Orkla Asa · OSL:ORK
Orkla Asa — Investor Day (October 2018)
95 slides from Orkla Asa's investor day presentation, Oct 31, 2018
Slide 1: Strengthening One Orkla for future growth
1 Strengthening One Orkla for future growth Capital Markets Day, 31 October 2018
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: Welcome to Orkla's Capital Markets Day
Welcome to Orkla’s Capital Markets Day Agenda and speakers: 13:00 Strengthening One Orkla for future growth President & CEO Peter A. Ruzicka Q&A 13:35 Winning in local markets EVP Ann-Beth Freuchen and Q&A EVP Stig Ebert Nilssen 14:10 Making our Supply Chain a competitive EVP Atle Vidar Nagel Johans
Slide 4: Today's speakers
Today’s speakers Peter A. Ruzicka President & CEO Orkla ASA Morten Fon CEO Jotun • Joined Orkla in 2014 • President & CEO of Jotun since 2005 • 25 years of experience from the retail sector • Joined Jotun in 1989 • MBA and degree in Business Economics • MBA Finance & Business Administration Ann-Beth
Slide 5: Index
Index Presentations Page Strengthening One Orkla for future growth 6 Winning in local markets 18 Making our Supply Chain a competitive advantage for Orkla 43 Jotun – a story of growth 61 Improving financial returns 77
Slide 6: Strengthening One Orkla for future growth
6 Strengthening One Orkla for future growth Peter A. Ruzicka, President & CEO
Slide 7: Providing unique customer and consumer insight into local markets
Vision: “Your friend in everyday life” Providing unique customer and consumer insight into local markets The leading Nordic- Unique local customer Resilient market Proven track record of based BCG company and consumer insight positions value creation • From industrial • #1 or strong #2 • Market posi
Slide 8: Orkla has outperformed Oslo Stock Exchange since 2014
Orkla has outperformed Oslo Stock Exchange since 2014 Total return indexed development from 1 January 2014 to 25 October 2018 240 220 25 October 2018 200 Orkla +94% 180 160 Oslo Børs All-share Index +65% 140 120 100 80 jan. 14 okt. 14 jul. 15 apr. 16 jan. 17 okt. 17 jul. 18 ORK-NO Norway Oslo All-Sh
Slide 9: We continue to create shareholder value by improving returns
We continue to create shareholder value – by improving returns on our existing business and by actively managing our portfolio Organic growth >= market Grow underlying EBIT U.EBIT %** >1.5pp by 2021 Generate strong cash flow Deliver shareholder value M&A + Portfolio Improve asset efficiency Manageme
Slide 10: Going forward we will prioritise…
Going forward we will prioritise…. Short-term: strengthening One Orkla Mid- to long-term: Accelerate growth • Reduce portfolio complexity • Accelerate growth • Improve price management • Simplify and standardise processes • Grow in new channels through one common ERP • Invest in future growth • Redu
Slide 11: …to deliver margin improvement…
…to deliver margin improvement… 1 2 Reduce SKU Improve price complexity management 3 4 Prioritise Select resources exits 11
Slide 12: …and continue to strengthen our unique business model
…and continue to strengthen our unique business model Winning with strong local brands and consumer insight… …while driving flexibility and efficiency ONE 12
Slide 13: Our markets are changing and we are adapting
Our markets are changing and we are adapting Lower growth in grocery channel Accelerate growth in other channels/markets Smaller players and PL take share of growth Continue to strengthen our position with local brands Digital transformation Use digitalization as a way Use of digital technology to r
Slide 14: Sustainability is critical for our customers and also for us…
Sustainability is critical for our customers and also for us… NUTRITION & SAFE SUSTAINABLE ENVIRONMENTAL CARE FOR PEOPLE WELLNESS PRODUCTS SOURCING ENGAGEMENT & SOCIETY Make healthy living Be prepared to handle Deliver products with Innovate to save Be the change we easier emerging risks sustainable
Slide 15: …and good for responsible and profitable business
…and good for responsible and profitable business Deliver sustainable Make healthy living Innovate to save the products easier environment ENGAGE Aim for Aim for DOUBLE 15% Aim for for healthy oceans 100% 100% INSPIRE INNOVATE Food waste products & services less FOSSIL-FREE and sustainable recyclabl
Slide 16: Higher-growth categories, channels and geographies are our M&A priority
Higher-growth categories, channels and geographies are our M&A and portfolio growth priority Current portfolio Growth priorities Category Foods C&S Care OFI Channel HoReCa Industry ialized Export Spec- Grocery Geography Baltics Other Rest Nordics Europe 16
Slide 17: In order to reach our targets, we will…
In order to reach our targets, we will… • Balance scale benefits vs. tailoring to the local consumer • Manage the shift in channels • Develop our portfolio to become even more sustainable and future-proof • Win the war for talent 17
