0:04 Welcome to the Novozymes Q4 Conference Call. Throughout the call, all participants will be in listen-only mode, so there is no need to return individual lines and afterwards there will be a question-and-answer session. Today, I'm pleased to present to be as Tobias Bjorklund, Head of Investor Relations. Please continue your [Indiscernible].

0:24 Thank you, operator, and welcome everyone to Novozymes’ Full Year 2021 Conference Call. My name is Tobias Bjorklund, and I'm the Head of Investor Relations here at Novozymes as mentioned. At this call, our CEO, Ester Baiget; and our CFO, Lars Green will go through our performance and key events of 2021 as well as the outlook for the 2022. 0:44 Also present at this call are Tina Fanø, EVP Agriculture & Industrial Biosolutions; Amy Byrick, EVP, Strategy and Business Transformation; Anders Lund, EVP, Consumer Biosolutions; and also Claus Fuglsang, CSO, EVP of Research and Development. The entire call will take about 50 minutes, including time for questions at the end. 1:04 Before we begin, I would like to remind you that the information presented during the call is unaudited and that management may make forward-looking statements. These statements are based on current expectations and beliefs, and they involve risks and uncertainties that could cause actual results to differ materially from those described in any forward-looking statements. 1:22 With that, I'll now leave the hand to our CEO, Ester Baiget. Ester, please.

