in demand for solutions like alternative proteins and probiotics as well as more climate-friendly options that are less dependent on chemicals and fossil-based resources. This development supports nearly all business areas in Novozymes. So it's in this global context that companies, customers and nations navigate, shape their business and policies and politics. And this is where biotechnology plays a pivotal role. It is Novozymes' responsibility to ensure that through our technology, we continue to provide solutions that meet the needs of consumers and the world. Novozymes innovative solutions enable us to imagine a better future, where together, we can achieve net zero emissions and sustainable growth while contributing to fair and equal societies. So let me give you a couple of examples of how such a world could look like. Imagine, just imagine if we could replace 10% of global animal protein with alternative proteins, this could mean saving about 2% of agricultural land that will be 50% of the [ in-use ] agricultural area. Another example, if you imagine we all shift to bio-based detergents, when cleaning our clothes, that could mean preventing 10 tonnes of chemicals from being poured down the drain every minute. That really could make a difference. So even if sometimes things look bleak in this world, biotechnology can help create a brighter future. So if there's anything we have learned in particular in recent years, it is that businesses must be focused. They must be agile, but we will stay true to our purpose. For Novozymes, our purpose is rooted in everything we do. It sounds together, we find biological solutions for better lives in a growing world. This is our purpose. It is a purpose that gives us the right to dream, to imagine a world made better with biotechnology. Sustainability is part of our DNA here at Novozymes. Novozymes is in a unique position to drive change towards a healthier planet. And as a company, we have a responsibility to make this happen. We are proud of the positive impact of the use of our product in the world. In more than 30 industries, in more than 130 countries, our enzymes, microbes, yeast and proteins help every day reduce consumption of energy, water, chemical substances and raw materials to help improve performance of our customer products and give people healthier, more sustainable choices for living better lives. Over the years, we have built an even stronger foundation. With our 60 years of experience and understanding biotechnology, we committed to growing our businesses sustainably, thereby making a lasting difference to the world and to all our stakeholders. In September 2021, we launched our strategy, "Unlocking Growth - Powered by Biotech." In this strategy, we focus on areas where we believe we can have the greatest impact. It's also these areas where we invest, use our growth potential. The strategy guides the way towards 2025. And it's also a foundation for our ambition to double our sales in 2030, while creating a carbon-neutral society, transforming [ fuel ] systems and enabling healthier lifestyles. 2021 was a good year for Novozymes, very much because of the success and the implementation -- with the implementation of our strategy, based on our strong foundation, Ester and the executive leadership team and all are well underway in executing this strategy. As a growth company, Novozymes is investing heavily in the future . We focus our efforts where we see the greatest need and demand and where we know we can make the largest impact for Novozymes and the world. In 2021, we made significant investments to ensure future growth. In August, for example, we announced that we are investing DKK 2 billion in a dedicated, state-of-the-art production line for advanced protein solutions. That's in Blair, Nebraska, in the U.S. With this investment, we tap into the growing market need for alternative, healthier sources of protein in BioHealth. In the [ under ] review, we acquired 3 companies, thereby expanding our portfolio of probiotics and microbiome solutions, and we accelerated our ]. In emerging markets, we increased our reach. We've got a better foothold. And we created a good growth through existing platforms like with our yeast platform in Latin America, Southeast Asia. We are able to support our customers in developing greener detergents through our global powder center in India. In 2021, we continued to build on our digital offering to customers. In June, we launched a new digital program called [ Frontside ], where we use data and analysis, real-time, to help producers [ corn ] and enzymes to -- we help to dose [ corn ] and enzymes and production processes. So thereby enabling higher production yields and improving the environmental footprint. We are a global leader. We are a responsible corporation. So we want to do that in societies, where we operate. Our solutions play an important role in helping our customers contribute to a healthier planet. But it takes more than that. We must look beyond our own solutions. Novozymes does that by setting ambitious targets, and we are working together with others to drive the sustainable agenda, using our position as a leading global company to advance biotechnology as a key enabler of a healthier planet. For the last 20 years, we've cooperated with the UN Global Compact, and we continue working with climate change, for instance, through the science-based, target-initiative climate change platform and the ambition to keep the temperature increase in the world below 1.5 degrees. At the COP26 in -- Novozymes was awarded British Terra Carta Seal by His Royal Highness, the Prince of Wales. This award recognizes international corporations that have made a serious action-oriented commitment towards a sustainable future. So now, more than ever before, we are taking a lead in sustainability. With years of experience, we know we can create better results together than we can do alone. So companies, governments, global citizens, we all share the responsibility for a healthy planet. Novozymes will continue to actively advocate change by engaging in dialogue and offering expertise, when working with organizations like the UN Global Compact, the World Economic Forum, the International Chamber of Commerce, the B Team and many other important organizations. So we have a world, an ever-changing world. We must know our direction, but we must also be agile, where necessary. That's how we generate value for our shareholders, and that's how we can best contribute. Novozymes has upheld our commitment of giving return to our shareholders for dividend and stock buybacks. In 2021, Novozymes paid out DKK 1.466 billion. And we've bought back shares worth an additional DKK 1.5 billion, thereby completing the 2021 share buyback program. Today, we are proposing a dividend of DKK 1.524 billion at DKK 5.5 per share for the 2021 financial year. This is 5% up, DKK 0.25 up, compared with 2020, corresponds to a payout ratio of about 48.5% of the net profit. So it's in line with our policy to have a payout ratio of around 50%. Today, the Board is also seeking approval to distribute dividends more than once a year. The distribution of an interim dividend will not impact Novozymes policy with an annual payout ratio of target of around 50%. If approved, the Board will subsequently decide whether it wishes to make it for this authorization. We have started a new share buyback program of DKK 500 million for 2022. This is all in keeping with the capital structure policy we announced at the Capital Markets Day that was back in June of 2019. This poses us to maintain interest-bearing debt at the EBITDA level to return all free cash after investments and possible acquisitions, through a combination of dividends and stock buybacks. At the end of 2021 Novozymes' market capitalization reached DKK 151.5 billion. This was a strong increase, compared to -- really contributed to giving shareholders a return of 55%. This is satisfactory, but we recognize the high volatility of the share market, not least here as we see in the beginning of 2022. Global share markets are affected by macro-related events. So obviously, this is applied also to Novozymes shares, obviously. Well, as I mentioned earlier, 2021 offered uncertainties in the world. Our employees handle this uncertainty with a incredible spirit, dedication and perseverance. has continued to look out for one another, stay focused on their work and ensured, we couldn't only have to deliver to customers but we kept their trust. It is thanks to [ Alzheimer's ] that we can celebrate such [ refined ] results today. So on behalf of the full Board of Directors, I extend a sincere thanks to the [ Novozymers ] and to the executive leadership team for your enduring passion, commitment and contribution to our company. . So let's carry this great momentum that we created in 2021 forward. Lets carry it on into 2022 and beyond. Our global uncertainties and tragic war persist, our strategy unlocking growth, powered by biotech, builds on the strong foundation that has set a clear path for our journey , going forward. We will continue to invest in innovation and new ventures, in our people, in our partners, in our communities. And we will ensure that we live up to our purpose every day. I'm confident that Novozymes is in a strong position to spread out our bio-based solutions further to the benefit our customers but also to the benefit of the planet. So with this, I'd like to say thank you for now. And now, Ester will take you through the 2021 results and share insights into our expectations for 2022. Over to you, Ester.

