Orkla Asa · OSL:ORK
Orkla Asa — Investor Day (November 2021)
68 slides from Orkla Asa's investor day presentation, Nov 23, 2021
Slide 1: Background Material Capital Markets Day 2021
Background Material Capital Markets Day 2021 23 November 2021
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: Index
Index Presentations Page CEO key notes 4 Financial targets 8 Operating model 16 Prioritized growth initiatives 29 Portfolio management and M&A 52 Appendices 59
Slide 4: CEO Keynotes
CEO Keynotes • Strong foundation with 300 brands and ~80% of revenue from brands with number 1 and 2 market positions • Cultural change nurturing braveness and challenger mindset • Step change profitable organic growth*, targeting at least 2.5% • Targeting mid-single-digit underlying EBIT (adj.) gro
Slide 5: CEO Keynotes (ii)
CEO Keynotes (ii) • Top three priority approaches to reaching our targets: - Winning locally - Embracing change - Building tomorrow • International expansion of selected brands • Geographical expansion and partnerships • A more dynamic approach to our portfolio - Consider acquisitions, divestitures,
Slide 6: Top three priority approaches to reaching our targets
Top three priority approaches to reaching our targets Plant-based Our people Being consumer centric make the difference in a digital world Health Local consumer insight Being a local at the heart of everything champion for sustainability Out of Home Operational & commercial Being the best competitiv
Slide 7: Targets for Orkla 2022-2024
Targets for Orkla 2022-2024 Local champion for sustainability Organic growth* of at least 2.5%** • Scope 1&2 GHG reduction of 65%*** by 2025 • Scope 3 GHG reduction of 30%*** by 2025 Mid-single-digit U.EBIT (adj.)* growth** • 100% recyclable packaging by 2025 M&A and portfolio management to support
Slide 8: Financial targets
Financial targets
Slide 9: Status for financial targets from Capital Markets Day 2018
Status for financial targets from Capital Markets Day 2018* Net working capital U.EBIT %** reduction Organic growth** >= market >150 bp by 2021 (% of sales) >300 bp by 2021 2019 +30 bp 2019 -130 bp 2018 – 2021 (YTD Q3) 2020 +40 bp 2020 -230 bp 2.1% CAGR 2021 (YTD Q3) - 50 bp 2021 (YTD Q3) -30 bp 9 *
Slide 10: Targets for Orkla 2022-2024
Targets for Orkla 2022-2024 Local champion for sustainability Organic growth* of at least 2.5%** • Scope 1&2 GHG reduction of 65%*** by 2025 • Scope 3 GHG reduction of 30%*** by 2025 Mid-single-digit U.EBIT (adj.)* growth** • 100% recyclable packaging by 2025 M&A and portfolio management to support
Slide 11: Targeting organic growth of at least 2.5%
Targeting organic growth of at least 2.5% Organic growth* Target** 3.8% CAGR At least 2016 - 2.5% p.a. Q3-21 1.6% 1.6% 1.3% 1.6% 0.4% 2017 2018*** 2019 2020 YTD Q3-21 2022-24 * All Alternative Performance Measures (APM) are presented in the appendix 11 ** Target applicable to BCG incl HQ *** 2018 Ad
Slide 12: Targeting mid-single-digit underlying EBIT (adj.) growth
Targeting mid-single-digit underlying EBIT (adj.) growth Underlying EBIT (adj.)* growth for BCG incl. HQ 5.4% 5.2% CAGR 2016 – 4.1% Target Q3-21 2022 – 2024** 3.4% Mid-single-digit 2.3% -1.1% 2017 2018*** 2019 2020 YTD Q3-21 * All Alternative Performance Measures (APM) are presented in the appendix
Slide 13: Sustainability strategy and targets towards 2025
Sustainability strategy and targets towards 2025 Environmental Sustainable sourcing Nutrition and Safe products Care for people and engagement Partnership for sustainable wellness Safe products build trust society Strong engagement for the raw materials Making it easier to live Strong local engageme
Slide 14: M&A and portfolio management to support value creation strategy
M&A and portfolio management to support value creation strategy 50 Operating income* BNOK (BCG) 40 30 20 Key divestments 10 Share portfolio 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 14
