Slide 1: Second quarter results 2021
Second quarter results 2021 15 July 2021 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: Summary of financials for the quarter
Summary of financials for the quarter • Group EBIT(adj.)* growth of 5% in Q2 • Profit improvement in Hydro Power offset by negative development in Branded Consumer Goods • Adjusted EPS* increased by +4% to NOK 1.14 in the quarter 3 *All Alternative Performance Measures (APM) are presented in the app
Slide 4: Highlights for the quarter
Highlights for the quarter PHOTO • Volume driven organic revenue growth of 6.9%, but weak profit conversion in the quarter • Strong recovery for Orkla Food Ingredients • Continue to deliver on our M&A strategy 4
Slide 5: Good momentum in our three prioritized platforms for growth in Q2
Good momentum in our three prioritized platforms for growth in Q2 Plant based Out of Home Health • Organized as separate unit; • Acquisition of New York Pizza* • Completed acquisition of NutraQ Orkla Alternative Proteins • Kotipizza robust through Covid-19 • 9% growth for Møllers • Investments in pr
Slide 6: Continue to deliver on M&A strategy in Q2
Continue to deliver on M&A strategy in Q2 • Acquisition of New York Pizza* • Completed acquisition of NutraQ • Acquisition of Nói Siríus • Add-ons in Orkla Food Ingredients 6 *Pending approval competition authorities
Slide 7: Financial performance
Financial performance Harald Ullevoldsæter, CFO
Slide 8: Group EPS (adj.) +4% supported by Hydro Power and Jotun but offset by weak profit conversion in BCG
Group EPS (adj.) +4% supported by Hydro Power and Jotun but offset by weak profit conversion in BCG Key figures Q2-21 Q2-20 ∆ Q2 Operating revenues BCG 11,532 10,981 +5% EBIT (adj.) BCG 1,240 1,290 -4% EBIT (adj.) HQ -86 -70 EBIT (adj.) BCG incl. HQ 1,154 1,220 -5% EBIT (adj.) Orkla Industrial & Fin
Slide 9: Positive cash flow from operations year to date
Positive cash flow from operations year to date Cash flow from operations per 30.6 (pre-tax) YTD Q2-21 YTD Q2-20 Orkla Branded Consumer Goods (BCG, incl. HQ) EBIT (adj.) 2,362 2,323 Depreciation 890 881 Change in net working capital -648 105 Net replacement investments -1,088 -1,101 Total BCG cash f
Slide 10: Acquisitions increase net interest bearing debt
Aqcusitions increase net interest bearing debt = 1.8x 13,913 EBITDA 336 5,676 6,380 3,113 1,447 527 Net debt 31 Cash flow Taxes & Dividends Expansion FX effects Net debt 30 December from financial and share capex and June 2021 2020 operations items buyback net M&A 10 Amounts in NOK million
Slide 11: Branded Consumer Goods
A ‘Orkla Branded Consumer Goods
Slide 12: Organic top line growth of 6.9% in Q2 and 3.7% YTD
Branded Consumer Goods Organic top line growth of 6.9% in Q2 and 3.7% YTD BCG revenue, Q2-20 → Q2-21 (MNOK) BCG revenue, YTD Q2-20 → YTD Q2-21 (MNOK) 6.9% 3.7% 4.1% 11,532 2.1% 22,808 10,981 22,297 -6.0% -3.6% Q2-20 Organic FX M&A Q2-21 YTD Organic FX M&A YTD growth Q2-20 growth Q2-21 12 All Alterna
Slide 13: Strong comeback in Out of Home drives organic growth
Branded Consumer Goods Strong comeback in Out of Home drives organic growth Organic growth Q2-21 by business area Organic growth YTD Q2-21 by business area Foods 3.0% Foods -1.0% Confectionery Confectionery -1.2% 2.7% & Snacks & Snacks Care 2.5% Care 3.3% Food Food 20.5% 9.0% Ingredients Ingredients
Slide 14: Weak profit conversion driven by cost increases and negative mix effects
Branded Consumer Goods incl. HQ Weak profit conversion driven by cost increases and negative mix effects ∆ Q2 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin 1,220 11.6% 6.7% 1,154 11.4% 0.2%-p -6.6% 0.0%-p -5.4% Q2-20 Underlying FX M&A Q2-21 R12M Q2-20 Underlying M&A and FX R12M Q2-21 growth margin
Slide 15: Improved sales in Q2 but negative profit growth mainly from ERP implementation
