Slide 1: Growth platform strengthened in 2007
Growth platform strengthened in 2007 Fourth quarter and full year results 2007 14 February 2008
Slide 2: Agenda
Agenda • Highlights and strategy Dag J. Opedal • Financial performance Q4 and full year 2007 Terje Andersen — Orkla Financial Investments — Orkla Materials — Orkla Associates • Orkla Branded Consumer Goods Torkild Nordberg • Orkla Aluminium Solutions Ole Enger • Q&A 2 Q4 2007
Slide 3: 2007 in brief - Financial performance
2007 in brief - Financial performance Change compared with 2006: • Adjusted EPS, NOK 8.1 +23 % • Profit before tax, NOK 10.1 billion +18 % • EBITA, NOK 5.1 billion +1 % Annual return: • Share performance, dividend reinvested 52.4 % • Return on Capital Employed, Industry division 12.4 % • Return on S
Slide 4: 2007 in brief – positions substantially moved forward
2007 in brief – positions substantially moved forward • Increased exposure to the solar industry – Holding in REC increased to 39.73 % (average cost NOK 50 per share) – Elkem Solar plans for commercialisation by the end of 2008 • Orkla and Alcoa create world leading aluminium extrusion company • Rea
Slide 5: Q4-07 – Operational issues
Q4-07 – Operational issues • Performance as expected for Orkla Branded Consumer Goods – Action plan on track • Sapa-merger progressing according to plan – Weaker markets and one-off costs for Sapa Profiles • Profit in Primary Aluminium negatively impacted by weaker USD and higher raw material costs
Slide 6: Growth in EPS 1995-2007
Growth in EPS 1995-2007 (excl. Carlsberg Breweries NOK 12.1 in 2004 and Orkla Media NOK 4.0 in 2006) 8.1 6.9 5.6 3.4 2.9 2.4 2.1 1.7 1.8 1.6 1.5 1.3 1.3 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005 2006* 2007 6 Q4 2007
Slide 7: Dividend strategy - predictability and stability
Dividend strategy- predictability and stability 0.80+5.00 2.25 0.90+1.00 2.00 1.50 0.68 0.50 0.60 0.65 0.23 0.27 0.32 0.39 0.41 0.19 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007* Ordinary dividend Special dividend * Proposed by the Board of Directors 7 Q4 2007
Slide 8: The Orkla Group – strategic positions
The Orkla Group – strategic positions Branded Consumer Aluminium Solutions Solar Energy Materials Financial Investments Goods • The leading Nordic • The world’s largest • 39.73 % in REC • Global leading • One of the largest FMCG company with aluminium profile • 100 % in Elkem producer of silicon pri
Slide 9: Financial performance
Financial performance Terje Andersen CFO
Slide 10: Group income statement Q4-07
Group income statement Q4-07 Key figures in NOK million 1 Oct - 31 Dec 2007 2006 Change Operating revenues 18 135 14 580 24 % EBITA 1 219 1 652 -26 % Amortisation intangibles -63 -57 Restructuring and significant impairment -385 -388 EBIT 771 1 207 Associates 5 118 Dividends and portfolio gains 694
Slide 11: Change in EBITA from Q4-06 to Q4-07
Change in EBITA from Q4-06 to Q4-07 1 652 -173 -109 -92 -49 -10 1 219 Q4-06 Elkem and Elkem Primary Orkla Branded Elkem Solar Other Q4-07 Borregaard Energy Aluminium Consumer Goods All figures in NOK million 11 Q4 2007 - Financial performance
Slide 12: Group income statement 2007
Group income statement 2007 Key figures in NOK million 1 Jan - 31 Dec 2007 2006 Change Operating revenues 63 867 52 683 21 % EBITA 5 112 5 084 1% Amortisation intangibles -230 -216 Restructuring and significant impairment -814 -388 EBIT 4 068 4 480 Associates 848 289 Dividends and portfolio gains 4
Slide 13: Orkla - Q-Cells put options
Orkla - Q-Cells put options Exercise Exercise Right of % in REC period start period end deferral* Exercise price 4.00 % 09.02.2008 09.02.2009 1.5 years 70 NOK/per share 5.95 % 09.02.2008 09.02.2010 2.5 years 90 NOK/per share 5.95 % 09.02.2009 09.02.2010 2.0 years 90 NOK/per share 15.90 % * From star