Thank you. Thank you, Jorgen, and thank you all for joining us today. It's truly a pleasure to be here and for us to share our 2021 achievements and offer a look into the coming year and also the forthcoming years ahead, I will hope, for Novozymes. 2021 was a year of many things. It was a year of a coming. It was a year of inspiring. It was a year of investing. It was a year of delivering. It was a year of learning. And while the effects of the COVID-19 pandemic lessened in the past year, the changes in consumer behavior and the supply chain issues continue to affect the industries that we live in, in many different ways. And despite a -- and despite these challenges, Novozymes delivered a strong organic sales growth of 6%, ending the year in the high end of our guidance. Our growth was led by emerging markets, delivering an impressive 18%, and developed markets increased by 1%. The reported EBIT margin came also at 26.8% for the year, also in line with the 2021 outlook. Net profit increased by 11% and free cash flow before acquisitions was at DKK 2.9 billion. And finally, on the key parameters for 2021, return on invested capital, including goodwill, blended at a solid 19.3%, also in line with our outlook. I am proud to say that in 2021, we delivered double-digit growth in 3 of our 5 business areas: Food, Beverages & Human Health; Grain & Tech Processing, and Bioenergy, all a testimony to the strength of our well-diversified business and product portfolio. Household Care delivered soft performance, which came against a strong 2020 performance and was impacted by challenged European credit conditions, especially at the year-end. Agricultural, Animal Health and Nutrition delivered flat sales in line with our expectations. We wanted to reach more customers and aim to generate at least 50% of our sales-led digitally. This goal was also achieved as more than 60% of our new labs were led digitally. Overall, the innovation plays a key role on our strong performance with over 30% of our sales coming from solutions launched in the past 5 years. To drive the put on further growth, we launched a total of 14 innovative solutions in 2021. I invite all of you to learn more on the performance of the individual business areas and also to learn more about all the important solution launches in the Novozymes 2021 report. We will continue to operate today in a world where, unfortunately, changes seems to be the new norm. I am proud of the results. I am especially, especially proud of how we achieve them. Zymers, and I see many here in the room, you keep to make me, you keep to make me with your dedication, with your resilience, the passion, the passion behind in biological solutions for better lives in a growing world. And not surprisingly, our employees are very engaged. Last year, we keep a score of 82 on the Zymer Spirit Index, showing that our employees are engaged and committed to our purpose and to our strategy. To put this number in perspective, what the 82 means, the average benchmark of the top 20 companies using the same measurement system was 79. We score higher in all parameters when we compare to the external benchmark. That's to be proud. Last year, we also focused on how to ensure the voice of Zymers could be heard and importantly continued. Even when many continue to be restricted to home offices. To keep engagement high and to offer safe and accessible spaces where we can listen and continue to encourage of dialogue, we did several things. We hosted virtual townhalls. We hosted regional and functional townhalls. We're considered time of those townhalls was allocated and set aside to answer, to listen and to answer the of questions of the Zymer. We held a special sessions for the new Zymers hosted by all the executive leadership team. We appointed change agents to act as voice of the Zymers and ensure that we continue success with our strategy implementation. We enabled [indiscernible] workplace, and we launched an e-learning on anti-harassment and nondiscrimination. Despite an uncertain world, I generally hope that 2022 will give me the whole XL team and the possibility to meet many of Zymers face to face. With our new strategy, unlocking growth, powered by biotech, we have a clear road map to ensure our solutions can have maximum impact. Our strategy, it guides us on how to invest, it guides us on how to innovate on how we interact with our customers and how we interact with our partners. I believe it's fair to say that when we look at Novozymes in the past, we have been known primarily as an enzyme company, as an enzymes supplier. At Novozymes we have much more than that. Our expertise reaches far beyond enzymes. We have world-class biotech tool box from fermented proteins to microorganism. We have unique scaleup capability. We have an extraordinary innovation muscle where we master cutting-edge technologies. Novozymes is a biotech powerhouse. And when we look at the world of whom we are, a biotech powerhouse, then we're fighting an addressable opportunity, addressable market size of at least DKK 1 billion, a space that will continue to grow as bio-based solutions continue to replace fossil-based solutions. And as we answer also the margin needs of the society with solutions like bio recycling for plastic, all carbon capture. This means a whole lot of new opportunities, is just there ahead of us. There's now a [indiscernible] a world of opportunities it requires attentive prioritization. It requires attentive prioritization. And with our new strategy, we boldly decide what we do more, but we also decide where to invest less, to ensure our resources are spend where they matter the most. Our strategy is good on our unique, very unique ability to unlock growth for our customers, for investors, for the world with the power of biotechnology. It is on this solid foundation that we're now building on our future. We guided by our commitment to a healthy planet, understanding for me on the solid foundation, we create sustainable growth for Novozymes by evolving our core business, by expanding BioHealth and Human Nutrition and by exploring new options for growth. 