1:28 Thank you, Tobias. And thank you all for calling in. Please turn into slide number 2. I'm very pleased with our performance in 2021, we delivered a strong sales, earnings and non-financial numbers and advanced our business in accordance with our refresh strategy, unlocking growth, Powered by Biotech that we launched last September. Organic sales grew 6% and benefiting from our diversified portfolio. Performance was particularly strong in Food, Beverages & Human Health, in Bioenergy, and in Grain & Tech Processing, all three business areas delivered a strong double digit growth. Household care declined slightly and Agricultural, Animal Health & Nutrition was flat and when both business areas were soft, they were roughly in line with our latest expectations for the full year. 2:21 Over the past couple of years, we have invested in our commercial activities, especially in emerging markets and it's very, very encouraging to see the sales here growing by an impressive 18%. Sales in the developed markets also grow, although at a more moderate rate. Sustainability it's part of our DNA (ph) here at Novozymes and I'm very pleased to say that we are on track to meet 12 of our 30 non-financial targets. While the targets are for 2022, we actually exceeded several of them already in 2021. 2:57 The benefits to the wall from the use of our products are something we are all very proud of and we embrace the responsibility to be at the forefront of the movement for a healthier planet as a company with a strong purpose. We are committed to support the transition towards a climate-neutral society and in 2021, 77% of our revenue was generated from products that contribute to lowering CO2 emissions by reducing the use of fossil-based resources and by reducing waste. Another key to achieve a more sustainable world is to transform food systems. In 2021, 35% of our revenue came from products, enabling our food production systems to produce more food from less and improve nutrition and quality. Additionally, we strongly committed to enabling healthier lives and 5% of our full-year revenue came from products that enable a better health for people around the world. 3:59 From an innovation perspective, 2021 was another strong year with the launch of market leading products such as Pristine, which is the broad-market Freshness solution and ProAct 360, which improves digestibility of proteins for animals. In total, we launched 14 products during 2021, including six in the fourth quarter alone. This is much in line with previous years. 4:23 Turning to our financials, we delivered a strong EBIT margin and ROIC including goodwill, as well as a strong free cash flow, and while reinvesting significantly in commercial activities, making several acquisitions and increasingly experience the headwinds from higher input costs towards the end of the year. 4:43 Executing on our strategy has been a number one priority in 2021. After acquiring Microbiome Labs, and the biotechnology asset in the first quarter, we took another important step to advance our BioHealth business in the fourth quarter with the acquisition of Synergia Life Science. Synergia isa leading developer and manufacturing sporeprobiotics, and natural vitamin K2-7, and it will play a key role for us in expanding our position in Human Health and also in functional foods. Also in the fourth quarter, we enter into a very exciting collaboration with Saipem on enzymatic carbon capture and continue the construction of the new state of the art production for Advanced Protein Solutions in Blair, Nebraska, and the US. 5:31 The steps we have taken during the last couple of years sets us up to deliver another good year in 2022 and we expect to be off to a good start for the year. In 2022, we expect sales to grow by 3% to 7% organically. With growth across all business areas, sales in Danish Kroner is expected to be around three percentage points higher. The EBIT margin is expected at a solid 25% to 26%, despite significant pressure from higher input costs. 6:04 And lastly, we expect ROIC including goodwill to end between 16% and 17%. While the free cash flow before acquisitions is expected between DKK 1.7 billion to DKK 2.1, including a significant uptick in CapEx mainly driven by the new production line in Blair. With that overview, let's now look at each of the five business areas in more detail and starting with Household Care. Could you please turn to slide number 3? Thank you. 6:35 Household Care declined by 1% organically in 2021. The soft full-year performance came against a strong performance in 2020. Emerging markets performed well, supported by investments to expand our commercial footprint and tailored solutions resulting in an increase enzymatic penetration. Our sales develop in developed markets declined, as the European consumer demand was significantly lower than expected. Performance for the worsen in the second half of the year, where also two mid-sized private-label players went out of businesses. 7:10 The Freshness technology performed well and in line with expectations, it was made available across multiple countries in Europe, and the broad-market solution was successfully launched in the third quarter. Sales in the fourth quarter declined 3% organically. Similar to the full year performance emerging markets performed well, while Europe in particular continue to decline for the same reasons as mentioned for the full year. While the 1% decline in 2021 was not satisfactory. An average annual growth of a rate of 2% over the past two years is a meaningful step in the right direction. 7:49 Looking ahead, we expect sales in Household Care to grow by 2% to 4% in 2022. Growth is expected to be driven by increased market penetration in emerging markets by Freshness as well as in the non-laundry areas of professional and medical cleaning and in dishwash. As mentioned, we launched the broad-market version of Freshness technology in 2021. This was a significant milestone, and freshness is expected to increasingly contribute to growth as the year progress as well as in the years to come. Could you please turn into slide number 4? Thank you. 8:24 Our Food, Beverages & Human Health businesses had an excellent year and the team has done a terrific job in executing on the strategic direction, while also capitalizing on the support the market conditions. Sales grew 14% organically in 2021, with all three main categories growing by double digits. Growth in food was mainly driven by market penetration and demand man was particularly strong for health-focused solution, such as acrylamide reduction in baking, sugar reduction in dairy and solution for plant-based protein extraction. In addition, baking benefited to some extent from raw material optimization and ingredient substitution. 9:07 Beverages performed well and outgrew the underlying market while also benefiting from a recovery in global brewing (ph) volumes. Growth in Human Health was very strong and driven by cross selling and geographical expansion. In the fourth quarter sales grew 13% organically. The performance was led by food, beverage – by Food. Beverages grew slightly and was somehow impacted by the stocking whereas Human Health performed well and according to expectations. Also, in the fourth quarter we strength an accelerated our BioHealth business by acquiring a majority stake in Synergia Life Science and as I've already mentioned. 9:49 Let me now turn to the outlook. In 2022, we expect organic sales in Food, Beverages & Human Health to grow by high-single digit rate. With all sub areas contributing to growth. Growth in food will be driven by market penetration supported by health focus solutions and raw material optimization and ingredient substitution. For beverages, we expect the growth on top of the double-digit growth in 2021. And for Human Health, we expect continued solid double digit growth driven by innovation, cross selling and regional expansion. Please turn into slide number 5? Thank you. 10:26 Full year sales in Bioenergy grew 11% organically. The strong performance was driven by the recovery of US ethanol production growth from innovation, capacity expansion of corn-based ethanol production in Latin America and market penetration with enzymatic solutions for biodiesel production. Putting the US development a bit into context. It's important to remember that US gasoline demand and ethanol production was severely disrupted during 2020. US ethanol production rates gradually recovered during 2021, but still remain lower than the 2019 pre-COVID level. 11:07 Organic sales in the fourth quarter grew 10% driven by the same factors as already mentioned for the full year performance. Additionally, sales benefit from growth market conditions for ethanol producers with some of the biggest crush margins in almost a decade. For 2022, we expect sales to grow by low to mid-single digits and is in 2021, growth continues to be driven by the recovery of US ethanol production, innovation, capacity expansion in Latin America, the expansion in Latin America, as well as market penetration in biodiesel. 11:43 And as a final note, the past two years have been unusually volatile for the ethanol industry and uncertainties related to the pandemic and volatile market conditions are still present. This is also why Bioenergy covers a relatively broad range wide – broadly growth range. Please turn into slide number 6? Thank you. 12:05 Grain & Tech processing sales grew 13% organically in 2021. Sales in both Grain & Tech grew by double digits with strong performance across sub areas. The growth in grain was led by market penetration with solutions for vegetable oil processing, innovation in starch, particularly in grain milling as well as an increase end-market demand for starch-delivered products, especially in emerging markets. Tech grew primarily due to the recovering sales in textile, following the negative COVID-19 impact in 2020. 12:41 Good performance in areas such Pulp & Paper, leather and diagnostic enzymes for the pharmaceutical industry. They also contributed to the full year performance. Four quarter sales grew by 15% organically. The performance was also broad-based in the quarter with growth being fuelled by innovation and higher end-market demand in starch-delivered product. Market penetration in vegetable oil processing and sales of diagnostic enzymes for pharma. 13:10 Looking at 2022, the development is expected to be more moderate compared to 2021. And thus, we expect the sales performance to range from flat to low single-digit growth. Growth will be led by continued market penetration in vegetable oil processing and from innovation in starch such as for grain milling. Similar to the situation in Bioenergy, the relatively large uncertainty related to the pandemic and the volatile market conditions are affecting the way we see prospects for Grain & Tech processing. Hence, we have applied a relatively broad sales range for this business area as well. Could you please turn to slide number 7? 13:52 Organic sales in Agricultural and Animal Health & Nutrition ended the year flat, despite a negative base effect from 60 million one-off in the second quarter of 2020. Related to the former BioAg set up. Sales in Animal Health & Nutrition grew primarily from increased market penetration driven by interventions such Balancius and ProAct 360. Sales in agriculture declining to the aforementioned base effect, an increase if adjusted to it. The adjusted performance was driven by market penetration led by Latin America. 14:28 Fourth quarter sales grew 7% organically. Growth was a strongest in Animal Health & Nutrition with increased demand for both protein and health solutions. Sales in agricultural also grew driven by higher demand for bioyield solutions. In 2022, we expect organic sales in agricultural Animal Health & Nutrition to grow in the high-single digits to glow [Indiscernible]. Growth will be led by agricultural, which is expected to grow at double digit rate. Good market conditions and beneficial sustainability pull is expected to benefit a higher usage of inoculants. This combined with innovation and a refined go-to-market model will enable increased market penetration of both bioyield and biocontrol solutions. Animal Health & Nutrition sales are also expected to grow, full mainly by innovation and market driven volume growth supported by favourable market conditions. 15:28 And with that, I’ll land over to Lars for a review of the financials. Lars, Please.