Slide 15: Funding considerations & allocation priorities
Funding considerations & allocation priorities Funding considerations Allocation priorities • Maintain a financial and business risk profile consistent • #1 priority is maintaining an attractive and predictable with an investment grade credit rating dividend policy – have never reduced ordinary divi
Slide 16: Operating model
Operating model
Slide 17: Orkla Group in figures
Orkla Group in figures 47.1 billion 5.5 billion 1.0 billion OPERATING INCOME* EBIT (ADJ)* PROFIT FROM ASSOCIATES * / *** EMPLOYEES** PRODUCTION SITES** SERVICE LEVEL** 21,500 117 97% * Full-year figures 2020 17 ** As at Q3 2021 *** Orkla holds 42.6% ownership in Jotun AS
Slide 18: Operating model: Optimized model
Operating model Optimized model Optimized means that Orkla will win through taking out more scale than smaller, local players and being closer and more flexible so as to accommodate local preferences than global peers LOCAL STRENGTH Improving everyday life through enjoyable Smaller, local and sustai
Slide 19: Orkla Optimized Model
“Improving everyday life through enjoyable and sustainable local brands” Orkla Optimized Model A leading Nordic-based Strong Brands Local presence Scale advantages BCG company • Long heritage in the • Strong positions in • Being close to the • Develop concepts Nordic region smaller markets consumer
Slide 20: A unique portfolio of strong local brands
A unique portfolio of strong local brands Orkla Orkla Orkla Industrial & Orkla Orkla Confectionery & Food Consumer Financial Foods Care Snacks Ingredients Investments Investments (NOK billion) (NOK billion) (NOK billion) (NOK billion) (NOK billion) Sales: 18.3 Sales: 7.2 Sales: 6.9 Sales: 10.7 Sales
Slide 21: Increased exposure outside Norway and ~25% of revenue in Out of Home
Increased exposure outside Norway and ~25% of revenue in Out of Home Sales revenues by geographical region* BCG channel split (net sales), FY 2020 BNOK 47 100% 100% 10% 90% 14% 16% 16% 90% 20% 23% 23% 7% 13% 23% 23% 80% 18% 3% 4% 80% 8% 7% 5% 7% 7% 5% 5% 70% 3% 7% 5% 5% 5% 70% 11% 6% 10% 8% 8% 6% 11
Slide 22: 80% of revenue from number 1 and 2 market positions
80% of revenue from number 1 and 2 market positions Example of market positions and brands in the grocery channel: Norway Sweden Finland Denmark Estonia Latvia Snacks #2 #1 #1 #1 #3 #1 Ketchup #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 Health supplements #1 #3 22
Slide 23: Operating model: Examples: Growing the core
Operating model Examples: Growing the core
Slide 24: How Stratos has doubled its market share over the last three years
How Stratos has doubled its market share over the last three years Over the last three years the Stratos chocolate brand has doubled its market share and increased its sales revenues by + 115%. Stratos’ performance accounts for 32% of the value growth in the chocolate tablet category. Brand-building
Slide 25: New Launch Sjöbris
Restart of local Home Care brand Grumme in Sweden in 2016, after acquisition of Cederroth • Positioning as the sustainable pioneer New Launch • Investment in brand-building • Bold insight-driven 2020 communication • Strong innovation program based Sjöbris on utilizing portfolio cross-border ➢ + 60%
Slide 26: Replicating the success of Paulúns in other markets
We have replicated the success of Paulúns in Sweden in other markets, with a clear health positioning and tasty products Sweden: Launched in 2010 Finland: Launched in 2015 Norway: Launched in 2017 Today: Today: Today: No. 1 brand in Granola and Cereals No. 1 brand in Müsli & Granola No. 2 brand in G
Slide 27: New technology platform pizza
NEW TECHNOLOGY PLATFORM PIZZA; To improve quality and modernize our strong brands More than. 500 million-NOK invested since 2018 NEW PORTION SIZE CONCEPT IMPROVED PRODUCT QUALITY Thin and crispy crust ® New and tasty pan baked crust © Contemporary toppings Cheddar cheese for extra satisfaction
