Slide 1: Second quarter results 2016
1 Second quarter results 2016 15 July 2016 Peter A. Ruzicka, President & CEO
Slide 2: Continued growth in the quarter
Highlights Q2 2016: Continued growth in the quarter • Continued growth in Branded Consumer Goods • 3.8% organic growth1 supported by positive Easter effects • EBIT (adj.)2 growth of 20% in BCG due to organic growth, M&A and FX effects • Strong contribution from associates • Sapa delivered solid impr
Slide 3: Positive organic growth in Q2 and YTD
Branded Consumer Goods YTD 2016: Positive organic growth in Q2 and YTD Organic growth performance1 Organic growth performance YTD 20161 3.8% Orkla Foods 3.6% 2.8% 2.5% 1.8% Orkla Confectionery 6.8% & Snacks 1.1% 0.7% Orkla Care -0.4% Orkla Food Ingredients 1.4% -2.8% Orkla BCG 2.8% 2011 2012 2013 20
Slide 4: 8% growth in the new category Orkla Wound Care
8% growth in the new category Orkla Wound Care The next generation of mobile First Aid Kits Salvequick launched with Disney’s “Frozen” Salvequick’s new design 4
Slide 5: Successful Waffle Cut cross-country launch
Successful Waffle Cut cross-country launch 5
Slide 6: Meeting consumer demand for more organic alternatives
Meeting consumer demand for more organic alternatives Sales of organic products have increased by 52% in Orkla Foods Sweden in 2016 vs 2015 6 Example from Orkla Foods Sweden
Slide 7: Meeting consumer demand for healthier food
Meeting consumer demand for healthier food Vitana’s Farmer’s Soup is a new range of premium, natural soups 7
Slide 8: Ongoing cost improvements produce results
Ongoing cost improvements produce results Several cost measures implemented Illustrative graph - Integration programmes of acquired companies • Cederroth synergies above and ahead of plan - Utilising opportunities from acquired companies • Consolidating production in four categories following acquis
Slide 9: Strong EBIT growth helped by currency effects
Branded Consumer Goods YTD 2016: Strong EBIT growth helped by currency effects Breakdown of BCG R12M EBIT (adj.) EBIT (adj.) growth YTD 2016 NOK million 16% 4 500 4 000 5% 11% 3 500 3 000 2 500 2 000 1 500 2010 2011 2012 2013 2014 2015 Reported Currency EBIT (adj.) EBIT (adj.) translation growth in
Slide 10: Strong improvement in Sapa
Strong improvement in Sapa R12M underlying EBITDA (NOK billion) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Q4- Q2- 13 16 10
Slide 11: Investing in leading branded consumer goods community
Financial investments Investing in leading branded consumer goods community Orkla is investing in new office building at Skøyen in Oslo – Gathering a major branded consumer goods community under one roof in Oslo – Will provide workspace for around 800 employees – Cash outlays of close to NOK 800 mil
Slide 12: Financial performance
1 2 Financial performance Jens Bjørn Staff, CFO
Slide 13: Group EBIT (adj.) improvement of 26% in the quarter
Group EBIT (adj.) improvement of 26% in the quarter Amounts in NOK million Key figures Q2-15 Q2-16 YTD-15 YTD-16 Operating revenues 7 705 9 433 15 246 18 043 EBIT (adj.) 789 996 1 514 1 813 Other income and expenses -55 -81 -172 -111 EBIT 734 915 1 342 1 702 Profit/loss from associates and JV 545 44
Slide 14: Branded Consumer Goods
A ‘Orkla Branded Consumer Goods
Slide 15: Sales growth of 24% driven by M&A, FX and organic growth
Sales growth of 24% driven by M&A, FX and organic growth Amounts in NOK million 9,147 14.2% 5.5% 7,404 3.8% BCG operating Organic growth1 FX M&A BCG operating revenues Q2-15 revenues Q2-16 15 1Reported growth adjusted for currency translation effects and structural changes
Slide 16: Continued growth in Branded Consumer Goods
Branded Consumer Goods Q2 2016 Continued growth in Branded Consumer Goods Amounts in NOK million 2015 2016 EBIT (adj.) EBIT (adj.) margin (%) 1.842 11.1% 10.7% 10.9% 10.5% 1.589 982 820 Q2-16 YTD-16 Q2-16 YTD-16 • 20% EBIT (adj.) growth in Q2, driven by organic • Margin diluted by M&A and distributi
Slide 17: Organic growth and profit improvement in Orkla Foods
Orkla Foods Q2 2016 Organic growth and profit improvement in Orkla Foods Amounts in NOK million 2015 2016 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +3.9% OG1 +3.6% OG1 7,385 840 12.5 11.7 11.5 11.4 6,167 711 3,967 463 3,122 389 Q2 YTD Q2 YTD Q2 YTD • 27% top line growth supported by FX •
Slide 18: Strong growth in Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Q2 2016 Strong growth in Orkla Confectionery & Snacks Amounts in NOK million 2015 2016 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +7.3% OG1 +6.8% OG1 2,933 336 10.8 11.4 11.5 2,543 291 9.8 1,344 1,476 132 159 Q2 YTD Q2 YTD Q2 YTD • Broad-based, volume-driven •
Slide 19: Profit improvement for Orkla Care
Orkla Care Q2 2016 Profit improvement for Orkla Care Amounts in NOK million 2015 2016 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) 1.6% OG1 -0.4% OG1 3,284 16.4 463 15.4 2,484 408 13.3 14.1 1,629 1,157 216 178 Q2 YTD Q2 YTD Q2 YTD • Significant revenue growth driven by • Profit improvement
