Slide 1: Fourth quarter results 2018
1 Fourth quarter results 2018 6 February 2019 Peter A. Ruzicka, President & CEO
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Orkla ASA (the “Company”) solely for information purposes. The presentation does not constitute an invitation or offer to acquire, purchase or subscribe for securities. Certain statements included in this presentation contain various forward-looking
Slide 3: Highlights 2018: 2018 has been a demanding year
Highlights 2018: 2018 has been a demanding year • Organic sales progress with growth in Foods and Food Ingredients • Weak performance in Health Poland and House Care UK addressed and set to improve during 2019 • Good sales growth in Confectionery & Snacks in Sweden, Finland and Denmark, but progress
Slide 4: Issues in Health Poland and House Care UK addressed and set to improve during 2019
Issues in Health Poland and House Care UK addressed and set to improve during 2019 Orkla HPC • Destocking at largest wholesalers in Health Poland • Limited impact on sales to consumer and market shares stable Orkla Health • Expected to improve during 2019 • UK turnaround ongoing with positive moment
Slide 5: Branded Consumer Goods 2018: Growth momentum hampered by sugar-tax and challenges
Branded Consumer Goods 2018: Growth momentum hampered by temporary impact of sugar-tax and challenges in Health Poland and House Care UK Organic growth for Branded Consumer Goods Organic growth 2018 by business area 2.8% Orkla Foods 1.5% 1.8% 1.6% Orkla Confectionery -3.4% 0.5% & Snacks 0.7% 0.4% Or
Slide 6: Financial performance
6 Financial performance Jens Bjørn Staff, CFO
Slide 7: Branded Consumer Goods Q4-18: Growth overshadowed by changed sugar tax in Norway
Branded Consumer Goods Q4-18: Growth momentum overshadowed by changed sugar tax in Norway and decline in Orkla Health BCG revenue, Q4’17 –> Q4’18 (MNOK) 10,587 +2.4% 10,607 -0.3% -1.4% Q4-17 Organic growth FX M&A Q4-18 Organic growth including loss of C&S distribution business 7 Amounts in NOK milli
Slide 8: Branded Consumer Goods incl. HQ: Weak quarter caused by drop in Orkla Health
Branded Consumer Goods incl. HQ: Weak quarter caused by drop in Orkla Health in Poland and Foods Norway ∆ Q4 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin Underlying margin growth: +0.1pp 1,346 1,277 0.1pp 11.2% 0.0pp -3.5% 11.1% -1.3% -0.3% -0.2pp Q4-17 Underlying FX M&A Q4-18 R12M Variable Other
Slide 9: Orkla Foods
Orkla Foods Broad top line growth. Exits and factory-related costs impacted EBIT Q4-18 YTD Q4-18 Revenues 4 366 16 000 • Good organic growth across most markets Organic growth 2.7% 1.5% • Continued negative impact on input EBIT (adj.) 651 2 048 cost from weak SEK EBIT(adj.) growth -5.5% -0.3% • Prof
Slide 10: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Phasing effects between 18/19 in Norway hampered growth Q4-18 YTD Q4-18 Revenues 1 840 6 246 • Sugar tax and Wrigley continued to weigh on Norwegian business Organic growth -4.5% -3.4% Adj. for Wrigley -1.2% 0.5% • Destocking effect in Q4 in Norway, volumes improving in
Slide 11: Orkla Care
Orkla Care Actions implemented to turn around performance in Poland and UK Q4-18 YTD-18 Revenues 1 994 8 075 • Growth hampered by weak performance in Health, primarily in Poland Organic growth -5.2% -1.8% • Good performance in Home & Personal EBIT (adj.) 208 1 084 Care, Wound Care & Pierre Robert EB
Slide 12: Orkla Food Ingredients
Orkla Food Ingredients Solid EBIT (adj.) growth of 9% in the quarter, margins improving Q4-18 YTD Q4-18 Revenues 2 486 9 562 • Improvement projects and turnaround cases contributed positively Organic growth -0.9% 1.2% • Actions to improve margins produce EBIT (adj.) 140 533 results EBIT(adj.) growth
Slide 13: Targeting step change in net working capital efficiency
Targeting step change in net working capital efficiency R12 net working capital / R12 Net Sales 14 13% 13 12 11 10% % 10 9 8 7 6 Dec- Q4-18 2021 2016 13 Figures include Orkla’s Branded Consumer Goods businesses including HQ
Slide 14: Capex levels in 2018 reflect ongoing ERP investments and large expansion investments
Capex levels in 2018 reflect ongoing ERP investments and large expansion investments Capex split 2018 Run rate maintenance level ~3% of NSV • Maintenance capex of close to 3% in 2018 – Overall level in line with previous years Expansion • Total 2018 capex level of ~5% of NSV driven by Maintenance on
Slide 15: Jotun (42.6%)
Jotun (42.6%) Continued sales growth and stabilising raw material prices Q4-18 Q4-17 Comments Operating income 4,337 3,965 • Continued growth in operating Change vs LY 9% revenues • Good growth in Decorative Paints and strong improvement in Protective Coatings Operating profit 85 -31 • Marine Coatin
Slide 16: Significant non-recurring items in Q4 affecting pre-tax earnings and EPS
