Slide 1: First quarter results 2020
First quarter results 2020 5 May 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: Covid-19 has profound implications for society and our industry
Covid-19 has profound implications for society and our industry • Our priorities ‒ Safeguarding our employees ‒ Ensuring supply by safeguarding operations ‒ Maintaining strong balance sheet • Demand implications ‒ Out of home consumption significantly down ‒ Increased in-home consumption ‒ Short-ter
Slide 4: Majority of business in branded packaged goods sold through grocery
Majority of our business is in branded packaged goods sold through grocery, but approx. 1/4 of sales is exposed to Out of home market BCG channel split (net sales), FY 2019 BNOK 43 100% 80% 60% 40% 20% 0% Foods Confectionery Care Food Consumer Orkla total & Snacks Ingredients Investments Other chann
Slide 5: Strong sales growth largely driven by consumer stockpiling
Strong sales growth largely driven by consumer stockpiling - production proven resilient but significant uncertainty ahead of us Impact from Covid-19 until now Navigating uncertainty • Significant demand impact in March with • Clear operational priorities → safeguarding temporary boost from consumer
Slide 6: Financial performance
Financial performance Harald Ullevoldsæter, CFO
Slide 7: Sales & profit growth driven by temporary change in consumer behaviour
Highlights Q1-20 Sales & profit growth driven by temporary change in consumer behaviour • Solid increase in net profit for Orkla driven by revenue growth for branded consumer goods • Strong sales and profit growth in Foods & Care driven by consumer stockpiling and increased in-home consumption • Neg
Slide 8: Adj. EPS +24% from profit growth in Branded Consumer Goods and Jotun
Adj. EPS +24% from profit growth in Branded Consumer Goods and Jotun Key figures Q1-20 Q1-19 ∆ Q1 Operating revenues BCG 11,316 9,868 +15% EBIT (adj.) BCG 1,204 1,027 +17% EBIT (adj.) HQ -101 -92 -10% EBIT (adj.) BCG incl. HQ 1,103 935 +18% EBIT (adj.) Industrial & Financial Investments 40 85 -53% O
Slide 9: Cash flow from higher earnings partly offset by increased investments
Cash flow from higher earnings partly offset by increased investments and temporarily higher working capital from strong March sales Cash flow from operations per 31.03 (pre-tax) Q1-20 Q1-19 Orkla Branded Consumer Goods (BCG, incl. HQ) EBIT (adj.) 1,103 935 Amort., depr., and impairment 430 382 Chan
Slide 10: Significant FX effects impact net debt in NOK
Significant FX effects impact net debt in NOK - continued strong balance sheet and financial flexibility = 1.1x EBITDA 1,085 7,395 6,551 780 9 144 386 Net debt 31 Cash flow Taxes & Net paid to Expansion FX effects Net debt 31 December from financial shareholders capex and March 2020 2019 operations
Slide 11: Funding sources and maturity profile
Funding sources and maturity profile Debt maturity → average maturity 3.8 years Funding sources (in BNOK) MNOK 5,500 2.4 5,000 4,500 6.3 4,000 3.3 3,500 3,000 2,500 4.8 2,000 1,500 Unutilised credit facilities 1,000 Banks 500 Bonds and CP 0 Cash, cash equivalents and interest bearing assets 2020 202
Slide 12: Business areas
A ‘Orkla Business areas
Slide 13: Foods and Care drove improvement in organic growth
Branded Consumer Goods Q1-20: Foods and Care drove improvement in organic growth Organic growth for Branded Consumer Goods Organic growth Q1-20 by business area 5.4% Foods 10.8% Orkla Confectionery 2.1% & Snacks 1.8% 1.6% Care 11.1% 1.3% 0.4% Food -1.3% Ingredients 2016 2017 20181 20192 Q1-20 Consum
Slide 14: Weaker NOK and recent M&A add ~9% to top line growth
Branded Consumer Goods Q1-20: Weaker NOK and recent M&A add ~9% to total top line growth of ~15% BCG revenue, Q1-19 → Q1-20 (MNOK) 3.8% 11,316 5.5% 5.4% 9,868 Q1-19 Organic growth FX M&A Q1-20 14 Amounts in NOK million
Slide 15: Profit improvement driven by revenue growth in Foods and Care
Branded Consumer Goods incl. HQ: Profit improvement driven by revenue growth in Foods and Care ∆ Q1 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin 3.6% 1,103 0.2%-p 6.3% -0.1%-p 11.2% 8.1% 11.2% 935 Q1-19 Underlying FX M&A Q1-20 R12M Q1-19 Underlying M&A and FX R12M Q1-20 growth margin 15 Note: Fig
Slide 16: Orkla Foods: Strong growth in March, large stockpiling effects
Orkla Foods Strong growth in March across most markets, large stockpiling effects Q1-20 Q1-19 Revenues 4,618 3,889 • Good organic growth across most markets Organic growth 10.8% driven by significant positive one-off effects from Covid-19 EBIT (adj.) 535 430 • Profit growth mainly from increased sal
Slide 17: Orkla Confectionery & Snacks: Organic growth hampered by Denmark and Baltics
Orkla Confectionery & Snacks Organic revenue growth hampered by Denmark and the Baltics Q1-20 Q1-19 Revenues 1,602 1,502 • Higher grocery sales across the Nordic markets Organic growth 2.1% in March offset by reduced listing with one customer in Denmark and demand shortfall in the Baltics EBIT (adj.