Slide 28: Building a new Biscuit factory in Latvia
Building a new Biscuit factory in Latvia will serve Orkla’s needs going forward and significantly reduce our climate footprint New Orkla Biscuit Production (OBP) factory Key Figures 32 000 square meters 300 employees 13 production lines Strong local brands serving all markets Increased innovation ca
Slide 29: Growth initiatives (i): Plant-based
Growth initiatives (i) Plant-based Growing sales from 1 to 3 BNOK in 2025
Slide 30: Long-term consumer trends driving the shift towards plant-based
Long-term consumer trends are driving the inevitable shift towards plant-based – Orkla uniquely positioned to bring down barriers CONSUMER DRIVERS CONSUMER BARRIERS SUSTAINABILITY AWARENESS HEALTH TASTE & TEXTURE ANIMAL WELFARE PRICE 30
Slide 31: Target of NOK +3 billion turnover in 2025 in plant-based
Orkla has set an ambitious target of NOK +3 billion turnover in 2025 in plant-based Orkla sales, plant-based NOK +3 billion (2017-2025, NOK million1) target for 20252 3.000 CAGR: 52%1 981 846 621 449 240 2017 2018 2019 2020 RTM 2021-Q3 2022 2023 2024 2025 target 31 1) Not adjusted for currency fluct
Slide 32: Orkla is uniquely positioned to be a leading player within Plant-based
Orkla is uniquely positioned to be a leading player within Plant-based Orkla strengths Strong capabilities Leading positions Local presence Competence in meat and Strong brands with Expanding footprint fueled dairy replacements built NATURLI’ and Anamma by strong local over the last 30 years paired
Slide 33: Strong capabilities and leading positions in meat and dairy replacement
Strong capabilities and leading positions in meat and dairy replacement – built over 30 years Sweden Finland Current Orkla Plant-based • Orkla has built strong competence in plant-based categories for the last Norway 30 years through our brands Baltics NATURLI’ and Anamma • We have market leading po
Slide 34: NATURLI' brand and product portfolio growing across 20+ markets
The NATURLI’ brand and product portfolio have proven successful, and are growing across 20+ markets Plant-based, NATURLI’ potential • NATURLI’ products can be found in more than 20+ markets globally …from Denmark to South Korea, Australia and New Zealand • With NATURLI’ we have a brand and a product
Slide 35: Award-winning plant-based products
Orkla has several award-winning plant-based products driving our strong positions Examples of award-winning products NATURLI’ vegan butter NATURLI’ Joe’ Kurt Anamma shapeable Anamma pizza • 100% vegan, • Joe’ Kurt vegan yoghurt has a • Shapeable minced meat • Most sold vegan pizza in undistinguishab
Slide 36: Expanding footprint fueled by strong local organizations in 12 European markets
Expanding footprint fueled by strong local organizations in 12 European markets Local presence Sweden • Local business units in 12 European markets, providing knowledge of consumer insight, taste preferences, Norway and strong go-to-market capabilities • Local production, technology and innovation f
Slide 37: Orkla Alternative Proteins as new business unit
Orkla Alternative Proteins (OAP) as new business unit to set a broader and more ambitious strategy for meat and dairy replacements Orkla Alternative Proteins focus Strengthen Orkla’s long-term technology roadmap fueled by a proactive partnership strategy Broaden Orkla’s focus on alternative protein
Slide 38: Growth initiatives (ii): Out of Home strategy
Growth initiatives (ii) Out of Home strategy Building a leading European Pizza Franchise
Slide 39: Changing consumer preference driving Out of Home position
Changing consumer preference is driving the desire to establish a sizeable position in the Out of Home market Why Out of Home? Why Pizza? ▪ Consumers are spending an increasing share of ▪ Sizeable market with industrialization potential wallet Out of Home (OOH), driving strong growth in the market ▪
Slide 40: Limited-Service Pizza represents a strong and growing market