15:34 Thank you, Ester. Let me start by reviewing the performance of our sustainability and non-financial targets. Please turn to slide number eight. With our refresh strategy, unlocking growth Powered by Biotech, we made new long-term commitments to accelerate towards a climate-neutral society, transform food systems and enable healthier lives. We also significantly raised the bar by including Scope 3 emissions in addition to Scope 1 and 2 in our CO2 savings target for 2030. 16:06 The 2022 non-financial targets from 2019 are still valid and serve as milestones on our long term journey. And it's encouraging to see that we are on track to meet 12 out of the 13 targets we defined back in 2019. As the non-financial targets are coming to an end here in 2022. We are also committing to communicate the progress and milestones, we have towards our long-term targets for 2030 and 2050. We'll hear more about this during the year. Now please turn to slide number 9 for a review of our financial performance. 16:42 The performance in 2021 was highly satisfactory, meeting or exceeding all targets set out at the beginning of the year. In addition, we successfully integrated two companies acquired asset and launched our strategy, unlocking growth Powered by Biotech. Sales grew 6% organically and 7% in reported Danish Kroner and included a 2 percentage point contribution from M&A, and roughly a 1 percentage point headwinds from currencies. Sales in the fourth quarter grew 7% organically and 11% in Danish Kroner. 17:19 The gross margin was strong at 57.7%, 170 basis points higher than the gross margin in 2020. While many companies experienced the impact from higher input costs already in 2021, Novozymes unique productivity improvements and production excellence including our leverage allows for some alleviation of such changes in input costs. However, we are not immune to the significantly higher input costs, and we started to see a growing impact in the fourth quarter when the gross margin came in at 56.1%. This was 60 basis points above the fourth quarter of 2020. But around 200 basis points lower than for the first nine months of 2021. We saw the same beneficial operational factors throughout the year. With the addition of a supportive prime mix – price mix and M&A contribution. The first quarter year-on-year gross margin development was driven by the same factors as for the full year, with input costs becoming a stronger headwind in the quarter. 18:21 The EBIT margin was solid at 26.8% in line with expectations and 70 basis points higher than in 2020. Higher operating costs were more than offset by higher gross profits, and an increase in other operating income. As implied by the 27% full year outlook, the fourth quarter EBIT margin was expected to be soft and the year-on-year decline was primarily due to increased operating costs which offset the improved gross margin. 18:50 The first quarter increase in operating costs was as expected mainly due to higher sales and distribution spent one-off transaction costs and the recognition of acquisitions. Currency has provided a slight headwind for the full year, but were marginally supportive in the fourth quarter. When adjusting for one-offs, the underlying full-year EBIT margin for 2021 was around 27% and roughly on par with the underlying EBIT margin for 2020. 19:20 Further, when comparing year-on-year margins 2021 included close to a 1 percentage point headwind from M&A and currencies, compared to 2020. In the fourth quarter, the underlying EBIT margin when adjusted for both the transaction costs related to the acquisition of Synergia Life Sciences, and the sale of a non-core building in Switzerland's was around 22% compared to the 21% reported. 19:45 Additionally, the fourth quarter included high operational costs as expected, and included in the outlook of around 27% for the full year. Net investments totaled DKK 1.1 billion somewhat below expectations, mainly due to timing in the fourth quarter. Free cash flow before acquisitions was solid a DKK 2.9 billion. Working capital changes and increased net investments offset higher net profits and improved earnings quality. 20:15 The lower year-on-year cash flow was much as expected following the 2020 BioAg one-off and the previously highlighted timing effects that had a positive effect on working capital in 2020. The first quarter free cash flow was DKK 200 million and roughly in line with expectations, following higher net working capital as well as higher investments. 20:39 Return on invested capital including goodwill was 19.3% in 2021. This was 40 basis points higher than in 2020. The improvement in ROIC was due to the higher net operating profit after tax, which more than offsets an increase in average investor capital following the three acquisitions. Please turn to slide 10 for the 2022 outlook. 21:05 We continue to invest and position ourselves to unlock Novozymes true sustainable, long-term growth potential. Organic sales are expected to grow by 3% to 7% in 2022 and sales in Danish Kroner are expected to be around 3 percentage points higher, including roughly 1 percentage point from the acquisition of Synergia. The indicated ranges per business area are broader for the agricultural-exposed areas, catering for higher implied end-market volatility. The full year indications per business area are in line with the overall 2025 targets presented at our recent capital markets day. Seen over the year, we expect performance to be off to a good start in 2022. 21:50 The EBIT margin outlook for 2022 is between 25% to 26%, including an expectation of a slight year-on-year benefit from currencies. The margin would benefit from operational leverage productivity improvements as well as targeted price increases. This is expected to be more than offset by significantly higher input costs and continued investments in the business. Included in the Outlook, the gross margin is assumed to decline by 1.5 percentage to 2 percentage points in 2022, compared to the previous year. We are making a dedicated effort to pass on higher input costs and while we expect this to have a net neutral impact on our year-on-year sales growth. The effort is expected to be supportive to the gross margin, and it's included in the Outlook. 22:37 The free cash flow before acquisitions, is expected at DKK 1.7 billion to DKK 2.1 billion including a significant step up in net investments to support our growth opportunities. Net investments are expected at between DKK 2.5 billion and DKK 2.8 billion, the increase in net investments reflects maintenance, expansion and optimization CapEx as well as investments to support our ambitions in the Food and Health related areas. The amount we expect for net investments in 2022 includes roughly DKK 1 billion related to the Advanced Specialty Protein Facility in Blair. 23:14 When adjusting for the protein investments, net investments add up to around 10% CapEx to sales ratio, which is in line with what we communicated at our Capital Markets team. The outlook for return on invested capital including goodwill is for 16% to 17%. Subject to approval at the annual shareholders meeting in March, the dividend is proposed at DKK 5.5 per share, up by 5% from the year before, and corresponding to a payout ratio of 48.5%. 23:46 In addition, a share buyback program of up to DKK 500 million has been approved for 2022. This is in line with our capital structure policy to return the free cash flow generated to shareholders through a combination of dividends and share buybacks at a net debt-to-EBITDA ratio of around 1. 24:05 With this. I'll now hand back to Ester for a wrap up before we open up for questions. Ester, please.

