Slide 1: First quarter results 2012
First quarter q results 2012 Oslo, 3 May 2012
Slide 2: Agenda
Agenda • Introduction Åge Korsvold, Acting President & CEO • Highlights Hi hli ht Q1 Q1-12 12 Terje Andersen, CFO • Orkla Brands Torkild Nordberg, CEO Orkla Brands • Sapa Svein Tore Holsether, CEO Sapa 2
Slide 3: Q1-12 Results
Q1 12 RESULTS Q1-12 TERJE ANDERSEN, CFO 3
Slide 4: Highlights Q1-12
Highlights Q1-12 • Orkla Brands in line with last year y • Underlying top line growth +4% • Continued weak European markets for Sapa • Actions taken in Sapa Heat Transfer improved results compared with Q4-11 • A strong quarter for Borregaard • Market conditions still strong, strong however high raw
Slide 5: Divestment of Borregaard - a dual process
Divestment of Borregaard g - a dual process • A strong Q1 Q1-12 12 for Borregaard, EBITA in NOK million per quarter with continued favourable market 164 conditions 153 134 125 • Borregaard’s industrial activities, separated from the hydro power 92 85 80 assets as of 1 April 2012 • Preparations for I
Slide 6: Key figures Q1-12
Key figures Q1-12 Q1 12 Q1-12 Q1 11 Q1-11 Ch Change Operating revenues 14 792 15 000 -1% EBITA 888 786 13% Amortisation intangibles -11 -7 Other revenues and expenses -40 -66 EBIT 837 713 Profit/loss from associates 353 920 Dividends received 52 84 Gains, losses and write-downs Share Portfolio 427 3
Slide 7: Change in EBITA Q1-11 to Q1-12
Change in EBITA Q1-11 to Q1-12 888 95 786 -33 3 46 -9 9 Q1-11 Sapa Orkla Borregaard Hydro Power Real Estate Q1-12 Brands Chemicals & other 7
Slide 8: Strong financial flexibility and expansion capacity
Strong financial flexibility and expansion capacity N t iinterest-bearing Net t t b i li liabilities biliti (NOK (NOKm)) E it ratio Equity ti (%) 27 424 53.6 52.6 51.7 51.8 19 848 19 652 47.7 10 645 9 487 2008 2009 2010 2011 as of 2008 2009 2010 2011 as of Q1-12 Q1 12 Q1-12 8
Slide 9: Orkla Brands
ORKLA BRANDS TORKILD NORDBERG, NORDBERG CEO ORKLA BRANDS 9
Slide 10: EBITA in line with Q1 last year
EBITA in line with Q1 last year EBITA Rolling 12 months Amounts in NOK million 3,000 2,900 2,800 2,700 2,600 2,400 , 2,300 2,200 2,100 2 000 2,000 1,900 1,800 200 100 0 Q1- Q2- Q3- Q3- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1-
Slide 11: Underlying top line growth of 4%
Underlying top line growth of 4% Operating revenues Q1-12 Q1-11 Change • Volume growth in retail sector, while loss of industry contracts Orkla Brands 5 583 5 714 -2% hurt B2B sales Orkla Foods Nordic 2 026 2 213 -8% Orkla Brands Nordic 1 924 1 937 -1% Orkla Brands International 452 445 2% • Profit
Slide 12: Raw material prices still high
Raw material i l prices i still ill high hi h • Orkla O kl BBrands d has h compensated t d for f increased input cost • Some difference compared to the FAO index* due to: • Norwegian agriculture policy, EU exposure and some time lag effects • Increased p packaging g g cost due to high crude oil pric
Slide 13: Orkla Foods Nordic
Orkla Foods Nordic EBITA in NOK million 357 • Underlying profit growth of 2% • Front-loaded advertising investments 277 262 • Positively affected by Easter 186 197 • Underlying top-line growth of 5% • Positively affected by Easter Q1 Q2 Q3 Q4 • Continued profit growth for Stabburet, Norway EBITA mar
Slide 14: Orkla Brands Nordic
Orkla Brands Nordic EBITA in NOK million • Profit weaker than last year 428 • Loss of contract production 363 361 • Front-loaded advertising investments 334 312 • Underlying top line on par with last year • Continued good development for Chips Group Q1 Q2 Q3 Q4 • Restructuring of biscuit production
Slide 15: Orkla Brands International
Orkla Brands International EBITA in NOK million Russia 87 • Profit improvement • Increased advertising investments • Realised synergies due to the merger of 10 SladCo and Krupskaya • Strong increase in sales to modern trade -37 -26 and lower sales of non-branded non branded products -63 Q1 Q2 Q3 Q4