2021 was also a year where we took steps to realize our 2030 ambition of doubling our sales sustainably. And I would like to mention, to share with you a few of those strategic examples that make us closure -- that put us on the right path to reach our ambition of doubling our self-sustainable and also in alignment -- fully in line with our commitment to a healthy planet. In 2021, 77% of our revenue was generated from products that contributed to low CO2 emissions by reducing the use of fossil-based resources and reducing waste. Last year, we added 2 new solutions to our ambition to yeast platform, the Innova Element and in Innova Quantum. We also launched Fiberex 2.5 our enzymes, our yeast, our digital solutions, our technical services, all combined allow the ethanol producers to generate the highest level of ethanol, diversify their portfolio, lower input costs and achieve significant productivity gains, all that to the benefit also of the planet. With the launch of our new laundry solution at Pristine we took a significant step in delivering biological solutions that address the benefits of stain removal. Pristine addresses the malodor, the grime, the discoloring and ultimately also improving the life of the fabric. We also announced a collaboration with Saipem for the development of innovative solutions for enzymatic carbon capture. Enzymatic carbon capture is answering a need, a precious need, a vital need in the society. But in addition, it does it more sustainable, more cost-effective than other solutions as enzymes enable lower heat input and more moderate use of chemicals. In 2021, 35% of our revenue came from products enabling our food production systems to produce more food with less, and in addition, improve the nutrition and the quality. There is an increasing demand for sustainable nutrition and consumers are embracing plant-based products. Jorgen mentioned it before, Novozymes is investing DKK 2 billion in the new state-of-the-art production line in Blair in Nebraska for high-value novel proteins. And this facility allows us to capitalize on decades of experience on fermenting catalytic proteins. In a parallel world we continue to invest in protein expansion enzymes that also support the trajectory and the lead solutions for plant-based foods. Last year, we also entered a strategic collaboration with FMC, a leading global agricultural science company to research, to codevelop, to commercialize new enzyme based crop protection solutions for all the pharmas around the world. And in turn, helping the agricultural business to move away from chemical solutions to bio-based solutions, to move away from chemicals to bio-based and helping the agricultural industry. In 2021, at least 5% of our revenue came from solutions that enable better health for people around the world. After acquiring Microbiome Labs and purchasing the Biota technology, we took another important step to advance to move forward our BioHealth business with the acquisition of Synergia Life Sciences. Synergia is a leading developer and manufacturer of spore probiotics but also of natural vitamin K2-7. And it will play a key role for us in expanding our position in human health and in functional foods. Lots to be proud of. Last year, we again restricted on how much we could tumble and meet each other. And our most important stakeholders are face-to-face. Many Zymers have the opportunity to return to the office, sometimes only for a little short time, when some others managed to do also to enjoy rare business trips when the conditions were safe. Whether we met in person, whether we met digitally, we still met. We share ideas. We share ideas, we successfully collaborated and we successfully continue to move Novozymes forward. We did this both within Novozymes, but we also did it at the global stage. We continue to participate in COP26, the United Nations General Assembly and interactive in the World Economic Forum. We see in this arena a very active engagement from companies and other stakeholders. And for Novozymes, many have shown real interest in the power of biology and encouraged to learn more about existing bio-based solutions that will enable, that will be part of the answers for transition to a more sustainable economy. In 2002, Novozymes, was the first company in the world to report and make ourselves accountable to the triple bottom line. Today, more than 20 years later, we continue to show sustainability leadership and constantly challenging ourselves how to be bolder, how to continue to be a leader. As global leaders we are, we must build trust and confidence by showing the path for others on how to move ahead. And the best way to do that is to lead by action. When shaping our strategy, we took an honest look at the operational targets. And we ask ourselves how we could best embrace our leadership position in sustainability. We are proud -- we're very proud of what we have accomplished with a 42% reduction in CO2 emission reductions in Scope 1 and 2, when you compare relative to the 2018 baseline. But we are very much on the right path towards our strong sustainability targets for a better planet in healthier people like reaching carbon neutrality by 2050, operating with 100% renewable energy by 2030 and ensuring gender balance across all professionals and senior leadership also by 2030. So if we turn our attention now in 2022. In 2022, we expect to increase sales organically by 3% to 7%. The wide range reflects uncertainty related to the ongoing pandemic and the volatile market conditions. We also expect solid reported EBIT margin between 25% and 26%. We're building off last year's great momentum, where we set a strong direction. And already, we have seen great progress, and we're walking the talk in our strategy. Novozymes, we're on a good path of reaching our 2025 financial targets of average organic sales of 5% or higher, EBIT margin of 26% or higher, and ROCE of 20% or higher. We are excited about our ambition to sustainably double our sales by 2030, and by doing that, also enabling a healthier planet. Novozymes is a company that embraces its obligation to dream. This embraces the right to be bought, the right to be ambitious. And with that, we keep also by portfolio that carries great potential where we apply eventologic. And as we scout for tomorrow's growth, we only continue to invest if the milestones are met. And this includes areas -- exciting areas like nitrogen fixation, carbon capture and biorecycling of plastics. There's very few companies that can match the reach and the impact those Novozymes solutions. We translate the world needs into biological sustainable enzymes. And we do that by using our unique technology and our innovation power. Our innovation is the result of the Zymer dedication. It is the result of the Zymer willingness to put their heads and their souls together to find the best solutions. And that means -- it's very simple, that means that our success relies on retaining and attracting the best in global power. And part of that happens when you can offer an inclusive and healthy workplace and a strong company culture. In Novozymes, we seek people with different education with different life experience, with different genders and perspectives to contribute, to challenge each other and to live up to our ambition. So we continue to invest in Zymer development, fostering a culture where people can be themselves and where they can have the space to thrive. Where they can have the space to be inspired. And it's only then, it's when we do that, when we master this space, then it's when the magic happens. We are on a journey. We are on a journey. And while we have had a successful 2021, we're not done, we're not done by far. We can and we will be better. The world needs our solutions. So let's continue to think tomorrow together. I would like to thank all Zymers for the hard work and the commitment to our purpose through 2021. And I would also like to thank our shareholders for continuing to see and continue to believe in our potential. Thank you for your time and your attention. I'll now hand it back to Jorgen.