Slide 14: Cash flow 2007
Cash flow 2007 Key figures in NOK million 1 Jan - 31 Dec 2007 2006 Cash flow from operations 4 443 4 555 Financial items, net - 618 - 814 Cash flow from industrial activities 3 825 3 741 Cash flow from Financial Investments 1 352 1 113 Taxes paid and miscellaneous - 957 -1 232 Cash flow before capit
Slide 15: Net gearing 0.3 per 31 Dec 2007
Net gearing 0.3 per 31 Dec 2007 NOK Net gearing billion 60 1.4 54 1.2 48 42 1.0 36 0.8 30 0.6 24 18 0.4 12 0.2 6 0.0 0 -6 2000 2001 2002 2003 2004 2005 2006 2007 -0.2 Equity Net interest-bearing liabilities Net gearing 15 Q4 2007 - Financial performance
Slide 16: Orkla Financial Investments
Orkla Financial Investments 16 Q4 2007
Slide 17: Return on Share Portfolio +16.2 % in 2007
Return on Share Portfolio +16.2 % in 2007 Portfolio OSEBX MSCI Nordic S&P 500 27.0 % 27.5 % Gains and dividends in NOK million 23.6 % 1 Oct - 1 Jan - 2007 31 Dec 31 Dec Unrealised gains - 204 -1 837 16.2 % Net gains and losses 264 3 150 Change in fair value of associates 73 477 11.5 %11.7 % Dividend
Slide 18: Orkla Finans and Orkla Real Estate
Orkla Finans and Orkla Real Estate Orkla Finans • Strengthened position Profit before tax in NOK million • Operating revenues increased by 22 % 1 Jan - 31 Dec 2007 2006 Change • More uncertain market conditions in 2008 Orkla Finans 216 178 21 % Orkla Real Estate 360 145 148 % Orkla Real Estate • Rea
Slide 19: Orkla Materials
Orkla Materials 19 Q4 2007
Slide 20: Elkem – Lower profit in Q4
Elkem – Lower profit in Q4 • Weak USD and higher raw material costs for primary aluminium Elkem in NOK million 1 Oct - 31 Dec • Satisfactory results for the energy- Revenues 2007 2006 Change operations – Down from exceptionally high trading Elkem 3 290 2 461 34 % results in Q4-06 Energy 442 425 4% P
Slide 21: Primary Aluminium – Weak USD and higher raw material costs
Primary Aluminium – Weak USD and higher raw material costs hamper profitability in Q4 • USD/NOK weakened, effect on EBITA NOK 51 million EBITA per quarter - Primary aluminium • Increased raw material costs – Alloy materials 160 – New alumina contracts from 140 2007 120 100 • One-off effect of NOK 16
Slide 22: High LME but increased cost curve for aluminium
High LME but increased cost curve for aluminium Income: • Metal hedges reduce exposure to LME - USD 100 per MT, change in EBITA of NOK 25 million per year – Unrealised loss 2008: NOK 222 million – Unrealised loss 2009: NOK 223 million – Unrealised loss 2010: NOK 134 million – Unrealised loss 2011: N
Slide 23: Elkem – development projects enhancing value
Elkem – development projects enhancing value Solar Primary Aluminium Energy Silicon-related Positions: • Technological • Competitive • Major player in • Global leading frontrunner in cost position Nordic hydro production of power market solar grade silicon • Sauda project • Continued strong Developm
Slide 24: Borregaard – Improved profitability for Chemicals
Borregaard – Improved profitability for Chemicals Borregaard in NOK million • Favourable market conditions for 1 Oct - 31 Dec lignin and speciality cellulose Revenues 2007 2006 Change Borregaard 1 194 1 237 -3 % • Higher wood and energy prices, Energy 50 105 -52 % weaker USD hamper profitability Che
Slide 25: Orkla Associates
Orkla Associates IG <E} ORKLA
Slide 26: Orkla Associates
Orkla Associates REC Jotun in NOK million in NOK million 1 Jan - 31 Dec 2007 2006 Change 1 Jan - 31 Aug 2007 2006 Change Revenues 6 642 4 334 53 % Revenues 6 136 5 228 17 % EBITDA 3 172 1 965 61 % EBIT 2 588 1 574 64 % EBIT 701 528 33 % Profit before tax 1 977 1 540 28 % Profit before tax 687 489 40