Orkla Foods Improved sales in Q2 but negative profit growth mainly from ERP implementation Q2-21 YTD Q2-21 Revenues 4,465 8,764 • Organic sales growth in Q2 across most markets Organic growth +3.0% -1,0% • YTD sales decline driven by Covid-19 effects and lower activities in Sweden EBIT (adj.) 517 1,
Slide 16: Market growth offset by phasing of sales and non-periodic items
Orkla Confectionery & Snacks Market growth offset by phasing of sales and non-periodic items Q2-21 YTD Q2-21 Revenues 1,637 3,338 • Unusual high market growth in the Nordics from Organic growth -1.2% 2.7% May 2020 continued in the quarter, however at a lower pace EBIT (adj.) 198 439 • Sales and EBIT
Slide 17: Topline growth offset by cost increases
Orkla Care Topline growth offset by cost increases Q2-21 YTD Q2-21 Revenues 1,624 3,438 • Strong sales growth in Health, Wound Care and Organic growth 2.5% 3.3% HSNG categories. Decline in hand sanitizers and alcogel as last year’s growth is reversed EBIT (adj.) 211 507 • EBIT (adj.) decline due to
Slide 18: Strong recovery against weak comparables
Orkla Food Ingredients Strong recovery against weak comparables Q2-21 YTD Q2-21 Revenues 2,971 5,517 • Volume recovery as markets gradually reopen, Organic growth 20.5% 9.0% some segments however still hampered by restrictions EBIT (adj.) 205 285 • Margin improvement driven by scale/recovery EBIT (a
Slide 19: Solid growth across the portfolio partly driven by temporary demand boost
Orkla Consumer Investments Solid growth across the portfolio partly driven by temporary demand boost Q2-21 YTD Q2-21 Revenues 956 1,979 • Continued sales growth for painting tools in Q2 driven by UK market due to partial lock down last Organic growth 13.2% 14.3% year EBIT (adj.) 109 273 • Kotipizza
Slide 20: Sales and profit growth for Jotun - tougher times ahead
Investments - Jotun (42.6%) Sales and profit growth for Jotun - tougher times ahead Jotun 100% basis YTD Q2-21 • Sales growth in Decorative, Protective and Powder segments. Continued slowdown in Marine Revenues 11,297 coatings Revenue growth 8,6% • Margin pressure in all segments driven by rapidly i
Slide 21: Closing remarks
Closing remarks
Slide 22: Satisfactory first half of 2021, we expect headwind going forward
Satisfactory first half of 2021, we expect headwind going forward Summing up Q2 Outlook • Volumes returning in Out of Home • Increased raw material prices • Weak profit conversion for Branded • Normalised in-home consumption Consumer Goods • Continue to pursue growth opportunities • M&A transactions
Slide 23: Q&A
Q&A Jaan Ivar Semlitsch, President & CEO Harald Ullevoldsæter, CFO
Slide 24: Save the date: Orkla Capital Markets Day
Save the date Orkla Capital Markets Day 23 November 2021
Slide 25: Appendices
Appendices
Slide 26: Profit growth in Hydro Power from significant increase in power prices
Orkla Investments Profit growth in Hydro Power from significant increase in power prices Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/kWh): (NOK million): Q2: 549 (685) Q2: 46.9 (4.9) Q2: 112 (-19) YTD: 1,026 (1,329) YTD: 47.9 (10.1) YTD
Slide 27: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) NIBD / R12 EBITDA 13,913 1,8x 1,0x 6,551 0,9x 6,380 12,417 0,5x 3,037 4,895 4,893 14 0,0x 2017 2018 2019 2020 Q2 2021 2017 2018 2019 2020 Q2 2021 Leasing debt Ex leasing debt 27 Amounts in NOK million
Slide 28: Funding sources and maturity profile
Funding sources and maturity profile Debt maturity → average maturity 3.2 years Funding sources (in BNOK) MNOK 8,000 1.2 7,000 6.8 6,000 8.1 5,000 4,000 5.5 3,000 2,000 1,000 Unutilised credit facilities Banks 0 2021 2022 2023 2024 2025 2026- Bonds and CP Cash, cash equivalents and interest bearing
Slide 29: 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 calculat
Slide 30: 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 b
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