Orkla Asa · OSL:ORK
Orkla Asa — Q1 2024 Earnings Presentation
38 slides from Orkla Asa's earnings presentation, May 3, 2024
Slide 1: First quarter results
First quarter results 3 May 2024
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: Q1-24 | Continued momentum from Q4-23
Q1-24 | Continued momentum from Q4-23 • EPS (adj.) of NOK 1.50 (+14% y/y) • Positive volume performance and EBIT (adj.) margin expansion for most of the Portfolio Companies • Underlying EBIT (adj.) growth of 16.4%1,2 for the Consolidated Portfolio Companies • Sale of 40% of Orkla Foods Ingredients c
Slide 4: Breakdown of Portfolio Companies' performance in Q1-24
Breakdown of Portfolio Companies’ performance in Q1-24 Anchor Grow and build Transform or exit R12M EBIT (adj.) margin 11.3% 11.8% 6.2% 13.3% 13.3% 9.5% 9.9% 9.2% 3.1% 4.0% 10.3% 9.9% 9.3% Underlying EBIT (adj.) growth (Q1-24 vs. Q1-23) 12.0% 30.3% -5.6% 12.2% 22.5% 19.5% 62.0% -7.8% 14.3% -47.7% 15
Slide 5: Portfolio Company targets 2023-2026 (consolidated)
Portfolio Company targets 2023-2026 (consolidated)1 Underlying EBIT EBIT (adj.) Return on Capital Employed (adj.) growth margin (ROCE) 16.4% 10.5%-11% 13% 9.0% 9.3% 9.9% 10.1% 8%-10% (CAGR) 6.9% 2023 YTD-242 2023-263 2023 R12M 20263 2023 R12M 20263 (Actual) (Actual) (Actual) Note: 1: Including HQ; 2
Slide 6: Financial Performance
Financial Performance Harald Ullevoldsæter, CFO All Alternative Performance Measures (APMs) are presented in the appendices All figures in NOK million unless otherwise stated
Slide 7: EBIT (adj.) growth of 15% for the Consolidated Portfolio Companies
EBIT (adj.) growth of 15% for the Consolidated Portfolio Companies Key figures Q1-24 Q1-23 ∆ Q1 Operating revenues Group 17,107 16,188 6% EBIT (adj.) Consolidated Portfolio Companies 1,700 1,473 15% EBIT (adj.) Financial Investments 165 258 -36% EBIT (adj.) HQ and Business Services -102 -125 -18% EB
Slide 8: Improved EBIT (adj.) margin
Improved EBIT (adj.) margin Underlying EBIT (adj.) margin change Consolidated Portfolio Companies | R12M EBIT (adj.) margin (incl. HQ) (Q1-24) Underlying 12.0% 11.7% Category Portfolio Company EBIT (adj.) 11.6% 11.4% margin change1 11.5% 11.2% 11.3% 11.0% Orkla Foods Europe +0.9 %-p 11.0% Anchor Ork
Slide 9: Back to positive volume growth
Back to positive volume growth Breakdown of organic growth by price Organic growth split for the Consolidated Portfolio Companies and volume/mix (Q1-24) Organic revenue growth Y/Y1 Organic growth 1.3% 1.6% 4.3% 9.6% 8.1% 13.4% 8.5% 6.0% 5.3% 3.6% (Y/Y) Category Portfolio Company Price Vol/Mix Volume
Slide 10: Continued focus on cash flow from operations
Continued focus on cash flow from operations Cash flow from operations (pre-tax) Q1-24 Q1-23 Cash conversion (R12M) EBIT (adj.) 1,598 1,348 Cash Category Portfolio Company conversion Depreciation 627 577 Orkla Foods Europe 131% Change in net working capital -538 -625 Anchor Orkla Confectionery & Sna
Slide 11: NIBD at NOK 18.4bn per Q1-24, with NIBD/EBITDA at 1.9x
NIBD at NOK 18.4bn per Q1-24, with NIBD/EBITDA at 1.9x Figures in NOK billion 18.8 = 1.9x Corresponding to 50% of total dividend received EBITDA1 from Jotun for the financial year 2023 – remaining share to be 18.4 paid in H2-24 = 1.6x 1.4 EBITDA2 0.5 0.2 0.5 0.1 = 2.2x 0.4 0.0 EBITDA3 Net interest-
Slide 12: Portfolio Companies
Portfolio Companies Harald Ullevoldsæter, CFO All Alternative Performance Measures (APMs) are presented in the appendices. All figures in NOK million unless otherwise stated.