Thanks, Ester. So we have come to the matter of remuneration to the Board and management and corporate governance as it's called. The executive management fee is set by the Board of Directors within the framework set by the AGM, Novozymes remuneration policy for the executive management is designed to attract and retain qualified members of the executive management and to provide a simple performance based remuneration package that supports a sustainable value creation for our shareholders. The individual components and the policy is structured to strongly align the interest of executives and shareholders with a focus on delivering on Novozymes key strategic objectives. Executives receive a fixed remuneration consisting of a base salary, pension and other benefits. In addition, significant proportions of their remuneration packages are based on performance related pay through short and long-term incentives. The majority of the variable remuneration is weighted towards long-term value creation. This is in line with Novozymes strategic focus and mirrors the long-term nature of Novozymes investments in the business. The goals for the short-term incentive program in '21 to '21 was split. The financial performance of the company was 60% weight. That was composed of 45% EBIT and cash flow of 15%. And targets for the individual executives at 40% weight. The financial performance of Novozymes in 2021 resulted in both the EBIT target and the cash flow target being exceeded. So the payout related to this was 100% and 77% which effectively up the maximum. In according with the remuneration policy, we have established a new long-term incentive program for the executive management with the performance period covering the '22 to '24. Since 2020 has issued annual long-term incentive program grant with overlapping 3-year performance periods. This allows the Board of Directors to be reassess targets for each annual grant cycle to ensure the targets are sufficiently demanding incentivizing and also aligned with the strategy. The new long-term intensive program on the executive leadership team covering the performance period of '22 to '24 consists of 50% shares and 50% share options. The long-term incentive program reflects a 4% weight on organic sales growth, 20% weight on EBIT margin from primary operations and 20% from the return on invested capital and 20% weight on nonfinancial targets. These targets are aligned with the updated strategy and business success criteria for the period '22 to '24. The annual long-term incentive program cannot exceed 19 months base salary, which is a value-add conditional grant. In addition, the program includes a maximum value that allows the Board to limit the total allocation of stock options to stock, if the intrinsic value exceeds twice the annual conditional grant. The Board of Directors received total remuneration in 2021 in the amount of DKK 9.8 million compared with DKK 8.2 million in 2020. The increase is a result of the full year impact of the new Innovation Committee was established in August 2020, plus the increase in employee representative from 3 to 4 and the 2% increase in the fixed based remuneration fee, which was also an increase in 2015. The individual Board members fees and their shares can be found in the Novozymes remuneration report. The Novozymes Remuneration Report 2021 is the official title of that report. In 2021, the Board of Directors commissioned an external consultant to conduct an evaluation of the Board in accordance to the recommendation from the Danish Committee on Corporate Governance. The Board of Directors was deemed to be well functioning Board that has worked exceptionally well together. The operational Board processes were in place and their involved tune of the Board of Directors was positive, encouraging, challenging and constructive. While the Board was perceived to be very well functioning, the valuation identify the few focus areas where the work of the Board could be improved, such as the balance between meetings for the full Board and meetings in committees and also the balance between virtual meeting and physical meetings. When laying down the management principles of Novozymes, the Board of Directors followed recommendations under corporate governance that form part of the disclosure requirements applicable to companies listed on NASDAQ. Company, a detailed review of Novozymes position and need of the recommendations and a description of the internal controls of risk management system relating to financial reporting can be found in the statutory report on corporate governance prepared pursuant to Section 107B of the Danish Financial Statements Act. These recommendations regard companies to comply or explain, that's a principle, comply or explain. The recommendations were revised effective from the financial year 2021. Changes have been implemented and Novozymes follows 39 of the 40 recommendations. In '21, Novozymes adopted a data ethics policy. This policy assessed the overall principle for ethical management update of Novozymes and supplement our commitment to integrity and compliance. The basic principles identified to support the commitment to ethical data management universe principles relevant for all category in place and present in and by Novozymes. So hereby, I give the floor back to Niels Kornerup.

