Slide 1: Fourth quarter results 2014
Fourth quarter results 2014 5 February 2015 Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 2: Highlights Q4 2014
Highlights Q4 2014 Improving operations and delivering on strategy • Group EBITA increased by 6% to NOK 1,015 million compared to Q4’13 • Improving operations in Branded Consumer Goods – 1.8% organic growth1. Positive organic growth for all business areas – 0.7 percentage points EBITA margin improve
Slide 3: BCG Q4: EBITA margin improved by 0.7 percentage points
BCG Q4: EBITA margin improved by 0.7 percentage points Q4’13 Q4’14 EBITA margin BCG EBITA margin BCG per business area 13.1% 13.1% Orkla Foods 13.9% 12.4% Orkla 16.0% Confectionery & Snacks 16.9% 15.3% Orkla Home & Personal 15.3% Orkla Food 5.6% Ingredients 6.8% Q4’13 Q4’14 3
Slide 4: BCG Q4: Positive growth in all business areas
BCG Q4: Positive growth in all business areas Organic growth1 BCG Organic growth1 BCG per business area in Q4 Orkla Foods 2.2% 1.8% Orkla Confectionery 0.8% & Snacks Orkla Home 0.1% & Personal -3.6% Orkla Food 2.5% Ingredients Q4’13 Q4’14 4 1 Reported growth adjusted for FX, M&A and timing of sellin
Slide 5: 2014: Improved organic growth in Branded Consumer Goods
2014: Improved organic growth in Branded Consumer Goods Organic growth development1,2 Actions 2.5% • Stronger innovation programmes 1.8% • More cross-market initiatives 1.1% 0.9% 0.7% 0.4% • Increased sales force effectiveness • Strengthened relations with our customers -1.2% -2.8% 2011 2012 2013 20
Slide 6: Examples of successful innovations and relaunches in 2014
Examples of successful innovations and relaunches in 2014 Pierre Robert’s Sport Collection (relaunch) Helmax Norway’s most sold training top Pizza Most successful launch in Norway1 Pauluns Superlunch Polly Winner of award for Most Healthy Ready Meal2 Tablet Successful utilization of strong brands ac
Slide 7: 2014: Improved RTM EBITA margin in Branded Consumer Goods
2014: Improved RTM EBITA margin in Branded Consumer Goods RTM EBITA margin development Actions 12,6% • Delivered on initiated and ongoing structural 12,2% 11,9% processes 11,7% 11,7% 11,5% 11,7% • Focused on activities that drive organic growth and improve margins • Ongoing optimisation of productio
Slide 8: We work continuously to optimise our factory footprint
We work continuously to optimise our factory footprint across all business areas Orkla Foods Orkla Confectionery & Snacks Orkla Food Ingredients Orkla Home & Personal 2 2 2 2 1 1 1 1 1 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 7 factories closed or in the process of being closed during 2014 An additional 2 site
Slide 9: Structural changes communicated 2014 – YTD 2015
Structural changes communicated 2014 – YTD 2015 Sale of non-core assets Investing in BCG businesses • Sale of real estate (NOK 0.4bn), shares and • Acquisition of NP Foods – pending financial assets (NOK 0.4bn) (undisclosed) • IPO of Gränges (NOK 2.3bn) • Acquisition of Cederroth – pending (Enterpri
Slide 10: Acquisition of Cederroth: Significantly strengthens Orkla Home & Personal’s position
Acquisition of Cederroth: Significantly strengthens Orkla Home & Personal’s position in the Nordics • Agreement to acquire 100% of the shares of the Product portfolio examples branded consumer goods company Cederroth – Turnover of SEK 1,984m and EBITDA of SEK 194m in 20131 • The acquisition will str
Slide 11: Financial targets
Financial targets Targets from Orkla Investor Day 20131 Comments2 EBIT Organic revenue • Organic revenue growth ambitions from Orkla’s (adj.) growth Investor Day in 2013 unchanged margin From 2016 • The time frame for achieving the margin targets in Orkla Foods > 15.0% 2-3% Orkla Foods and Orkla Con
Slide 12: Increased focus on operations
Increased focus on operations • Deliver on initiated and ongoing structural processes • Focus on activities that drive organic growth and improve margins – Strong innovation programmes – More cross-market initiatives – Increase sales force effectiveness – Strengthen relations with our customers • Op
Slide 13: Financial Performance
Financial Performance Jens Bjørn Staff, CFO
Slide 14: Group EBITA improved by 6% to NOK 1,015 million in Q4