Slide 20: Growth in Orkla Food Ingredients
Orkla Food Ingredients Q2 2016 Growth in Orkla Food Ingredients Amounts in NOK million 2015 2016 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) 3.3% OG1 1.4% OG1 3,994 203 6.7 6.8 3,494 179 144 5.1 5.1 121 2,121 1,814 Q2 YTD Q2 YTD Q2 YTD • 17% top line growth supported by • Improved EBIT dri
Slide 21: Orkla Investments
A ‘Orkla Orkla Investments
Slide 22: Jotun (42.5%) share portfolio
Orkla Investments Jotun (42.5%) Sapa (50%) Financial investments share portfolio Book value real estate: Real estate & Hydro Power NOK 1.5 billion Market value share portfolio: NOK 288 million 22
Slide 23: Significant underlying and reported earnings growth in Sapa
Sapa (50/50 joint venture) Significant underlying and reported earnings growth in Sapa Amounts on 100% basis in NOK million 2015 2016 Orkla’s share of Operating revenues Underlying EBIT net profit after tax 528 28,535 27,976 1,375 875 319 14,484 14,071 804 483 52 7 Q2 YTD Q2 YTD Q2 YTD • Increased d
Slide 24: Sales and profit growth in Jotun
Jotun (42.5%) Sales and profit growth in Jotun Amounts on 100% basis in NOK million 2015 2016 Operating revenues Operating profit 5,234 5,483 935 774 January-April January-April • All-time-high sales and operating profit for Q2 • Profitability improvement driven by volume growth and higher gross mar
Slide 25: Higher power prices drive earnings improvement
Hydro Power Higher power prices drive earnings improvement 2015 2016 GWh produced Spot prices (NOK/MWh) EBIT (adj.) (NOK million) 1,246 1,221 223 212 226 97 177 83 688 674 53 27 Q2 YTD Q2 YTD Q2 YTD • Slightly lower production • Higher power prices compared • Higher power prices resulted in volumes
Slide 26: Net debt
2 6 Net debt
Slide 27: Changes in net debt Q2-16
Changes in net debt Q2-16 Amounts in NOK billion 10.2 0.3 0.2 8.3 2.6 0.1 0.7 0.1 Net debt 31 Expansion Cash flow Sale of Net paid to Tax, FX effects Net debt 30 March 2016 and sale of from shares and shareholders dividends June 2016 companies operations financial received, net assets financial & ot
Slide 28: Summary
2 8 Summary Peter A. Ruzicka, President & CEO
Slide 29: Delivering on strategy
Delivering on strategy • 2.8% organic growth1 in BCG Strong • EBIT (adj.)2 growth of 16% in BCG performance • Strong performance from associates YTD • EPS growth of 21% • Strengthening existing position in painting tools in the Develop UK with acquisition of Harris3 position in • Gaining critical ma
Slide 30: Q&A
3 0 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 31: Appendices
‘Orkla Appendices
Slide 32: Group income statement
Group income statement Amounts in NOK million Q2-15 Q2-16 YTD 2015 YTD 2016 Operating revenues 7 705 9 433 15 246 18 043 EBIT (adj.) 789 996 1 514 1 813 Other income and expenses -55 -81 -172 -111 EBIT 734 915 1 342 1 702 Profit/loss from associates and joint ventures 545 442 783 904 Interests, net
Slide 33: Net financial items
Net financial items Amounts in NOK million FY 2015 Q2-15 Q2-16 Net interest expenses -192 -18 -47 Currency gain/loss 0 0 -10 Result from Share Portfolio and dividends 135 35 74 Other financial items, net -71 -16 -115 Net financial items -128 1 -98 33
Slide 34: Statement of financial position
Statement of financial position Amounts in NOK million 31.12.2015 30.06.2016 Intangible assets 17 676 18 393 Property, plant and equipment 10 523 10 892 Investments in associates and joint ventures etc. 13 029 13 174 Non-current assets 41 228 42 459 Assets held for sale 182 0 Inventories 4 623 5 257
Slide 35: Cash flow
Cash flow Amounts in NOK million YTD 2015 YTD 2016 Operating profit 1 282 1 678 Amortisation, depreciation and write-downs 546 533 Change in net working capital -72 -564 Net replacement expenditures -404 -760 Cash flow from operations 1 352 887 Cash flow from operations, Financial Investments 35 -97
Slide 36: Sapa (joint venture) – figures on 100% basis
Sapa (joint venture) – figures on 100% basis Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Sales volume (1,000 tonnes) 358 341 311 349 366 Operating revenues (NOK million)1 14 484 13 895 12 821 13 905 14 071 Underlying EBIT 483 404 128 571 804 Excluded items: Unrealised derivative positions -158 -95 209 83 116 Othe
Slide 37: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest bearing debt (NOK million) Net gearing 10,180 0.32 8,496 0.28 7,805 0.24 0.23 5,661 0.19 4,786 2012 2013 2014 2015 Q2-16 Q1-15 Q2-15 Q3-15 Q4-15 Q2-16 37
Slide 38: Debt maturity profile
Debt maturity profile Amounts in NOK million 5,500 Average maturity 3.4 years 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2016 2017 2018 2019 2020 2021 Later Unutilised credit facilities Drawn amounts 38
Slide 39: Funding sources
Funding sources Amounts in NOK billion 1.5 Unutilised credit facilities 5.1 8.3 Banks Bonds and CP Cash, cash equivalents and interest bearing assets 6.6 39
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