Slide 27: Orkla Branded Consumer Goods
Orkla Branded Consumer Goods Torkild Nordberg EVP
Slide 28: Orkla Branded Consumer Goods - EBITA 12 month rolling
Orkla Branded Consumer Goods - EBITA 12 month rolling NOK million 2 600 2 400 2 200 2 000 1 800 1 600 1 400 1 200 Q1-02 Q3-02 Q1-03 Q3-03 Q1-04 Q3-04 Q1-05 Q3-05 Q1-06 Q3-06 Q1-07 Q3-07 Q1-08 Q3-08 28 Q4 2007 - Orkla Branded Consumer Goods
Slide 29: Action plan proceeding as planned
Action plan proceeding as planned 1) Price increases for finished goods to offset hike in raw material prices, wages and energy costs – Raw material and other costs will continue to increase – Further price increases will be passed on 2) International operations – Superfish has been divested – Furth
Slide 30: Orkla Brands – Satisfactory top line growth
Orkla Brands – Satisfactory top line growth • Underlying top line growth +3 % Orkla Brands in Q4-07 in NOK million – + 4 % in 2007 1 Oct - 31 Dec 2007 2006 Change Revenues 1 986 2 085 -5 % • Profit decrease in Q4-07 compared EBITA 308 329 -6 % with Q4-06 due to increased raw EBITA margin 15.5% 15.8%
Slide 31: Orkla Foods – Decline in profit
Orkla Foods – Decline in profit, but lower in relative terms compared with previous quarters Orkla Foods • Strong underlying growth for in NOK million Orkla Food Ingredients + 7 % 1 Oct - 31 Dec 2007 2006 Change Revenues • Weak performance for the bread and bakery operations Orkla Foods 4 229 4 201
Slide 32: New organisation: Strengthened multi local approach
New organisation: Strengthened multi local approach Torkild Nordberg Finance Director Harald Ullevoldsæter Human Resources Director Anders Berglie Corporate Affairs Director Håkon Mageli Orkla Foods Nordic Orkla Brands Nordic Orkla Brands International Orkla Food Ingredients Atle Vidar Johansen Jan
Slide 33: Launch: New Jif mopp system
Launch: New Jif mopp system 33 Q4 2007 - Orkla Brands
Slide 34: Q4 2007 - Orkla Brands
34 Q4 2007 - Orkla Brands
Slide 35: Orkla Aluminium Solutions
Orkla Aluminium Solutions Ole Enger CEO Sapa 35 Q4 2007
Slide 36: The Sapa growth story
The Sapa growth story 2007 2007/2008 — Improve EBITA – margin to 5-6 % Targets: — Sapa and Alcoa over a business cycle, 3 x asset establish world turnover and ROCE at 15-20 % leading extrusion business within 3 years — Balance portfolio between US, Europe and Asia Actions: — Restructuring within the
Slide 37: Safety Year to Date December 2007
Safety Year to Date December 2007: Sapa Group Sapa Group Recordable Accidents 30.0 Per 1,000,000 hours 25.0 20.0 Sapa LWDR 15.0 Sapa TRR 10.0 5.0 0.0 S e - 07 M r - 07 20 5 Ja 06 Ju 0 7 No -07 De -07 Au l-07 F e - 07 Ju - 07 M -0 7 Ap 0 7 O -07 07 0 20 n- c- - g ct n v p ay ar b LWDR: Lost Work Day
Slide 38: Communicated in Q3: Q4 will be influenced by
Communicated in Q3: - Q4 will be influenced by: • Weaker markets for Profile and Building System than Q4 last year • Strong demand for Heat Transfer • Restructuring costs for Sapa Profiles • Further start-up/integration costs for Sapa Profiles 38 Q4 2007 - Orkla Aluminium Solutions
Slide 39: The U.S. slowdown, started with the housing downturn
The U.S. slowdown, started with the housing downturn Sapa Europe shipments (tonnes) by Market segment 2006 2007 Automotive B&C Industrial Comm Trading - Prod Transport Distribution • Weakness in Building & Construction (B&C) now seen in Europe as well as U.S. • 40-50 % of Sapa Profiles production is
Slide 40: Delivered Volumes - December
Delivered Volumes - December Sapa Europe profile companies 2003 - 2007 December shipments as % of total year 6.5% 6.0% 6.0% 5.5% 5.5% 5.5% 5.2% 5.0% 4.5% 4.2% 4.0% 3.5% 3.0% 2003 2004 2005 2006 2007 Dec. In % total year • Relative December profile shipments were the lowest in the last 5 years 40 Q4