Slide 13: Jotun: A good start to the year
Anchor Grow and build Transform or exit Jotun (42.7% - associated company) A good start to the year Jotun 100% basis Q1-24 Q1-23 Key comments Revenues 8,056 7,766 • Continued sales growth from higher volumes in all segments Revenue growth – fixed rate 7.4% 17.6% • Earnings and profitability improvem
Slide 14: Orkla Foods Europe: Underlying EBIT (adj.) growth and strong cash conversion
Anchor Grow and build Transform or exit Orkla Foods Europe Underlying EBIT (adj.) growth and strong cash conversion in the quarter Q1-24 Q1-23 Key comments Revenues 5,100 4,903 • Underlying EBIT (adj.) growth supported by organic revenue Contribution ratio 38.0% 37.9% growth and cost savings linked
Slide 15: Orkla Confectionery & Snacks: Positive volume/mix growth
Anchor Grow and build Transform or exit Orkla Confectionery & Snacks Positive volume/mix growth, and improvements in biscuit factory Q1-24 Q1-23 Key comments Revenues 2,296 1,994 • Volume/mix growth of 3.1%, driven by successful markeing Contribution ratio 43.1% 41.8% activities • The new biscuit fa
Slide 16: Orkla Food Ingredients: EBIT (adj.) on par with last year
Anchor Grow and build Transform or exit Orkla Food Ingredients EBIT (adj.) on par with the same period last year Q1-24 Q1-23 Key comments Revenues 4,464 4,393 • Good underlying EBIT (adj.) growth in Bakery and Plant Based Contribution ratio 29.0% 27.6% clusters. Decline in underlying EBIT (adj.) rel
Slide 17: Orkla Health: Solid volume growth led to a strong quarter
Anchor Grow and build Transform or exit Orkla Health Solid volume growth led to a strong quarter Q1-24 Q1-23 Key comments Revenues 1,934 1,614 • Strong volume driven revenue growth in D2C business and the Contribution ratio 56.9% 58.3% global brands Möller’s and Jordan EBIT (adj.) 305 265 • Substant
Slide 18: Orkla India: Strong sales growth in International business
Anchor Grow and build Transform or exit Orkla India Strong sales growth in International business Q1-24 Q1-23 Key comments Revenues 763 672 • Organic sales growth of 11.6% and volume growth of 5.8%, Contribution ratio 34.7% 33.6% driven by strong International business sales • The contribution ratio
Slide 19: The European Pizza Company: Earnings growth supported by restructuring
Anchor Grow and build Transform or exit The European Pizza Company Earnings growth supported by restructuring in Germany Q1-24 Q1-23 Key comments Revenues 710 690 • EBIT (adj.) growth and margins positively affected by the Contribution ratio 43.2% 41.2% closure of 54 locations in Germany in 2023 • S
Slide 20: Orkla Home & Personal Care: Good performance in Norway
Anchor Grow and build Transform or exit Orkla Home & Personal Care Good performance in Norway with positive volume/mix growth Q1-24 Q1-23 Key comments Revenues 673 592 • Organic growth driven by volume/mix growth in Norway, as well Contribution ratio 41.1% 39.9% as contract manufacturing • Brand inv
Slide 21: Orkla House Care, Health and Sports Nutrition, Pierre Robert, Lilleborg
Anchor Grow and build Transform or exit Orkla House Care Health and Sports Nutrition Pierre Robert Group Lilleborg Group Sales growth in EBIT (adj.) margin EBIT (adj.) decline EBIT (adj.) margins all main markets expansion in the quarter mainly driven by the back to above 10% timing of Easter levels
Slide 22: Closing remarks
Closing remarks Nils K. Selte, President and CEO All Alternative Performance Measures (APMs) are presented in the appendices. All figures in NOK million unless otherwise stated.