Slide 16: Orkla Food Ingredients
Orkla Food Ingredients EBITA in NOK million • Challenging markets and increased competition 71 63 62 • From artisan to industrial customers • Significant g increase in raw material p prices 34 29 • Price increases have been implemented, but p profit was slightly g y lower than last y year Q1 Q2 Q3 Q
Slide 17: Examples of innovations
Examples of innovations MEN'S COLLECTION were Developing people — creating value (33 O R IK LA
Slide 18: Short-term outlook
Short-term outlook • Contract production at lower levels than in 2011 • Volatile V l til raw material t i l prices i going i fforward d • Raw material prices expected to increase in Norway • Higher raw material costs to be compensated for in pricing • Strong focus on cost in every part of the value
Slide 19: Sapa
SAPA SVEIN TORE HOLSETHER, HOLSETHER CEO SAPA 19
Slide 20: Weaker European markets impact Q1 results
Weaker European p markets impact p Q1 results • Volume growth growth, share gain gain, and improved results for Profiles North Operating Revenues Q1-12 Q1-11 Change America Sapa 7 712 7 882 -2% Profiles 6 093 6 168 -1% 1% Heat Transfer and Building System 1 822 1 941 -6% • Restructuring on plan Elim
Slide 21: Actions to improve Heat Transfer are taking effect
Actions to improve p Heat Transfer are taking effect • Price increases implemented Sapa Heat Transfer EBITA margin performance • Volume transfer from Sweden to China 9% 8% to leverage lower cost position ongoing 7% 7% • Operational improvements according to plan 4% • Cast house and cold rolling mill
Slide 22: Profiles North America continues to improve
Profiles North America continues to improve • Continued market share gain Sapa Profiles North America EBITA margin in % • Volume up 13 000 tonnes compared with Q1 4.5 last year (+13%) 4.0 2.9 • Footprint optimisation and productivity improvement -1.7 2009 2010 2011 Q1-12 22
Slide 23: Declining profitability in Profiles Europe
Declininggp profitability y in Profiles Europe • Market-driven Market driven volume reduction Sapa Profiles Europe EBITA margin in % • Down 9% to 106 000 tonnes compared with Q1-11 2.1 • Margin M i pressure, especially i ll iin 19 1.9 1.6 Southern Europe • European restructuring according to plan •
Slide 24: Investing in build-up and knowledge transfer in Asia
Investing g in build-up p and knowledge transfer in Asia • Considerable resources allocated to accelerate development • Short-term ramp-up costs • Positive cash contribution as from mid-2013 • Installation of large press in Shanghai area • Target industrial markets • Leverage on customer solutions c
Slide 25: Growth expectations for NA, weak trend continues in Europe
Growth expectations p for NA,, weak trend continues in Europe Expected Development by Geographic Region & End-Use Market 2012 vs. 2011 Distribution Industrial Com. B&C Res. B&C Transport Automotive North America 0% to 5% 0% to 5% 0% to -5% 0% to 5% 5% to 10% 5% to 10% Europe 0% to -5% 0% to -5% -5%
Slide 26: Short-term outlook
Short-term outlook • Slower market growth expected for Profiles North America, while the weak market trend in Europe is expected to continue • Q2 seasonally stronger than Q1 for Profiles • Heat transfer markets expected to be in line with Q1 • Restructuring programmes on track • Reduction of ~900 em
Slide 27: Q&A
Q&A • Åge Korsvold, Acting President & CEO • Terje Andersen, CFO • Torkild Nordberg, g, CEO Orkla Brands • Svein Tore Holsether, CEO Sapa
Slide 28: Appendix
APPENDIX EB Developing people — creating value (33 O R IK L A
Slide 29: A strong quarter for Borregaard
A strong quarter for Borregaard Amounts in NOK million • Overall market conditions Operating revenues Q1-12 Q1 12 Q1-11 Q1 11 Change favourable Borregaard Chemicals 981 1 032 -5% EBITA Q1-12 Q1 12 Q1-11 Q1 11 Change • Strong NOK and high raw Borregaard Chemicals 125 134 -7% material and energy costs
