Slide 1: Second quarter results
Second quarter results 15 July 2024
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: Q2-24 | Continued growth and margin expansion
Q2-24 | Continued growth and margin expansion • EPS (adj.) of NOK 1.66 (+7%) • Underlying EBIT (adj.) growth of 22% for the Consolidated Portfolio Companies1 • Organic growth of 3.3% and positive volume/mix for the Consolidated Portfolio Companies Note: 1. Including HQ Alternative Performance Measur
Slide 4: Breakdown of Portfolio Companies' performance in Q2-24
Breakdown of Portfolio Companies’ performance in Q2-24 Anchor Grow and build Transform or exit R12M EBIT (adj.) margin 11.7% 12.1% 6.3% 13.4% 14.3% 10.6% 10.3% 11.0% 2.8% 3.1% 9.7% 10.3% 9.7% Underlying EBIT (adj.) growth (Q2-24 vs. Q2-23) 19.0% 29.2% 3.4% 12.4% 43.4% 63.6% 22.0% 76.0% -43.5% -176.6
Slide 5: H1-24 | Key highlights
H1-24 | Key highlights • Financial performance in line with ambitions communicated at the Capital Markets Day • Progress on structural initiatives - Orkla Food Ingredients partnership completed - Sale of Lilleborg - Pre-IPO study on Orkla India finalised Alternative Performance Measures (APMs) are p
Slide 6: Portfolio Company targets 2023-2026 (consolidated)
Portfolio Company targets 2023-2026 (consolidated)1 Underlying EBIT EBIT (adj.) Return on Capital Employed (adj.) growth margin (ROCE) 19.5% 10.5%-11% 13% 9.7% 9.0% 10.6% 9.9% 8%-10% (CAGR) 6.9% 2023 YTD-242 2023-263 2023 R12M 20263 2023 R12M 20263 (Actual) (Actual) (Actual) Note: 1: Including HQ; 2
Slide 7: Financial Performance
Financial Performance Arve Regland, EVP Finance and CFO All Alternative Performance Measures (APMs) are presented in the appendices All figures in NOK million unless otherwise stated
Slide 8: EBIT (adj.) growth of 17% for the Consolidated Portfolio Companies
EBIT (adj.) growth of 17% for the Consolidated Portfolio Companies Key figures Q2-24 Q2-23 ∆ Q2 Operating revenues Group 17,244 17,087 1% EBIT (adj.) Consolidated Portfolio Companies 1,864 1,591 17% EBIT (adj.) Financial Investments 253 305 -17% EBIT (adj.) HQ and Business Services -94 -110 -15% EBI
Slide 9: Continued improvement in EBIT (adj.) margin
Continued improvement in EBIT (adj.) margin Underlying EBIT (adj.) margin change Consolidated Portfolio Companies | R12M EBIT (adj.) margin (incl. HQ) (Q2-24) Underlying 12.0% 11.7% Category Portfolio Company EBIT (adj.) 11.6% 11.4% margin change1 11.5% 11.2% 11.3% 11.0% Orkla Foods Europe +1.9 %-p
Slide 10: Broad-based positive volume/mix performance
Broad-based positive volume/mix performance Breakdown of organic growth by price Organic growth1 split for the Consolidated Portfolio Companies and volume/mix (Q2-24) Organic growth 1.3% 1.6% 4.3% 9.6% 8.1% 13.4% 8.5% 6.0% 5.3% 3.6% 3.3% (Y/Y) Category Portfolio Company Price Vol/Mix Orkla Foods Eur
Slide 11: Cash flow improvement from EBIT (adj.) growth and lower net replacement investments
Cash flow improvement from EBIT (adj.) growth and lower net replacement investments YTD YTD Cash flow from operations (pre-tax) Q2-24 Q2-23 Cash conversion (R12M) EBIT (adj.) 3,368 2,829 Cash Category Portfolio Company conversion Depreciation 1,264 1,179 Orkla Foods Europe 133% Change in net working
Slide 12: NIBD/EBITDA at 2.0x
NIBD/EBITDA at 2.0x Figures in NOK billion = 2.0x EBITDA1 2.7 20.0 0.2 = 1.6x 6.0 EBITDA2 18.8 3.2 0.5 0.5 0.8 Net interest- Cash flow from Taxes Financial items Dividend Net paid to Expansion capex FX effects Net interest- bearing debt operations & Other items received shareholders and net M&A and
Slide 13: Portfolio Companies
Portfolio Companies Arve Regland, EVP Finance and CFO All Alternative Performance Measures (APMs) are presented in the appendices. All figures in NOK million unless otherwise stated.
