Orkla Asa · OSL:ORK
Orkla Asa — Q4 2009 Earnings Presentation
54 slides from Orkla Asa's earnings presentation, Feb 11, 2010
Slide 1: Q4 and full-year results 2009
Q4 and full-year results 2009 11 February 2010
Slide 2: Agenda
Agenda • Highlights and outlook Dag J. Opedal, CEO • Financial performance Terje Andersen, CFO • Orkla Aluminium Solutions and Orkla Materials Bjørn Wiggen, EVP • Orkla Brands Torkild Nordberg, EVP 22 Q4 and full-year results 2009
Slide 3: 2009 in brief
2009 in brief ACHIEVEMENTS CHALLENGES • Operational • Revenues – All time high EBITA – Drop of 14 % Orkla Brands and Jotun (42.5%) – Lower break even levels for Orkla Alum. Solutions and Materials • EBITA / ROCE – Weak 1st half of 2009 – Share Portfolio return > benchmark • Structural • Solar – Asse
Slide 4: Comprehensive actions – EBITA improved through 2009
Comprehensive actions – EBITA improved through 2009 EBITA in NOK million 1 400 1 200 1 000 800 2008 600 2009 400 200 0 Q1 Q2 Q3 Q4 4 Q4 and full-year results 2009
Slide 5: Comprehensive actions aimed to strengthen REC's and ES's positions in 2010/11
Comprehensive actions aimed to strengthen REC’s (39.7%) and ES’s positions in 2010/11 • Attractive solar PV market provided clear competitive advantage – Robust long term drivers – Growth for cost/quality/technology leaders – Market imbalances short term • REC and Elkem Solar (ES) expected to comple
Slide 6: Short-term outlook
Short-term outlook • Market outlook slightly firmer – Clear signs of stabilisation at a low level from mid-2009 – Somewhat more positive underlying momentum in second half of 2009 – No major trend-shifts expected in Q1 2010 – Economic trends still uncertain 6 Q4 and full-year results 2009
Slide 7: Dividend strategy - predictability and stability
Dividend strategy- predictability and stability 0.80+5.00 2,25 2,25 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 2008 2009* Ordinary dividend Special dividend * Proposed by the Board of Directors
Slide 8: Financial performance
Financial performance Terje Andersen, CFO 88 Q4 and full-year results 2009
Slide 9: Financial highlights Q4-09
Financial highlights Q4-09 • Improved cost base increased profit in Q4 • EBITA NOK 1.1 billion vs NOK 1.0 billion in 2008, + 7 % – Strong quarter for Orkla Brands with profit growth of 9 % • Markets still weak – Operating revenues -9 % • Gain on sale of energy assets: NOK 4.2 billion (NOK 3.1 billio
Slide 10: Brands and Sapa drive improvement vs. Q4-08
Brands and Sapa drive improvement vs. Q4-08 EBITA performance from Q4-08 to Q4-09 (figures in NOK million) -164 7 70 219 -43 -18 1 1 070 998 Q4-08 Orkla Orkla Brands Borregaard Elkem ex. Elkem Solar Orkla Other Q4-09 Aluminium Solar Financial Solutions Investments All figures in NOK million 10 Q4 an
Slide 11: Group income statement 2009
Group income statement 2009 Amounts in NOK million 2009 2008 Change Operating revenues 56 228 65 579 -14 % EBITA 2 448 4 240 -42 % Amortisation intangibles -213 -228 Gain on sale of power assets* 3 066 -372 Restructuring and significant impairment -195 -1 282 EBIT 5 106 2 358 Associates -3 919 2 189
Slide 12: Strengthened financial position
Strengthened financial position • Improved cash flow from operations • Capital contribution from sale of assets • Managed the debt portfolio 12 Q4 and full-year results 2009
Slide 13: Cash flow from operations exceeded EBITA for all business areas in 2009