Slide 18: Winning in local markets
1 8 Winning in local markets Stig Ebert Nilssen, EVP & CEO Orkla Care Ann-Beth Freuchen, EVP & CEO Orkla Foods (Nordics & Baltics)
Slide 19: Winning in local markets
Winning in local markets Point of departure: Growing the platform: A local champion with strong Winning with Orkla’s unique brands and solid market positions business model 19
Slide 20: Point of departure
Point of departure Point of departure: Growing the platform: A local champion with strong Winning with Orkla’s unique brands and solid market positions business model 20
Slide 21: We have built strong brands based on local consumer insights
We have built strong brands based on local consumer insights throughout generations… 1806 2018 21
Slide 22: Resilient market positions with strong no. 1 positions
…we have resilient market positions with strong no. 1 positions in > 50 % of our categories Example of market positions and brands in the grocery channel: Norway Sweden Finland Denmark Estonia Latvia Snacks #2 #1 #1 #1 #2-3 #1 Ketchup #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 Health supplements #1 #1 22
Slide 23: Scale through our broad category range
…and we have achieved scale through our broad category range… Orkla Confectionery Orkla Food Orkla Foods Orkla Care & Snacks Ingredients 1. Health 1. Margarine 1. Ready meals 1. Snacks supplements 2. Ice cream ingr. 2. Pizza 2. Confectionery 2. Personal Care 3. Improvers & 3. Taste enhancers 3. Bisc
Slide 24: Our One Orkla model combines local consumer preferences with scale
Our One Orkla model combines local consumer preferences with scale • Strong local presence creates unique consumer insights Local • Tailor products to local needs tailoring to consumer • Flexibility in the value chain preferences • Ability to tailor products to local customers & Country / market sca
Slide 25: Our market growth rates are still modest
Our market growth rates are still modest…. Growth in grocery retail value, year-on-year % 2016 2017 H1 2018 Nordics 1.5% 1.8% 2.2% Baltics 1.3% 3.0% 3.2% CEE 3.9% 4.9% 3.9% (Orkla’s main markets) • Modest growth rates in grocery retail • Higher growth rates in other channels • Estimated market growt
Slide 26: Increasing growth by focusing on nearby European markets
…but we are increasing growth and extracting further synergies by focusing more on nearby European markets BCG Revenues by geographical area 3% 4% • Acquisition of consumer companies in the 16% Baltics and Central Europe 23% 4% 5% • Higher underlying growth rates in Eastern 77% Europe and India 68%
Slide 27: Growing the platform
Growing the platform Point of departure: Growing the platform: A local champion with strong Winning with Orkla’s unique brands and solid market positions business model 27
Slide 28: Our unique business model is our competitive advantage
Our unique business model is our competitive advantage 1 Accelerate growth in other channels/ markets 2 Continue to strengthen our position with local brands 3 Growing Use local consumer insight to respond to consumer trends in local markets 4 Use digitalisation as a way to increase our competitiven
Slide 29: We will increase exposure to faster growing markets and channels
1 We will increase exposure to faster growing markets and channels International sales E-commerce Out-of-home • Launched international • Higher market share • Increased exposure sales department online than offline towards attractive market growth rates • Focusing on European • Online penetration is
Slide 30: Taking Möllers international = 84% growth in sales
1 Taking Möllers international = 84% growth in sales Revenues (NOK million) Distributed to 500 20 countries 400 300 200 100 +84% +7% from export sales in home markets 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 RTM 2018 30
Slide 31: Using online to expand into new channels
1 Using online to expand into new channels and creating a convenient service Project “Bare Bra Mat” - A custom food concept for kindergartens – enabled as a digital service 31
Slide 32: Our local brands are our biggest competitive advantage
2 Our 300 local brands are our biggest competitive advantage Using strong local brands as an Stretching brands to new categories endorser where the brand essence is relevant 32
Slide 33: Leveraging consumer trends to grow our portfolio
3 Leveraging consumer trends to grow our portfolio and keep our brands relevant Meeting consumer trends with strong local brands DIGITAL TRANSFORMATION 33
Slide 34: Leveraging the “Sustainability” trend
3 Leveraging the “Sustainability” trend Meeting consumer trends with strong local brands DIGITAL TRANSFORMATION 34
Slide 35: Leveraging the “Convenience” trend
