Peder Holk Nielsen - CEO Tina Fanø - Head of Agriculture and Bioenergy Anders Lund - Head of Household Care Andy Fordyce - Head of Food and Beverages Thomas Videbæk - Head of Research Innovation and Supply

Gunther Zechmann - Bernstein Lars Topholm - Carnegie Andrew Benson - Citigroup Laurence Alexander - Jefferies Hans Gregersen - Nordea Søren Samsøe - SEB Ben Gorman - UBS Ian Wood - Redburn Annette Lykke - Handelsbanken Michael Rasmussen - ABG

Good morning and welcome to the Novozymes conference call. Today we’ll review our performance in the first nine months of 2017 and our keep priorities for the business. Our presentation should take around 25 minutes and after that we'll take your questions. My name is Peder Holk Nielsen and I'm the CEO of Novozymes. I'm joined here today by my colleagues and the Executive Leadership Team that is Tina Fanø who's heading up Agriculture and Bioenergy, Anders Lund, Head of Household Care, Andy Fordyce, Head of Food and Beverages and Thomas Videbæk, Head of Research Innovation and Supply. Our IR team is also present here today. Please turn to Slide 2. All in all we had a good first nine month and we saw a continuation of the momentum in the business from the first half of the year. Sales grew by 4% organically in the first nine month and by 8% in the third quarter. This was satisfying and better than we had expected. And sales is robust, we continue to see growth in our three largest segments, household care, food and beverages and bioenergy. The growth in household care enzyme market remains fairly slow. Some customers in the developed markets are cutting back in formulation cost, but also we see small and midsized players stepping up the innovation game with higher use of enzymes. And we have good growth in the emerging markets. Our food and beverage business is performing well, very well and better than expected. Most of the subcategories continue to experience solid growth in food and beverages. I'm pleased to see our bioenergy business maintaining the good momentum we started to see in the fourth quarter of 2016. In particular, sales of enzymes for conventional biofuels is developing well. In agriculture and feed, we're now seeing the rebound following the change in sales cycle in BioAg. But there are still uncertainty regarding BioAg. Also in the fourth quarter, when the BioAg alliance builds its positions for the first half of 2018. In feed, sales came in soft in the third quarter mainly as a result of volatile inventory levels and a reduced end market demand. Let's take a look at the earnings. Continued efficiency improvements in production gave a slight improvement in the gross margin to 58%. Reported EBIT grew by 5% for the first nine months posting an EBIT margin of 27.9%. Free cash flow was also solid and our investment programs are running according to plan. After a better than expected performance for the first nine month, we are adjusting our expectations for the full year. But as the agricultural related markets remain volatile, we’re allowing for greater uncertainty than usual in the full-year outlook. We adjusted our organic growth guidance for the full year to 3% to 5% and we maintain an EBIT margin guidance of around 28%. All in all a satisfying performance and a slightly more positive outlook. Please turn to Slide 3. Our goal is to return to historical growth rates while maintaining focus on profitability. We'll try to provide continuous updates on the steps we're taking to get there. From a geographical perspective both emerging and developed markets grew by 4%. All the main geographies posted mid-single digit growth rates for the first nine months. Sales in Latin America and North America performed well in the third quarter for this is also where we have the easiest comparison. We continue to increase our commercial activities in emerging markets to support the interesting growth opportunities we see there. These are mainly in household care and food and beverages. This is going according to plan and should give support to growth in the years to come. We are expanding our offerings in developed markets with new and improved solutions across segments. And I believe we can conclude the divisional set up from 2016 enabled us to bring more impactful innovation to our customers. Thomas will talk more about this later. Our biological offerings are sustainable and environmentally friendly. They improve the quality and sustainability of end products, the nutritional value of food and the yield and throughput in our customer’s production processes, more with less. These drivers are global and support our growth across geographies. So let me just close by reiterating that our focus is on growth, organic growth and maintaining profitability. Now nine months into the year, we’re heading in the right direction. And I'll now hand it over to Anders, Anders please.

