Slide 1: First quarter results 2014
First quarter results 2014 Peter A. Ruzicka, President & CEO 8 May, 2014
Slide 2: Agenda
Agenda 1. Peter A. Ruzicka, President & CEO Highlights and strategy 2. Terje Andersen, Group CFO & CEO Orkla Investments Financial performance 3. Christer B. Åberg, CEO Orkla Confectionery & Snacks Branded Consumer Goods 4. Terje Andersen, Group CFO & CEO Orkla Investments Orkla Investments 2
Slide 3: Highlights Q1 2014
Highlights Q1 2014 • Group EBITA improved by 23% to NOK 736 million • 17% sales growth in Branded Consumer Goods – -1.2% adjusted organic growth • EBITA in BCG improved by NOK 76 million compared to Q1’13 – Structural growth and realisation of synergies in Orkla Foods – Improved performance by Orkla
Slide 4: Business areas
Business areas Orkla Orkla Orkla Orkla Orkla Orkla Confectionery Home & Food Foods International Investments & Snacks Personal Ingredients Gränges Hydro Power Financial Investments Real Estate Operating Operating Operating Operating Operating revenues: revenues: revenues: revenues: revenues: 9.797 4
Slide 5: No change in strategy but focus on improving operation
No change in strategy but focus on improving operation • Future growth and value creation from a focused Nordic based BCG company • Focus on organic growth as the key long-term value driver Strategy • Going from a very decentralized model to a more optimized model • Leveraging on our substantial loc
Slide 6: Operational focus: Deliver on initiated and ongoing structural processes
Operational focus: Deliver on initiated and ongoing structural processes Orkla Confectionery & Orkla Foods Orkla Home & Personal Snacks Denmark 6
Slide 7: Operational focus: Stronger innovations from the restructured units
Operational focus: Stronger innovations from the restructured units Competence and technology Brands across Confectionery & Snacks in Rieber & Søn + Stabburet 7
Slide 8: Operational focus: Improved packaging drives growth
Operational focus: Improved packaging drives growth Example: Nora Jam in Norway (consumer value NOK million) 450 400 2.3X 350 300 250 200 150 100 50 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 8 Source: Internal estimates
Slide 9: Operational focus: Rolling out successful launches across countries
Operational focus: Rolling out successful launches across countries Same product – different brand Innovation in Sweden 30% growth per year after a successful release in 2011 Successful in Denmark After 2 months it is the 2nd biggest sauce SKU in the market Launched in Finland Q1 2014 9
Slide 10: Operational focus: Building relations with customers based on common interests
Operational focus: Building relations with customers based on common interests 10
Slide 11: Operational focus: Optimizing production structure
Operational focus: Optimizing production structure Overview of Nordic and Baltic BCG production structure 11
Slide 12: Financial targets announced at Investor Day 2013
Financial targets announced at Investor Day 2013 EBIT EBIT Organic Organic (adjusted) (adjusted) revenue revenue margin margin growth growth 2013 2015/2016 2013 From 2016 Orkla Foods 13.0% > 15.0% -4.2% 2-3% Orkla Confectionery & 14.3% > 16.5% -3.1% 2-4% Snacks Orkla Home & 17.1% > 17.5% -1.5% 3-5%
Slide 13: Financial Performance
Financial Performance Terje Andersen, Group CFO & CEO Orkla Investments
Slide 14: Group income statement