24:11 Thank you. Thank you Lars, Please turn to slide number 11. Thank you. I'm very pleased with a strong set of both financial and non-financial results that we have delivered in 2021. We grew our sales 6% organically with double-digit growth in three of five business areas. We deliver solid earnings and cash flow, while still reinvesting significantly in the business. And we are on track to be 12 out of the 13 of our non-financial targets. We expect the strong performance from 2021 to continue in 2022 and we're guiding for 3% to 7% organic sales growth, with a solid EBIT margin that comes despite higher input costs both right and cash flow are impacted by high investments to secure growth of the business. 25:02 Our relatively broad range for sales growth allows us to navigate through continued uncertainty related to the pandemic and volatile market conditions. Similar to the way we position our outlook for 2021. At the beginning of 2021, we outline for progress areas to allow you to follow our strategy execution from a different angle. One of them was to engage in at least three large commercial R&D collaboration. This goal was achieved with a collaboration with Saipem with a key player in the plant-based industry and with FMC in agricultural. 25:38 The second progress area focus on commercializing innovation. This goal was also completion, as more than 30% of our sales were from solutions launch during the last five years. Thirdly, we wanted to reach more customers and aim to generate at least 50% of our sales leads digitally. This goal was achieved as more than 60% of our new leads were generated digitally. 26:01 And finally, we want to be a strong voice on the world stage for the ever increasing need of sustainable solutions. We wanted to take part in at least three global events linked to sustainability and by participating at the World Economic Forum, the UN Global Compact leaders and the COP26 (ph) in Glasgow, we also reach our target for this key progress area. Executing on our strategy remains a top priority here in 2022. And three key progress areas for us are achieving key milestones in the construction of the new production line for Advanced Protein Solutions in Blair, Nebraska. Leverage the recent acquisitions and deliver double-digit growth in Human Health. Continue to strengthen our commercial setup, also by initiating investments in the first customer co-creation center. 26:52 And finally, we will secure that we keep diligent focus on prioritizing in our core business, making sure we deliver on our short as long as our long-term commitments. 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 have built an even stronger foundation over the past two years and with our 60-year legacy in understanding biotechnology, we are committing to grow our business sustainably, making a lasting difference to the world and to all our stakeholders. And with this world – these words, please, let's now begin the Q&A session. Operator, please begin.

27:35 Thank you. [Operator Instructions] Our first question comes from the line of Gunther Zechmann of Bernstein. Please go ahead. Your line is open.

27:58 Hi, good morning, everyone. A few questions from my side. The first one is on comments that you have in your release around the ROIC, you say that he expects no [Indiscernible] in 2022 to be lower and that explains the lower ROIC guidance. Can I just confirm that because if I take the midpoint of your organic growth guidance, put the Danish Kroner guidance on top and then an average margin, even at the higher tax rate of 22% in 2022. I get a lot of flat notepads. So I'd like to understand why you have as an assumption that you have a lower notepad in 2022. There's the second one, I was intrigued by your comments on pricing to pass on the higher raw material costs. Can you give us some guidance, what you've already seen in the field and what you're expecting to expect to see in 2022, because it's not usually at the end-time market, it is not usually one by you, see positive pricing and so some commentary, that would be very helpful. And then lastly one for Tina if I can sneak that one in as well. You sound very bullish on BioAg, usually at the beginning of the year, you have wide guidance range – wider guidance range in BioAg, what gives you the confidence for the strong growth that early in the year already in BioAg, please.

29:21 Thank you, Gunther for this very good questions, I'll comment on pricing and then pass it to Lars for the building on your comments on ROIC and then Tina on BioAg. So on pricing, what gives us the confidence. I mean, it's not – we have not started the journey on pricing today. This is a long journey that we have already been working, if you remember, already for – since the time for sure, since I have been in the team and we start seeing the benefits of those focus last year and this year with doubling our energy in this segment. We live in extraordinary circumstances with a rapidly increasing raw material prices. As you say none of us heard the last saying we did a fantastic job this year uploading and postponing the impact of these high increase raw material till Q4, but we're not immune. And this opens a fantastic situation for environment for our discussions and conversations with our customers as contracts expire as contract sunset to bring up the discussion on value on price on the table and we aiming for a space where we're going to move into a positive impact from pricing in gross margin. But then yes, overcome by the higher raw material price increases and then overall still with a slightly compaction of gross margin of 1.5% to 2%. And then I'll pass it to you, Lars.