Thank you Peder. Please turn to Slide 4. Sales in household care grew organically by 2% in the first nine month and by 4 in the third quarter. Asia Pacific continues to deliver solid growth spearheaded by strong growth in China. We've introduced significant enzyme innovation over the last years to increase wash performance and support the continued shift to liquid detergent in these markets. Looking at Latin America, sales regained ground in the third quarter compared to the first half. Growth in North America, Europe, the Middle East and Africa improved relative to what we've saw in the first half year. This was partly due to easy comparisons in the third quarter last year, while some larger customers in these markets are going through cost saving programs, other customers are increasingly focusing on performance, especially in the dishwasher category is experiencing strong growth. For the full year, we expect modest organic growth in household care. The fourth quarter is expected to continue on current absolute sales levels, but remember that we also face a tougher comparisons from Q4 ‘16. The freshness and hygiene platform is gearing up for launch in the fourth quarter as planned. As we've said before, sales will only have modest effect at the start of ’18 and then ramp up from the second half of the year. The first product is an exclusive launch to one customer. We believe the emerging markets hold significant untapped potential and we're supporting our efforts with significant investments in both people and new technologies. An example of this is the progress in product which we just launched. This new emerging market product is targeting the vast unpenetrated volumes in Asia and Africa. Thomas will elaborate on this product in the R&D update. Before my summary I would like to give a few comments on technical and pharma, which is smallest area in Novozymes representing 7% of overall sales. Here our largest industries are textiles, leather, waste water and pharma. Sales were down 3% in the first nine months and down 1% in Q3. This is mainly a result of volatile off takes in pharma. So let me summarize, sales growth in Q3 was in line with expectations back in August. We remain excited about the significant potential we see in the emerging market and we continue to supply new and better products to customers across the world. And finally our freshness and hygiene platform remain on track for the first product launch in Q4 with more technologies to follow. And I'll hand it over to Andy to talk about food and beverages.

Thanks Anders. Please turn to Slide 5 to see the good results for food and beverages. Sales continued the strong performance from Q2 with organic growth of 9% for the first nine months and 11% for the Q3 alone. Most subsegments contributed positively to the strong results with food nutrition and starch being the main drivers. The aspiration to deliver solutions that help our customers improve the quality and sustainability of their food and beverage products remains at the forefront of our efforts in food and beverages. And we see good buy in on this positioning. Food nutrition delivered strong growth driven by both lactose reduction in dairy and infant nutrition. Starch grew in line with expectations, still benefiting from our launches in this area over the last two years. Favorable prices for corn relative to raw sugar also benefited our sales especially in China. I'm proud to see the good growth in baking. This is driven mainly by higher demand for our solutions in the Europe, Middle East, Africa region. In North America, we saw a continued modest decline in baking enzyme sales for the first nine months. This is similar to what we saw for the first half and a bit better than expected. This was due to higher elasticity in the market as we've been reducing prices in the North American fresh keeping market to prepare for the upcoming patent expiration in North America in Q1 2018. From a regional perspective, EMEA was the main contributor to growth with very strong Q3 growth in both food and nutrition, and baking. Asia Pacific also delivered strong results in the third quarter. This was supported by all segments with sales to the baking and food nutrition segments both picking up quite nicely. Starch continued the same trend seen in the first half. Our brewing business in this region regained ground, but it’s contribution to the overall growth remains fairly modest. Latin America improved in Q3 especially in food nutrition, but sales remained down for the first nine months. We see customers continuing to suffer from weak economics and depressed consumer demand. To finish let me summarize, we continue to see strong performance in the third quarter in food and beverages and posted 9% organic growth for the first nine months driven by most segments and geographies. This was very satisfactory. And with that I'll leave it to Tina to go through agriculture and bioenergy. Tina Fanø: Thank you Andy. Let's take a look at bioenergy on Slide 6. I'm pleased to see good development in our bioenergy business with 16% organic growth in the third quarter we come in with a very satisfying 10% for the first nine months. Growth came mainly from conventional biofuels and this was across geographies. This supports de-cannibalization of road transport which is great news. As you may recall, inventory levels were relatively high at the time of the first half year presentation and this is still the case. Now in the third quarter growth in US ethanol production is estimated to have been flat year on year. We estimate volumes are up by around 2% for the first nine months, so underlying volume growth is coming down as expected. Our tailored custom approach helps our performance. It is made possible by our broad portfolio of innovative enzymes so the launches made in previous years are paying off. This is the case in both the US and other parts of the world. Sales of enzymes for biomass conversion continued to contribute to bioenergy sales growth in the first nine months, but make up a small portion of bioenergy sales. We expect slower growth in the fourth quarter as higher run rates at our customers facilities started at this time last year. Trials for conventional ethanol are doing well at planned scale, but we expect commercial ramp up in 2018. So all in all we have seen a good first nine months in bioenergy supported by volume growth, tailored technical solution and a broad innovative enzyme product range. Innovation and closeness to our customers are key to continuing to deliver growth in the future. Now let's take a look at agriculture and feed on Slide 7. Sales in the third quarter were up 8% taking growth for the first nine months to minus 2%. The improved performance is related to strong BioAg growth in Q3 due to the change in sales cycle, which is moving sales from the first to the second half of the year. Our technology in this segment supports the drive to watch more sustainable agriculture. In feed, the third quarter came in soft. This was mainly explained by volatile inventory levels and somewhat lower end-market demand. While these shifts are not significant and volatile inventory levels or our dynamic end market are nothing new, we are cautious about the performance for the remainder of the year. Animal probiotics continued to develop well from a lower base. Rollout is taking place into new regions with good feedback from customers. For example, we recently received registration for one of our products in China and we continue to build on our interesting partnerships with [indiscernible]. For the past several quarters now we have highlighted how farmers are facing tough conditions and how we are feeling this as well. Here in the second half of the year a lot of our focus is on getting ready for the North American planting season in early 2018. This bring someone certainty and we are still in the middle of our preparation. Our focus in BioAg is on developing new products and expanding into new regions to drive long-term growth. Acceleron B-300 SAT is one example of this. In January, we will update you on the progress on our exciting pipeline together with Monsanto. So to summarize, we had a good Q3 driven by the changed sales cycle in BioAg but there is still uncertainty regarding the fourth quarter as the agricultural markets are volatile. And now I'll hand over to Thomas for an update on innovation. Thomas Videbæk: Thank you Tina, please turn to Slide 8. 2017 has been a good year for Novozymes on the innovation front. We see continued progress in our pipeline with important launches on track. So far we've made seven new product launches in 2017. This is come across industries, three in household care, two in food and beverages, one in bioenergy and one in BioAg. They represent a combination of brand new application areas such as vegetable oil processing will Palmora and strong innovation within well known enzyme areas such as Progress Excel enabling better enzyme stability in liquid detergent formulations. In Q4, we will launch the first product in freshness and hygiene and we're very excited about this breakthrough technology. As Anders mentioned earlier in the call, we have launched Progress In in fourth quarter. This is a new specially developed protease for powered detergent tailored to low and mid tier formulators in Africa and Asia. Progress In will make the enzyme enabled laundry benefits available to even more customers in these markets. A couple of years ago we carried out a reorganization. Amongst many things we anchored the R&D application units in the three divisional organizations. This has created a stronger connection between the commercial side and R&D with more impactful products entering our pipeline. Continuing with news on the innovation, on September 21, Novozymes launched Hello Science, an open innovation network where innovators startup companies and others can work together to develop solutions to some of the world's greatest challenges. The first theme is water scarcity, a response to a call from UNICEF. On October 20th, Novozymes was named the world's second best science employer by the respected science magazine. After entering this survey in 2015 Novozymes have consistently been in the top ten. And the number two position makes us very proud. Novozymes work culture is strongly science based supporting our high rating as a global innovation leader. That's all from me back to Peder for a few words on the financials and the outlook. Peder?

