Orkla Asa · OSL:ORK
Orkla Asa — Q1 2009 Earnings Presentation
49 slides from Orkla Asa's earnings presentation, May 6, 2009
Slide 1: Orkla ASA First quarter results 2009
Orkla ASA First quarter results 2009 6 May 2009 1 First quarter 2009
Slide 2: Agenda
Agenda • Highlights and financial performance by CEO Dag J. Opedal • Orkla Brands by EVP Torkild Nordberg • Orkla Aluminium Solutions and Orkla Materials by EVP Bjørn Wiggen 2 First quarter 2009
Slide 3: Highlights Q1-09
Highlights Q1-09 • Weak EBITA due to global economic downturn – Orkla Brands holding up relatively well – Orkla Aluminium Solutions and Materials negatively impacted • Reinforced action plan aimed at controlling cash flow – Orkla Aluminium Solutions target to stay cash neutral in 2009 – Capacity cur
Slide 4: Financial performance
Financial performance • Group EBITA at NOK 233 million vs NOK 1 029 million in Q1-08 – Satisfactory results in Orkla Brands, EBITA NOK 522 million – Weak sales volume for Orkla Aluminium Solutions, EBITA NOK -342 million • Net profit NOK 638 million vs NOK 687 million in Q1-08 – The swap agreement b
Slide 5: Change in EBITA from Q1-08 to Q1-09
Change in EBITA from Q1-08 to Q1-09 30 18 -82 1029 -685 All figures in NOK million -32 -45 233 Q1-08 Orkla Brands Elkem ex. Solar Elkem Solar Orkla Aluminium Orkla Financial Other Q1-09 Solutions Investments 5 First quarter 2009
Slide 6: Key figures for the Orkla group
Key figures for the Orkla group in NOK million Q1 Q1 2009 2008 Operating revenues 13 448 16 332 EBITA* 233 1 029 Profit/loss before tax -315 846 Net profit 638 687 Cash flow from industrial operations 214 839 Net cash flow - 501 -2 275 31.3 31.12 2009 2008 Net interest-bearing liabilities 26 588 27
Slide 7: Orkla Associates
Orkla Associates REC Jotun in NOK million in NOK million 1 Jan - 31 Mar 2009 2008 Change 1 Jan - 31 Mar 2009 2008 Change Revenues 2 013 1 771 14 % Revenues 2 740 2 259 21 % EBITDA 527 742 -29 % EBIT 302 579 -48 % Profit before tax 600 327 • EBITDA decline of 29 % from Q1-08 • Growth in operating rev
Slide 8: Share Portfolio – better return than benchmark, but negative performance as of Q1
Share Portfolio – better return than benchmark, but negative performance as of Q1 Portfolio MSCI Nordic OSEBX S&P 500 • Net sold NOK 0.36 billion as of Q1 2009 2009 2007-2009 0,4 % -5,7 % -7,3 % -11,0 % -11,9 % -13,1 % -15,2 % -17,0 % Key figures in NOK million NOK million 31 Mar 09 31 Dec 08 Change
Slide 9: Orkla is well prepared for stormy weather
Orkla is well prepared for stormy weather • A diversified portfolio reduces risk from business-specific volatility – Large share of cash flow from less cyclical areas • Robust balance sheet and gearing • Unutilised committed credit facilities cover instalments well into 2011 • Tight cash management
Slide 10: Global downturn – comprehensive action plan
Global downturn – comprehensive action plan • Orkla Brands – continuous improvement – Reinforced action plan • Sapa - cash neutral basis in 2009 – Gross reduction in man-years of approx. 2,500 (21 %) in Sapa Profiles – Several factories closed down • Capacity in Elkem adjusted to current market cond
Slide 11: Debt maturity profile
Debt maturity profile NOK million 8 000 Average maturity 4.5 years 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019- Drawn amounts Unutilised credit facilities 11 First quarter 2009 Including financial initiative after Q1
Slide 12: Stable net gearing 0.56
Stable net gearing 0.56 NOK Net gearing billion 60 1,4 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 Q1 09 -0,2 Equity Net interest-bearing liabilities Net gearing 12 First quarter 2009
Slide 13: Short term outlook
Short term outlook • Decline in global GDP in 2009 • Financial crisis - low visibility in terms of – Duration and depth – Impact per sector • Q2-09: – Orkla Brands expected to hold up relatively well – Continued low volumes for Orkla Aluminium Solutions – Low demand and destocking for Orkla Material
Slide 14: Timing in the cycle
Timing in the cycle Early Mover Orkla Financial Investments Orkla Aluminium Solutions Orkla Materials (39.73 %) (42.5 %) Orkla Brands Cyclicality 14 First quarter 2009
Slide 15: Orkla Aluminium Solutions and Materials exposed to cyclical segments
Orkla Aluminium Solutions and Materials exposed to cyclical segments Industrial Automotive/ transportation Orkla Aluminium Solutions Building & Construction Aluminium Orkla Materials Chemicals Electronics Foundries 15 First quarter 2009
Slide 16: The Orkla Group – leading positions
