Slide 1: Third quarter results 2022
27 October 2022 Third quarter results 2022
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 30% • EBIT (adj.) for Branded Consumer Goods incl. HQ decline of 11% • Organic revenue growth of 9%, broad based and price driven • Adjusted earnings per share were NOK 1.58 (+15%) *All Alternative Performance Measures (APM) are pre
Slide 4: Strengthening Sweets Ingredients cluster and Out-of-Home Pizza position through Denali and Da Grasso acquisitions
Strengthening Sweets Ingredients cluster and Out-of-Home Pizza position through Denali and Da Grasso acquisitions • Announced acquisition of Denali Ingredients, a leading ice cream ingredients business in the USA* • Turnover of approx. 1.1 BNOK for fiscal year 2022 (ending 30 September) • The seller
Slide 5: We are changing to become a leading industrial investment company
We are changing to become a leading industrial investment company with a brands and consumer-oriented scope WHY WHAT HOW Speed up value creation Create more structural optionality Reshape Orkla ASA with focus on the ownership role Reduce complexity More active portfolio management Establish autonomo
Slide 6: Our advantage lies in the combination of our investment team, commercial and operational expertise
Our advantage lies in the combination of our investment team, our commercial and operational expertise and extraction of synergies through business service companies Orkla ASA President & CEO Business service Investment Team Corporate Functions companies Investment Professionals Finance Orkla Procur
Slide 7: Orkla's Group Executive Board effective from mid-December '22
Orkla’s Group Executive Board effective from mid-December '22 Nils Selte President & CEO Investment Team Corporate Functions Atle Vidar Nagel Johansen Harald Ullevoldsæter EVP & Investment Executive EVP Finance & CFO Hege Holter Brekke Christer Grönberg EVP & Investment Executive EVP Human Resources
Slide 8: We differentiate ourselves through the combination of six characteristics
We differentiate ourselves through the combination of the following six characteristics Long-term Industry shaping Entrepreneurship & Code of Expertise & dynamic capital Scale perspective localness Conduct allocation Taking a longer-term Adding competence and Capital allocation and Realizing scale a
Slide 9: Our current portfolio of companies and financial investments, operational from 1 March 2023
Our current portfolio will consist of 12 portfolio companies in addition to 2 financial investments, operational from 1 March 2023 Orkla ASA President & CEO Business service Investment Team Corporate Functions companies Portfolio Companies Financial invest. BoD BoD BoD BoD BoD BoD Jotun1 Orkla Foods
Slide 10: Milestones going forward
Milestones going forward Q3-22 Q4-22 Q1-23 Q2-23 New operating model Implementation of Go live New reporting outlined corporate structure new operating model structure • New organization and ambition for • Provide full year indicative top-line • New organization in operation • New reporting structur
Slide 11: Financial performance
Harald Ullevoldsæter, CFO Financial performance
Slide 12: Strong sales growth, EBIT growth driven by Hydro Power
Strong sales growth, EBIT growth driven by Hydro Power Key figures Q3-22 Q3-21 ∆ Q3 Operating revenues BCG 13,887 12,914 +7.5% EBIT (adj.) BCG 1,528 1,695 -9.9% EBIT (adj.) HQ -82 -76 EBIT (adj.) BCG incl. HQ 1,446 1,619 -10.7% EBIT (adj.) Industrial & Financial Investments 777 93 Other income and e
Slide 13: Cash flow from operations in the first nine months of 2022
Cash flow from operations in the first nine months of 2022 Cash flow from operations as at 30.9 (pre-tax) YTD Q3-22 YTD Q3-21 Orkla Branded Consumer Goods (BCG, incl. HQ) EBIT (adj.) 3,773 3,981 Depreciation 1,504 1,392 Change in net working capital -2,794 -824 Net replacement investments -2,081 -1,