Group EBITA improved by 6% to NOK 1,015 million in Q4 Amounts in NOK million Key figures Q4-13 Q4-14 2013 2014 Operating revenues 8,125 8,119 28,015 29,599 EBITA 958 1,015 2,958 3,237 Other income and expenses -148 -102 -493 -100 EBIT 803 905 2,444 3,114 Profit/loss from associates -302 -252 -3 121
Slide 15: EBITA improvement driven by Orkla Foods and Orkla Food Ingredients
EBITA improvement driven by Orkla Foods and Orkla Food Ingredients Amounts in NOK million Branded Consumer Goods: NOK 69 million 1,015 +27 -35 -3 +23 +11 +34 958 Group EBITA Orkla Foods Orkla Orkla Home Orkla Food Orkla Orkla HQ Group EBITA Q4-13 Confectionery & Personal Ingredients Investments Q4-1
Slide 16: 1.8% organic growth in BCG
1.8% organic growth in BCG Amounts in NOK million -1.0 % 1.8 % 7,854 -1.0% 1.8 % 7,738 BCG operating Organic growth1 Selling days FX M&A BCG operating revenues Q4 2013 revenues Q4 2014 16 1 Reported growth adjusted for FX, M&A and timing of selling days
Slide 17: Branded Consumer Goods
Branded Consumer Goods Jens Bjørn Staff, CFO
Slide 18: Orkla Foods – Key financials
Orkla Foods – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) +2,2% -1,1% OG1 OG1 12,232 1.495 12.7 13.1 13.9 11,110 1.312 11.7 12.4 10.9 10.6 9.9 3,321 3,371 436 470 Q4 FY Q4 FY Q1 Q2 Q3 Q4 • Positive performance in the Nordics, • Broad-based improvement in
Slide 19: Orkla Confectionery & Snacks – Key financials
Orkla Confectionery & Snacks – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) +0.8% -0.4% OG1 OG1 4,868 4,987 17.7 690 693 16.0 16.0 16.9 13.1 10.9 10.3 9.7 1,463 1,448 234 245 Q4 FY Q4 FY Q1 Q2 Q3 Q4 • Q4 continued the positive trend • EBITA improvements i
Slide 20: Orkla Home & Personal – Key financials
Orkla Home & Personal – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) +0.1% +2.5% OG1 OG1 4,770 4,960 823 854 21.0 20.5 17.7 18.0 15.0 15.0 15.3 15.3 1,270 1,250 194 191 Q4 FY Q4 FY Q1 Q2 Q3 Q4 • Organic growth in Q4 ended • Product profitability in most s
Slide 21: Orkla Food Ingredients – Key financials
Orkla Food Ingredients – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) 2.5% 3.7% OG1 OG1 6,534 5,998 359 6.8 6.2 5.7 288 5.4 5.6 5.1 124 2.8 2.9 1,726 1,821 97 Q4 FY Q4 FY Q1 Q2 Q3 Q4 • Strong organic growth • Q4 EBITA at all time record high, up 28% compa
Slide 22: Orkla Investments
Orkla Investments Jens Bjørn Staff, CFO
Slide 23: Orkla Investments
Orkla Investments 50% 42.5% 31% • JVs & associates • Equity accounting Hydro Power Orkla’s financial investments • Wholly owned1 • Fully consolidated 23 1 In addition to Sapa, Jotun and Gränges, Orkla Investments has a number of smaller Associate Companies within the Real Estate area which are accou
Slide 24: Sapa (50/50 joint venture)
Sapa (50/50 joint venture) Amounts in NOK million 2013 2014 Orkla’s share of net profit Operating revenues1 Underlying EBIT1 after tax 44 54 46,384 652 42,270 -51 10,115 11,890 -55 -89 -312 -360 -340 Q4 FY Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q4 FY • Strong demand in North • Q4 is a seasonally weaker quart
Slide 25: Jotun (42.5%)
Jotun (42.5%) Amounts in NOK million YTD Aug’13 YTD Aug’14 Operating revenues EBIT 8,174 8,660 1.050 978 • Improved sales performance in Q4 • Following strong growth in sales and an improved cost position, Jotun saw a pick up in profitability • Compared to Q4’13, revenue growth across all four towar
Slide 26: Hydro Power
Hydro Power 2013 2014 Volume produced Spot prices (NOK/MWh) EBITA (NOK million) 741 609 583 650 680 312 97 294 285 263 296 264 545 568 252 77 73 211 58 326 42 46 39 -3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Higher volumes compared with • Lower spot prices compared • Profit in Q2 2013 partly Q4 2013 w
Slide 27: Capital structure
Capital structure Jens Bjørn Staff, CFO
Slide 28: Change in net debt 2014
Change in net debt 2014 Amounts in NOK billion 8.5 2.7 5.7 -0.2 -0.3 2.8 -2.5 0.4 Net debt 31 Expansion Cash flow Sale of shares Net paid to Tax, dividends FX effects Net debt 31 December and sale of from and financial shareholders received, net December 2013 companies operations assets financial &
Slide 29: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest bearing debt (NOK million) Net gearing 19,652 0.31 0.28 0.28 0.24 0.18 10,645 8,496 4,786 5,661 2010 2011 2012 2013 2014 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 • Average maturity 3.7 years • Average interest cost Q4’14: 3.0% (3.4% FY) 29