The Orkla Group – leading positions 16 First quarter 2009
Slide 17: Direction of development
Orkla Orkla Aluminium Orkla Orkla Orkla Financial Brands Solutions Materials Associates Investments Share Portfolio Foods Nordic Sapa Profiles Real Estate Brands Nordic Heat Transfer Brands International Building System Food Ingredients Direction of development • Organic and • From profiles • Elkem
Slide 18: Summing up
Summing up Demanding trading conditions Going forward • Understanding current realities • Leverage productivity gains • Adequate actions • Positioned for growth • Control of operations and • Future oriented cash flow business portfolio 18 First quarter 2009
Slide 19: Clarion Hotel Oslo Airport Gardermoen 17 June 2009
Clarion Hotel Oslo Airport Gardermoen 17 June 2009 at 12 CET 19 First quarter 2009
Slide 20: Orkla Brands
Orkla Brands EVP Torkild Nordberg 20 First quarter 2009
Slide 21: Orkla Brands – holding up relatively well
Orkla Brands – holding up relatively well (EBITA 12 month rolling) NOK million 2 800 2 600 2 400 2 200 2 000 1 800 1 600 1 400 1 200 Q1-02 Q3-02 Q1-03 Q3-03 Q1-04 Q3-04 Q1-05 Q3-05 Q1-06 Q3-06 Q1-07 Q3-07 Q1-08 Q3-08 Q1-09 21 First quarter 2009
Slide 22: Satisfactory Q1 results
Satisfactory Q1 results Orkla Brands • Flat organic top line growth in NOK million – Positively affected by Easter 1 Jan - 31 Mar 2009 2008 Change – Weak volume/mix performance Revenues Orkla Brands 5 398 5 361 1% Orkla Foods Nordic 2 283 2 293 0% • Increase in input costs- half is Orkla Brands Nord
Slide 23: Challenging market outlook – as expected
Challenging market outlook – as expected • A more cautious consumer- price-conscious – Market volumes declining in all markets – Discount stores increasing- price focus – Private label slightly increasing • Intensified (volume) rivalry among branded suppliers • Ongoing initiatives – Push and pull ac
Slide 24: Orkla Aluminium Solutions
Orkla Aluminium Solutions Bjørn Wiggen MD Sapa AB 24 First quarter 2009
Slide 25: The aluminium extrusion industry is highly cyclical
The aluminium extrusion industry is highly cyclical and is hit hard in economic downturns Correlation Between YoY US Extrusion Market Growth and US GDP Growth 30 % 20 % Year On Year Growth (%) 10 % 0% 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 GDP -10 % -20 % Extrusion -30 % 25 First quarter
Slide 26: Extrusion markets are continuing to decline
As a result, extrusion markets are continuing to decline US Extrusion Consumption European Extrusion Consumption 400 900 810 341 342 790 350 800 762 764 316 318 743 308 726 293 676 Thousand Tons 300 700 Thousand Tons 276 250 600 537 207 193 488 200 500 150 -39% 400 -36% -7% -10% -8% -23% -4% -6% -9%
Slide 27: Negative trend from end 2008 continued
Negative trend from end 2008 continued • Very weak market development in all segments Orkla Aluminium Solutions in NOK million – Volumes in Profiles down 41 % from Q1-08 Q1 Q4 Q1 Change Revenues 2009 2008 2008 Q1-Q1 – Heat Transfer hit by weak automobile markets Orkla Aluminium Solutions 4 883 6 139
Slide 28: Sapa is continuing to take action in response to lower market volumes
Sapa is continuing to take action in respons to lower market volumes • Volume decline in core activities has been met with 1:1 adjustments in direct manning levels • Temporary unemployment schemes, partial plant shut downs, and salary reductions have been implemented • In addition, a salary and expa
Slide 29: Market conditions will remain difficult for most Sapa companies in 2009
Market conditions will remain difficult for most Sapa companies in 2009 • The market for Sapa Profiles will remain weak in 2009 and is not expected to recover until earliest 2010 • Sapa Building System is mainly exposed to non- residential construction, which is expected to be less impacted • Sapa H
Slide 30: No change in long-term targets
No change in long-term targets EBITA margin 5-6 % over a business cycle Growth in GDP and Aluminum Extrusion Consumption - Western Europe - - North America - 300 300 Extrusion GDP & Extrusion Consumption GDP & Extrusion Consumption 250 250 GDP 200 GDP 200 Extrusion 150 150 100 100 Index 1982 = 100 I
Slide 31: Orkla Materials
Orkla Materials 31 First quarter 2009
Slide 32: Elkem – Good energy trading results and reduced demand for silicon-related products
Elkem – Good energy trading results and reduced demand for silicon-related products • Elkem Energy delivered improved Elkem results based on better trading in NOK million results and higher prices 1 Jan - 31 Mar 2009 2008 Change – Reservoir levels considerably below normal Revenues Elkem 1 838 2 065