Thank you Thomas. Let me first say that we're making good progress on recruitment of a new CFO, but I cannot disclose the name yet. So I’ll yet another time review our financial performance. Revenue came in better than expected, driven mainly by food and beverages and bioenergy. Sales grew by 4% organically as well as in Danish krone. EBIT grew by 5% and the EBIT margin was 27.9 compared with 27.7 in the same period last year. Excluding reorganizational cost or reorganization cost in the first half, the EBIT margin was closer to 29% compared with just above 28% for the first nine months of last year. As we communicated at the start of the year we are in the process of allocating more resources to growth initiatives and increasing our emerging market footprint. These investments are continuing to ramp up. Net profit came in 4% higher compared with the first nine months of last year. Hedging gains and a lower tax rate supported the 9% net profit growth in the third quarter. On a more unfortunate note, our partner M&G is facing financial difficulties and they recently filed for restructuring. M&G has provided Novozymes with a financial guarantee as biomass to ethanol projects in our joint venture beta renewables have not commercialized as we expected. As a consequence during the third quarter we have decided to write down DKK60 million on net financials which is half of the DKK120 million financial asset. The DKK60 million equals DKK47 million post-tax. We’ll now have to wait and see what happens and hope there will be a solution to their difficulties. Free cash flow before acquisitions was DKK2.1 billion and includes close to DKK1 billion in net investments. Investments picked up in the third quarter and we still expect them to be considerable this year as we expand in Nebraska, built our new Indian facility, and not leased our innovation campus in Denmark. We continue our share buyback program worth up to DKK2 billion for the full year. After the first nine month we have purchased shares for DKK1.7 billion.. Overall we are adjusting the outlook for organic revenue growth to 3% to 5% from previously 2% to 5% and EBIT growth to 2% to 4% from previously 1% to 4%. The expectation to net profit is maintained at 2% to 5% and includes the write down on financial items as well as a lower expected tax rate for the full year. And finally slightly lower investments result in an adjusted outlook for free cash flow. So we now guide between DKK2.1 billion and DKK2.3 billion. Please flip through Slide 10 and turn to Slide 11. So let me just quickly summarize our message here today. We’re adjusting expectations after a better than expected performance in the first nine month. There is some uncertainty related to our agriculture business and that's build into our guidance. We’re creating stronger connections between research, marketing and sales across industries and geographies. This is creating good momentum in the business and gives ground for optimism as we look forward. And now we're ready to take your questions. Operator please begin.