Group income statement Q1 Q1 NOK mn 2013 2014 Operating revenues 7 219 8 306 EBITA 596 736 Amortisation intangibles -7 -4 Other income and expenses -36 -35 EBIT 553 697 Profit/loss from associates and joint ventures 95 56 Dividends received 120 14 Gains, losses and write-downs shares and fin. assets
Slide 15: EBITA bridge Q1 2014
EBITA bridge Q1 2014 Amounts in NOK million -19 736 61 -10 32 76 596 EBITA Q1-13 Branded Gränges Hydro Power Financial HQ/other EBITA Q1-14 Consumer Investments Goods 15
Slide 16: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) Equity ratio (%) 19 652 59.1 60.0 53.6 51.8 52.9 10 645 8 496 7 574 4 786 2010 2011 2012 2013 Q1’14 2010 2011 2012 2013 Q1’14 16
Slide 17: Branded Consumer Goods
Branded Consumer Goods Christer B. Åberg CEO Orkla Confectionery & Snacks
Slide 18: Rolling 12 months EBITA for Branded Consumer Goods
Rolling 12 months EBITA for Branded Consumer Goods Amounts in NOK billion 3.1 3.0 2.9 2.8 2.7 2.6 2.5 2.4 2.3 2.2 2.1 2.0 0.1 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1’14 18
Slide 19: Orkla Foods
Orkla Foods • Broad-based underlying EBITA and margin Key figures (NOK million) Q1-13 Q1-14 improvement. Satisfactory margin improvement Operating revenues 1,924 2,548 compared to pro forma Q1’13 including Rieber Revenue growth 32.4% Adj. organic revenue growth1 -2.7% • Top line still challenging EB
Slide 20: Innovations from Orkla Foods
Innovations from Orkla Foods 20
Slide 21: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks • Weaker sales in Norway and Sweden Key figures (NOK million) Q1-13 Q1-14 – Demanding integration processes Operating revenues 1,100 1,114 – Later listings, launch of innovations and Revenue growth 1.4% campaigns compared to Q1’13 Adj. organic revenue growth1 -3.8% EBITA
Slide 22: Challenging turnaround short term
Challenging turnaround short term • Comprehensive restructuring process challenging in short term, but will contribute to profit improvement going forward – Companies in Norway, Sweden and Finland merged from 7 to 3 – Restructuring of field sales force in Norway completed during Q1 2014 – Synergy ef
Slide 23: Innovations from Orkla Confectionery & Snacks
Innovations from Orkla Confectionery & Snacks 23
Slide 24: Orkla Home & Personal
Orkla Home & Personal • Improvement in revenues and EBITA for all Key figures (NOK million) Q1-13 Q1-14 segments compared to Q1’13 Operating revenues 1,211 1,280 – Strong sales growth in Pierre Robert Group Revenue growth 5.7% driven by new launches, relaunches and campaigns in Norway Adj. organic r
Slide 25: Innovations from Orkla Home & Personal
Innovations from Orkla Home & Personal 25
Slide 26: Orkla International
Orkla International • Continued weak sales and profit performance in Key figures (NOK million) Q1-13 Q1-14 Orkla Brands Russia Operating revenues 406 660 – Structural sale process ongoing Revenue growth 62.6% Adj. organic revenue growth1 3.4% • Solid growth in India driven by core categories EBITA -
Slide 27: Orkla Food Ingredients
Orkla Food Ingredients • Broad-based EBITA improvement Key figures (NOK million) Q1-13 Q1-14 Operating revenues 1,333 1,451 • Positive effects from internal improvement projects Revenue growth 8.9% – Kåkå CZ (Czech Rep.), Belusa (Slovakia), Adj. organic revenue growth1 -0.3% Lanordija (Latvia), Cred
Slide 28: Orkla Investments
Orkla Investments Terje Andersen, Group CFO & CEO Orkla Investments
Slide 29: Sapa (50/50 joint venture)
Sapa (50/50 joint venture) • Improved demand for extruded products in North Key figures (NOK Pro forma America and Europe of 5% and 2%, respectively, Q1-14 million) Q1-13 compared to Q1’13 Operating revenues 10,367 11,346 Revenue growth 9.4% • Underlying EBIT improved in all business areas Underlyin