Significant non-recurring items in Q4 affecting pre-tax earnings and EPS Key figures Q4-18 ∆ LY FY-18 ∆ LY Operating revenues 10,983 +1% 40,837 +3% EBIT (adj.) BCG 1,369 -5% 4,671 +1% EBIT (adj.) HQ -92 +1% -284 +14% EBIT (adj.) BCG incl. HQ 1,277 -5% 4,387 +2% EBIT (adj.) Orkla Investments 131 +35%
Slide 17: Out of Home / Kotipizza
1 7 Out of Home / Kotipizza Peter A. Ruzicka, President & CEO
Slide 18: Consistent high growth in the Nordic Out of Home market
Consistent high growth in the Nordic Out of Home market Out of Home (BEUR) 6% 29.6 30 28.3 5% 26.6 Finland 25.1 25 24.0 22.9 22.0 20.5 Denmark 20 Norway 15 10 Sweden 5 0 2010 2011 2012 2013 2014 2015 2016 2017 Note: Out of Home definition based on national statistics definition. Can vary across the
Slide 19: Differentiated strategy for Out of Home consumption
Differentiated strategy for Out of Home consumption Sell existing Orkla products to OOH players Orkla Out of Home strategy Provide tailored OOH Invest in products and strong local solutions brands Orkla with long history as a supplier of products and customer oriented solutions to the Out of Home ch
Slide 20: Kotipizza is the leading Finnish pizza brand
Kotipizza is the leading Finnish pizza brand Finnish pizza market Out of Home Retail Out of Home ~80% Chilled & Largest brand in pizza – ~20% components ~8% market share 2017 RSV, EURm Award-winning world-class taste Frozen ~12% Ideal for all occasions – eat- in, take-away, delivery, on- the-go Ross
Slide 21: An integrated Out of Home player with proven track record
An integrated Out of Home player with proven track record +11% 93.0 EURm +22% +22% +8% 8.2% 7.4% 9.1% 9.3% 8.5% FY14 FY15 FY16 FY17 R12 Q3-18 EBITDA margin Net sales 21
Slide 22: Value creation along three main dimensions
Value creation along three main dimensions 1 Continue strong growth and value creation in Foodstock and Kotipizza together with our franchisees Realize potential in promising fast casual portfolio for Kotipizza 2 Group and the franchisees Realize top and bottom-line synergies with Orkla building on
Slide 23: Closing remarks
2 3 Closing remarks Peter A. Ruzicka, President & CEO
Slide 24: 2018 has been a demanding year: key takeaways and outlook
2018 has been a demanding year Key takeaways Outlook • Good growth in Foods and Food Ingredients • Stable, moderate growth across our markets • Increase in Norwegian sugar tax reversed from • Weak performance in Health and House Care 1 Jan 2019 UK addressed • Challenges in Health Poland and House Ca
Slide 25: We continue to grow through strong local brands
We continue to grow through strong local brands Smart Living by Nutrilett Smash! launched in Denmark Jordan Stay Fresh toothpaste A new series of meals full of tasty, natural ingredients and easy to Same product – local brand For the first time outside Norway prepare 25
Slide 26: Q&A
2 6 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 27: Appendices
‘Orkla Appendices
Slide 28: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Organic growth Organic growth shows like-for-like turnover growth for the Group’s business portfolio and is defined as the Group’s reported change in operating revenues adjusted for effects of the purchase and sale of companies and currency effects. In the calc
Slide 29: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Net replacement and expansion investments When making decisions regarding investments, the Group distinguishes between replacement and expansion investments. Expansion investments are the part of overall reported investments which is considered to be investment
Slide 30: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) Net gearing 7,805 8,056 0.23 0.24 5,661 0.18 3,037 0.09 14 0.00 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 30
Slide 31: Changes in net debt 2018
Changes in net debt 2018 3,488 4,063 3,037 21 905 1,564 14 Net debt 31 Expansion Net paid to Cash flow Tax, FX effects Net debt 31 December and sale of shareholders from dividends December 2017 companies & share operations received, net 2018 purchases financial & other items 31 Amounts in NOK millio
Slide 32: Debt maturity profile
Debt maturity profile Average maturity 4 years 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2019 2020 2021 2022 2023 2024 2025- Unutilised credit fasilities Drawn amounts 32 Amounts in NOK million
Slide 33: Funding sources
Funding sources 2.2 3.6 Unutilised credit facilities Banks Bonds and CP Cash, cash equivalents and interest bearing assets 2.6 2.7 33 Amounts in NOK billion
Slide 34: Update on Kotipizza tender offer
Update on Kotipizza tender offer • Orkla currently owns approx. 99% of the shares in Kotipizza – Tender offer completed on 17 January 2019 • Squeeze-out process initiated – Title to all shares expected by end of June 2019 – Delisting from Nasdaq Helsinki can then take place • EGM to be held 12 Febru
Slide 35: Your friend in everyday life