30:47 Yes, thanks Ester. And Gunther, to your question on ROIC, clearly the biggest impact on the lower return on invested capital is coming from the invested capital component where the, the acquired assets from our acquisitions is increasing the investor capital and number. So the notepad is the smaller impact. And of course, our guidance is a sort of a range on a number of parameters. And so therefore, our comments should be seen in that light. I think the key point is that the biggest impact on ROIC is coming from investor capital. Tina Fanø: 31:29 And then I'll answer on the Agriculture and Animal Health & Nutrition comment and BioAg specifically. So yes, we do guide relatively broad range here from high-single digit growth to the low teens and if we just take a step back in that area and in these ag-exposed areas, the growth drivers is both innovation, its market penetration, its sustainability and then there's also support when the commodity prices are high, given that what we deliver is a yield benefit and that has more value in a high commodity market. And if you look at the performance in 2021, in Agriculture, Animal Health & Nutrition, then you have to remember it was a flat performance, you have to remember the DKK 60 million which we saw in 2020. And also, we grew 7% in Q4. So we are in a strong trajectory, and we also think there is some timing, and that is supporting the high expectation for 2022.

32:43 Next question, please.

32:46 Thank you, that comes from the line of Michael Novod at Nordea, please go ahead. Your line is open.

32:53 Yeah, thanks a lot. Just two questions. One to Grain &Tech, maybe Tina, you've previously talked about the impact from enzymes to COVID-19 testing, maybe we could just detail for us also, how much of growth was impacted by this in Q4 and 2021? And how much is expected in 2022? And then secondly, to last regarding CapEx? So it should be shown that 2022 levels are the peak, or would it be one more sort of significantly elevated and then sort of feeding off from there? Thanks a lot.

33:28 Tina and Lars? Tina Fanø: 33:31 Yeah, so in a Grain & Tech, it's – if you look at the, yeah, both for the year and the quarter, then roughly 70% of the segment is coming from Grain and 30% is coming from Tech. And that means that and within the tech segment, as you know, we have many different businesses. So diagnostics is a small part of that. So it is a small impact.

33:55 And on CapEx, we guided in the capital markets day back in September for a CapEx to sales ratio of around 10% through the period to 2025 and then on top of that, we have our Advanced Protein Facility in Blair. Now, the latter is roughly DKK 2 billion in total, over the three-year period ‘21 to ‘23. And we recorded roughly DKK 200 million in ‘21 and other DKK 1 billion is expected here in ‘22. And so this leaves a residual roughly DKK 800 million for 2023. The good thing is we have progress in line with our plans, but exactly how the recording of the CapEx plays out of course, subject to a bit of uncertainty. So this is our expectations right now. So you have to set to add that residual component of roughly DKK 800 million to the 10% also in 2023.

34:58 Sure, understood. Thanks a lot.

35:02 Thank you. And our next question comes from the line of Nicola Tang at Exane BNP Paribas. Please go ahead. Your line is open.

35:10 [Indiscernible] questions. It was a few on Household Care actually. I was wondering if you could talk a little bit about the reduced demand in Europe and private-label issues. I know we were talking about them back in Q3. But can you confirm that the European issues are still sort of related to down trading? And when you think about your guidance, the 2% to 4% for 2022, can you just kind of clarify or explain what you're factoring for both those two elements. And then the second question is still on Household Care. We've seen a bit of news flow around activism and restructuring, one of your big Household Care customers that you need and in the past, I think in the industry, when we've had activists cases or cost cutting is led to lower levels of customer innovation and reformulation. So it's wondering whether you see this as a risk or what you're seeing anything with ECS as a risk this time round for you or what has changed in the household landscape versus a couple of years ago. Thanks.

36:09 Thank you, Nicola. Anders, Could you please take this question?

36:12 Yes, sure. Thanks. Let me start with Europe and what's going on. So the result of the performance in the retail market was that laundry which is by far our largest single segment is down 5% on volume and the way we look at it, it's a few different sort of trends that's going on, we see customers they are trading down to lower tier brands, we also see the customers are washing a little bit less than what they did last year. And then of course, we see the private-label segment being under a lot of stress and stress comes in different forms. It comes with two bits – two of our large midsize customers have gone out of business, but also comes in a way where you can see that they're actually losing substantially more than the big brands and our exposure to the private-label market has traditionally been quite strong. So from that perspective, we also get quick get quite some challenge in Europe. And I think when you look at the guidance for the full year, and looking at Household Care, Europe is actually the single and only area compared to our plans that delivers the deficit to our original guidance, so that's what's going on. Looking ahead on Europe, we plan for a flat European market next year. We believe that we have sort of seen the bottom of this, we also believe that the private-label pain that we saw that that will travel to other private labels. So for us, that's, I think, a good belief that we'll see sort of the – we've seen the bottom of the European market. 37:39 Now if we turn to the next question, if this is – it's difficult and then of course, I can only speculate and I can tell you what had – what happened in the past. Of course, we've seen investor pressure coming in, and it has shown itself in different shapes and forms. This time around, I think it's uncertain to say what's going to happen to Unilever, we know that Unilever is on a journey where they are really driving sustainability [Indiscernible], we have very strong conversations and also a very strong pipeline with Unilever. And I'm pretty sure that some of that will come through, it's too early to tell if there's going to be any negative impact. Right now, we don't see it and our conversations are positive towards growth and innovation. I think that's it.

