Slide 1: Solid quarter for Branded Consumer Goods
1 Solid quarter for Branded Consumer Goods Fourth quarter results 2017 8 February 2018 Peter A. Ruzicka, President & CEO
Slide 2: Performance in line with targets
Our targets 2016-2018: Performance in line with targets 2017 Keep the strategy on track Deliver organic growth at least in line with market growth +1.6% Target annual EBIT (adj.) growth of 6-9%1 in BCG +6.1% Maintain a stable dividend of at least NOK 2.50 per NOK share 2.602 1Including add-ons, excl
Slide 3: Strengthened portfolio through acquisitions and disposals
Strengthened portfolio through acquisitions and disposals Acquisitions in 2017 Disposals in 2017 Rolling out the Orkla model Lilleborg's professional laundry business Multi-channel sales strategy Building strong niche positions 3
Slide 4: Organic growth in all business areas
Organic growth in all business areas Continued organic growth1 Broad-based organic growth1 in 2017 2.8% Orkla Foods 1.4% 1.8% 1.6% 1.1% 0.7% Orkla Confectionery 3.1% & Snacks Orkla Care 2.9% Orkla Food Ingredients 0.5% -2.8% 2012 2013 2014 2015 2016 2017 4 1Reported growth adjusted for currency tran
Slide 5: Growing our large brands
Growing our large brands 9% sales growth in 2017 59% sales growth in 2017 12% sales growth in 2017 All time high sales in +45% in Norway +7% in home markets 2017 +84% from export sales Successfully launched in Sweden 5
Slide 6: Building new brands in high-growth categories
Building new brands in high-growth categories 45% sales growth 40% sales growth 17% sales growth Successful launch in 2017 in 2017 in 2017 exceeding ambitions 6
Slide 7: Effective cost reduction actions
Effective cost reduction actions Ongoing restructuring of supply chain SG&A reduced by leveraging One Orkla • Average revenue/factory +45% • Merged business units in 3 countries • 30 factory closures announced since 2014 • Cost reduction projects in several business • 13% reduction in number of supp
Slide 8: Targeted EBIT growth delivered
Targeted EBIT growth delivered 4,643 12.1% +6.1% +1.4% 11.8% 4,300 +60 bps +0.5% -10 bps -20 bps BCG FX M&A Growth BCG BCG EBIT M&A and Variable Other costs BCG EBIT EBIT (adj.) adj. for FX EBIT (adj.) margin FX effects costs margin FY-16 and M&A FY-17 FY-16 FY-17 8 Amounts in NOK million. Other cos
Slide 9: Financial performance
9 Financial performance Jens Bjørn Staff, CFO
Slide 10: Solid quarter for Branded Consumer Goods
Highlights Q4-17: Solid quarter for Branded Consumer Goods • BCG organic growth of 2.8% with strong volume/mix • Higher input costs balanced by price increases • Cost programmes and timing of advertising costs drive 100bps of underlying EBIT (adj.) margin expansion • EPS for continuing operations up
Slide 11: 5.5% increase in EPS for continuing operations in Q4
5.5% increase in EPS for continuing operations in Q4 Key figures Q4-17 ∆vs LY FY-17 ∆vs LY Operating revenues 10,851 5% 39,561 5% EBIT (adj.) 1,443 10% 4,635 8% Other income and expenses -1 -201 EBIT 1,442 22% 4,434 13% Profit/loss from associates -78 313 -36% Net interest and other financial items
Slide 12: 8.8% revenue growth from strong organic growth and FX
Branded Consumer Goods Q4-17: 8.8% revenue growth from strong organic growth and FX +8.8% 10,587 +1.4% +4.6% 9,734 +2.8% BCG operating Organic growth1 FX M&A BCG operating revenues Q4-16 revenues Q4-17 12 Amounts in NOK million. 1Reported growth adjusted for currency translation effects and structur
Slide 13: Underlying margin growth driven by cost savings
Branded Consumer Goods Q4-17: Underlying margin growth driven by cost savings Underlying margin development Q4: FY: +100 bps +40 bps 13.6% 12.1% 11.8% +100 bps +60 bps 12.8% -30 bps 0 bps -10 bps -20 bps BCG EBIT M&A and Variable Other costs BCG EBIT BCG EBIT M&A and Variable Other costs BCG EBIT ma
Slide 14: Orkla Foods: Continued improvement after a challenging H1-17
Orkla Foods Continued improvement after a challenging H1-17 Q4 FY -17 • Price increases offset increased raw Revenues 4,384 16,126 material prices in the quarter Organic growth 1.3% 1.4% • EBIT and margin improvement from price increases, cost improvements and EBIT(adj.) margin 15.7% 12.7% lower adv
Slide 15: Orkla Confectionery & Snacks: Increased top line and cost improvements
Orkla Confectionery & Snacks Increased top line and cost improvements Q4 FY -17 • Strong volume growth in Finland, Revenues 1.943 6.439 Sweden and Estonia Organic growth 3.9% 3.1% • Good growth in main categories EBIT(adj.) margin 20.3% 16.2% • Positive contribution from increased Change vs LY +130
Slide 16: Orkla Care: Profit growth from organic improvement
Orkla Care Profit growth from organic improvement Q4 FY -17 • Strong organic growth partly driven by high Revenues 1,930 7,479 campaign activity Organic growth 6.3% 2.9% • Organic growth in 5 out of 6 business units EBIT(adj.) margin 11.8% 14.4% • Strong margin improvement despite Change vs LY +100
Slide 17: Orkla Food Ingredients: Strong Q4 supported by growth in most markets