[Operator Instructions] Our first question comes from Gunther Zechmann with Bernstein. Please go ahead, your line is open.

Firstly, Anders on the hygiene platform, can you just give some more color on the timing and the size. Is that going to be more Halloween kind of hygiene platform or a Santa Clause kind of platform. I think if I look at the chart, it looks more towards very year end, and I interpretation too much into that timeline. And then on the size, you said before that this product launch will be enough to get household care back to mid-single digit growth rates. Now you say that you expect growth contribution from the second half of 2018. So when would we see that run rate that's the first question. And the second one on bioenergy, Tina, can you just confirm that the 16% growth rate we've seen in the third quarter that does not include any contribution from these.

I'm not sure we got the last part of that question, but I can get started on answering the first piece on household care, on the hygiene platform. I think what we're saying and maybe that is a little bit confusing. And watch we also reiterated that the last quarter was that we are launching the product already now, it will have modest effect in the first half of 2018. But of course there will be sales but on a basis of the size of household care will be relatively negligible. Now that when we go into the second half yea, we’ll start to see that pick up in the numbers and then of course the reason why we talk so excitedly about this has nothing to do with necessarily only ’18, but also the perspectives in ’19 and ’20 where more technologies will follow and that will drive significant growth. We believe this will be a significant part of getting household care back on a growth trajectory. Tina Fanø: And on the bioenergy question, which the way I heard it was about whether the 16% in Q3 included sales to east. So we are having a very, very minor pre-commercial sales as we are trailing a plant level getting ready for the launch in 2018, but this is insignificant.

Thank you. We’ll go next to Lars Topholm with Carnegie. Please go ahead. Lars, your line is open please go ahead.

Yes sorry I had some technical difficulties with this call, just a couple of questions. First of all congrats with a good quarter. Tina in bioenergy [Technical Difficulty] performance to what extent is it a function of beta mix and to what extent do you think it's a function of market share gains and can you comment in general on whether customers are trading up as a function of beta cross margins or if they’re just buying of them and maybe just some additional color on that. And then on BioAg and the little red flag you raised regarding Q4. Can you maybe give some comments on what commodity prices should we be looking at if we want to try to manage whether the outcome of this is beta worse than what's currently expected. And a related question do you know anything about the inventory levels at Monsanto [Technical Difficulty] inventory of inventories maybe low, how do you see that. Thanks.

Thank you Lars and thanks for staying with the two questions and they were both to Tina, so we’ll let Tina go on. Tina Fanø: Yes. So the first one on whether it was - we had some difficulty hearing the questions, but just to be certain I got it. Well there was a bit of mix or a market share, I would say that in general when you look at the margins in the biofuel producers, it's up a bit, but it's still quite low margins. In general it's a matter of plants running full out. We do see some market share moves but we do also see some better mix. So I would say it's a bit of both, we still have quite good traction of both our [indiscernible] as well as our Amp, but we do also sell the lower tier products. So it's a bit off of both. Then on the last question on inventory levels off Monsanto, we do have visibility off their inventory levels. We do here in the second half of the year build up to watch the launch in the North American season, which is the biggest part of our business. So you could say they are building up inventories in this part of the year, simply to get ready with the planting.

But my question was more if what you shipped to them last year because that was actually sold out. Tina Fanø: What we shipped to them last year was overall sold out. You saw from Monsanto I'm sure that all the seats they had treated with the Acceleron B-300 SAT, all the seats there were sold out.

[Technical Difficulty] please go ahead.

So first of all also on agriculture, can you share with us the growth, how it was to what let's say the older portfolio within soybeans. How much of the newer inoculates that you have seen there. And my second questions will be on the household care and the Progress In. Can you confirm that you expect that this new not only Progress In, but then whole freshness or hygienic platform enable you to grow the household care business at a single digit growth rate maybe from 2019 or so. Thank you.

Thanks for your question. We’ll give Tina a small break and let Anders start with the household care questions. Anders please.