Cash flow from operations exceeded EBITA for all business areas in 2009 5 802 3 269 2 793 2 533 1 715 1 125 436 -344 Orkla Brands Orkla Aluminium Solutions Orkla Materials Orkla Industry division EBITA Cash flow from operations 13 Q4 and full-year results 2009
Slide 14: Cash flow as of 31 Dec 2009
Cash flow as of 31 Dec 2009 Amounts in NOK million 31.12.2009 31.12.2008 Industry division: Operating profit 5 191 2 509 Amortisations, depreciations and write-downs 2 653 3 026 Gain on sale of power plants -3 066 0 Changes in net working capital 2 197 - 721 Net replacement expenditure -1 173 -2 271
Slide 15: Equity ratio 51.7 % Net gearing 0.41
Equity ratio 51.7 % Net gearing 0.41 NOK billion 60 1,4 Net gearing 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 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -0,2 Equity Net interest-bearing liabilities Net gearing 15 Q4 and full-year results 2009
Slide 16: Managed the debt portfolio
Managed the debt portfolio NOK million Average maturity 4.2 years 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2021 Drawn amounts Unutilised credit facilities 16 Q4 and full-year results 2009
Slide 17: Orkla Associates and Orkla Financial Investments
Orkla Associates and Orkla Financial Investments 17 Q4 and full-year results 2009
Slide 18: Orkla Associates
Orkla Associates Amounts in NOK million Amounts in NOK million 1.1-31.8. 1.1-31.8. REC Q4 2009 Q4 2008 Change Jotun 2009 2008 Change Revenues 2 676 2 380 12 % Revenues 7 811 6 739 16 % EBITDA 567 936 -39 % EBIT 858 807 6% EBIT* -1364 696 Profit before tax 782 792 -1 % Profit/loss before tax -1 218 1
Slide 19: Orkla Financial Investments Share Portfolio
Orkla Financial Investments Share Portfolio • Market value of Share Portfolio NOK 11 billion Portfolio MSCI Nordic OSEBX S&P 500 • Return on Share Portfolio in 2009 +39 % 2009 2007-2009 * 64,8 % • Increased net asset value * – + NOK 0.7 billion in Q4 39,0 % 36,1 % – + NOK 2.7 billion in 2009 26,5 %
Slide 20: Orkla Aluminium Solutions
17. June 2009 Orkla Aluminium Solutions Bjørn Wiggen, EVP 20 Q4 and full-year results 2009
Slide 21: A challenging year, but good cash flow performance
A challenging year, but good cash flow performance • Negative growth in the European and North American market of -23% and -19%* respectively • Improved structure and operational performance despite declining markets • Total Sapa Group pro-forma FTE reduction 3 760 from June 2008 to December 2009 (2
Slide 22: The last four quarters have been stable
The last four quarters have been stable - Year on year the market continues to decline North America Extrusion Apparent Consumption European Extrusion Apparent Consumption 500 900 459 445 810 450 432 800 790 415 762 764 411 743 726 388 Thousand Tonnes Thousand Tonnes 400 365 700 676 343 350 325 600
Slide 23: Comprehensive actions improved cost position
Comprehensive actions improved cost position Fixed costs reduction 12 month run-rate NOK 500 million Plants closed: Other structural actions: • Banbury • Catawba: Divested • Calgary • City of Industry: Cast house closed • Keystone Heights • Harderwijk: Press line to be closed • Louisville • Industri
Slide 24: Sapa has undergone a successful turn-around
Sapa has undergone a successful turn-around EBITA performance, by quarter 364 343 117 92 29 -102 -148 -342 Q1 -08 Q2 -08 Q3 -08 Q4 -08 Q1 -09 Q2 -09 Q3 -09 Q4 -09 24 Q4 and full-year results 2009
Slide 25: Solid cost management continues to improve profitability
Solid cost management continues to improve profitability Amounts in NOK million • Significant contribution from Q4 Q3 Q4 Change cost efficiency programmes Operating revenues 2009 2009 2008 Q4-Q4 brought positive results in Q4 Orkla Aluminium Solutions 5 592 5 424 6 139 -9 % • Negative growth in Euro