Slide 30: Hydro Power in Q1-12
Hydro Power in Q1-12 • Normal production levels, Production for Hydro Power in GWh however seasonally low quarter 496 475 331 • Significant decrease in prices, prices particularly at quarter end • Higher snow- and water reservoir Q1-11 Normal Q1-12 production Q1 levels than normal at quarter end Amo
Slide 31: Share Portfolio in Q1-12
Share Portfolio in Q1-12 Amounts in NOK million • Return of +12.9% Top 10 holdings Market value Share of portfolio Share of compared with Oslo Stock Principal holdings (%) equity (%) Exchange (OSEBX) +10.8% Tikkurila Oyj 335 7% 7.0 % Amer Sports 290 6% 3.2 % • Net sales of NOK 1.1 bn Kongsberg Grupp
Slide 32: REC - Orkla's holding: 39.7%
REC - Orkla’s holding: 39.7% • Orkla will support REC in their work on operational improvements and structural solutions • Weak solar markets reduce exit opportunities in the short term • The REC share price increased from 3.32 to 3.38 in the quarter Amounts in NOK million REC Q1-12 Q1-11 Change Rev
Slide 33: Orkla Brands - FAO Food Price Index
Orkla Brands - FAO Food Price Index 240 220 200 180 160 140 120 100 1/2006 7/2006 1/2007 7/2007 1/2008 7/2008 1/2009 7/2009 1/2010 7/2010 1/2011 7/2011 1/2012 33 33
Slide 34: Cash flow as of 31 Mar 2012
Cash flow as of 31 Mar 2012 Q1-12 Q1-11 2011 Cash flow Industial Activities: Operating profit 734 713 3 023 Amortisation, depreciations and impairment charg 449 477 2 088 Changes in net working capital, etc. - 789 -1 254 -1 094 Net replacement expenditure - 378 - 373 -1 557 Cash flow from operations
Slide 35: Balance sheet as of 31 Mar 2012
Balance sheet as of 31 Mar 2012 Amounts in NOK million 31.3.2012 31.12.2011 g Intangible assets 12 674 12 801 Property, plant and equipment 17 913 18 058 Financial assets 4 999 5 682 Non-Current assets 35 586 36 541 Assets in discontinued operations 391 I Inventories i 8 276 8 047 Receivables 11 206
Slide 36: Operating revenues and EBITA per segment
Operating p g revenues and EBITA per segment Amounts in NOK million Amounts in NOK million Operating revenues Q1-12 Q1-11 Change Operating profit - EBITA Q1-12 Q1-11 Change Orkla Group 14 792 15 000 -1% Orkla Group 888 786 13% Orkla Brands 5 583 5 714 -2% Orkla Brands 523 520 1% Orkla Foods Nordic 2
Slide 37: Currency translation effects
Currency translation effects Revenues Q1 12 Q1-12 Orkla Brands -121 Sapa -71 Borregaard Chemicals -8 8 Total -200 EBITA Q1-12 Orkla Brands -7 Sapa 6 Borregaard -1 Total -2 2 37
Slide 38: Financial calendar
Financial calendar • 3 May 2012 - Dividend payment • 20 July 2012 - Second quarter results 2012 • 31 October 2012 - Third quarter results 2012 38
Slide 39: Financial items
FINANCIAL ITEMS Developing people — creating value (33 O R IK L A
Slide 40: Net financial items
Net financial items Amounts in NOK million Q1-12 Q1-11 Full year 2011 Net interest expenses -125 -87 -378 Currency gain/loss 5 0 -34 Other financial items, net 1 - 31 - 34 Net financial items -119 -118 -446 40
Slide 41: Debt maturity profile, Orkla Group
D bt maturity Debt t it profile, fil Orkla O kl Group G NOK million 9,000 , 8,000 7,000 Average maturity 3.8 years 6,000 5,000 4,000 3,000 2,000 1,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Drawn amounts Unutilised credit facilities Gross Interest-bearing liabilities and Unutilised cred
Slide 42: Net gearing 0.27 as of Q1-12
Net gearing 0.27 as of Q1-12 60 1.40 54 1.20 48 1.00 42 36 0.80 30 0.60 24 18 0.40 12 0.20 6 - 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1- -6 2012 -0.20 Equity Net interest-bearing liabilities Net gearing 42
Slide 43: Funding sources
Funding sources Banks Unutilised credit 9.0 facilities 10 5 10.5 14.2 13 1 13.1 78 7.8 Bonds and CP 9.3 7.3 Cash, Cash equivalents and Figures in NOK billion Interest Bearing Assets 43
Slide 44: Orkla
{E} ORKLA