Slide 33: Good trading results for Elkem Energy
Good trading results for Elkem Energy • Improved trading results – Positive contribution versus EBITA per quarter - Energy negative contribution last year • Reduced production 340 – Low water and snow reservoir 280 levels in Q1-09 compared to high levels in Q1-08 220 – Higher prices than in Q1-08 16
Slide 34: Silicon-related – low demand and reduction of capacity
Silicon-related – low demand and reduction of capacity • Ferro silicon, silicon metal and Silicon-related carbon all experienced drop in in NOK million volume 1 Jan - 31 Mar 2009 2008 Change • Falling market prices Revenues 1 456 1 866 -22 % EBITA ex Elkem Solar 25 153 -84 % EBITA Elkem Solar - 159
Slide 35: Update on solar market
Update on solar market • Long-term drivers remain strong, but market conditions currently challenging – Price pressure and low demand visibility along the entire value chain – Strong political support – Continued cost reduction will improve solar competitiveness 35 First quarter 2009
Slide 36: Update on Elkem Solar – progressing according to plan
Update on Elkem Solar – progressing according to plan • Majority of production expected in second half – Targeting 2009 production of 1500 – 2500 MT – H1 production impacted by standard ramp-up procedures • Break-even EBITA estimated at approx. 2500 MT/year (40 % of capacity) – Break-even EBITDA at
Slide 37: Product quality key success criteria
Product quality key success criteria Cell efficiency (%) obtained by Q-Cells on industrial lines • Elkem Solar Silicon (ESS) is positioned in the polysilicon 15,52 15,52 15,57 15,53 15,42 quality segment 0,19 0,14 0,09 0,13 0,10 16 – Stable, low levels of 14 impurities – Phosphorus <1.5 ppmw 12 – Bo
Slide 38: Borregaard – soft markets hit Chemicals in Q1
Borregaard – soft markets hit Chemicals in Q1 • Weaker demand for key Borregaard products in NOK million • Volume decline for core lignin 1 Jan - 31 Mar and cellulose products for the construction sector Revenues 2009 2008 Change • Price level largely maintained Borregaard 988 1 216 -19 % Energy 48
Slide 39: First quarter 2009
39 First quarter 2009
Slide 40: Coming events
Coming events 17 June 2009 Orkla Investor Day 12 August 2009 Q2-2009 30 October 2009 Q3-2009 40 First quarter 2009
Slide 41: Appendix
Appendix 41 First quarter 2009
Slide 42: Group income statement Q1-09
Group income statement Q1-09 Key figures in NOK million 1 Jan - 31 Mar 2009 2008 Change Operating revenues 13 448 16 332 -18 % EBITA* 233 1 029 -77 % Amortisation intangibles -50 -52 Restructuring and significant impairment 0 0 EBIT 183 977 Associates 135 179 Dividends 45 88 Gains and losses/write-d
Slide 43: Cash flow
Cash flow Key figures in NOK million 1 Jan - 31 Mar 2009 2008 Industry division: Operating profit 230 993 Amortisations, depreciations and write-downs 658 528 Changes in net working capital - 349 - 335 Net replacement expenditure - 325 - 347 Cash flow from operations 214 839 Financial items, net - 5
Slide 44: Balance sheet
Balance sheet Key figures in NOK million 31.3.2009 31.12.2008 Intangible assets 17 720 17 301 Property, plant and equipment 25 314 26 368 Financial non-current assets 17 566 18 331 Non-Current assets 60 600 62 000 Assets in discontinued operations - 3 148 Inventories 8 637 9 564 Receivables 11 685 1
Slide 45: Net financial items
Net financial items Key figures in NOK million Full year 1 Jan - 31 Mar 2009 2008 2008 Net interest expenses -321 -185 -977 Currency gain/loss -22 11 -49 Other financial items, net -20 71 34 Net financial items -363 -103 -992 45 First quarter 2009
Slide 46: Funding Sources
Funding Sources Unutilised credit Bonds and CP 25 % facilities 22 % 7.6 8.8 18.9 Banks 53 % Figures in NOK billion 46 First quarter 2009
Slide 47: Currency translation effects
Currency translation effects in NOK million Revenues Q1-09 Orkla Brands 70 Orkla Aluminium Solutions 507 Elkem 68 Borregaard 51 Total 696 EBITA Q1-09 Orkla Brands 3 Orkla Aluminium Solutions -46 Elkem 5 Borregaard 0 Total -38 47 First quarter 2009
Slide 48: Largest holdings in the Share Portfolio
Largest holdings in the Share Portfolio Market value in NOK million per 31 Mar 2009 Principal holdings Industry Market value Share of Share of portfolio (%) equity (%) Tomra Systems Industry 586 5% 15,5 % Rieber & Søn Food 501 3% 15,6 % Hennes & Mauritz AB-B SHS Retailing 390 3% 0,2 % Network Norway
Slide 49: First quarter 2009
49 First quarter 2009