Slide 41: Summing up Q4
Summing up Q4 • The very low volumes in Q4 2007 were caused by three factors: — Low consumption — Destocking as a consequence of decline in aluminium prices — Fewer working days in December 2007 than in previous years Underlying consumption is probably somewhat better than what shipments indicate 41
Slide 42: Restructuring decided in Q4
Restructuring decided in Q4 • Banbury plant in UK to be shut down • Noblejas plant in Spain to be shut down • Redd Team location in Florida, USA to be shut down — Parts of production moved to other Sapa locations in USA • Magnolia plant in Arkansas, USA, extrusion activities scaled back, two presses
Slide 43: Effects of restructuring decided in Q4
Effects of restructuring decided in Q4 • P/L effect of NOK 309 million in Q4, but cash positive due to freeing up capital and sales of land • Production facilities will be scaled back or closed during first half 2008 • 600 employees affected • Positive EBITA effect of restructuring towards end of 20
Slide 44: Q4 results: Weak for Profiles, strong for Building System and Heat Transfer
Q4 results: Weak for Profiles, still strong for Building System and Heat Transfer • Lower margins due to Orkla Aluminium Solutions in NOK million — Dilution effect from consolidation of Alcoa figures 1 Oct - 31 Dec Revenues 2007 2006 Change — Weaker markets in North America, and Europe (10 % & Orkla
Slide 45: Orkla Aluminium Solutions – Full year results 2007
Orkla Aluminium Solutions – Full year results 2007 Orkla Aluminium Solutions in NOK million 1 Jan - 31 Dec Revenues 2007 2006 Change Orkla Aluminium Solutions 25 335 16 318 55 % Sapa Profiles 19 305 10 984 76 % Sapa HT and BS* 7 060 6 425 10 % Eliminations -1 030 -1 091 EBITA* Orkla Aluminium Soluti
Slide 46: Profile shipments in Europe in January
Profile shipments in Europe in January back to a more normal level, though lower than last year Kton January shipments 60 50 40 30 20 10 2004/Jan 2005/Jan 2006/Jan 2007/Jan 2008 / Jan Europe USA • January profile shipments may be overstated just as December was understated 46 Q4 2007 - Orkla Alumini
Slide 47: Q1-08 Sapa influenced by
Q1-08 Sapa influenced by: • Weaker for Profiles than in Q1-07, but better than in Q4-07 • Further start-up/integration costs for Profiles: — NOK 40-50 million per quarter related to implementation of Shared Service and cost cutting programmes in 2008 • Strong demand for Heat Transfer 47 Q4 2007 - Or
Slide 48: The Kam Kiu Aluminium Group
The Kam Kiu Aluminium Group • Strong foothold in China • Letter Of Intent signed February 5, 2008 • Net sales approx. SEK 1 400 million • Production level 60 Ktons/year — Potential to double capacity with low capex • Estimated completion Q2-08 48 Q4 2007 - Orkla Aluminium Solutions
Slide 49: From products to solutions
From products to solutions Cost improvements: Growth initiatives: • Restructuring • Kam Kiu Aluminium Group • Productivity • Organisational development • Manning reductions • Value added and expansion investments of NOK 300-500 million in 2008 • 5-6 % EBIT (15-20 % ROCE) in 3 years 49 Q4 2007 - Orkl
Slide 50: Coming events
Coming events 24 April 2008 Annual General Meeting 25 April 2008 Share quoted ex. dividend 6 May 2008 First quarter 2008 results 7 May 2008 Dividend payment 13 August 2008 Second quarter 2008 results 50 Q4 2007
Slide 51: Q4 2007
51 Q4 2007
Slide 52: Appendix
Appendix 52 Q4 2007
Slide 53: Balance sheet 2007
Balance sheet 2007 Key figures in NOK million 31.12.2007 31.12.2006 Intangible assets 16 626 17 571 Property, plant and equipment 21 481 16 568 Financial non-current assets 14 999 7 914 Non-Current assets 53 106 42 053 Assets held for sale 113 Inventories 8 533 6 510 Receivables 12 628 10 924 Share