38:21 Very well said Anders. Nicola, you did not really implicitly ask for it. But I would like to build on the Anders comments on what gives us the trust on the 2.4 guidance and also on the long-term growth. It is the – for one step very strong penetration of Freshness that we see the broad launches sticking and contributing to the growth and also a contributor to the growth of 2022. The continued penetration of our solutions in emerging geographies that they do grew lists this year, and they will continue to grow. And then the strong momentum and the pool for our customers for sustainable solutions, replacing chemicals and detergents. All these parameters, they make us confident that there is a growing path and that we are moving in the right direction to that growth path. Next question, please. Thank you.

39:12 Thank you. The next question comes from the line of Lars Topholm of Carnegie. Please go ahead. Your line is open.

39:19 Yes, congrats with another strong quarter. A couple of questions on my side to the guidance, since you're passing on input cost inflation at least partly, I just wonder to what extent that boosts your organic growth guidance and in line with that, both you Ester and Lars mentioned that you were off to a strong beginning of 2022. So just wonder what you mean by that, and inflation [Indiscernible] he is going to be front-end loaded. And then second question goes on alternative proteins because earlier in the year, you sent out a press release mentioning that you would like to sort of drive the creation of the micro protein industry party or I don't know what the right word is. To my knowledge, you don't have any significant microprotein products in the market, am I wrong? Is this something that is going to come? Why are you doing this? And should we expect any microprotein announcements going forward? Thank you.

40:30 Thank you Lars for your very kind of comments. Yes, we feel very pleased with the results and also that we expect a good start for the year. I will let Lars answer your first question and then Amy, follow up on your second one.

40:46 Yeah, so on our assumptions on pricing, our 2022 outlook includes a net neutral impact from price on the top line. We benefit from our targeted price increases, but we have also included some volume loss risks. So that's how we have built our guidance for the year, [Indiscernible] on top line is neutral, we expect a minor positive contribution to the gross margin and the assess to explain early on, we are looking to effectuate these price increases as contracts expire. So our commentary on being off or expecting to be off to a good start. It's important to understand that wording of expecting to be off to a good start. So we're really commenting on the fact that – that for the first quarter, and for the beginning of the year, we see and expect the momentum we had in the last part of ‘21, to continuing to ‘22. And therefore just trying to set the expectations for our first reporting of Q1 in April.

41:58 So that does this imply around a 7% organic growth rate for Q1?

42:07 So that we are not commenting on last, we're just saying that we have 3% to 7% for the year, and then that we are expecting a good start to the year.

42:16 But you grew 7% in the end of 2021 and if you're implying that growth is continuing, wouldn't that bring Q1 and at least in the high-end of your guidance range? Am I completely misunderstanding what you are telling me?

42:32 So what I was saying is that we were continuing the same momentum from Q4, I didn't say we would have exactly the same growth rates. So I think if anything, we will we are saying that we expect the first quarter of the year to be at least on average, for the full year growth and I think that's as far as we can help you on the first quarter expectations.

42:56 Fair enough.

42:57 And if I take a second question of Lars, are on alternative proteins, maybe to put this into context. Our alternative proteins, developments really fall into the two categories. If I link it back to the strategy, the first one in the Expand space, which is our investment in Blair, and everything we're doing in that area, which would be hitting us within the next three years in terms of really scaling up into growth. And then we have a piece of what we're working on, which is into our explore category from a strategic perspective, which is really looking at 2025 and beyond. And that's really where the microprotein falls into place. So the announcement we made last year was around an open call for innovation around microproteins really looking to couple the work that we're doing internally from an innovation perspective, with outside innovation and creating an environment and a network to accelerate innovation in the area. So we don't have anything that you should be expecting in the next year. This is really about that explore area into microproteins for the long-term growth.

44:01 But Amy, just to follow up on that, doesn't that mean it would be fair to assume that if we take a sort of five-year perspective, you alternative protein portfolio five years from now should be significantly broader than what you have already announced and investing specifically in Blair?

44:22 I think that's fair from an aspiration perspective. Right. So I mean, what we've announced with Blair, would be that three years following the start-up, we would reach DKK 1 billion of sales, this microprotein space would be the side that but again, on a longer-term basis.

44:37 Thank you very much, Amy.

44:43 Thank you. And our next question comes from the line of Alex Jones of Bank of America. Please go ahead. Your line is open.

44:51 Great. Thank you very much for taking my questions, two for me please. The first on the margin this quarter. I think you talks about 400 basis points lower underlying EBIT margin year-on-year due to sales and distribution. Can you give us a bit more color on exactly what in sales and distribution expenses increased? And how we should think about that going into 2022? And second question on Food, Beverage & Health. You talked about sort of raw material optimization and ingredient replacement in bakery having a positive impact both in 2021 and expected in 2022? Could you give us a bit more color on sort of how that depends on sacred commodity prices versus how much as a structural evolution of the banking industry. Thank you.

45:35 Excellent. Thank you. Very, very good questions. Alex. Lars if you could answer the first one, and then Anders built on the dynamics on baking. Thank you.