Slide 26: Outlook 2010
Outlook 2010 • Stabilising market demand for Profiles • Initially negative trend for Building System – Time-lag in market demand reduces order intake – Cold weather in Europe postpones projects • High focus on – Sustaining cost savings – Driving commercial excellence – Growth in Asia 26 Q4 and full-
Slide 27: Elkem
Elkem 27 Q4 and full-year results 2009
Slide 28: Improved break-even levels for Elkem
Improved break-even levels for Elkem Amounts in NOK million • Strong improvement in cash flow from Q4 Q4 operations (NOK 1.1 billion) Operating revenues 2009 2008 Change • Capacity utilisation at 69 % in Q4 for Elkem 2 187 2 497 -12 % Silicon-related Energy 340 408 -17 % Silicon-related 1 848 2 103
Slide 29: Hydropower going forward
Hydropower going forward • Part of the hydropower assets divested, the remaining assets have a production of 2.6 TWh* per year • Expected EBITA for Saudefaldene, NOK 200-250 million per year • Water and snow reservoir levels at Saudefaldene lower than normal at the end of Q4 • From 1.1.2010, Elkem E
Slide 30: Elkem Solar
Elkem Solar 30 Q4 and full-year results 2009
Slide 31: Ramp-up according to revised plan
Ramp-up according to revised plan • Production in January 114 MT • 2010 a ramp-up year – Ambition: Full capacity utilisation by end of 2010 • Main focus: Stabilising production and increasing capacity utilisation 31 Q4 and full-year results 2009
Slide 32: 2010 - a particularly difficult year
2010 - a particularly difficult year • Overcapacity of solar grade silicon and overcommitted customers – Broadening our customer base - One new contract signed – Ongoing dialogue with existing customers regarding 2010 deliveries • Project in relatively high-costs phase – The cost base is dimensioned
Slide 33: Well positioned longer term
Well positioned longer term • Ambitions of taking leading cost position – Mid USD 20 per kg* • Quality approved by new customer *USD/NOK 6,50 Elkem Solar plant, Kristiansand-Norway 33 Q4 and full-year results 2009
Slide 34: Borregaard
Borregaard 34 Q4 and full-year results 2009
Slide 35: Borregaard: Progress for Chemicals in Q4
Borregaard: Progress for Chemicals in Q4 Amounts in NOK million • Stronger results for lignin and speciality Q4 Q3 Q4 Change cellulose Operating revenues 2009 2009 2008 Q4-Q4 – Reduced cost level – Currency hedging off-sets stronger NOK Borregaard 984 963 1 104 -11 % – Price level largely maintained
Slide 36: Orkla Brands
Orkla Brands Torkild Nordberg, EVP 36 Q4 and full-year results 2009
Slide 37: Stable long term profit trend
Stable long term profit trend 12 months rolling EBITA 3 000 2 800 2 600 2 400 2 200 2 000 1 800 1 600 1 400 1 200 Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09
Slide 38: Strong results and underlying improvements in 2009
Strong results and underlying improvements in 2009 • Achieved a good EBITA result, NOK 2.8 billion – + 8 % compared with 2008 – +1.0%-p EBITA margin • Broad-based improvement despite difficult markets – Cost improvement programmes contribute in addition to price adjustments • Strong cash flow from o
Slide 39: Improved quality of earnings in Q4
Improved quality of earnings in Q4 • EBITA + 9 % in Q4 Amounts in NOK million Q4 Q4 Operating revenues 2009 2008 Change • Improved volume trend – Reduced price contribution Orkla Brands 6 324 6 741 -6 % Orkla Foods Nordic 2 658 2 792 -5 % – Improved volume/mix performance Orkla Brands Nordic 2 085 2
