Slide 1: Fourth quarter results 2019
Fourth quarter results 2019 6 February 2020 Jaan Ivar Semlitsch, President & CEO
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: Solid finish to 2019
Solid finish to 2019 • Sequential growth uptick and good earnings momentum • Strong performance in Jotun • Committed to delivering on our financial targets
Slide 4: Update on reorganization initiated in Q3 and our supply chain agenda
Update on reorganization initiated in Q3 and our supply chain agenda Future organization Supply chain agenda • Initiative progressing as planned • Striking balance between flexibility & efficiency ‒ Simplifying organization with clear centers of • Combination of restructuring production network, and
Slide 5: Update on Orkla Care
Update on Orkla Care Organic sales growth, Q1-17 → Q4-19 Highlights FY17: 2.9% FY18: -1.8% FY19: -0.9% • Improved organic growth, but weak comparables 6.3% • Progress in the largest areas HPC and Health 3.6% • Market situation remains challenging 2.4% • Turnaround initiative ongoing • Outlook unchan
Slide 6: Gearing for profitable growth by innovating in our strong core brands…
Gearing for profitable growth by innovating in our strong core brands… 6
Slide 7: …and scaling up new business opportunities
…and scaling up new business opportunities • Plant-based a prioritized growth platform • Sales 0.5 BNOK, grew 40% in 2019 • Sustainability & health trend drive growth, flexitarians the largest customer group Naturli + Anamma + Felix Veggie • Strong position in our largest categories 800 • Targeting
Slide 8: Financial performance
Financial performance Jens Bjørn Staff, CFO
Slide 9: Strong finish to 2019 with good sales and profit growth in Q4
Highlights Q4-19 Strong finish to 2019 with good sales and profit growth in Q4 • Good progress in Foods and Confectionery & Snacks • Profit growth in Food Ingredients mainly driven by M&A • Sales and earnings growth in Care, compared to a weak quarter in 2018 • Strong finish to 2019 for Jotun • Adju
Slide 10: Confectionery & Snacks and Care drive improvement in organic growth
Branded Consumer Goods Q4-19: Confectionery & Snacks and Care drive improvement in organic growth Organic growth for Branded Consumer Goods Organic growth Q4-19 by business area 1.8% Foods 1.5% 1.6% 1.4% Orkla Confectionery 5.0% & Snacks Care 2.4% 0.4% Food 0.4% Ingredients 2016 2017 20181 2019 BCG
Slide 11: Recent M&A and a weaker NOK add ~6% to total top line growth of ~8%
Branded Consumer Goods Q4-19: Recent M&A and a weaker NOK add ~6% to total top line growth of ~8% BCG revenue, Q4-18 → Q4-19 (MNOK) 3.1% 11,471 3.1% 2.0% 10,607 Q4-18 Organic growth FX M&A Q4-19 11 Amounts in NOK million
Slide 12: Profit and margin growth
Branded Consumer Goods incl. HQ: Profit and margin growth ∆ Q4 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin 3.5% 1,422 0.3%-p 11.3% 3.2% 0.0%-p 4.6% 11.1% 1,277 Q4-18 Underlying FX M&A Q4-19 R12M Q4-18 Underlying M&A and FX R12M Q4-19 growth margin 12
Slide 13: Orkla Foods: Organic growth and profit improvement
Orkla Foods Organic growth and profit improvement Q4-19 YTD Q4-19 Revenues 4,672 16,776 • Continued strong growth in Sweden and from plant Organic growth 1.5% 1.8% based products – also good progress in several of our largest brands EBIT (adj.) 734 2,276 • Continued progress in cost efficiency EBIT(
Slide 14: Orkla Confectionery & Snacks: Good sales growth in all markets
Orkla Confectionery & Snacks Good sales growth in all markets Q4-19 YTD Q4-19 Revenues 1,987 6,612 • Good organic revenue growth, partly related to de- Organic growth 5.0% 4.6% stocking effect in Q4 2018 in Norway • Overall strong market growth, especially for snacks EBIT (adj.) 398 1,094 • Positive
Slide 15: Orkla Care: Sales and profit growth compared to very weak Q4-18
Orkla Care Sales and profit growth in Care, compared to very weak Q4-18 Q4-19 YTD Q4-19 Revenues 2,125 8,170 • Sales improvement in HPC categories, but Organic growth volumes still lower in grocery retail in Norway 2.4% -0.9% • Profit growth for Orkla Health compared to a weak EBIT (adj.) 233 1,080
Slide 16: Orkla Food Ingredients: Strong profit growth from M&A
Orkla Food Ingredients Strong profit growth from M&A Q4-19 YTD Q4-19 Revenues 2,776 10,292 • Continued strong growth from vegan products Organic growth 0.4% 0.6% • Acquisitions the main driver behind profit growth EBIT (adj.) 169 626 • Profitability positively impacted by improved pricing and produc
