Orkla Asa · OSL:ORK
Orkla Asa — Debt Investor Presentation (May 2021)
31 slides from Orkla Asa's debt investor presentation, May 26, 2021
Slide 1: Orkla Green Bond Framework
Orkla Green Bond Framework Investor presentation 26th May 2021 Harald Ullevoldsæter, EVP & CFO Ellen Behrens, Director Sustainability Geir Solli, SVP Group Treasury
Slide 2: Agenda
Agenda 1. Introduction to Orkla 2. Sustainability in Orkla 3. Green Bond Framework 4. Funding priorities 5. Contemplated NOK senior unsecured Green Bond Issue 2
Slide 3: The leading Nordic supplier of branded consumer goods
The leading Nordic supplier of branded consumer goods
Slide 4: Vision: Your friend in everyday life – Winning in local markets
Vision: “Your friend in everyday life” Winning in local markets The leading Nordic- Unique local customer Resilient market Proven track record of based BCG company and consumer insight positions value creation • No.1 BCG Company in • #1 or strong #2 brands • Market positions in the Total shareholder
Slide 5: Strong Nordic presence accounting for ~70% of sales
Branded Consumer Goods: Strong Nordic presence accounting for ~70% of sales Geographical spread of sales revenues Rest of world 4% Norway Rest of Europe 26% 23% Baltics 5% 11% 22% Finland Sweden and Iceland 10% Denmark 5 Note: 2020
Slide 6: A unique portfolio of strong local brands
A unique portfolio of strong local brands Orkla Orkla Orkla Industrial & Orkla Orkla Confectionery & Food Consumer Financial Foods Care Snacks Ingredients Investments Investments (NOK billion) (NOK billion) (NOK billion) (NOK billion) (NOK billion) Sales: 18.3 Sales: 7.2 Sales: 6.9 Sales: 10.7 Sales
Slide 7: Strengthening Orkla as a BCG company by reallocating capital from non-core assets
We have continued to strengthen Orkla as a BCG company by reallocating capital from sale of non-core assets to BCG 50,000 Operating income in 45,000 NOK million 40,000 35,000 30,000 VOLVO 25,000 NORA AGREEMENT ACQUISITION ORKLA INTO 20,000 BEVERAGES 15,000 10,000 Key divestments BORREGAARD ACQUISITI
Slide 8: Main message Q1 2021
Main message Q1 2021 • BCG organic growth of 0.5% against strong comparables • U. EBIT improved by 9.5% in BCG incl. HQ Summary Q1 • Positive contributions from Hydro Power and Jotun • Adjusted EPS* increased by 21% to NOK 1.27 • Good market growth in grocery (but Stockpiling in March Various 2020)
Slide 9: Positive cash flow from operations in the quarter
Positive cash flow from operations in the quarter Cash flow from operations per 31.3 (pre-tax) YTD Q1-21 YTD Q1-20 Orkla Branded Consumer Goods (BCG, incl. HQ) EBIT (adj.) 1,208 1,103 Depreciation 441 430 Change in net working capital -515 -122 Net replacement investments -652 -601 Total BCG cash fr
Slide 10: Continued strong balance sheet and financial flexibility after completed M&A
Continued strong balance sheet and financial flexibility after completed M&A transactions in the period 7,848 1,819 573 6,380 406 447 263 Net debt 31 Cash flow Taxes & Dividends Expansion FX effects Net debt 31 December from financial and share capex and March 2021 2020 operations items buyback net
Slide 11: Orkla Alternative Proteins
Orkla Alternative Proteins Announcement 30 April 2021 • Orkla’s goal is to be one of the foremost players in alternative proteins in Europe • Establishing Orkla Alternative Proteins as a separate business unit • Existing plant-based brands in Orkla: total turnover NOK 869 mill. in 2020 (21% growth)
Slide 12: Sustainability in Orkla
‘Orkla Sustainability in Orkla
Slide 13: Orkla – long history of sustainability management
Orkla – long history of sustainability management 1997 2004 2007 2008 2011 2015 2018 EHS Corporate First Orkla First climate Human Orkla Orkla reporting Responsibility Sustainability strategy and rights Group sustainability sustainability Group Directive report targets policy strategy and strategy a
Slide 14: Sustainability at Orkla
Sustainability at Orkla Sustainability UN Sustainable Development Goal 12 is pivotal to Orkla’s sustainability work. Orkla companies seek to make the transition to sustainable production and consumption by engaging in promoting sustainable raw material production, developing recyclable packaging sol
Slide 15: Sustainability strategy and targets for 2025
Sustainability strategy and targets for 2025 Environmental Sustainable sourcing Nutrition and wellness Safe products Care for people and engagement Partnership for sustainable Making it easier to live healthy Safe products build trust society Strong engagement for the raw materials Strong local enga