Slide 18: Orkla Care: Strong sales and profit growth from stockpiling
Orkla Care Strong sales and profit growth from consumer stockpiling in March Q1-20 Q1-19 Revenues 1,688 1,461 • Consumer stockpiling and higher in-home Organic growth consumption of HPC products 11.1% • Improvement for Orkla Health due to increased EBIT (adj.) 297 221 exports and sales in Norway EBI
Slide 19: Orkla Food Ingredients: Negative impact from Out of home restrictions
Orkla Food Ingredients Negative impact from restrictions in Out of home segments Q1-20 Q1-19 Revenues 2,574 2,291 • Large exposure to Out of home markets (bakeries, Organic growth -1.3% ice cream shops & restaurants/cafés) which have experienced a significant fall in sales by end of Q1 EBIT (adj.) 7
Slide 20: Orkla Consumer Investments: Out of home slowdown and textile restrictions
Orkla Consumer Investments Out of home slowdown and coronavirus restrictions for the textile segments caused organic sales to decline Q1-20 Q1-19 Revenues 927 795 • Revenue and profit growth from M&A Organic growth -3.9% • Out of home businesses affected by restaurant sales restrictions. Partly offs
Slide 21: Orkla Industrial & Financial Investments: Decline in power prices
Orkla Industrial & Financial Investments Decline in power prices partly offset by increased volume in Hydro Power Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/KWh): (NOK million): Q1: 645 (476) Q1: 15.7 (45.7) Q1: 39 (73) Financial Inves
Slide 22: Closing remarks
<A ‘Orkla Closing remarks
Slide 23: Navigating uncertainty – what to expect
Navigating uncertainty – what to expect • Demand expectations ‒ Stockpiling over in March, possible reversal ahead ‒ Out of home significantly down (April sales index ranging 40-60) ‒ Continued higher in-home consumption of Food & HPC products ‒ Long term implications uncertain • Supply expectations
Slide 24: Building on our strong long term fundamentals
Building on our strong long term fundamentals • Immediate priorities ‒ Contingency planning to protect our people and operations ‒ Strict cash discipline, but building buffer stocks ‒ Strong balance sheet and available credit ‒ Preparing to endure the situation longer term • Long term implications ‒
Slide 25: Q&A
Q&A Jaan Ivar Semlitsch, President & CEO Harald Ullevoldsæter, CFO
Slide 26: Appendices
Appendices
Slide 27: 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 28: 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 is lower than the Group’s tax rate in bot
Slide 29: Investments - Jotun (42.6%): Continued growth and increased profitability
Investments - Jotun (42.6%) Continued growth and increased profitability Q1-20 Operating income 5,082 • Sales growth helped by positive FX translation effects Change vs LY 11% • Earnings driven by both strong sales and improved gross margins Operating profit 792 Change vs LY 36% • Considerable uncer
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 1,5x 7,396 6,551 1,1x 1,0x 3,037 0,5x 5,662 14 0,0x 2016 2017 2018 2019 Q1-20 2016 2017 2018 2019 Q1-20 Leasing debt Ex leasing debt 30
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