Thanks for the question, we haven't done the budgets for 2018, so I’d rather not comment directly on where we will - where we expect to end. But obviously you hit upon two of our strategic themes for expecting that we can actually turn around household care and deliver higher growth. One if the hygiene and freshness platform that will deliver in the coming years and another one is emerging markets. And with Progress In we have actually for the first time made a dedicated innovation that targets the mid and low tiers in the emerging market. And now our expectation is of course that we will try to penetrate further into these markets. How big that will be I think it's a little bit too early to say. But I think it's the right direction that we also now have technology for these markets.

So you think you can reach 4% to 5% growth loner term with this platform. Is that what you're saying?

So what we're saying is, we haven't done the budgets for 2018, but what we also have said is that we need to get household care up to deliver higher growth rates if we are to get Novozymes back to historical growth rates. So the underlying assumption is of course that based on that household care needs to contribute more.

And just to add a bit of aggressiveness to it, we are going to go back to historical growth rates and household care will get there. We'll let Tina talk about BioAg. Tina, please. Tina Fanø: Yes. So your question was relating to soybean and the older portfolio, we do see some growth as well in the older portfolio, but I think when you think about BioAg, the key is the new launches which are coming. It is a matter of getting products like Acceleron B-300 SAT out, it's a matter of off getting, you could say, the follow-up product, the corn bio yield too up, get that out. We are getting ready for that and we do expect sales of that product in 2018, because the external launch will be 2019. In our transformational pipeline, we do also have new soy products as well as products for wheat and that is really where you should expect the growth to come from.

Thank you. We’ll go next to Andrew Benson with Citigroup.

I just wonder with the challenges at the M&G group, how you see that affecting your 2G strategy and I do recognize it's developing much more slowly than sort of a few years ago. Secondly, I don't want to harp on about the BioAg too much, but I would have thought surely you would have all the order deliveries to Monsanto so that you'd be able to give a fairly clear guidance on the expected performance through to the end of the year or is that simply not the case?

Thanks for your questions. We have a bit of a technical issue hearing it also. Bear with me. I'll try to answer both of them. The challenges at M&G in Italy, as to the best of our understanding, is not related to any of the 2G activities, but because we have a financial asset on our books that is related to the M&G Financiera, the mother company. We are exposed to the difficulties that they experience in the PET business. We are hoping that these things will be resolved and that the Crescentino plant will probably get a new owner, we hope that they will get a new owner and that we can continue to use that as a demonstration plant. I think that's important for us, it's not critically important, but it's really good for us as we try to develop new 2G programs. And we do try to -- we do continue to push 2G technologies in the marketplace. It doesn't change our strategy, but it's yet another annoying bump on the road that we'll have to navigate, but it doesn't change our strategy at all. On Monsanto, at the risk of maybe oversimplifying it, but we are now in a position where we'll ship to Monsanto inventories inoculant that will go in the ground in April and May of next year. Monsanto is updating their projections for expected acreage and expected crops and they do that almost weekly. So the uncertainty we’re dealing with for the fourth quarter of this year is really how much they want to put in inventory at the risk of getting returns at the -- in the second quarter of next year and we’re just putting that uncertainty out, so that you understand that uncertainty.

So can I just clarify, the budget, because, actually some of your words, it seems to go silent every while, so I’m missing quite a bit of what you’re saying? But you’ve got the stock on your book and the sales recognition will depend on the degree to which Monsanto calls off that stock and there's uncertainty about that. Is that accurate?

We are manufacturing as we speak of course and so we have some of the stuff in our inventories, but we ship to Monsanto and their inventory buildup and how they put it on seats of course depends on again their expectations for the offtake at the end of the planting season, northern hemisphere in 2018.

Thank you. We’ll go next to Laurence Alexander with Jefferies.

Two quick ones. First on food and beverage, as you look at the new product pipeline there and the demand pull, do you think you can sustain the 10% plus organic growth rate for several more quarters or is this sort of a peak-ish run rate? And secondly on BioAg, can we at least assume that the acreage growth for BioAg [Technical Difficulty] to BioAg sales growth or is there going to be a significant mix effect next year.

Thanks for your questions. So Andy was enjoying the piece, but now he's getting disturbed. Andy, please.

Yeah. So we feel really good about the first nine months and we also feel really good about Q3. I have, in past calls, cautioned that of course it's difficult to maintain sort of double digit growth rates. With what we currently see, Q4 was also a pretty good quarter for us last year. So we've got a bit of a tougher comparison, so we expect that the double digit won't be achievable in Q4, but on the flip side of this, I think we are seeing broad based momentum in the food business. We're seeing good balanced demand from both developed and emerging markets and we're investing in a very focused way to continue to create growth drivers. So we feel very good about the momentum, we'll see exactly what the quarter to quarter results are, but in general, we feel positive.