Slide 16: Sustainability highlights 2020
Sustainability highlights 2020 Transition to low-carbon operations Healthier products More women in management Orkla has set science-based targets (SBT) for its Orkla continues its efforts to reduce salt and sugar Orkla is aiming for 50 per cent women managers operations and in the period 2014-2020
Slide 17: Strategic product portfolio management
Strategic product portfolio management In 2020, 19% of revenues came from “most sustainable products”. To be classified as “most sustainable” the product must meet the highest criteria (level 3) for 2 out of 3 dimensions. Sustainable raw materials Sustainable packaging Health & wellness Reduced clim
Slide 18: Green Bond Framework
‘Orkla Green Bond Framework
Slide 19: Orkla's Green Bond framework
Orkla’s Green Bond framework Use of Process for project Management of Reporting and Second Proceeds evaluation& selection proceeds transparency Opinion • Eco-efficient and/or • Projects approved • Green Account and • Annual Green Bond • Framework circular economy by Green Bond database of Eligible I
Slide 20: Use of proceeds
Use of proceeds Eco-efficient and/or circular economy adapted products,production technologies and processes Sub-category Description Examples Plant-based and certified products Eco-efficient and/or circular economy adapted products,production technologies and processes R&D The development of new •
Slide 21: Use of proceeds
Use of proceeds Resource and energy efficiency – Green buildings – Renewable energy Description Examples Orkla City – Drammensveien 149 Resource and energy efficiency Investments into resource efficiency measures • Reduction of raw materials, waste and and energy efficiency measures – target water u
Slide 22: Process for project evaluation and selection
Process for project evaluation and selection Green bond committee and green account Green bond committee Green account • Consists of six members from • An amount equal to the net proceeds of any Green ‒ Group management Bonds raised will be credited to a segregated Green ‒ Treasury Account with the
Slide 23: Reporting
Reporting Overall and green bond specific Orkla’s annual ESG report Green bond investor letter Categories Examples of impact indicators • Estimate of the reduction in greenhouse gas emissions as a result of Eco-efficient and/or the investments circular economy • Amounts of volume of purchased certif
Slide 24: Second opinion
Second opinion Shading and comments CICERO shading Strengths and weaknesses • Received an overall shading of Strengths Medium Green ‒ “Eco-efficient and/or circular • Sustainability ambitions and governance economy adapted products, • Ambitious targets for GHG reduction and resource production techn
Slide 25: Funding
‘Orkla Funding
Slide 26: Funding – key priorities
Funding – key priorities • Net debt max 2,5 x EBITDA over time • Maintain financial flexibility – liquid assets and undrawn facilities to cover: • 12 months maturities • Known capital capital needs • Strategic reserve • Diversified funding sources (Banks, DCM, PP, lending institutions) • Smooth matu
Slide 27: Funding sources and maturity profile – Q1 2021
Funding sources and maturity profile – Q1 2021 Debt maturity → average maturity 3.5 years Funding sources (in BNOK) MNOK 4,500 1.5 4,000 3,500 3.3 6.3 3,000 2,500 2,000 4.6 1,500 1,000 Unutilised credit facilities 500 Banks 0 Bonds and CP 2021 2022 2023 2024 2025 2026- Cash, cash equivalents and int
Slide 28: Orkla in the Norwegian Bond Market
Orkla in the Norwegian Bond Market Bond Notional Outstanding Treasury holding NOK mill. NOK mill. NOK mill. ORK 82 2015/22 1,500 724 776 ORK 83 2016/23 1,000 675 325 ORK 80 2013/24 1,000 885 115 ORK 84 2016/26 1,000 1,000 - TOTAL 3,284 1,216 • All bonds listed on Oslo Børs • Nordic Trustee documenta
Slide 29: Contemplated Green Bond issue – May 2021
Contemplated Green Bond issue – May 2021 • NOK senior unsecured green bond issuance • 5-10 years tenor • Fixed or floating rate • DNB Markets, Handelsbanken Capital Markets and SEB mandated arrangers • SEB: Sole Green Bond Structuring Advisor 29
Slide 30: Use of proceeds
Use of proceeds • Initial Green Bond proceeds mainly expected to be allocated to: ➢ Orkla House - Group HQ in Oslo • BREEAM Excellent, Energy class A ➢ Certified raw materials • 2021 costs ➢ Production facilities and production lines for plant-based products 30
Slide 31: Thank you!
Thank you!