Slide 30: Dividends 1993 – 2015
Dividends 1993 – 20151 Amounts in NOK Special dividend Ordinary dividend 5,00 5,00 2,50 2,50 2,50 2,50 2,50 2,25 2,25 2,25 2,00 1,50 1,00 2,50 0,68 0,39 0,41 0,50 0,60 0,65 0,19 0,23 0,27 0,32 0,80 0,90 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 (1) 30 1 Proposed dividend
Slide 31: Financial calendar 2015
Financial calendar 2015 • 5 February: Q4-2014 • 16 April : The Annual General Meeting • 7 May: Q1-2015 • Ultimo May: Sapa presentation • 17 July: Q2-2015 • September: Investor Day Orkla ASA • 30 October: Q3-2015 31
Slide 32: Outlook
Outlook Peter A. Ruzicka, President & CEO
Slide 33: Operational focus going forward
Operational focus going forward • Future growth and value creation as a focused Nordic based BCG company • Organic growth as the key long-term value driver Strategy • Going from a very decentralised model to a more optimised model • Leveraging on our substantial local presence, skills and insights •
Slide 34: Still potential “white spots” in the Nordics
Still potential “white spots” in the Nordics Examples Home Care √ Personal Care √ Biscuits √ √ √ Confectionery √ √ Dietary supplements √ √ √ √ Textiles (grocery) √ √ Snacks √ √ √ √ Frozen pizza √ √ √ Ketchup √ √ √ √ Preserved vegetables √ √ √ √ Jam / marmalade √ √ √ Caviar (cod roe spread) √ √ 34
Slide 35: AquaDerma – New facial skin care series from Lilleborg
AquaDerma – New facial skin care series from Lilleborg • Lilleborg’s largest product launch since Define was launched in 2002 • Pure high-quality products for everyday use • Meets strict criteria for ingredients – free from parabens, alcohol, mineral oils and silicones 35
Slide 36: Q&A
Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 37: Appendices
‘Orkla Appendices
Slide 38: P&L and cash effect: Divestment of Orkla Brands Russia
P&L and cash effect: Divestment of Orkla Brands Russia P&L effect FY 2014: NOK -522m Cash effect Q1 2015: NOK 373m • Loss including historical currency translation • Proceeds from the settlement 19.1.2015 effects: NOK -347m totalled NOK 373m • Profit / Loss after tax in OBR for the period 1.1.-31.12
Slide 39: Group income statement
Group income statement Amounts in NOK million Q4'13 Q4'14 FY'13 FY'14 Operating revenues 8,125 8,119 28,015 29,599 EBITA 958 1,015 2,958 3,237 Amortisation intangibles -7 -8 -21 -23 Other income and expenses -148 -102 -493 -100 EBIT 803 905 2,444 3,114 Profit/loss from associates and joint ventures
Slide 40: Net financial items
Net financial items Amounts in NOK million FY 2014 Q4'13 Q4'14 Net interest expenses -363 -86 -128 Currency gain / loss 0 1 3 Other financial items, net -93 -42 -39 Net financial items -456 -127 -164 40
Slide 41: Statement of financial position
Statement of financial position Amounts in NOK million 31.12.2013 31.12.2014 Intangible assets 15 402 14 598 Property, plant and equipment 11 651 9 484 Investments in associates and joint ventures etc. 11 042 13 026 Non-current assets 38 095 37 108 0 Assets held for sale 0 22 Inventories 4 836 4 073
Slide 42: Cash flow
Cash flow Amounts in NOK million FY'13 FY'14 Operating profit 2 307 3 181 Amortisation, depreciation and write-downs 1 503 930 Change in net working capital - 155 - 491 Net replacement expenditures - 880 - 838 Cash flow from operations, industrial activities 2 775 2 782 Cash flow from operations, Or
Slide 43: Sapa (joint venture) – Pro forma information (100%)
Sapa (joint venture) – Pro forma information (100%) Amounts in NOK million Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Sales volume (1000 tonnes) 311 346 360 345 314 359 368 350 322 Revenues 9,654 10,367 10,974 10,798 10,115 11,346 11,544 11,603 11,890 Underlying EBITDA1 154 304 508 328 -4
Slide 44: Debt maturity profile
Debt maturity profile Amounts in NOK million 6,949 5,957 1,016 810 781 605 410 3 2015 2016 2017 2018 2019 2020 2021 Later Unutilised credit facilities Drawn amounts 44
Slide 45: Funding sources
Funding sources Amounts in NOK billion 3.4 Unutilised credit facilities 7.4 Banks Bonds and CP Cash, cash equivalents and interest bearing assets 5.1 4.0