Slide 1: Fourth quarter results 2023
Fourth quarter results 2023 8 February 2024
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: 2023 | Summary of financials
2023 | Summary of financials • Total shareholder return of 15.7% • EPS (adj.) of NOK 5.78 (+6% vs. 2022) • Strong profit performance from Jotun - Board of Directors intends to propose an increase in dividend • Broad based improvement for the Consolidated Portfolio Companies1: - Underlying EBIT (adj.
Slide 4: Portfolio Company targets (consolidated) and TSR target
Portfolio Company targets (consolidated)1 TSR target Underlying EBIT EBIT (adj.) Return on Capital (adj.) CAGR margin Employed (ROCE) 7% 8-10% 9% 10.5-11% 10% 13% 12-14% Total Shareholder Return (TSR) per annum 2024-2026 2023 2023-262 2023 2023-262 2023 2023-262 (Actual) (Actual) (Actual) Note: 1: I
Slide 5: Q4-23 | Signs of easing volume pressure
Q4-23 | Signs of easing volume pressure • Stable EPS (adj.) performance of NOK 1.31 • Continued strong performance from Jotun • Underlying EBIT (adj.) growth for the Consolidated Portfolio Companies of 6.9%1 • Easing volume pressure for the Portfolio Companies Note: 1. Including HQ 5
Slide 6: Breakdown of performance for the Portfolio Companies in Q4-23
Breakdown of performance for the Portfolio Companies in Q4-23 Anchor Grow and build Transform or exit R12M EBIT (adj.) margin 11.1% 11.4% 6.2% 13.4% 13.1% 9.0% 9.0% 9.6% 2.9% 4.4% 8.8% 9.8% 9.0% Underlying EBIT (adj.) growth (Q4-23 vs. Q4-22) 6.0% -6.9% 10.3% -6.8% 22.5% 10.8% 64.8% 134% 39.4% -8.1%
Slide 7: Financial Performance
Financial Performance Harald Ullevoldsæter, CFO All Alternative Performance Measures (APM) are presented in the appendix All figures in NOK million unless otherwise stated
Slide 8: EBIT (adj.) growth of 17% for the Consolidated Portfolio Companies
EBIT (adj.) growth of 17% for the Consolidated Portfolio Companies Key figures Q4-23 Q4-22 ∆ Q4 Operating revenues Group 17,739 16,077 +10% EBIT (adj.) Consolidated Portfolio Companies 1,596 1,366 +17% EBIT (adj.) Financial Investments 158 651 -76% EBIT (adj.) HQ and Business Services -132 -114 +16%
Slide 9: EBIT (adj.) margin has reached the trough
EBIT (adj.) margin has reached the trough Consolidated Portfolio Companies | R12M EBIT (adj.) margin (incl. HQ) Underlying EBIT (adj.) change (Q4-23) Underlying 12.0% 11.7% 11.6% Category Portfolio Company EBIT (adj.) 11.4% margin change1 11.5% 11.2% 11.3% 11.0% Orkla Foods Europe2 +0.1%-p 11.0% Anc
Slide 10: Easing volume pressure for most of the Portfolio Companies
Easing volume pressure for most of the Portfolio Companies Organic growth split for Consolidated Portfolio Companies (2019-23) Split by price and volume/mix (Q4-23) Organic revenue growth Y/Y1 Organic growth (Y/Y) 1.3% 1.6% 4.3% 9.6% 8.1% 9.5% 13.4% 8.5% 6.0% 5.3% Category Portfolio Company Price Vo
Slide 11: Strong cash flow from operations – inventory levels starting to normalise
Strong cash flow from operations – inventory levels starting to normalise Cash flow from operations (pre-tax) 2023 2022 Cash conversion (2023) Consolidated Portfolio Companies (incl. HQ and Business Services) Cash Category Portfolio Company conversion EBIT (adj.) 5,956 5,025 Orkla Foods Europe1 127%
Slide 12: NIBD at NOK 18.8bn per Dec-23, with NIBD / EBITDA at 2.0x
NIBD at NOK 18.8bn per Dec-23, with NIBD / EBITDA at 2.0x Figures in NOK billion 18.8 1.3 = 2.0x 17.2 EBITDA1 1.7 = 1.7x 3.1 EBITDA2 7.1 0.6 2.0 Net interest- Cash flow from Taxes Financial items & Net paid to Expansion capex FX effects Net interest- bearing debt operations received dividend shareho
Slide 13: Portfolio Companies
Portfolio Companies Harald Ullevoldsæter, CFO All Alternative Performance Measures (APM) are presented in the appendix All figures in NOK million unless otherwise stated
Slide 14: Jotun: Continued strong sales and earnings growth