Slide 14: Acquisitions and dividend increase net interest bearing debt
Acquisitions and dividend increase net interest bearing debt 16,500 = 1.7x EBITDA* 578 1,253 2,997 12,758 2,166 1,080 Net debt 31 Cash flow Taxes & Dividends Expansion FX effects Net debt 30 December from financial and share capex and September 2021 operations items buyback net M&A 2022 Amounts in N
Slide 15: Branded Consumer Goods (BCG)
Branded Consumer Goods (BCG)
Slide 16: Organic growth driven by price, with slightly negative volumes
Branded Consumer Goods Organic growth driven by price, with slightly negative volumes BCG revenue, Q3-21 → Q3-22 (MNOK) BCG revenue, YTD Q3-21 → YTD Q3-22 (MNOK) 9.0% 5.2% 40,202 1.2% 13,887 9.6% -2.7% -2.2% 12,914 35,722 Q3-21 Organic FX M&A Q3-22 YTD Organic FX M&A YTD growth Q3-21 growth Q3-22 Al
Slide 17: All business areas had positive growth in the quarter
Branded Consumer Goods All business areas had positive growth in the quarter Organic growth for Branded Consumer Goods Organic growth Q3-22 by business area 9.6% Orkla Foods Europe 4.2% Orkla India 20.1% Confectionery 7.5% & Snacks 4.3% 3.8% Orkla Care 3.7% Orkla Food 1.8% 1.6% 1.6% 20.9% 1.3% Ingre
Slide 18: Continued progress for the three prioritized growth initiatives
Continued progress for the three prioritized growth initiatives Full-year baseline (2021) Reported Q3-22 YTD (YoY)* Consumer Health Revenue Growth Grow at least 50% by 2025 BNOK 4.6** 28% Consumer sales Growth Out of Home MEUR ~337 **/*** 101% A European leader in pizza franchise No of outlets No of
Slide 19: Cost increases continue to weigh on profitability
Branded Consumer Goods incl. HQ Cost increases continue to weigh on profitability ∆ Q3 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin 1,619 11.5% -1.7% 9.7% 0.0% -8.6% 0.2% 1,446 -2.3% Q3-21 Underlying FX M&A Q3-22 R12M Q3-21 Underlying M&A and R12M Q3-22 growth margin FX All Alternative Performanc
Slide 20: Broad based cost increases continue to put pressure on margin
Branded Consumer Goods incl. HQ Broad based cost increases continue to put pressure on margin • Input cost (raw material, packaging, traded goods and energy): - Expect 15-18% increase in cost base for 2022 - Market prices show signs of levelling off, but Orkla is still catching up due to broad expos
Slide 21: Orkla Foods Europe: Weak profits from higher input costs and inflation
Orkla Foods Europe Weak profits from higher input costs and inflation Q3-22 YTD Q3-22 Revenues 4,340 12,897 • Organic sales growth driven by price increases and partly offset by negative volume development Organic growth +4.2% +7.2% • Normalized sales development compared to last EBIT (adj.) 526 1,4
Slide 22: Orkla India has strong market positions in Southern India
Orkla India Orkla India has strong market positions and production set-up in the attractive region of Southern India • Acquired MTR in 2007 (Sales +13% CAGR since 2007) • Significant regional differences in taste and culture in India, fitting well with Orkla’s local operating model • Strong, market
Slide 23: Orkla India: Strong sales and EBIT (adj.) performance in Q3
Orkla India Strong sales and EBIT (adj.) performance in Q3 Q3-22 YTD Q3-22 Revenues 689 1,877 • Good organic domestic sales and recovering trend in export sales after the pandemic Organic growth +20.1% +17.3% • Both masalas and spice mixes growing double-digit EBIT (adj.) 93 230 • Profitability cont
Slide 24: Orkla Confectionery & Snacks: Price driven top-line growth