45:43 Yes, absolutely. So our operational expenses in the fourth quarter were significantly higher than they were in the beginning of the year. And this we called out, actually already in the – in our release of the second quarter, that we were expecting higher operational costs in the in the second half, and the majority of those hit in the fourth quarter. So where's – so what they were, for example, in Commercial Investments, we had our one health areas where we had significant investments in cross channel and cross geography promotion, and new product launches, building on our acquisitions off of the two and our three companies in the area and we initiated a number of clinical trials and we also across the businesses, it is not only in the area one hills but also in the other areas had significant investments in digital solutions so those were some of the key factors that impacted the first quarter spent primarily in the sales and distribution area. And when we look forward to ’22 then the fourth quarter of last year is not the appropriate benchmark for how ’22 would look like. So as we said on the gross margin, we expect for the year to be 1.5% to 2% in this point lower than what we saw for ’21. Maybe to give you an idea of the other line items then admin cost is probably a good assumption to be in line with history at 5% to 6% We have historically had R&D cost of 13, S&D 11% to 12%, but on the latter two, we have consciously chosen to shift a bit of our resources from R&D to S&D. So, I think you would probably see a slightly higher S&D ratio maybe closer to 12% or 12ish and R&D maybe still in line with 13% or so. So I think that is maybe a good way to think about how the cost competition would be in 2022. And arriving at an EBIT margin of 25% to 26%.

48:03 And on Food and Beverages, I will just expand a little bit on how growth is composed in ’21. So the major driver for us was a very strong underlying demand and innovation and market penetration that made up more than two-thirds of the growth in food and beverages. Then we saw especially in the brewing space some recoveries that also supported growth and then we come to raw material optimization. And absolutely as you highlight that was mainly in baking. What happened in baking was that we saw shortages of certain raw materials like the [Indiscernible] we saw quite some inflationary pressure on scalable gas to diversify us and so on and then you can ask well does this stick, we believe when we talk to customers that it is actually quite sticky and that's a business that will continue. Our estimates is between two-thirds and three-fourth of this that will stick and the reason we believe it will stick is that customers, they use it to sort of drive, clean label claims. They of course also do it because of the stability of cost and then there is some pain associated with to make these reformulations. So all of that makes us quite confident that what we have seen of reformulation and optimization will actually remain in in ‘22, and the years to come.

49:19 Okay. Thank you very much.

49:22 Thank you. And our next question comes from the line of Søren Samsøe of SEB. Please go ahead. Your line is open. Søren Samsøe: 49:32 Yes. Good morning. Just two questions from my side. First on [Indiscernible] regarding the margin bridge from the 27% and underlying in 2021 to the 26.5%, if you could give us the components to bridge that gap and then secondly, you had quite impressively protein product launches in 2021. Solutions, you can say, could you highlight the most important ones in terms of sales growth contribution over the next five years? Thank you.

50:08 Lars?

50:12 Yes, so on the first question. So from the 27% underlying the most important factor of towards the 25% to 26% EBIT margin guidance we have for ‘22 and is the lower gross margin, which we believe will be 1.5 percentage to 2 percentage points are lower than what we saw in 2021. We are also continuing to invest in our business and therefore, as I just outlined with our expectations or at least the way you can think about some of the individual coastlines, we are still investing also in both sales and distribution and also R&D on a growing top line. So we don't see any significant other ordinary items in the 2022 numbers. So those would be the significant drivers of the margin arriving from the 27% last year to 25% to 26% in 2022.

51:23 And to your second question. We make 14 launches, we love them all. That, it's – it's – it's hard to choose, which is the one that we feel more proud of they all contributing to what it has been already also a trajectory of our innovation continues to be a strong contributor of our growth. 30% of our sales this year, they were coming for launches we made in the last five years. But if you make me – if you asked me, where would you see that contributing in the future, it will be across all fronts. So from one side, we have very high expectations and our launches in animal nutrition including the latest launch, we have made in the four years for animal nutrition, very strong trend and momentum, we mentioned on Freshness with the broad launch, that continues to contribute to them – to continue to grow in Household Care. Very good momentum in Human Health, very high level of cross fertilization on the acquisitions that we brought in, and also the tangible example from innovation from our innovation muscle and then also cross fertilization across the globe and then lastly, not to mention, is a strong trend in the market for consumers for healthier foods, some buy replacement of chemicals as ingredients, that's as Anders mentioned, but the strong also driver for nutritional changing habits in seeking for plant-based solutions where our enzymes contribute. If you couple that with also a stronger penetration in emerging geographies. I have to close your question saying we love them all and we pleased with the 30% contribution of innovation and we know that innovation is a key contributor of our long-term growth. Søren Samsøe: 53:08 Okay, thanks for that.

53:11 Thank you. And our next question comes from the line of Sam Perry at Credit Suisse. Please go ahead, your line is open.

53:18 Hi, guys. Thank you for taking my question. If I look at your two-year stack organic growth, your 22 guide at the mid-to-upper end implies double-digit to mid-team growth on a two-year basis. This is a level that hasn't been seen on a two-year basis since pre-2015, when commodity prices are also much higher. Similarly, if I look at the midpoint of your sales and EBIT growth, so EBIT guide for ‘22 is broadly in line with 2016, despite having some acquisitions. So I guess my question is how much of your ability to print these higher growth and earnings numbers, do you think is based on changes you've made to the business over the past five years, and new innovation and how much is based on increasing soft commodity prices and customers, reformulating towards enzyme-based products? Thank you.