Limited-Service Pizza represents a strong and growing market Development in addressable1) European Limited-Service Restaurants (LSR) pizza markets BEUR +5.7% 9.7 +6.4% 8.3 +3.9% 4.7 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 Estimates ▪ Addressable1) European pizza m
Slide 41: Out of Home pizza platform with tangible growth potential
Out of Home pizza platform with tangible growth potential, both organically and structurally Current platform Current presence 1 A sizeable OOH1) platform with 635 franchised restaurants MEUR 276 Consumer sales LTM Q3’212) 293 Finland Tangible organic growth opportunities in Finland, the Netherlands
Slide 42: Kotipizza and New York Pizza historical growth
Kotipizza and New York Pizza have historically grown strongly through same-store sales and network expansion Consumer sales growth1) Growth in number of units MEUR # of units +247 635 276 3x German 105 acquisitions 243 +14% 515 495 213 472 197 435 173 388 399 146 124 2015 2016 2017 2018 2019 2020 LT
Slide 43: Orkla's in-house competence supporting Out of Home growth
Orkla with strong in-house competence across several key dimensions supporting accelerated growth in the Out of Home market Out of Home Best practice sharing and Strong pizza competence Well known franchise set-up synergy potential ✓ Strong pizza capabilities within ✓ Sourcing ✓ Strong franchise com
Slide 44: Three key growth pillars for a European Out of Home platform
Three key growth pillars to develop a sizable European Out of Home platform 1 Same store growth 2 Network expansion 3 Structural initiatives ▪ High quality products & ▪ Available white spots in all ▪ Strengthen and expand our services current markets geographical footprint in and around our core mar
Slide 45: Growth initiatives (iii): Consumer Health
Growth initiatives (iii) Consumer Health Increase sales +50% by end of 2025
Slide 46: Consumer Health beliefs
WE BELIEVE resilience is WE BELIEVE in healthy a key to better health and a minds in healthy bodies better life Consumer Health WE BELIEVE beauty starts WE BELIEVE social well-being with an inside job is a key to healthy living
Slide 47: Current business is a foundation for growth within consumer health
The current business is a strong foundation for future growth within consumer health The Orkla companies offering solutions for consumer health. Total revenue base of ~4.6 BNOK* Orkla Health Orkla Wound Care HSNG NutraQ • The Nordic region’s biggest • First launched in 1947 • Health and Sports Nutri
Slide 48: Consumer Health – a lot of possibilities
Consumer Health – a lot of possibilities We are physically active We get older and want to We are overweight We are using technology have an active lifestyle Science is new We want to live and eat We care about the We have less time knowledge healthy environment 48
Slide 49: A more holistic approach to consumer health
Orkla intends to take an even more holistic approach to consumer health across our categories The consumer health landscape is shifting Consumer health services Personalization and individual guidance Diagnosis Online coaching Supplements Online medical advice … Personalized Based on needs Healthy l
Slide 50: Combination of capabilities as competitive edge in consumer health
The combination of our capabilities will be our competitive edge in taking a bigger stake in the growing consumer health market Local consumer Strong Strong local Trusted partner insight capabilities in brands – with in the markets consumer health proven export we are in success
Slide 51: Consumer health in Orkla – strategic growth pillars
Consumer health in Orkla – 6 strategic growth pillars Strategic growth pillars 1 2 3 5 6 Develop / acquire New channels: Revitalize and grow Geographic new health concepts accelerate D2C & New growth areas the core retail expansion & capabilities online • Revitalize our current • Develop and rejuven