Thank you very much to Jørgen Buhl and appreciated. We've now heard the double report on the past year and the outlook for 2022, and we have had a presentation of the audited annual reports with proposals for the distribution of the profit. The company has also prepared a remuneration report for 2021. That's the one that the Chairman is being developed about now and which pursuant to Section 139B of Danish Companies Act. The Board of Directors recommend the remuneration report for adoption and I would refer you to the Chair's review of the remuneration of the executive leadership team and of the Board of Directors and to the remuneration report which has been available on the company's website since the 1st of January -- sorry, February this year. Before I open the meeting, I should point out that the annual report has been signed by members of the Board of Directors and the executive leadership team and certified by the company's auditors without any qualifications or endorsements. And the Board of Directors proposed the payment of a dividend for 2021 of DKK 5.5 per share of DKK 2, which means a total payout of 48.5% of the profit for the year or DKK 1.524 billion. This proposed the remaining profit DKK 1.621 billion be taken to retained earnings. So it's now possible to put questions and give comments. There are some that have already signed up, if you wish to speak you should make a note to me.

The Danish Association of Shareholders has announced that they had a presentation. But just before the meeting started, we heard that their representative has been taken ill, but it is okay for us to read out their contribution. Usually, we have sort of a verbal discussion in order to have some life to the whole thing but under the given circumstances, we feel that it is okay to read it out. So this is what they would have said if they had been present at the meeting. So my name is [ Jen Scalper ]. I represent the Danish Association of Shareholders. We are association with approximately 1,000 members, and we look after the interest of small- and medium-sized private investors. We work to develop a healthy investment and share culture. We participate every year in several annual general meetings all over the country in order to promote our core topics. I am not personally a shareholder of Novozymes, but it's been my pleasure to follow your developments in the past. In particular, the green aspect is interesting, I find. So thank you for the presentation of the annual report. It seems to say you have come through the -- the restructuring well, EBIT 27% and increase in the share price, which is very fine. Also in view of the continued turbulence that we find in the market in 2021. Novozymes did really well in 2021. But we do have a couple of questions. First of all, total revenue reported in DKK has been more or less stagnant for the past 4 years although it appears that there is a growth in volume of 6%. Could you explain what you expect will happen going forward because -- what will happen to the growth in revenue? And what is the connection to the new strategy? You have been very attractive as an update of investors, but -- that was last year. But now, in January of this year, the share price has fallen more than in the market in general. Could you please say why? Are there any underlying reasons why? And how did if affect you? And my third and last question is what is most topical COVID-19 and the crisis in Ukraine. These 2 factors do they cause you to review your strategy for Russia and the Asian markets, in particular, China? We are satisfied with the development in the price here in 2021 and the proposal of a dividend of DKK 5.5 per share. Obviously the financial gearing is sensible only too bad that you have a problem with the pay level for women. We wish all shareholders a good 2022, and thank you for 2021. And this was Jen Scalper. And now over to the Chairman for reply to the questions put in this document.