Slide 23: 3 Commitments
3 COMMITMENTS Drive organic value Execute value- Reduce complexity in existing adding structural of existing portfolio portfolio transactions 23
Slide 24: New CFO from June 2024
New CFO from 1 June 2024 Harald Ullevoldsæter Arve Regland 24
Slide 25: Q&A
Q&A Nils K. Selte, President and CEO Harald Ullevoldsæter, CFO
Slide 26: Upcoming events
Upcoming events Second quarter results 15 July 2024 26
Slide 27: Appendices
A ‘Orkla Appendices
Slide 28: Lower power prices main driver of earnings decline in Hydro Power
Financial Investments Lower power prices was the main driver of earnings decline in Hydro Power. Positive impact from removal of windfall tax2 Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/kWh): (NOK million): NO1 Q1: 103 (104) NO1 Q1: 76
Slide 29: Sound financial profile
Sound financial profile Net interest-bearing liabilities (NOKbn) NIBD / R12M EBITDA 18.8 18.4 2.0x 1.9x 17.2 1.8x 1.5x 12.8 1.0x 0.9x 16.5 16.1 6.6 6.4 15.2 10.8 0.5x 3.0 4.9 4.9 2018 2019 2020 2021 2022 2023 Q1-24 2018 2019 2020 2021 2022 2023 Q1-24 Leasing debt Ex leasing debt 29
Slide 30: Funding sources and maturity profile per Q1-24
Funding sources and maturity profile per Q1-24 Debt maturity average maturity 2.8 years Funding sources (in NOKbn) NOKbn 8 1.8 7 7.3 6 5 11.1 4 3 6.8 2 1 Unutilised credit facilities 0 Bank 2024 2025 2026 2027 2028 2029 2030 2031 Bonds and CP Drawn amounts (ex leasing) Unutilised credit facilities C
Slide 31: Overview of financial targets (1/3)
Anchor Overview of financial targets (1/3) Revenue EBIT margin Cash conversion ROCE 13-14% 127% 131% >15.0% 11.1% 11.3% 12.4% 12.7% >100% Orkla Foods 6.6% Europe 3.2% 2-3% 2023 YTD-24 Target1,2 2023 R12M Target 2023 R12M Target 2023 R12M Target (2026) Volume-mix EBIT margin Cash conversion ROCE >15.
Slide 32: Overview of financial targets (2/3)
Grow and build Overview of financial targets (2/3) Revenue Underlying EBIT ROCE 8.7% 12.0% 5.0% 6.9% Orkla Food 10.8% 10.5% 12.5-13% Ingredients -2.9% -5.6% 2023 YTD-24 Target1 2023 YTD-24 Target1 2023 R12M Target Revenue EBIT margin 9.9% 13.4% 13.3% 14.0% Orkla Health 6.3% 7-9% 2023 YTD-24 Target1
Slide 33: Overview of financial targets (3/3)
Transform or exit Overview of financial targets (3/3) Underlying EBIT (adj.) Cash conversion Orkla Home & 62.0% 128% 159% 35.5% 100% Personal Care >10.0% 2023 YTD-24 Target1 2023 R12M Target EBIT margin Orkla House 14-15% 9.6% 9.2% Care 2023 R12M Target Revenue EBIT margin Cash conversion Health and
Slide 34: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Contribution ratio Contribution margin ratio is calculated by dividing the contribution margin by operating revenues. Operating revenues minus variable operating expenses constitute the contribution margin. Variable operating expenses are reported on the financ
Slide 35: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Change in underlying EBIT (adj.) Change in underlying EBIT (adj.) shows like-for-like EBIT (adj.) growth for the group’s business portfolio, and is defined as the group’s reported change in EBIT (adj.), adjusted for effects of the purchase and sale of companies
Slide 36: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Return on Capital Employed (ROCE) cont. Average capital employed is always an average of the closing balances in the five last reported quarters. ROCE shows the return that the Orkla group receives on the capital invested in the various consolidated portfolio c
Slide 37: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Net interest-bearing liabilities Net interest-bearing liabilities are the sum of the group’s interest-bearing liabilities and interest-bearing receivables. Interest-bearing liabilities include bonded loans, bank loans, other loans, lease liabilities and interes
Slide 38: Orkla
‘Orkla