And Tina, the split between acreage and mix please. Tina Fanø: Yes. There are. You could say, it's a bit of both to be honest. There are some mix effects, I mean, depending on whether we sell a premium soybean inoculant or you could say more in private label inoculant. However, you could say in terms of growth, the key will come from us rolling out on more acres and I'm sure recall, we, with the Monsanto alliance, have the plan on in 2025 to reach 250 million to 500 million acres, up from these -- less than 100 million acres, which we are at today. So, this is where you should expect to see, you can say, a link between acres growth and seeds growth.

Thank you. We’ll go next to Hans Gregersen with Nordea.

Good morning. The line is quite bad, so I've missed some of the answers. So, sorry if I'm repeating some questions. First of all, on household care, you have mentioned in the report that you're seeing continuing price pressure amongst servers, can you give a little bit further insight into that scenario? And then secondly, could you give a little bit -- repeat whatever you said on the emerging market outlook? Thank you.

Questions for Anders. Anders please.

So what we’re saying on the household care side is that we're seeing a shift in terms of some of our customers investing more in innovation and some are doing less and what's right now happening is that there seems to be more momentum with some of the regional large players to invest more in innovation and some of the big global detergent manufacturers to invest less. I think that nets out in our results and as you can see it and that's sort of some of the upsides and some of the downsides that we're seeing. I guess that's nothing new in that it may be the change in the dynamics, a little bit new. In terms of emerging markets, we are seeing good growth. We're seeing, especially good growth in Asia, specifically in China, but also in Southeast Asia and we actually expect that to continue. When we look at penetration levels, they’re still low in China and in Southeast Asia and those are the markets where we have the highest hopes and that's also the areas where we do expect to invest the most -- in resources and we'll expect to get the highest return.

Anders, you dropped out of the first answer of my questions. Could you repeat? And I didn't understand your answer. If you look on the cost pressure you're seeing among some of the servers, is that resulting in less volume being used or price pressure.

So what we've seen in the first nine months of the year, to a large extent with some of the large servers, we’re seeing this as a dosage reduction and to a lesser extent, a pricing issue. Where that will take us in the future, I'm sure it's more uncertain, but that's the situation right now.

So more dosing than price mix?

That's correct.

Thank you. Our next question comes from Søren Samsøe with SEB. Søren Samsøe: Just again a question on bioethanol and again, I’m sorry, that was a lot of it, I couldn’t hear. So if you would just give a split on the growth in bioethanol, what is mix, what is volume, what is coming from 2G ethanol, so we sort of get a sense of what is behind this very strong growth? Also if you can comment on the inventory levels in [Technical Difficulty] in the coming quarters. And then a second question is on detergents, which is more sort of growing 4% with a very comparable minus 5%. Now going into Q4, with a very strong comparable 5% plus, where should we sort of think the underlying growth is right now for you in detergents? Is it closer to sort of flat growth or is it closer to mid-single digit growth right now? Thank you.

Thank you. Søren, we’re also quite annoyed with the technical difficulties. I think the question was to Tina to expand a bit more on ethanol and ethanol inventory levels in the marketplace. Tina please. Tina Fanø: Yes So. The inventory levels in the marketplace is elevated and that for sure, they have been that for quite some time and that's for sure one of the risks you could say we are calling out on the biofuel situation, but they have been that for quite some time. Then, you also asked about the split on the growth in the bioenergy numbers. If we look at it for the nine months, then biomass or, yes a lot of ethanol is also contributing to the growth. It's a smaller part. It's also a smaller absolute level. We see contribution coming from here in Q3. I would say the way biggest majority is from conventional ethanol. This is conventional ethanol, both in the US as well as in other geographies and here, I took both Europe, Latin America, Asia.

Thank you, Tina. I hope it was transmitted and then we'll have Anders talk about detergents. Anders please.

Yeah. Thanks for the question. You should expect absolute sales performance to continue on the current level and of course that would also imply that the growth rates will come down as you rightfully say, comparisons are much higher in Q4 compared to Q3.

Thank you. We’ll go next to Ben Gorman with UBS.

Firstly and just specifically on food and beverage. In terms of the price pressure in North America, you spoke previously about that price pressure easing versus what’s your prior expectations and today, you’ve talked about it sort of being offset by elsewhere, can you give an update on the dynamic there, is price pressure -- really, are we looking at a situation where you've got growth in EMEA and things are sort of flat pricing wise in North America. And then secondly in terms of sort of longer term outlook in ag. And you obviously discussed a fair amount in terms of Q4 and into next year. But are we still looking at 90 million acres being feasible in terms of your previously stated timeframe or are we really looking at an environment now where the ag industry is tougher and sort of selling the biological solutions that should be more difficult over the next sort of five yeah time horizon. Thanks.

