Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
Financial items (net) and tax
Financial items (net) showed a net gain of DKK 2,100 million compared
with a net loss of DKK 5,747 million in 2022, reflecting gains on hedged
currencies, primarily in US dollar.
In line with Novo Nordisk's treasury policy, the most significant foreign
exchange risks for Novo Nordisk have been hedged, primarily through
foreign exchange forward contracts. The foreign exchange result was a gain
of DKK 1,652 million compared with a net loss of DKK 4,651 million in 2022.
As per the end of December 2023, a positive market value of financial
contracts of approximately DKK 1.6 billion has been deferred for
recognition in 2024.
The effective tax rate was 20.1% in 2023 compared with an effective
tax rate of 19.6% in 2022.
Net profit increased by 51% to DKK 83,683 million and diluted earnings
per share increased by 52% to DKK 18.62.
Cash flow and capital allocation
Free cash flow realised in 2023 was DKK 68.3 billion compared with
DKK 57.4 billion in 2022 supporting the strategic aspiration to deliver
attractive capital allocation to shareholders. The cash conversion in
2023 is positively impacted by timing of payment of rebates in the US,
including provisions related to the revised 340B distribution policy in
the US. Income under the 340B Program has been partially recognised.
Capital expenditure for property, plant and equipment was DKK 25.8
billion compared with DKK 12.1 billion in 2022, primarily reflecting
investments in additional capacity for active pharmaceutical ingredient
(API) production and fill-finish capacity for both current and future
injectable and oral products. Capital expenditures for intangible assets
was DKK 13.1 billion in 2023 compared with DKK 2.6 billion in 2022
reflecting business development activities.
CASH FLOW AND CAPITAL ALLOCATION (DKK billion)
Dividend for prior year
Interim dividend
70
60
50
40
30
20
10
0
Share repurchases
2021
2022
2023
2024E1
1. Expectations for 2024.
2024 outlook
Sales growth is expected to be 18% to 26% at CER. Given the current
exchange rates versus the Danish krone, sales growth reported in
DKK is expected to be around 1 percentage point lower than at CER.
The guidance reflects expectations for sales growth in both North
America Operations and International Operations, mainly driven by
volume growth of GLP-1-based treatments for Obesity and Diabetes
care. Intensifying competition and continued pricing pressure within
Diabetes and Obesity Care are included in the guidance.
Following higher than expected volume growth in recent years, including
GLP-1-based products such as OzempicⓇ and WegovyⓇ, combined with the
expectation of continued volume growth and capacity limitations at some
manufacturing sites, the outlook also reflects expected continued periodic
supply constraints and related drug shortage notifications across a
number of products and geographies. Novo Nordisk is investing in internal
and external capacity to increase supply both short and long term. Novo
Nordisk started gradually increasing the supply of the lower dose strengths
of WegovyⓇ in the US in January 2024. A gradual roll-out of WegovyⓇ with
capped volumes in International Operations is included in the guidance.
Operating profit growth is expected to be 21% to 29% at CER. Given the
current exchange rates versus the Danish krone, growth reported in DKK
is now expected to be around 2 percentage points lower than at CER.
The expectation for operating profit growth primarily reflects the sales
growth outlook and continued investments in future and current growth
drivers within Research, Development and Commercial. Within R&D,
investments are related to the continued expansion and progression of
the early and late-stage pipeline. Commercial investments are mainly
related to Obesity care market development activities as well as
increased spend related to GLP-1 diabetes care.
Novo Nordisk now expects financial items (net) to amount to a gain of
around DKK 1.3 billion, mainly reflecting gains associated with foreign
exchange hedging contracts as well as interest gains from cash and
marketable securities.
The effective tax rate for 2024 is expected to be in the range of 19-21%.
Capital expenditure is expected to be around DKK 45 billion in 2024
reflecting the expansion of the supply chain, including the previously
communicated expansions of the manufacturing facilities in Kalundborg
and Hillerød, Denmark, and Chartres, France. The investments in
Kalundborg will create additional capacity across the entire global value
chain from manufacturing of active pharmaceutical ingredients (API) to
packaging, with the majority invested in API capacity. The API facility will
be designed as a multi-product facility with flexibility to accommodate
current and future processes. In Hillerød, the investments will create
additional production capacity of API within Cardiovascular & Emerging
Therapy Areas. The expansion of the production facilities in Chartres are
related to additional aseptic production and finished production
processes. In the coming years, the capital expenditure to sales ratio is
still expected to be low double digit.
Depreciation, amortisation and impairment losses are expected to be
around DKK 10 billion.
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