54:11 We – thank you, thank you for your question. We have launched as you as you recall our strategy in September. And a lot of the fruits that we're seeing today are already from the work made on the past, but also from the steps we're taking for the implementation of the strategy. It's a combination of both. We, yes, capitalizing on the headwinds that we see in the market. We're not shy of that. But then also many of those ones, they are sticky as they stay, we know that once you try to our solutions, then our customers fall in love with the value propositions of sustainability that we bring in and that's true across all fronts. In animal nutrition, where we bring beyond Increased Protein enhancement, also lower manure, like in baking, where we were moving into natural and chemical – formulation and clean labels enabling or detergents are leading to washing our consumers [Indiscernible] lower temperatures and replacing chemicals. So there is good momentum. We're capitalizing on that but there is a lot of self-help and the self-help comes from productive investments we've made in a margin geographies, on assets, on people, on labs. The self-help also comes from acquisitions that we have made in Human Health, to maximize a potential that we have as a biotech company and to contribute to the world in our – in a very rapidly growing trend, on healthier needs. Same will be for plant-based proteins on the investments was made in Blair – and we making on Blair, that's one of the key milestones also for this year to move ahead with those investments. And that will be a contributor also for the future growth.

55:51 Great, thank you very much.

55:55 Thank you. And our next question comes from the line of Charles Bentley at Jeffries. Please go ahead. Your line is open.

56:02 Thanks for taking my questions. So I just have two, so one is just on the comments are on Household Care, the Europe has already bottomed and private-label, you'll see the shifting, I mean, this is what you're already seeing in Q1 because the guide implies kind of an acceleration versus the Q4 exit rate. So just want to understand whether this is what you can already see in January and then coming through the order book for the rest of the fourth quarter or does this assume that this picks up at some point. And then secondly, just on the – just another question on the kind of Q4 margins and the commercial investments you've mentioned, I mean, it seems to suggest that something like DKK 100 million of costs in Q4, I think previously, you suggested it would be something like DKK 300 million total, is that right? And then kind of related to that? What's the likely phasing on the remaining costs? Thank you.

56:57 Thank you, Charles. I'll let Anders answer your first question and then last, can you build up on the second one? Thank you.

57:04 Yeah. So of course, we have one-month in the books and it confirms what I said before that we believe that Europe will look around flat, maybe slight growth and that's what we see now and that's also we see in the order books.

57:21 kart And I would say on the on the spent in the fourth quarter. I don't know. But I assume that DKK 300 million you refer to is the cost that we carved out all the way back in ‘19, when we started to sort of reshape our cost structures towards sales and distribution. I think now we are almost three years later, and I think it becomes very difficult to separate the what was carved out there and what is now invested where. So I would maybe rather look at our commitment to continue to invest in our business, which we also do and imply in our guidance here for 2022. And then we have also provided a long-term guidance back in the capital markets day that we aim for an EBIT margin of 26% in 2025 or above, and no individual year going below 25. And that's what we're guiding for here in 2022 with a continued investment in our business to support the organic sales growth.

58:22 Great, thank you very much.

58:22 We have time for one more last, one last question, please.

58:28 Thank you. That comes from the line of Sebastian Bray at Berenberg Bank. Please go ahead. Your line is open.

58:34 Hello, good morning. And thank you for taking my questions. They're primarily focused on gross margin development, I can understand why the current raw material environment would mean that the outlook is, let's say downwards for 2022. What makes me curious is what the company thinks of as its mid-to-long term gross margin. If price recovery is good enough, do we get 100 to 150 basis points back? Is there anything in 2023 onwards? Is there anything to suggest the current decline in gross margins may prove permanent as opposed to temporary? 59:11 And secondly, a quick question on plant-based meats and products. If I say as a rough guess, I think Novozymes is making a little less than DKK 100 million in this area on an annualized basis, and I'm like getting warm. Thank you.

59:25 Thank you, Sebastian. Good morning and I will let Lars answer to your questions.

59:31 Yes, thanks, Sebastian. So, right now, we are like many other companies impacted by the higher input costs and therefore we are guiding to a lower gross margin of 1.5 percentage to 2 percentage points. We are also saying that we are taking actions to pass on some of those higher input costs to our customers over time and therefore we see a small positive contribution from that pricing initiative on our gross margin and then I would say we are still continuing to see the productivity improvements, as we have seen for years and years and years, leveraging the scale and the volume growth in our facilities. So in the long-term, we still see potential to expand gross margin, from productivity, from scale and then we will see how the future develops both in terms of input costs, and also in terms of price discussions. But the fundamental factors that enables us to see gross margin expansion, those are intact and then of course, there are more parameters, like we now experienced in ‘22, which will determine the actual gross margin in the individual year.

60:48 Thank you Lars and that closes the session. Oh, sorry, Anders, yes, please go with the second question.

60:55 I think there was a kind of question around protein and let me just expand on that. I'll give you a specific guidance on how much we sell and how with DKK 100 million is warm or cold. But what we do, we have a sizable business on protein extraction and protein modification that relates to meat patties, both delivering on taste and texture, and reduction of salt. It's a business that's growing very, very nicely right now. And of course, one when you look at the trends, we have a lot of hope and faith will continue to grow for Novozymes.

61:26 And now, yes. Thank you very much all for your questions. Thank you for your time and looking forward, continue the conversations with you, with many of you in the forthcoming days, wishing you a very nice day, thank you.