Thank you to the Danish Association of Shareholders for these questions. I'd like to address as best as I can. The first one had to do with growth expectations, you could say. Can Novozymes grow because over the last few years, we haven't grown that much. I think it's now important to say that Novozymes by definition, it's a growth company. We want to be, we must be a growth company. If we look back in time when we've been separate companies since the year 2000. We've delivered an average 6% organic sales growth. There have been years when it's been more, and there has been less. But we have been a growth company for the 21 years of our existence as an independent company. We certainly have an ambition to continue being a growth company going forward. And now we delivered 6% in 2021. We are planning, as to showed you, to deliver between 3% and 7% growth in 2022, and we have the ambition to be at the upper end of that range, not at the lower end, but there is a lot of uncertainties in the world. That's why we certainly need this range, a wide range. But we are a growth company. There will be years when it's more difficult to raise 6-plus percent. But we believe in the strategy we have for Novozymes. We prioritize where we see underlying growth and with the trends that we see in the world we can and we will deliver on the growth journey. And deliver on our ambition to double our revenue by 2030. The next question has to do with the price of the share. And what has happened in '21 and what has happened in 2022. We do not generally comment on share prices, we cannot manage that as a company. Whatever we do in Novozymes, it is not driven short-term development in share prices. No. It's driven by what we believe to be the right strategic long-term decision. We are not managed by any short term in terms. That being said, I can give you a couple of sort of guidelines to what we think has happened in the market. We mustn't forget that the price of our share went up by 55% in '21. That was really a strong increase. So Novozymes is a growth company. It's a grow share. So that means when there's lots of speculation, lots of worries about inflation, interest increases. Growth shares are hit harder than those that are not seen as growth shares And that's why probably I think it hit Novozymes a bit harder here at the beginning of 2022 than companies that are not seen as growth companies. We look at comparable companies let's call them ingredient companies, we've developed very much in line with the other ingredient companies here in -- at the beginning of this year. So we believe a lot of that has to do with worries around interest rate increases and inflation. The last question had to do with COVID and what's happening in Ukraine and what else is happening in the world. Do we see that changing our strategy, changing the things we do. Basically not because we really believe we have as the healthy strategy, the right strategy based on global trends that are in society. And this tendency that we should all be more sustainable, and we should be more responsible consumers. Our entire business is based on that. And those trends are not going to change because things happen in the short run. So -- but obviously, we have a strategy. We operate in a way so that we can adapt and adjust if things happen, in particular regions or countries, segments, we are able to adapt. And that is certainly what our management is doing all the time adapting to new situations. But underlying, we do not see any need to change our strategy. I hope that gave the Danish Association of Shareholders a good reply.

Thank you to the Chairman for answering the questions here from the Danish Association of Shareholders. Does anyone else wish to speak, that does not seem to be the. Oh, a person is coming up, please come up here. [ Dan Pelego ] is the name of the next speaker.

Good afternoon. I'd like to thank the Chairman and the women member of the executive leadership for what they said. I'm not very good in languages, unfortunately. But I'm very good at reading financials, but that's an entirely a different matter. Wouldn't it have been wonderful if you had subtitled the U.K. or the English version -- the English text, that would be to the benefit of all of our shareholders. And now my question. We go back in history. In the notes, when Novozymes was separated off from Novo, the objective of the company was to reach 10 billion by 2010. That didn't happen, but it was close. as the achievement was about 9 billion. Now 11 years later, we are seeing 14 billion. So in 11 years, the figure has grown by 5 billion, that's about 0.5 million per year. And now over a period of 8 years, their plans of going to 29 billion. So I think I would like to know a bit more about how you intend to do that in view of the time it took to go from one step to the next 4 in the past 20 years. And guess for my own interest, does it mean that dividend will go up from DKK 5.5 to DKK 11 per DKK 2 in 2030.

Thank you for your comments and questions. I think it's a Chairman who will give the reply.

First to your first part of your question, just think about Danish and having it and writing up here. I hope it was clear when you entered the room and when you wanted if you wanted the headset to hear the Danish translation you can just ask for it at the entrance, please. So they are available to everyone if it was a problem with the English. We have tried to make sure that was okay. About growth and dividend, I really don't know what to answer to that question other than to say that if I understood correctly what you've said, this is a growth company. We have delivered 6% growth on the top line over the 21 years. It's been a nice growth journey, there have been years where we didn't deliver quite what we wanted but there were years we delivered more. Whether that can be translated into the same growth in dividend, I don't know, but it's a clear policy where we have a clear policy above 50% of earnings will go back to that's where we're at. Now we were not there some years ago. So what we are paying to shareholders today is a higher percentage of what we earned than what it used to be I hope, I hope that answers your question, what you tried to know, it didn't answer your question, it seems.

Thank you very much to the Chairman. And there is an additional from Mr. Pengel.

The Chairman misunderstood my question entirely. What I said about the dividend was actually meant in front. But now that -- it has taken 11 years to go from -- to go to 5 billion. How do you intend to go to 14 billion in just 8 years. That's what my question was aimed at.

Thank you very much to Mr. Pengel I don't know whether this triggers any comments from the Chairman. Yes. Okay.

I'm not quite sure. I 100% understand where all this comes from because, again, what we have announced has been our ambition, this top line sales growth when you took 14 billion and back to what it was. What we have announced is our ambition to double our sales from the current level and by 2030. We believe we can do that with the current strategy. With the investments we undertake also long term in new potential growth areas. I also said that the journey we have been on since 2001 to 2021 has given us an average growth per year of 6%. We -- a bit above 6% for the period until 2030 as much but available. I hope this is sufficient to answer your question otherwise come up to me after the meeting is over, and we can deal with this on a bilateral basis.

And as another speaker headed towards the Rostrum. Please approach and your name is Fleming Alex?