Thanks for staying with the two questions. The first one is for Andy. Andy?

Yeah. So what we've talked about in the past is that we've been proactively reducing price in North America as part of our channel strategy with our partners to prepare for the expiry in 2018. That's going, I’m going to say, according to plan. The part that was uncertain was what's the elasticity in the North American market and we've been able to see actually a bit of increased volume, which is helping to compensate for the price reductions. But on the other hand, outside of North America, we've just seen very nice growth and penetrating in especially emerging markets. And that's been able to more than offset the price decreases that have occurred in North America. So all in all, through the nine months, baking looks pretty good and we feel good about the momentum.

Thanks, Andy. And Tina?

Very quickly on that, can I just ask very quickly on that in terms of EMEA? Is that really an accounting growth in EMEA or is it an underlying volumes industry growth, what’s sort of making that region so strong for you guys?

It's not that people are consuming a lot more baked goods. It's that in the markets outside of North America, and for that matter, Western Europe, there's a lot of unpenetrated baked goods that we can go ahead and add value using enzymes. So we're penetrating existing volume and kind of also benefiting from industrialization in the emerging markets around certain food industries.

Thanks, Andy. And maybe just to add, actually, in many of our businesses, but in particular, in food and beverage, we have significant customers in Europe who also have a business of reselling in the emerging markets. So some of the business that we’re picking up in Europe in particular in baking actually is eventually finds its end users in the emerging markets. Tina, the longer term outlook for BioAg please. Tina Fanø: Yes. We are still confident on the long term potential of BioAg. We still have with Monsanto, the plans of reaching the 250 million to 500 million acres in 2025.

I think we’re ready for the next question please.

Certainly. We’ll go next to Ian Wood with Redburn.

May I ask another one for Tina, I’m afraid? I guess, you do mentioned in your presentation the Chinese bioethanol targets, which have been announced. I wonder if you could give more commentary around how realistic you think these are and how well positioned you think Novozymes would be to capture any growth in that market? And then secondly on emerging markets, you do seem to be seeing very good results in both household care and [Technical Difficulty] seeing a slowdown. Do you think, you're seeing a genuine market pick up or is this a case of you’re not properly targeting these markets before going after them harder now? Thank you.

We’ll let Tina start please. Tina Fanø: Yes. So on China and the announcement of that they want in 2020 to get to 10, we are well positioned in China. We do already have sales in China. We have sales organization and so forth. So we are well positioned for China. Right now, what is happening is that we are getting some further understanding of what is it actually that it will mean, because for sure, if it ends up being a 5 billion gallon by 2020, that's a lot of ethanol, which needs to either be imported or produced locally in China. So we are investigating this situation and we believe that we are well positioned in order to capture the growth which will come there. So that is great news.

Thank you, Tina. I think in general, if you allow me to take the emerging markets question and again, we did not hear all of it, but we’ll try to answer anyhow. In many of our businesses, we seeing a, first of all, you see significant emerging markets where you -- there's a lot of economical growth, there is middle class that is evolving very fast and that brings with it demand, but it also brings industry consolidation and with a more consolidated industry, be it in food and beverages, household care, you start seeing that businesses are willing to and capable of engaging in more technical and innovation related dialogs. So I think, you could always argue whether we are late comers. I don't think we are, we're incredibly well positioned in the emerging markets and we’re hitting it a lot harder now, because the markets are changing and opportunities are emerging very quickly.

[Operator Instructions] Our next question comes from Gunther Zechmann with Bernstein. Please go ahead.

Just on capital allocation. If I look at your CapEx in the first nine months, it was just shy of 1 billion and in your guidance, it implies for Q4 that you spend something in the region of 700 million in CapEx, sounds quite high. Is that still realistic and maybe in a bigger picture, what should we expect in terms of buybacks for next year, is this something you'd be looking [Technical Difficulty] Thomas Videbæk: Okay. We got cut off there unfortunately, but looking at our investment program. So as you know, we are currently investing in big programs, our innovation campus in Denmark. We're looking at building a completely new facility in Mumbai, India for surface fermentation and we are expanding our capacity in North America. You're right that we are a little behind for 2017. We're working very, very hard to make sure that these projects get finalized on time, if we will make it completely in ’17, might be a little challenged, but the programs are running and we are at full speed in getting them finalized.