Slide 14: Jotun: Continued sales and earnings growth
Anchor Grow and build Transform or exit Jotun (42.7% - associated company) Continued sales and earnings growth Jotun 100% basis Q2-24 YTD-24 Key comments Revenues 8,689 16,745 • Double-digit underlying sales growth YTD in the Marine, Revenue growth – fixed rate 7.2% 7.3% Protective and Powder segmen
Slide 15: Orkla Foods Europe: Underlying EBIT (adj.) growth and cash conversion above 100%
Anchor Grow and build Transform or exit Orkla Foods Europe Underlying EBIT (adj.) growth and cash conversion above 100% Q2-24 YTD-24 Key comments Revenues 4,963 10,063 • Underlying EBIT (adj.) growth from cost improvement projects Contribution ratio 39.8% 38.9% and stronger focus on category and pro
Slide 16: Orkla Confectionery & Snacks: Volume/mix growth and biscuit supply improvements
Anchor Grow and build Transform or exit Orkla Confectionery & Snacks Volume/mix growth and biscuit supply improvements Q2-24 YTD-24 Key comments Revenues 2,312 4,608 • Organic volume/mix growth of 6.7%, driven by increase for Contribution ratio 42.9% 43.0% confectionery and biscuits • Improved EBIT
Slide 17: Orkla Food Ingredients: Slight increase in EBIT (adj.)
Anchor Grow and build Transform or exit Orkla Food Ingredients (59.4%)1 Slight increase in EBIT (adj.) Q2-24 YTD-24 Key comments Revenues 4,859 9,323 • Improved contribution ratio from price management. Customer Contribution ratio 30.0% 29.5% price adjustments implemented selectively in response to
Slide 18: Orkla Health: Continued volume/mix growth driven by D2C and international expansion
Anchor Grow and build Transform or exit Orkla Health Continued volume/mix growth driven by D2C and international expansion Q2-24 YTD-24 Key comments Revenues 1,768 3,702 • Volume/mix driven revenue growth in D2C business and global Contribution ratio 57.8% 57.3% brands, Möller’s and Jordan • Intensi
Slide 19: Orkla India: Volume/mix and EBIT (adj.) growth
Anchor Grow and build Transform or exit Orkla India (90%)1 Volume/mix and EBIT (adj.) growth Q2-24 YTD-24 Key comments Revenues 776 1,539 • Q2-24 revenues and EBIT (adj.) include financial incentives Contribution ratio 39.8% 37.3% provided by the Government of India of NOK 20m • Volume/mix growth of
Slide 20: The European Pizza Company: EBIT (adj.) growth supported by restructuring in Germany
Anchor Grow and build Transform or exit The European Pizza Company EBIT (adj.) growth supported by restructuring in Germany Q2-24 YTD-24 Key comments Revenues 763 1,473 • Recovery of consumer sales growth in the Netherlands after a Contribution ratio 42.6% 42.9% soft start to the year in Western Eur
Slide 21: Orkla Home & Personal Care: Volume/mix driven EBIT (adj.) growth
Anchor Grow and build Transform or exit Orkla Home & Personal Care Volume/mix driven EBIT (adj.) growth Q2-24 YTD-24 Key comments Revenues 637 1 310 • Volume/mix driven revenue growth in Norway and in contract Contribution ratio 40.0% 40.6% manufacturing, with broad-based market share increase • Con
Slide 22: Orkla House Care, Health and Sports Nutrition Group, Pierre Robert Group, Lilleborg
Anchor Grow and build Transform or exit Orkla House Care Health and Sports Nutrition Pierre Robert Group Lilleborg Group Sales growth in Cash conversion of Volume decline in Lilleborg sold to all main markets 136% in Q2, negative Norway offset growth in Solenis in the quarter EBIT (adj) delta Finlan
Slide 23: Closing remarks
Closing remarks Nils K. Selte, President and CEO All Alternative Performance Measures (APMs) are presented in the appendices. All figures in NOK million unless otherwise stated.