Mr. Buhl, I'd like to give you a helping hand. I've been involved in the company all the way back to the time we were located in the Meat district in central Copenhagen I think the name of the CEO was [ Riisgaard ] with and the agreement was at the time that the first 10 years we wanted to reach 10%. I think that's where all this comes from. I also -- it was before your time. After he stopped that may have been people who were not that skilled at causing growth, but with the current team, I'm sure that we will deliver on those promises.

Thank you for these comments from Fleming, anyone else wish to speak. That does not seem to be the case.

So I take it that we have finalized the debate and that shareholders have approved the annual report, the proposed distribution of profits and the remuneration report has been adopted. And as I said, because of proxies and personal votes this was already in place. And that finalizes Items 1 to 4. Item 5 is the approval of the remuneration of the Board of Directors for 2022. The proposal is to increase the base fee from DKK 510,000 to DKK 522,000 for ordinary Board members. It is proposed that the fee for the Chair and Vice Chair and supplementary fees of the Chair and other members of the audit committee, the nomination committee and remuneration committee and the innovation committee, that will be set on the basis of the base fee as 3, 2, 1, and 0.5x the base fee, respectively. This is in line with previous year's principles. The Chair and Vice Chair of the Board of Directors will not receive any supplementary payment if they elected to the nomination and remuneration committee. Are there any comments on this? Does anyone wish to speak on this topic? Does not seem to be the case. So I take it that this proposal has been duly adopted. And again, I can tell you it had the vote in advance. That brings us to the matter of election. Item 6 is the election of the Chairman. The Board proposes the reelection of Jørgen Buhl Rasmussen as Chair as Chairman. His management positions, et cetera, are listed in the notice convening the meeting. Are there other candidates for the position of Chairman of the Board? Does not seem to be the case, so I hereby confirm that Jørgen Buhl Rasmussen has been reelected for a 1-year term. Congratulations. Next item is also an election that is Item 7. The election of the Vice Chairman. And the proposal is to reelect Cees de Jong, his management position are listed in the notice convening the meeting. Are there other candidates for that position? This does not seem to be the case, so I hereby confirm that Cees de Jong has also been reelected for a 1-year term. Also congratulations to you. This brings us to Item 8. The election of other Board members. And the thing is that the Board is proposing reelection of 4, Heine Dalsgaard; Sharon James; Kasim Kutay; and Kim Stratton. And the Board of Directors proposes to newly elect Morten Sommer. And the candidate management positions are listed in the notice convening the meeting. Are there other candidates for the Board? That does not seem to be the case. So these 5 candidates have been duly reelected and newly elected. Congratulations and all the best wishes to you all. So the members by the AGM are now Jørgen Buhl Rasmussen as Chairman; Cees de Jong, our Vice Chair. And as ordinary members, Heine Dalsgaard; Sharon James; Kasim Kutay; Kim Stratton; and Morten Sommer. The employee-elected Board members are Anne Breum; and Anders Hentze Knudsen; Preben Nielsen; and Jens Øbro. The employee elected the Board members were elected in 2021 for -- as you know, for a 4-year term when it goes to employee-elected Board members. So we have here the new full Board of Directors. And this also means that Mathias Uhlén is retiring. And I give the floor to the Chairman to comment on that.

Yes, I just thought I'd take the opportunity here to say thank you in front of all your shareholders. Thank you very much to Mathias Uhlén. He's been a member of the Board for 15 years and contributed significantly through his deep understanding of research and development, biotechnology and intellectual property rights. We have really appreciated Mathias's dedication for the many years and the lasting impact he is left on Novozymes. Unfortunately, Mathias is unable to join us here today. He was supposed to be here, but unfortunately, 2 days ago, he got COVID. So obviously he couldn't come. So it's a big shame we can't say good bye to him properly. But I hope we will all give him a hand. So he can hear it all the way to Stockholm, where I hope he's feeling better. Thank you so much, Mathias.