And on share buybacks, we are, as I said, we have now bought back shares worth for 1.7 billion out of the 2 billion Danish kroner program. Our guidance, as regards to capital allocation is the net debt through EBITDA ratio and we are currently at 0.3 and we guide between 0 and 1 and I think that's as close as we'll get it today.

Thank you. We'll go next to Annette Lykke with Handelsbanken.

Yes. Just on earnings, maybe you can share with us a little bit of insight on how you see margins. You had a pretty decent margin this quarter and you also have [Technical Difficulty] getting back to good growth rates for household care and also with the division, so the whole issue is such, should we expect also increases in your gross margins and also EBIT in this respect. And then afterwards, I have questions to food and beverage.

So I'll take your margin question. It's correct that we see good improvements in gross margins for the first nine months and for the quarter in particular. Looking forward, I think you should expect that there's still margin potential. The question of course is one the competitive games, I mean, are we going to see how much price erosion that we're going to see. Right now, we are, I mean, in the usual bracket of between 1% to 2% price erosion on like-for-like products. We expect that to roughly continue. So no big news there, but of course, that is an uncertainty, there's competition in the market. I think the question that of course we'll have to address as we get into budgeting is more about the mix, it's more about which segments are going to grow and now, I’m talking about the subsegments of, in particular, food and beverage, but also the subsegments of household care and bioenergy and BioAg. The growth mix of the segments will affect the overall mix and will have an effect on gross margin. But everything else being equal, you're going to see continued efficiency improvements. So everything else being equal, you're going to see a potential to take up margins. Then the question is, do we actually do that on the EBIT margin? We're very excited about spending more in the emerging markets. We see a fantastic amount of opportunities in the emerging markets and we see very, very significant innovation opportunities also that we want to invest in. But that's going to be folded together in our budget for 2018 and we’ll be very happy to talk about that in February of next year. And then you had a question for Andy on food and beverage I think.

Yeah. It was more like, with 11% growth and a rather decent performance this year, what are sort of, I mean, it didn’t appear that you had any material effects on, at least, you compensated pretty well from that. Are we seeing the same sort of levels in next year or formalized in China, as we continue to see that performance to be good in ’18 as well?

So I think when you look at food and beverage, what we're working on is on innovation in a growth platform format, so that we get sort of, I'm going to call it, leverage and synergies in helping to deliver overall growth in the food and beverage business. We're working very hard in grain milling, where we've launched Frontia as opening up a new area within starch. We've launched Palmora as a initial step in opening up a nice growth platform in vegetable oil processing. We're working on innovation areas within baking and also in dairy, we've gotten very nice results out of our lactase technology, Safira [ph]. We're going to continue to push on these things, also while covering white spaces in emerging markets and that is how we're going to try to push up on a sustained basis, the food and beverage business. So far, it goes well. Let's see how much progress we can make and what level we can hold it at.

Thanks, Andy. We will take one more question and then close the session. Operator, please.

Certainly. We'll go next to Michael Rasmussen with ABG. Please go ahead.

And obviously I’ve had the same questions as everybody else, if you could just add a couple of words on the -- if you've seen any impact from the bioenergy from the temporary higher blending rates, I think we’ve seen in sectors and also a couple of comments when this temporary blend increase from 10% to 15%, if it has been stopped as of now.

That's a question for Tina. Tina please. Tina Fanø: Yeah. So the temporary blending increase, in fact, was due to the hurricane. Typically in the US, they are outside summer months allowed to include 15% or, we call it an RVP relief. So that's -- those only, you could say, restrictions in the summer months. That was lifted at bit earlier due to the hurricane, but as we are now in winter months, it is typically lifted and it's true that there has been a doubling of the amount of gas stations in the US who are carrying e15. So it's going in the right direction.

But maybe just to add a bit more to it, we are growing -- significantly outgrowing the market. We expect the ethanol volumes in the US for the first nine months to be up 2% over last year and we significantly outgrow that and it's mostly because of the very strong innovation, there's also a bit of market share gain to it. We believe, but it's mostly innovation. And if you allow me to conclude, I think one of the things that really pleases me about the development in the business is the pickup of innovation programs. I think, the products we brought to the markets over the last couple of years and the products we're going to bring into the market over the next quarter and next year, it looks really good and that gives us ground for optimism as we look forward.

Time is up for today. I want to thank you for your interest in Novozymes and I do want to apologize for the technical issues we've had. If it's any comfort, I think it's been just as annoying for us as it has for you. So there's a large incentive on this side to try to make it better next time. But thank you so much for attending the conference. Thank you.