Slide 1: Third quarter results 2018
1 Third quarter results 2018 25 October 2018 Peter A. Ruzicka, 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: Highlights Q3-18: Overall progress, but challenges in some Care markets
Highlights Q3-18: Overall progress, but challenges in some Care markets • Improved sales and profit in Confectionery & Snacks and Food Ingredients • Good growth for Foods outside Norway • Growth in Care hampered by weak performance in Poland and UK • Continued sales growth and stabilising raw materi
Slide 4: Branded Consumer Goods Q3-18: Overall progress hampered by Care
Branded Consumer Goods Q3-18: Overall progress hampered by Care BCG organic growth Organic growth Q3-18 by business area 2.8% Orkla Foods 1.1% 1.8% 0.7% 1.6% Orkla Confectionery 0.8% 0.5% 0.8% -0.2% 3.5% 0.7% & Snacks 0.2% 0.1% Orkla Care -2.6% -0.2% 2014 2015 2016 2017 Q1-18 Q2-18 Q3-18 Orkla Food
Slide 5: Branded Consumer Goods R12M Q3-18: Improved margin driven by fixed cost agenda
Branded Consumer Goods R12M Q3-18: Improved margin driven by fixed cost agenda ∆ BCG U.EBIT (adj.) margin R12M Q3-18 Underlying margin growth: +0.4pp 12.0% 11.8% 0.3pp -0.2pp 0.1pp EBIT (adj.) M&A and Variable costs Other costs1 EBIT (adj.) margin FX effects margin R12M Q3-17 R12M Q3-18 Note: Figure
Slide 6: Financial performance
6 Financial performance Jens Bjørn Staff, CFO
Slide 7: Branded Consumer Goods Q3-18: Structural growth in Care and Food Ingredients
Branded Consumer Goods Q3-18: Structural growth in Care and Food Ingredients 9,783 +0.8% +2.3% 9,584 -0.4% +0.2% BCG operating Organic growth FX M&A BCG operating revenues Q3-17 revenues Q3-18 Organic growth including loss of C&S distribution business 7 Amounts in NOK million
Slide 8: Orkla Foods: Broad top and bottom line growth outside Norway
Orkla Foods Broad top and bottom line growth outside Norway Q3-18 YTD Q3-18 Revenues 3 937 11 634 • Good organic growth in most markets Organic growth 1.1% 1.0% • Sales in Norway negatively impacted by changed campaign activity and EBIT (adj.) 558 1 397 increased retail prices in Norway EBIT(adj.) g
Slide 9: Orkla Confectionery & Snacks: Improved sales and margin performance
Orkla Confectionery & Snacks Improved sales and margin performance Q3-18 YTD Q3-18 Revenues 1 518 4 406 • Organic growth recovered Organic growth -0.2% -3.0% • Positive effects from timing of campaigns Adj. for Wrigley +3.5% 1.2% and new launches EBIT (adj.) 278 636 • Negative margin impact from wea
Slide 10: Orkla Care: Actions initiated to turn around performance in Poland and UK
Orkla Care Actions initiated to turn around performance in Poland and UK Q3-18 YTD Q3-18 Revenues 1,973 6,081 • Growth in Care hampered by weak performance in Poland and UK Organic growth -2.6% -0.6% • Good performance in Home & Personal EBIT (adj.) 314 876 Care and Wound Care EBIT(adj.) growth -4.0
Slide 11: Orkla Food Ingredients: Strong contribution from ice cream ingredients
Orkla Food Ingredients Strong contribution from ice cream ingredients and positive M&A effects Q3-18 YTD Q3-18 Revenues 2,432 7,076 • Sales and EBIT (adj.) progress in ice cream ingredients Organic growth 1.4% 1.9% • Good sales growth from vegan EBIT (adj.) 160 393 products, bakery ingredients busin
Slide 12: Branded Consumer Goods YTD Q3-18: Narrowing gap in sales and fixed cost growth
Branded Consumer Goods YTD Q3-18: We are addressing the narrowing gap in sales and fixed cost growth + 0 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD Q3 2018 Organic sales growth Underlying growth in fixed costs1 12 1Fixed cost excludes A&P and Depreciation
Slide 13: Operating Cash flow
Operating Cash flow Cash flow from operations (excl. financial investments) Cash flow as at 30.09 2018 2017 Operating profit 3,181 2,975 Amort., depr., and impairment 896 915 Change in net working capital -998 -343 Net replacement investments1 -987 -771 Cash from operations 2,092 2,776 13 Amounts in
Slide 14: Jotun (42.6%): Continued sales growth and stabilising raw material prices
Jotun (42.6%) Continued sales growth and stabilising raw material prices YTD Aug-18 YTD Aug-18 comments Operating income 11,871 • Continued growth in Operating revenue Change vs LY 7% ‒ Good growth for Decorative Paints and strong improvement for Protective Coatings Operating profit 1,154 ‒ Marine C
Slide 15: Group EBIT (adj.) +7% helped by non-periodic items