Slide 30: Hydro Power
Hydro Power • High precipitation and volumes in Q1 EBITA (NOK million) – 609 GWh versus 326 GWh last year 97 77 58 42 • Spot prices were 19% lower compared to Q1’13 – Spot prices in Q2 expected significantly -3 lower than in Q2 2013 Q1 Q2 Q3 Q4 – Estimated profit contribution in Q2 lower than in Q1
Slide 31: Jotun (42.5%)
Jotun (42.5%) • Satisfactory start with growth in all segments Key figures (NOK million) 2012 2013 Operating revenues 11,351 12,034 • Increase in costs primarily linked to market Revenue growth 6.0% development activities in growth markets EBIT 1,126 1,258 • Ongoing plant investments in Russia, Braz
Slide 32: Gränges – Continued profit improvement in Q1
Gränges – Continued profit improvement in Q1 • Continued volume growth in both Europe and Asia Key figures (NOK million) Q1-13 Q1-14 Operating revenues 1,010 1,090 • Improved margin performance Revenue growth 7.9% – Successful restructuring in Sweden EBITA 85 117 • Settlement with insurer following
Slide 33: Q&A
Q&A Peter A. Ruzicka, President & CEO Terje Andersen, Group CFO & CEO Orkla Investments Christer B. Åberg, CEO Orkla Confectionery & Snacks
Slide 34: Appendices
<A, AS S é( : an. Orkla ane Appendices
Slide 35: Debt maturity profile
Debt maturity profile Amounts in NOK million 6,000 Average maturity 3.6 years 5,000 4,000 3,000 2,000 1,000 0 2014 2015 2016 2017 2018 2019 2020 2021 Later Drawn amounts Unutilised credit facilities 35
Slide 36: Balance sheet
Balance sheet NOK mn 31.12.2013 31.03.2014 Intangible assets 15 402 15 277 Property, plant and equipment 11 651 11 371 Investments in associates and joint ventures etc. 11 042 10 830 Non-current assets 38 095 37 478 0 Inventories 4 836 4 989 Receivables 6 328 5 962 Shares and financial assets 1 051
Slide 37: Cash flow
Cash flow NOK mn Q1 2013 Q1 2014 Operating profit 545 708 Amortisation, depreciation and write-downs 245 292 Change in net working capital - 613 - 57 Net replacement expenditures - 150 - 218 Cash flow from operations, industrial activities 27 725 Cash flow from Orkla Financial Investments 13 9 Tax -
Slide 38: Net financial items
Net financial items FY 2013 Q1-13 Q1-14 Net interest expenses -375 -71 -95 Currency gain/loss -1 2 0 Other financial items, net -117 -20 -21 Net financial items -493 -89 -116 38
Slide 39: Sapa (joint venture) – Pro forma information (100%)
Sapa (joint venture) – Pro forma information (100%) NOK million Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Sales volume (1000 tonnes) 343 311 346 360 346 314 359 Revenues 10,414 9,654 10,367 10,974 10,797 10,132 11,346 Underlying EBITDA1 365 154 304 508 328 -43 440 Underlying EBIT 76 -142 16 213 24 -
Slide 40: Historical dividends
Historical dividends Amounts in NOK 5,00 5,00 2,50 2,50 2,50 2,25 2,25 2,25 2,00 1,50 1,00 2,50 0,41 0,50 0,60 0,65 0,68 0,19 0,23 0,27 0,32 0,39 0,80 0,90 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Special dividend Ordinary dividend 40
Slide 41: Net gearing 0.24 as of Q1-14
Net gearing 0.24 as of Q1-14 Amounts columns in NOK billion 60 0.60 50 0.50 40 0.40 30 0.30 20 0.20 10 0.10 0 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1-14 -10 -0.10 Equity Net interest-bearing liabilities Net gearing 41
Slide 42: Funding sources
Funding sources Amounts in NOK billion 3.0 Unutilised credit facilities 5.0 10.5 8.4 13.1 Bonds and CP 11.2 3.8 7.0 Banks 9.3 2.0 Cash, cash equivalents and interest bearing assets 6.7 42