Slide 54: Cash flow 2007
Cash flow 2007 Key figures in NOK million 1 Jan - 31 Dec 2007 2006 Industry division: Operating profit 3 831 4 295 Amortisations, depreciations and write-downs 2 556 2 377 Changes in net working capital - 286 - 770 Net replacement expenditure -1 658 -1 347 Cash flow from operations 4 443 4 555 Finan
Slide 55: Largest holdings in the Share Portfolio
Largest holdings in the Share Portfolio Market value in NOK million per 31 Dec 2007 Share of Share of Principal holdings Industry Market value portfolio (%) equity (%) Tomra Industry 922 5,3 14,5 % Vimpelcom Telecommunication 888 5,1 0,3 % Hennes & Mauritz Retailing 727 4,1 0,3 % Fast Search Systems
Slide 56: Portfolio key figures
Portfolio key figures Key figures in NOK million 31 Dec 07 31 Dec 06 Change 07 Market value portfolio 17 513 18 198 - 685 Unrealised gains before tax 3 810 5 647 -1 837 Share of portfolio invested - outside Norway 55 % 51 % +4 % pts - in listed companies 85 % 85 % -0 % pts 56 Q4 2007 - Appendix - Or
Slide 57: Currency translation effects
Currency translation effects in NOK million Revenues Q4-07 2007 Orkla Foods -179 -82 Orkla Brands -42 -6 Orkla Aluminium Solutions -792 -856 Elkem 0 0 Borregaard -55 -96 Total -1 068 -1 040 EBITA Q4-07 2007 Orkla Foods -17 -16 Orkla Brands -4 -3 Orkla Aluminium Solutions -10 -8 Elkem 0 0 Borregaard
Slide 58: Aluminium hedging at Elkem
Aluminium hedging at Elkem Primary Aluminium - LME 3 month USD/MT 3 000 2 800 2 600 USD/MT 2 400 2 200 2 000 1 800 1 600 jan 05 mai 05 sep 05 jan 06 mai 06 sep 06 jan 07 mai 07 sep 07 jan 08 - Elkem Aluminium recorded a loss of NOK 75 million on its metal hedging in Q4-07 (50 % basis) - At the end o
Slide 59: New reporting structure – Orkla Brands
New reporting structure – Orkla Brands: Orkla Brands in NOK million 1 Jan - 31 Dec Revenues 2007 Orkla Brands 22 253 Orkla Foods Nordic* 9 548 Orkla Brands Nordic 7 666 Orkla Brands International 2 262 Orkla Food Ingredients 3 200 Eliminations - 423 EBITA * Orkla Foods Nordic will include Orkla Orkl
Slide 60: Orkla Aluminium Solutions – Comparable figures for 2007
Orkla Aluminium Solutions – Comparable figures for 2007 Orkla Aluminium Solutions - Comparable figures 2007 in NOK million Q1 Q2 Revenues 2007 2007 Change Orkla Aluminium Solutions 9 151 8 820 4% Sapa Profiles (Alcoa+Sapa Profiles) 7 703 7 211 7% Sapa Heat Transfer and Building System 1 778 1 857 -4
Slide 61: Financial items Q4 2007
Financial items 61 Q4 2007
Slide 62: Financial items
Financial items Key figures in NOK million 1 Jan - 31 Dec 2007 2006 Net interest expenses -704 -579 Currency gain/loss 32 -38 Other financial items, net* 1 112 333 Net financial items 440 -284 * Major effects in 2007: - Gains from sale of shares in Mecom (NOK 311 million), financial interest in Good
Slide 63: Equity and liabilities
Equity and liabilities NOK Net gearing billion 60 1.4 54 1.2 48 42 1.0 36 0.8 30 0.6 24 18 0.4 12 0.2 6 0.0 0 -6 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 -0.2 Equity Net interest-bearing liabilities Net gearing Figures as reported IFRS accounting from 2004 63 Q4 2007 - Appendix - Financial
Slide 64: Debt maturity profile 31 Dec 2007
Debt maturity profile 31 Dec 2007 NOK million Average maturity 5.3 years 6 000 5 000 4 000 3 000 2 000 1 000 0 2008 2009 2010 2011 2012 2013 2014 2017 Drawn amounts Unutilised credit facilities 64 Q4 2007 - Appendix - Financial Items
Slide 65: Funding Sources Dec 2007
Funding Sources 31 Dec 2007 Unutilised credit Bonds and CPs 31 % facilities 39 % 11.2 9.0 8.6 Banks 30 % Figures in NOK billion 65 Q4 2007 - Appendix - Financial Items