Orkla Confectionery & Snacks Price driven top-line growth. Market conditions remain challenging Q3-22 YTD Q3-22 Revenues 1,889 5,332 • Further weaking of volume in grocery market Organic growth +7.5% +5.1% • Raw material costs and inflation covered by price increases to customers EBIT (adj.) 286 644
Slide 25: Orkla Care: Revenue growth, but profit impaired by cost inflation
Orkla Care Revenue growth for Orkla Care, but profit is impaired by significant cost inflation Q3-22 YTD Q3-22 • Top line growth for Care despite significant Revenues 2,170 6,452 volume decline for the Norwegian entities as the Organic growth +3.7% +5.8% grocery channel is contracting post pandemic
Slide 26: Orkla Food Ingredients: Strong Q3 performance due to price management
Orkla Food Ingredients Strong Q3 performance due to solid price management Q3-22 YTD Q3-22 Revenues 3,744 10,527 • Broad-based sales growth across categories and geographies Organic growth +20.9% +21.3% • EBIT (adj.) growth due to solid price management, EBIT (adj.) 252 655 but somewhat offset by co
Slide 27: Orkla Consumer Investments: Painting tools decline, pizza franchise growth
Orkla Consumer Investments Continued decline in painting tool sales, notably in the UK. Solid growth in consumer sales across pizza franchise network Q3-22 YTD Q3-22 Revenues 1,205 3,528 • Lower home improvement activity drives sales Organic growth +0.7% -2.5% decline for painting tools. UK market n
Slide 28: Strong sales growth for Jotun
Investments - Jotun (42.6%) Strong sales growth for Jotun Jotun 100% basis YTD Aug-22 • Solid sales growth in all segments driven by price Revenues 18,243 increases and volume growth Revenue growth 21.8% • Margin pressure from higher raw material prices continues. Signs of prices easing EBITA 2,654
Slide 29: Power prices boost earnings in Hydro Power to record levels
Orkla Investments Power prices boost earnings in Hydro Power to record levels Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT (adj.) (GWh): (øre/kWh): (NOK million): Q3: 512 (406) Q3: 289,9 (80,3) Q3: 773 (89) YTD: 1,602 (1,432) YTD: 200,8 (58,7) YTD: 1,697
Slide 30: EBIT (adj.) of BNOK 1.7 for Hydro Power and proposed tax changes
EBIT (adj.) of BNOK 1.7 for Hydro Power YTD Q3 and proposed changes in Hydro Power tax legislation • If the new tax legislation is approved, proforma effective tax rate YTD Q3 would be 55%, of which 85 Orkla Hydro Power production* (GWh) million (5%-p) due to the proposed increase in 500 1 000 1 500
Slide 31: Q&A
Nils K. Selte, President & CEO Harald Ullevoldsæter, CFO Q&A
Slide 32: Closing remarks
Nils K. Selte, President & CEO Closing remarks
Slide 33: Closing remarks
Closing remarks • Solid Group EBIT (adj.) growth driven mainly by Hydro Power, as well as by profit growth in Jotun • We are changing to become a leading industrial investment company with a brands and consumer- oriented scope • Diverse and competent management team in-place from mid-December 33
Slide 34: Upcoming event: Fourth quarter 2022, 14 February 2023
Upcoming event: Forth quarter 2022 14 February 2023
Slide 35: Appendices
Appendices
Slide 36: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) NIBD / R12 EBITDA 16,500 1,7x 1,5x 12,758 1,0x 0,9x 6,551 6,380 14,652 10,834 0,5x 3,037 4,895 4,893 14 0,0x 2017 2018 2019 2020 2021 Q3-22 2017 2018 2019 2020 2021 Q3-22 Leasing debt Ex leasing debt Amount
Slide 37: Funding sources and maturity profile
Funding sources and maturity profile Debt maturity → average maturity 3.4 years Funding sources (in BNOK) MNOK 9,000 1.5 8,000 7.5 7,000 6,000 9.1 5,000 4,000 3,000 7.1 2,000 1,000 Unutilised credit facilities Banks 0 Bonds and CP 2022 2023 2024 2025 2026 2027- Cash, cash equivalents and interest be
Slide 38: 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 39: 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 as a
Slide 40: Orkla
A, ‘Orkla