Thank you very much to the Chairman. We have now dealt with Item 8. So we have the last election item, which is election of auditor. The Board proposes the reelection of PricewaterhouseCoopers, [indiscernible] and pursuant to the EU audit regulations I am obliged to inform you that the proposal is based on a recommendation from the audit committee and the committee has not been influenced by third parties in its recommendation or has not been subject to any agreement with a third party restricts the election of auditor by the Annual Shareholders Meeting today. So are there any other candidates? That doesn't seem to be the case. So with your support, I find that PricewaterhouseCoopers have been reelected. This brings us to Item 7, which is a proposal from the Board, the Chair -- now is 10, that's probably what I means needs. There are 7 proposals in Item 10. The first proposal 10A contains renewal of the authorization to implement capital increases. Article 5 of the Articles of Association contained several different authorizations to the Board of Directors to implement capital increases that all expire this year. Please refer to the notice convening in the meeting. And the Board proposes that these authorizations be renewed and extended for 1 year, which means until April 1, 2023. Article 5 of the Articles of Association will be amended as specified in the meeting notice. As mentioned in my introduction, adoption of the proposal requires the majority vote pursue to [ Article 9-2 ] of the Articles of Association. Are there any comments to this proposal? I would like to hear if there are any comments or questions? That doesn't appear to be the case. I take that as a sign that the meeting has approved the proposal that seems to be the case. Thank you very much. The second proposal is 10B has to do with the reduction of share capital by the cancellation of treasury shares of 8th of February 2021, Novozymes initiated a share buyback program that was first announced in company announcement #1 of the 2nd of February 2021. In pursuit of the buyback program, Novozymes bought back a total of 3,401,975 B shares in 2021 with a transaction value of DKK 1.5 billion. In connection with the buyback, Novozymes announced that the shares would be used to reduce the share capital and to honor obligations relating to the company's various incentive programs. The Board of Directors, therefore, proposes the company's share capital be reduced by the cancellation of a proportion of the company's holding of treasury B shares. I refer to the convening notice, but we'll briefly mention that the Board of Directors proposals for cancellation of 1 million B shares of DKK 2 each i.e. and average price of DKK 440.8 per B share of DKK 2, which means that a total of DKK 438,800,000 has been paid out to shareholders in addition to the nominal capital reduction. The total share capital after this will be DKK 562 million. This requires a majority vote like the last item did. Are there any comments or questions to this? That does not appear to be the case. I take it to show that once again, we have adopted the proposal to reduce the share capital. I find that the company has been adopted. I can also point out that notice to [indiscernible] will subsequently be issued with a deadline of 4 weeks, after which the reduction of the share capital will be final. There will be a company announcement that shows when the share capital has been reduced. The next item on the agenda is 3C, has to do with authorization to acquire treasury shares? This is an issue that we are all familiar with from previous year's shareholders' meetings. Ongoing purchases and sales of treasury shares is a useful tool in the company's efforts to regulate or adjust its capital structure so as to achieve the correct balance between the company's own resources and its loan capital. The current authorization, which were used in connection with the share buyback program last year expires after this meeting. And therefore, the Board of Directors would like to ask for authorization in the period until 1st of April 2023 for the company to acquire treasury shares on an ongoing basis up to a total nominal amount of DKK 56.2 million, corresponding to 10% of the share capital subject to a holding limit of 10% of the total share capital. The purchase price must not be a by more than 10% from the price listed on NASDAQ Copenhagen. The authorization is required to complete the announced new share buyback program. This only requires a simple majority vote. Are there any comments or questions? That doesn't seem to be the case. Again, I take it to me that the meeting has adopted this proposal. Thank you very much. The fourth proposal is 10D has to do with authorization to the Board of Directors to distribute extraordinary dividends. In the interest of financial planning and as a service to Novozymes shareholders, the Board of Directors proposals that until the next Annual General Meeting and accord with and 182 and 183 of the Danish Companies Act that it be authorized to adopt one or more decisions to distribute extraordinary dividends to the company's shareholders to the extent possible under applicable legislation. Any comments? That doesn't seem to be the case. I take this to mean that the meeting has adopted this proposal #5. So this is a change to Articles of Association regarding the age limitation for members of the Board. This proposed that it could be deleted. The current age limit of 70 years for members of the Board of Directors in Article 22 of the Articles of Association should be deleted. So this proposal amends [ Article 12 2 ] our as specified in an invitation to the general meeting. There's also stated in the invitation to the AGM, the Board of Directors has a revised competency profile that describes the required qualifications of the Board directors collectively and individually and the desired diversity of the Board of Directors in order to carry out his tasks in the best possible way. The Board of Directors does not believe that a certain age is automatically exclude persons from being elected to the company's Board of Directors as they're in compliance with the competency requirement. So the revised competitive profile does not contain an age limits within it. Does anyone wish to speak on that? It does not seem to be the case. I take it to mean that the motion has been duly adopted. Thank you. The sixth proposal concerns an amendment to Article 4-2 of the Articles of Association concerning the keeper of the company's shareholders registered. The Board of Directors proposes to do the delete article 4-2 concerning the keeper the company's shareholders register for increased flexibility in the choice of provider. At the same time, the numbering of the subsequent sections of Article 4 will be updated accordingly. As a result of this change, the Board of Directors will be -- continue to be responsible for keeping the shareholders registered, but will obviously continue to delegate the task to a professional service provider. Are there any comments to this item, this very interesting item? There's not seem to be the case. No, no, no. I'm not the keeper of the shareholders register that says the Chair the meeting. No, that's not the case. So this proposal has been duly adopted. The last item that's 10G the authorization to authorize the meeting chairperson yours truly to ensure that amendment to the Articles of Association just adopted are duly registered and in more details are concerned in the notice convening are stating notice convening the meeting. Does anyone wish to speak on that? That is not the case. So I take it that this has also been to duly adopted. So that brings us to the end of Item 10. We are now at item 11, any other business. This is where you can speak of the company. You can give comments. You can state whatever you want concerning the company but you cannot make any proposals. You should have sent in proposals in advance. But that doesn't seem to be the case, last possibility? No. So that completes the agenda and all that is left for me is to thank you and to finish my work. So I discontinue my work as Chairman of the meeting, and give the floor back to the Chairman.

Well, that just leaves me with saying that the meeting is over, and on behalf of Novozymes, I'd like to thank all those who participated, and now it leads you to our Chairman of the meeting, who once again help us navigate safely through the agenda. So the meeting is adjourned. And on behalf of the Board of Directors, I'd like to thank our shareholders for support and interest in 2022. We look forward to seeing you again perhaps even a higher number of you next year in 2022. Thank you for attending.