Slide 52: Portfolio management and M&A
Portfolio management and M&A
Slide 53: Top three priority approaches to reaching our targets
Top three priority approaches to reaching our targets Plant-based Our people Being consumer centric make the difference in a digital world Health Local consumer insight Being a local at the heart of everything champion for sustainability Out of Home Operational & commercial Being the best competitiv
Slide 54: We value trust-based and long-term partnerships
We value trust-based and long-term partnerships Examples 54 Note: Orkla’s ownership in Dragsbæk is 67%, Lofoten Marine Oils 50%, Eastern 68% (pre-merger) and New York Pizza ~75%
Slide 55: Growth potential through geographic expansion in three clusters
We see growth potential through geographic expansion in three clusters Nordics Central South and Baltics Eastern Europe Asia Faster growing geographies, a successful business model, and existing category expertise. Food Ingredients, Wound Care and Out of Home have a broader European catchment area 5
Slide 56: Orkla Portfolio Transformation Framework
Orkla Portfolio Transformation Framework Hold Clean up Build and New growth and and monetize areas grow divest 56
Slide 57: Summarizing Orkla's M&A strategy
Summarizing Orkla’s M&A strategy Bigger Faster Better Average # transactions per year Percentage of invested capital in above 500 MNOK* growth categories or geographies • Increased focus on 1 integration and realization of synergies 21% 2011-2019 2• Additional dedicated resources in integration team
Slide 58: Long term value creation
Long tem Value creation YOrkla
Slide 59: Appendices
Appendices
Slide 60: Five-year earnings and margin performance
Five-year earnings and margin performance Annual underlying EBIT +3% since 2016 (MNOK) Underlying EBIT margin +0.8pp since 2016 11.5% 5,526 1% 0.8%-p -0.2%-p 3% 3,975 3% 10.9% 2016 Underlying M&A FX RTM Q3 2016 Underlying M&A and FX RTM Q3 growth 2021 growth 2021 60 Figures include Orkla’s BCG busin
Slide 61: Cost breakdown FY 2020
Cost breakdown FY 2020 BCG incl. HQ, cost breakdown 2020 (BNOK), % of revenues 46,6 50% 15% 5% 4% 15% 5,4 Revenues Cost of Conversion Logistics cost Advertising SG&A EBIT (adj.) materials cost cost 61 Figures include Orkla’s BCG businesses including HQ
Slide 62: 30 BNOK in external spend in 2020
30 BNOK in external spend in 2020 Third party spend (BNOK) 8 30 2 3 4 13 Raw Materials Pack- Traded Goods Logistics Indirect Third party aging spend 62 Figures include Orkla’s BCG businesses including HQ
Slide 63: Orkla Investments
Orkla Investments Hydro Power Fully consolidated into Orkla’s financial statements Volume (GWh): YTD Q3-21: 1,432 (2,182) Ownership: Orkla 85% Orkla 100% Power prices* Type: Reservoir plant Run of the river plant (NOK/kWh): YTD Q3-21: 0.59 (0.09) Average annual 1.9 TWh** 0.6 TWh production (2011- EB
Slide 64: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) NIBD / R12M EBITDA* 14,028 1,7x 1,0x 0,9x 6,551 6,380 12,273 0,5x 3,037 4,895 4,893 14 0,0x 2017 2018 2019 2020 Q3 2021 2017 2018 2019 2020 Q3 2021 Leasing debt Ex leasing debt 64 Amounts in NOK million * I
Slide 65: Funding sources and maturity profile
Funding sources and maturity profile* Debt maturity → average maturity 3.4 years Funding sources (in BNOK) MNOK 10,000 1.8 9,000 8,000 7.9 7,000 9.8 6,000 5,000 4.2 4,000 3,000 2,000 Unutilised credit facilities 1,000 Banks 0 2021 2022 2023 2024 2025 2026- Bonds and CP Cash, cash equivalents and int
Slide 66: 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 calculat
Slide 67: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Earnings per share (adj.) Earnings per share (adj.) show earnings per share adjusted for “Other income and expenses” (OIE) after estimated tax. Items included in OIE. The effective tax rate for OIE is lower than the Group’s tax rate in both 2021 and 2020 chiefl
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