Slide 17: Investments - Kotipizza: Good performance in 2019
Investments - Kotipizza Good performance in 2019 Q4-19 YTD Q4-19 Revenues 281 982 • Continued growth in YTD** chain sales*** with 12% Organic growth* 7.1% 13.0% growth (6% like for like YTD and 4% in Q4) • Strong profit growth YTD. Earnings in Q4 impacted EBIT (adj.) 19 82 by increased marketing spe
Slide 18: Adj. EPS +30% from profit growth in Branded Consumer Goods and Jotun
Adj. EPS +30% from profit growth in Branded Consumer Goods and Jotun Key figures Q4-19 Q4-18 ∆ Q4 Operating revenues BCG 11,471 10,607 +8% EBIT (adj.) BCG 1,534 1,369 +12% EBIT (adj.) HQ -112 -92 EBIT (adj.) BCG incl. HQ 1,422 1,277 +11% EBIT (adj.) Orkla Investments 93 131 -29% Other income and exp
Slide 19: Improvement in net working capital of ~1%-p in 2019
Improvement in net working capital of ~ 1%-p in 2019 R12M Net working capital / R12M Net sales 14 13 % 12 11 Jun’18 Jun’19 Dec’17 Dec’18 Dec’19 19 Figures include Orkla’s Branded Consumer Goods businesses including HQ
Slide 20: Investment level in 2019 reflects normalised maintenance level, combined with ERP and expansion
Investment level in 2019 reflects normalised maintenance level, combined with ongoing ERP investments and large expansion projects Capex split 2019 Run rate maintenance level ~3% of NSV • Maintenance capex of close to 3% in 2019 ‒ Overall level in line with previous years Expansion • Total 2019 cape
Slide 21: Strong cash flow from operations leaves Orkla with a sound balance sheet
Strong cash flow from operations, continued expansion investments and structural growth leaves Orkla with a sound balance sheet = 1.0x 3 6,551 EBITDA 3,112 1,447 3,037 4,933 2,589 1,296 Net debt 31 IFRS 16 Cash flow Taxes & Net paid to Expansion FX effects Net debt 31 December effect from financial
Slide 22: Closing remarks
A ‘Orkla Closing remarks
Slide 23: Summary, expectations and priorities
Summary, expectations and priorities • Solid finish to 2019 with sequential growth uptick and good earnings momentum • Market expectations into 2020 ‒ Continued moderate growth across Orkla’s key markets ‒ Key end markets in Care categories remain challenging ‒ Raw material inflation increasing, and
Slide 24: Q&A
Q&A Jaan Ivar Semlitsch, President & CEO Jens Bjørn Staff, CFO
Slide 25: Appendices
Appendices
Slide 26: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Organic growth Organic growth shows like-for-like turnover growth for the Group’s business portfolio and is defined as the Group’s reported change in operating revenues adjusted for effects of the purchase and sale of companies and currency effects. In the calc
Slide 27: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Earnings per share (adj.) Earnings per share (adj.) show earnings per share adjusted for other income and expenses (OIE) after estimated tax. Items included in OIE are specified in Note 3. The effective tax rate for OIE in 2019 is lower than the Group’s tax rat
Slide 28: Orkla Investments: Lower volumes and power prices in Hydro Power
Orkla Investments Lower volumes and power prices in Hydro Power Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/KWh): (NOK million): Q4: 534 (658) Q4: 39.0 (46.0) Q4: 72 (132) YTD: 2,156 (2,320) YTD: 38.4 (42.2) YTD: 292 (390) Financial Inv
Slide 29: Investments - Jotun (42.6%): Strong finish to 2019
Investments - Jotun (42.6%) Strong finish to 2019 Q4-19 Operating income 5,090 • Broad based sales growth helped by positive FX translation effects Change vs LY 17% • Earnings driven by both strong sales and improved gross margins Operating profit 300 • Outlook affected by global trade- and geopolit
Slide 30: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) NIBD / R12 EBITDA 8,056 1,6x 7,805 1,5x 6,551 1,0x 3,037 0,5x 4,895 14 0,0x 2015 2016 2017 2018 2019 2015 2016 2017 2018 Q4-19 Leasing debt Ex leasing debt 30
Slide 31: Current debt maturity profile
Current debt maturity profile Debt maturity → average maturity 3.7 years Funding sources (in BNOK) MNOK 4 500 2.0 4 000 3 500 5.8 2.8 3 000 2 500 2 000 4.1 1 500 1 000 Unutilised credit facilities Banks 500 Bonds and CP 0 Cash, cash equivalents and interest bearing assets 2020 2021 2022 2023 2024 20
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