Anchor Grow and build Transform or exit Jotun (42.7% - Associated company) Continued strong sales and earnings growth Jotun 100% basis Q4-23 Q4-22 Key comments Revenues 7,560 6,916 • Continued sales growth from higher volumes and positive mix Revenue growth – fixed rate 11% 20% effects • Profit impr
Slide 15: Orkla Foods Europe: EBIT (adj.) growth driven by price increases
Anchor Grow and build Transform or exit Orkla Foods Europe EBIT (adj.) growth and contribution ratio driven by continued price increases Q4-23 2023 Key comments Revenues 5,504 20,319 • Broad-based organic sales growth driven by price while volume Contribution ratio 38.8% 38.1% decline was less negat
Slide 16: Orkla Confectionery & Snacks: Improved volume/mix, biscuit factory impact
Anchor Grow and build Transform or exit Orkla Confectionery & Snacks Improved volume/mix performance, but EBIT (adj.) still affected by biscuit factory Q4-23 2023 Key comments Revenues 2,619 8,880 • Organic volume/mix growth in the quarter Contribution ratio 40.3% 41.2% • Improved market share perfo
Slide 17: Orkla Food Ingredients: Broad-based underlying EBIT (adj.) growth
Anchor Grow and build Transform or exit Orkla Food Ingredients Broad-based underlying EBIT (adj.) growth Q4-23 2023 Key comments Revenues 4,754 18,661 • Underlying EBIT (adj.) growth and margin improvement due to Contribution ratio 29.2% 28.3% good revenue management, partly offset by higher fixed c
Slide 18: Orkla Health: Continued investments in advertising
Anchor Grow and build Transform or exit Orkla Health Continued investments in advertising to fuel future top-line growth Q4-23 2023 Key comments Revenues 1,561 6,364 • Broad-based organic revenue growth, driven by both price and Contribution ratio 56.2% 57.5% volume • Increased advertising spend as
Slide 19: Orkla India: Broad-based organic growth
Anchor Grow and build Transform or exit Orkla India Broad-based organic growth across all core categories Q4-23 2023 Key comments Revenues 784 2,947 • Organic sales growth in all core categories, both home markets Contribution ratio 37.3% 36.1% and international business, both price and volume drive
Slide 20: The European Pizza Company: Cost reductions in Germany
Anchor Grow and build Transform or exit The European Pizza Company Underlying EBIT (adj.) growth driven by cost reductions in Germany Q4-23 2023 Key comments Revenues 760 2,962 • Underlying consumer sales growth of 4.5% in main markets Contribution ratio 43.1% 42.0% (-0.8% including Germany) • Organ
Slide 21: Orkla Home & Personal Care: Strong organic growth
Anchor Grow and build Transform or exit Orkla Home & Personal Care Strong organic growth, with positive market share performance in Norwegian grocery sector Q4-23 2023 Key comments Revenues 662 2,497 • Strong organic growth in Q4 related to strong performance in Contribution ratio 38.3% 39.2% Norway
Slide 22: House Care, Health and Sports Nutrition, Pierre Robert Group, Lilleborg
Anchor Grow and build Transform or exit Orkla House Care Health and Sports Nutrition Pierre Robert Group Lilleborg Group Continued sales and Successful warehouse Price driven EBIT (adj.) Strong organic growth margin growth in Q4 relocation and margin growth offset by coupled with improved automation
Slide 23: Closing remarks
Closing remarks Nils K. Selte, President & CEO All Alternative Performance Measures (APM) are presented in the appendix All figures in NOK million unless otherwise stated
Slide 24: Summary of main messages
Summary of main messages • Signs of easing pressure on volume and input cost development • Continued strong performance from Jotun • Significant improvement in cash flow from operations • The Board intends to propose a total dividend of NOK 6.00 per share for FY2023, whereof NOK 3.00 is in addition
Slide 25: 3 Commitments
3 COMMITMENTS Drive organic value Execute value- Reduce complexity in existing adding structural of existing portfolio portfolio transactions 25