Group EBIT (adj.) +7% helped by non-periodic items Q3 Key figures Q3-18 ∆vs LY Operating revenues 10,126 +3% EBIT (adj.) BCG 1,310 +3% EBIT (adj.) Orkla Investments 94 +2% EBIT (adj.) HQ/Other business -51 EBIT (adj.) 1,353 +7% Other income and expenses -62 EBIT 1,291 +2% Profit from associates 116
Slide 16: Closing remarks
1 6 Closing remarks Peter A. Ruzicka, President & CEO
Slide 17: Overall progress, but challenges in some Care markets
Overall progress, but challenges in some Care markets Key takeaways Capital Markets Day 31 October 2018 • Progress in Confectionery & Snacks and Food Ingredients • Good growth for Foods outside Norway • Volume decline in Norwegian grocery retail • Turnaround initiated in Care in Poland and UK • Cont
Slide 18: We continue to meet consumer trends through local brands
We continue to meet consumer trends through local brands Convenience Taste & indulgence Sustainability Health & well-being ✓ Chilled ready-made sauces ✓ Chocolate coated Panda ✓ 100 % recycled plastic ✓ 100% plant based mince ✓ Made from real broth and liquorice balls dusted with ✓ Bio-based bristle
Slide 19: Q&A
1 9 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 20: Appendices
‘Orkla Appendices
Slide 21: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) EBIT (adj.) EBIT (adj.) is operating profit or loss before other income and expenses (OIE). The main purpose of this performance measure is to identify material non-recurring items and items substantially relating to other periods to ensure that the changes in
Slide 22: Group Income statement
Group Income statement Change Change Change Change Q3-18 Q3-17 in MNOK in % YTD-18 YTD-17 in MNOK in % Operating revenues 10,126 9,858 268 3% 29,854 28,710 1,144 4% EBIT (adj.) 1,353 1,267 86 7% 3,369 3,192 177 6% Other income and expenses -62 3 -65 n.a. -186 -200 14 7% EBIT 1,291 1,270 21 2% 3,183
Slide 23: Key figures: Orkla Foods and Orkla Confectionery & Snacks
Key figures: Orkla Foods and Orkla Confectionery & Snacks Orkla Foods Change Change Q3-18 Q3-17 YTD-18 YTD-17 in % in % Operating revenues 3,937 4,007 -1.7% 11,634 11,742 -0.9% EBIT (adj.) 558 540 3.3% 1,397 1,366 2.3% EBIT (adj.) margin 14.2% 13.5% 0.7 pp 12.0% 11.6% 0.4 pp Orkla Confectionery & Ch
Slide 24: Key figures: Orkla Care and Orkla Food Ingredients
Key figures: Orkla Care and Orkla Food Ingredients Orkla Care Change Change Q3-18 Q3-17 YTD -18 YTD -17 in % in % Operating revenues 1,973 1,878 5.1% 6,081 5,549 9.6% EBIT (adj.) 314 327 -4.0% 876 847 3.4% EBIT (adj.) margin 15.9% 17.4% -1.5 pp 14.4% 15.3% -0.9 pp Orkla Food Ingredients Change Chang
Slide 25: Net financial items
Net financial items Q3-18 Q3-17 YTD-18 YTD-17 FY-17 Net interest expenses -40 -47 -122 -123 -149 Currency gain/loss 0 1 2 1 -3 Result from Share Portfolio and dividends 3 0 3 55 54 Other financial items, net -6 -15 -32 -54 -78 Net financial items -43 -61 -149 -121 -176 25 Amounts in NOK million
Slide 26: Statement of financial position
Statement of financial position 30.09.2018 31.12.2017 Intangible assets 19,859 19,921 Property, plant and equipment 11,936 11,683 Investments in associates and joint ventures etc. 4,018 4,108 Non-current assets 35,813 35,712 Assets held for sale 0 0 Inventories 5,863 5,684 Inventory of development p
Slide 27: Cash flow
Cash flow YTD-18 YTD-17 FY-17 (1.1-30.9) (1.1-30.9) (1.1-31.12) Operating profit 3,181 2,975 4,423 Amortisation, depreciation and write-downs 896 915 1,313 Gain from operations moved to Investments and sold entities -2 -28 -299 Change in net working capital -998 -343 18 Net replacement expenditures
Slide 28: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing debt (NOK million) Net gearing 7,805 8,056 0.23 0.24 5,661 0.18 3,836 0.12 14 0.00 2014 2015 2016 2017 Q3-18 2014 2015 2016 2017 Q3-18 28
Slide 29: Changes in net debt Q3-18
Changes in net debt Q3-18 3,863 162 3,836 13 5 889 708 Net debt 30 Expansion Cash flow Net purchase Tax, FX effects Net debt 31 June 2018 and sale of from of shares dividends September companies operations received, net 2018 financial & other items 29 Amounts in NOK million
Slide 30: Debt maturity profile
Debt maturity profile Average maturity 4.1 years 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2018 2019 2020 2021 2022 2023 2024 2025- Unutilised credit fasilities Drawn amounts 30 Amounts in NOK million
Slide 31: Funding sources
Funding sources 1.5 3.5 Unutilised credit facilities Banks Bonds and CP Cash, cash equivalents 2.9 and interest bearing assets 2.4 31 Amounts in NOK billion
Slide 32: Your friend in everyday life