Slide 40: Outlook 2010
Outlook 2010 • Overall stable retail markets, soft volumes • Demanding market conditions in Russia, Baltics, Out-of-Home channels and export • Raw material prices expected in total to be neutral in EU, but increasing further in Russia, India and Norway 40 Q4 and full-year results 2009
Slide 41: Important new launches in Q1 2010
Important new launches in Q1 2010 41 Q4 and full-year results 2009
Slide 42: Q&A
Q&A Dag J. Opedal, CEO Torkild Nordberg, EVP Bjørn Wiggen, EVP Terje Andersen, CFO 42 42 Q4 and full-year results 2009
Slide 43: Appendix
Appendix 43 Q4 and full-year results 2009
Slide 44: Financial calendar
Financial calendar 25 March 2010 - Release of Annual Report 2009 22 April 2010 - Annual General Meeting 23 April 2010 - Share quoted ex. dividend 4 May 2010 - Dividend payment 5 May 2010 - First quarter 2010 21 July 2010 - Second quarter 2010 28 October 2010 - Third quarter 2010 44 Q4 and full-year
Slide 45: Balance sheet as of 31 Dec 2009
Balance sheet as of 31 Dec 2009 Amounts in NOK million 31.12.2009 31.12.2008 Intangible assets 14 731 17 301 Property, plant and equipment 24 694 26 368 Financial assets 15 922 18 331 Non-Current assets 55 347 62 000 Assets in discontinued operations 3 148 Inventories 7 531 9 564 Receivables 16 568
Slide 46: Group income statement Q4-09
Group income statement Q4-09 Amounts in NOK million Q4 Q4 2009 2008 Change Operating revenues 15 040 16 492 -9 % EBITA 1 070 998 7% Amortisation intangibles -60 -70 Gain on sale of power assets* 3066 -372 Restructuring and significant impairment -91 -1248 EBIT 3 985 - 692 Associates -3 516 284 Divid
Slide 47: Currency translation effects
Currency translation effects Amounts in NOK million per Revenues Q4-09 Q4-09 Orkla Brands -384 -207 Orkla Aluminium Solutions -371 802 Elkem -158 30 Borregaard -20 97 Total -933 722 per EBITA Q4-09 Q4-09 Orkla Brands -48 -34 Orkla Aluminium Solutions -12 -82 Elkem -3 11 Borregaard -1 3 Total -64 -10
Slide 48: Largest holdings in the Share Portfolio
Largest holdings in the Share Portfolio Market value in NOK million per 31 Dec 2009 Principal holdings Industry * Market value Share of Share of portfolio (%) equity (%) Tomra Systems Industrials 637 6% 15,3 % Rieber & Søn Food & Beverage 503 4% 16,0 % Amer Sports Consumer Discretionary 397 4% 5,7 %
Slide 49: Financial items
Financial items 49 Q4 and full-year results 2009
Slide 50: Net financial items
Net financial items Key figures in NOK million Full year Full year Q4-09 Q4-08 2009 2008 Net interest expenses -186 -370 -883 -977 Currency gain/loss 14 -49 15 -49 Other financial items, net* -37 - 27 - 84 34 Net financial items -209 -446 -952 -992 50 Q4 and full-year results 2009
Slide 51: Debt maturity profile
Debt maturity profile NOK million Average maturity 4.2 years 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2021 Drawn amounts Unutilised credit facilities 51 Q4 and full-year results 2009
Slide 52: Net gearing 0.41 as of Q4-09
Net gearing 0.41 as of Q4-09 NOK billion 60 1,4 Net gearing 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 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -0,2 Equity Net interest-bearing liabilities Net gearing 52 Q4 and full-year results 2009
Slide 53: Funding Sources
Funding Sources Unutilised credit Bonds and CP 28 % facilities 26 % 9.4 10.0 16.5 Banks 46 % Figures in NOK billion 53 Q4 and full-year results 2009
Slide 54: Q4 and full-year results 2009
54 Q4 and full-year results 2009