Orkla Food Ingredients Strong Q4 supported by growth in most markets Q4 FY -17 • Strong end of the year with broad based Revenues 2,410 8,703 sales growth Organic growth 3.4% 0.5% • Successful turnaround in Romania and Finland EBIT(adj.) margin 5.3% 5.4% Change vs LY +20 bps flat • Organic growth an
Slide 18: Orkla Investments: Record-high for Hydro Power, tough quarter for Jotun
Orkla Investments Record-high for Hydro Power, tough quarter for Jotun Fully consolidated into Orkla financial statements Accounted for using equity method Volume (GWh): Jotun (42.6%) Hydro Power Q4: 735 (451) FY: 2,729 (2,396) Power prices1 (NOK/MWh): Q4: 295 (312) FY: 274 (249) EBIT adj. (NOK mill
Slide 19: Jotun (42.6%)
Jotun (42.6%) Continued volume growth, but higher raw material prices impact profit FY-17 Q4-17 comments Operating revenues 16,401 • Continued volume growth and increase in Change vs LY +4% operating revenue year over year Operating profit 1,354 • Good performance in Decorative Paints, while the mar
Slide 20: Strong cash flow generation FY-17
Strong cash flow generation FY-17 Cash from operations (excl. financial investments) Cash flow per 31.12 2017 2016 Operating profit 4,423 3,785 Amort., depr., and impairment 1,313 1,138 Change in net working capital1 18 -186 Net replacement expenditures -1,050 -1,327 Cash from operations 4,405 3,368
Slide 21: Changes in net debt 2017
Changes in net debt 2017 8.1 11.4 4.1 7.7 0.0 0.0 0.6 0.4 Net debt 31 Expansion Net paid to Cash flow Sale of Tax, FX effects Net debt 31 December and sale of shareholders from shares and dividends December 2016 companies operations financial received, net 2017 assets financial & other items 21 Amou
Slide 22: Focus going forward
2 2 Focus going forward Peter A. Ruzicka, President & CEO
Slide 23: Delivering on our strategy through One Orkla
Delivering on our strategy through One Orkla Key takeaways full year 2017 • Performance in line with targets • Continued growth - in line with market • Cost improvements from working as One Orkla • Sale of 50% share in Sapa completed • Portfolio strengthened through acquisitions and disposals Outloo
Slide 24: McVegan launched in Sweden and Finland with vegan burger from Orkla
McVegan launched in Sweden and Finland with vegan burger from Orkla 24
Slide 25: Vill – made with more of the naturally good stuff
Vill – made with more of the naturally good stuff 25
Slide 26: Introducing chewing gum under well-known toothpaste brand
Introducing chewing gum under well-known toothpaste brand 26
Slide 27: Q&A
2 7 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 28: Appendices
‘Orkla Appendices
Slide 29: Group income statement
Group income statement Change Change Q4-16 Q4-17 in % FY-16 FY-17 in % Operating revenues 10,286 10,851 5% 37,758 39,561 5% EBIT (adj.) 1,307 1,443 10 % 4,298 4,635 8% Other income and expenses -122 -1 -382 -201 EBIT 1,185 1,442 22 % 3,916 4,434 13 % Profit/loss from associates* -29 -78 488 313 Inte
Slide 30: Orkla Foods and Orkla Confectionery & Snacks
Key figures: Orkla Foods and Orkla Confectionery & Snacks Orkla Foods Q4-16 Q4-17 Change FY-16 FY-17 Change Operating revenues 4,186 4,384 198 15,476 16,126 650 EBIT (adj.) 616 689 73 1,968 2,055 87 EBIT (adj.) margin 14.7 % 15.7 % 1.0 ppt 12.7 % 12.7 % 0.0 ppt Cash flow from operations 507 742 235
Slide 31: Orkla Care and Orkla Food Ingredients
Key figures: Orkla Care and Orkla Food Ingredients Orkla Care Q4-16 Q4-17 Change FY-16 FY-17 Change Operating revenues 1,730 1,930 200 6,740 7,479 739 EBIT (adj.) 186 227 41 956 1,074 118 EBIT (adj.) margin 10.8 % 11.8 % 1.0 ppt 14.2 % 14.4 % 0.2 ppt Cash flow from operations 259 301 42 727 777 50 O
Slide 32: Net financial items
Net financial items FY-17 Q4-16 Q4-17 Net interest expenses -149 -40 -26 Currency gain/loss -3 4 -4 Result from Share Portfolio and dividends 54 56 -1 Other financial items, net -78 -22 -24 Net financial items -176 -2 -55 32 Amounts in NOK million
Slide 33: Statement of financial position
Statement of financial position 31.12.2016 31.12.2017 Intangible assets 18,343 19,921 Property, plant and equipment 11,038 11,683 Investments in associates and joint ventures etc. 13,148 4,108 Non-current assets 42,529 35,712 Inventories 5,195 5,684 Inventory of development property 70 113 Trade rec
Slide 34: Cash flow
Cash flow FY-16 FY-17 Operating profit 3,785 4,423 Amortisation, depreciation and write-downs 1,138 1,313 Change in net working capital -186 18 Gain from operations moved to Investments and sold entities -42 -299 Net replacement expenditures -1,327 -1,050 Cash flow from operations 3,368 4,405 Cash f
Slide 35: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing debt (NOK million) Net gearing 8,496 0.28 7,805 8,056 0.23 0.24 5,661 0.18 14 0.00 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 35
Slide 36: Debt maturity profile
Debt maturity profile Average maturity 4.3 years 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2018 2019 2020 2021 2022 2023 2024 2025- Unutilised credit facilities Drawn amounts 36 Amounts in NOK million
Slide 37: Funding sources
Funding sources 3.6 Unutilised credit facilities 5.2 Banks Bonds and CP Cash, cash equivalents and interest bearing assets 2.6 2.6 37 Amounts in NOK billion
Slide 38: Your friend in everyday life