Slide 26: Q&A
Q&A Nils K. Selte, President & CEO Harald Ullevoldsæter, CFO
Slide 27: Upcoming events
Upcoming events Annual General Meeting 18 April 2024 First quarter 2024 3 May 2024 27
Slide 28: Appendices
A ‘Orkla Appendices
Slide 29: Hydro Power earnings decline driven by lower power prices
Financial Investments Hydro Power earnings decline driven mainly by lower power prices – positive impact from removal of windfall tax2 from Q4-23 Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/kWh): (NOK million): NO1 Q4: 110 (137) NO1 Q4:
Slide 30: Sound financial profile
Sound financial profile Net interest-bearing liabilities (NOKbn) NIBD / R12M EBITDA 18.8 2.0x 17.2 1.8x 1.5x 12.8 1.0x 0.9x 16.5 6.6 6.4 15.2 10.8 3.0 4.9 4.9 2018 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Leasing debt Ex leasing debt 30
Slide 31: Funding sources and maturity profile per Q4-23
Funding sources and maturity profile per Q4-23 Debt maturity average maturity 3.3 years Funding sources (in NOKbn) NOKbn 7 1.9 6.0 6 5 8.9 4 3 9.6 2 1 Unutilised credit facilities 0 Bank 2024 2025 2026 2027 2028 2029 2030 2031 Bonds and CP Drawn amounts (ex leasing) Unutilised credit facilities Cash
Slide 32: Cost breakdown for 2023
Cost breakdown for 2023 Consolidated Portfolio Companies incl. HQ, cost breakdown 2023 as % of revenues 100% -53% -14% -5% -4% 9% -15% Revenues Cost of materials Conversion costs Distribution costs Advertising costs SG&A EBIT (adj.) 32
Slide 33: Overview of financials targets (1/3)
Anchor Overview of financials targets (1/3) Revenue CAGR EBIT margin Cash conversion ROCE 13-14% 127% >15.0% 11.1% 12.4% >100% Orkla Foods 6.6% Europe 2-3% 2023 Target 2023 Target (2026) 2023 Target 2023 Target Volume-mix CAGR EBIT margin Cash conversion ROCE >15.0% 100% 13.0% >2.0% 11.4% 9.9% Orkla
Slide 34: Overview of financials targets (2/3)
Grow and build Overview of financials targets (2/3) Revenue CAGR EBIT CAGR ROCE Orkla Food 8.7% 12.0% 10.8% 12.5-13% 5.0% 6.9% Ingredients 2023 Target 2023 Target 2023 Target Revenue CAGR EBIT margin 7-9% 13.4% 14.0% Orkla Health 6.3% 2023 Target 2023 Target Revenue CAGR EBIT CAGR Cash conversion Cu
Slide 35: Overview of financials targets (3/3)
Transform or exit Overview of financials targets (3/3) EBIT CAGR Cash conversion Orkla Home & 35.5% 128% 100% Personal Care >10.0% 2023 Target 2023 Target EBIT margin Orkla House 14-15% 9.6% Care 2023 Target Revenue CAGR EBIT margin Cash conversion Health and 10.4% 5.0% 100% Sports Nutrition >5.0% 2
Slide 36: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Contribution ratio Contribution ratio is calculated by dividing the contribution margin by operating revenues. Operating revenues minus variable operating expenses constitute the contribution margin. Variable operating expenses are reported on the financial sta
Slide 37: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Change in underlying EBIT (adj.) Change in underlying EBIT (adj.) shows like-for-like EBIT (adj.) growth for the group’s business portfolio and is defined as the group’s reported change in EBIT (adj.) adjusted for effects of the purchase and sale of companies a
Slide 38: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Return on Capital Employed (ROCE) cont. Average capital employed is at all times an average of the closing balance for the five last reported quarters. ROCE shows the return that the Orkla group receives on the capital invested in the various consolidated portf
Slide 39: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Structure (acquisitions and disposals) Structural growth includes adjustments for the acquisition of the businesses Norstamp, Bubs Godis, Da Grasso, Khell-Food, Denali Ingredients, Lofoten Marine Oils, Healthspan and Hadecoup, and the winding-up of Hamé Foods i
Slide 40: ‘Orkla
‘Orkla