Slide 24: 3 Commitments
3 COMMITMENTS Drive organic value Execute value- Reduce complexity in existing adding structural of existing portfolio portfolio transactions 24
Slide 25: Q&A
Q&A Nils K. Selte, President and CEO Arve Regland, EVP Finance and CFO
Slide 26: Upcoming events
Upcoming events Third quarter results 29 October 2024 26
Slide 27: Appendices
A ‘Orkla Appendices
Slide 28: Financial Investments: Hydro Power and Real Estate
Financial Investments Higher production in the quarter was more than offset by lower power prices. Positive impact from repeal of windfall tax2 Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/kWh): (NOK million): NO1 Q2: 171 (163) NO1 Q2: 4
Slide 29: Financial impact of the Orkla Food Ingredients transaction
Financial impact of the Orkla Food Ingredients transaction • Sale of 40% of Orkla Food Ingredients with accounting effect from 17 April 2024 Orkla Group figures • Orkla Food Ingredients will continue to be consolidated on a 100% basis • Rhône’s ownership will be included as a non-controlling interes
Slide 30: Sound financial profile
Sound financial profile Net interest-bearing liabilities (NOKbn) NIBD / R12M EBITDA 20.0 2.0x 2.0x 18.8 1.8x 17.2 1.5x 12.8 1.0x 0.9x 16.5 17.8 6.6 6.4 15.2 10.8 0.5x 3.0 4.9 4.9 2018 2019 2020 2021 2022 2023 Q2-241 2018 2019 2020 2021 2022 2023 Q2-24 Leasing debt Ex. leasing debt Note: 1. Of which
Slide 31: Funding sources and maturity profile per Q2-24
Funding sources and maturity profile per Q2-24 Debt maturity average maturity 2.7 years Funding sources (in NOKbn) NOKbn 10 2.2 8.8 8 6 11.2 4 8.8 2 0 Unutilised credit facilities 2024 2025 2026 2027 2028 2029 2030 2031 Bank Drawn amounts - Orkla Group excl. Orkla Food Ingredients (ex. leasing) Draw
Slide 32: Overview of financial targets (1/3)
Anchor Overview of financial targets (1/3) Revenue EBIT margin Cash conversion ROCE 13-14% 133% >15.0% 127% 11.7% 13.3% 11.1% 12.4% >100% Orkla Foods 6.6% Europe 1.9% 2-3% 2023 YTD-24 Target1,2 2023 R12M Target 2023 R12M Target 2023 R12M Target (2026) Volume-mix EBIT margin Cash conversion ROCE 5.0%
Slide 33: Overview of financial targets (2/3)
Grow and build Overview of financial targets (2/3) Revenue Underlying EBIT ROCE 8.7% 12.0% Orkla Food 5.0% 6.9% 10.8% 12.5-13% 10.5% 0.1% Ingredients 2023 YTD-24 Target1 -0.3% 2023 YTD-24 Target1 2023 R12M Target Revenue EBIT margin 8.6% 7-9% 13.4% 13.4% 14.0% Orkla Health 6.3% 2023 YTD-24 Target1 2
Slide 34: Overview of financial targets (3/3)
Transform or exit Overview of financial targets (3/3) Underlying EBIT Cash conversion Orkla Home & 35.5% 38.9% 128% 114% 100% Personal Care >10.0% 2023 YTD-24 Target1 2023 R12M Target EBIT margin Orkla House 14-15% 9.6% 11.0% Care 2023 R12M Target Revenue EBIT margin Cash conversion Health and 10.4%
Slide 35: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Contribution ratio Contribution margin ratio is calculated by dividing the contribution margin by operating revenues. Operating revenues minus variable operating expenses constitute the contribution margin. Variable operating expenses are reported on the financ
Slide 36: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Change in underlying EBIT (adj.) Change in underlying EBIT (adj.) shows like-for-like EBIT (adj.) growth for the group’s business portfolio, and is defined as the group’s reported change in EBIT (adj.), adjusted for effects of the purchase and sale of companies
Slide 37: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Return on Capital Employed (ROCE) cont. Average capital employed is always an average of the closing balances in the five last reported quarters. ROCE shows the return that the Orkla group receives on the capital invested in the various consolidated portfolio c
Slide 38: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Net interest-bearing liabilities Net interest-bearing liabilities are the sum of the group’s interest-bearing liabilities and interest-bearing receivables. Interest-bearing liabilities include bonded loans, bank loans, other loans, lease liabilities and interes
Slide 39: ‘Orkla
‘Orkla