3 Leveraging the “Convenience” trend Meeting consumer trends with strong local brands DIGITAL TRANSFORMATION 35
Slide 36: Leveraging the “Health and well-being” trend
3 Leveraging the “Health and well-being” trend Meeting consumer trends with strong local brands DIGITAL TRANSFORMATION 36
Slide 37: Leveraging the “Taste and indulgence” trend
3 Leveraging the “Taste and indulgence” trend Meeting consumer trends with strong local brands DIGITAL TRANSFORMATION 37
Slide 38: Naturli' capitalises on consumer trends across categories
3 Naturli’ is a good example of a brand with products that capitalise on consumer trends across categories Solid growth for Naturli’ Drinks Spread- Dinners Ice ables cream Naturli’ turnover +46% 2014 2015 2016 2017 2018E Plant-based Convenience Sustainability Taste 38 Source: Naturli’, Orkla Food In
Slide 39: Interacting with our consumers and creating engagement
4 Interacting with our consumers and creating engagement Communicating to and with the …and using scale in local consumer data consumers… and insight Utilising our size as the largest Nordic based BCG-company to win in the digital world 39
Slide 40: Launching “Klar” using digital channels
4 In launching “Klar” we used digital channels to connect with the consumer and develop better products Bringing consumers into the Getting honest consumer Using social media to get product development process: feedback: valuable consumer insight: 40
Slide 41: Creating value with Orkla's business model
5 Creating value with Orkla’s business model Adapting to local taste in Jams Standardising packaging in Home Care Managing complexity based on consumer preferences: Do local tailoring when it matters to the consumer 41
Slide 42: Our unique business model is our competitive advantage
Our unique business model is our competitive advantage 1 Accelerate growth in other channels/ markets 2 Continue to strengthen our position with local brands 3 Growing Use local consumer insight to respond to consumer trends in local markets 4 Use digitalisation as a way to increase our competitiven
Slide 43: Making our Supply Chain a competitive advantage for Orkla
4 3 Making our Supply Chain a competitive advantage for Orkla – through a cost efficient and flexible infrastructure Atle Vidar Nagel Johansen, EVP Supply Chain Johan Clarin, EVP & CEO Orkla Food Ingredients
Slide 44: Making Supply Chain a competitive advantage combining cost and flexibility
Making Supply Chain a competitive advantage for Orkla when combining cost and flexibility 1 4 Further simplification and Substantially improve our net harmonization working capital position 2 5 Accelerate Strengthen and digitize our purchasing savings Supply Chain capabilities 3 6 Continued cost Bui
Slide 45: A lot has been achieved on our One Orkla journey for Supply Chain
A lot has been achieved since we started out on our One Orkla journey for Supply Chain, but more remains to be done Pre 2016 2016-2018 2019 – Point of departure – – Moving to base camp – – Climbing up and forward – • Unclear strategic direction • Step-change in footprint • Simplification and for S
Slide 46: Orkla Supply Chain in figures
Orkla Supply Chain in figures 8.5 million 98 percent 4.0 times / year CONSUMER UNITS DELIVERED ON TIME INVENTORY PRODUCED DAILY TURNOVER SUPPLY CHAIN COST BASE EMPLOYEES FACTORIES (BNOK) 11,000 103 46 ~27
Slide 47: Orkla Supply Chain with great cost improvement potential
Orkla Supply Chain with great cost improvement potential Supply Chain – A significant share of Orkla’s cost base Cost base 2017 (BNOK) 7.0 34.2 1.7 0.3 27.1 5.8 19.4 79% Material Conversion Distribution Other SC Total SC Non SC Total cost cost cost cost cost cost costs 47
Slide 48: Substantial cost synergies through consolidation of logistics operations
1. Further simplification and harmonization We have delivered substantial cost synergies through consolidation of our logistics operations Reduction of distribution centers and logistics service providers Case study: Logistics operations in Finland • Distribution Centers consolidated from 31 in • Co
Slide 49: Continued progress in footprint programme
1. Further simplification and harmonization Continued progress in our footprint programme resulting in significantly increased revenue per factory Revenue per factory Comments on progress Number of factories • Maintained focus on the Annual revenue per factory (MNOK) 1-1-1 strategy (targeting one X
Slide 50: 1-1-1 strategy shows results: Ready Meals case in Romania
1. Further simplification and harmonization 1-1-1 strategy deployment starts to show results as exemplified by Ready Meals case in Romania We have closed the Caracal factory and moved pâté and ready meal volumes to the Covasna factory Achievement • SKU harmonization and simplification 13,000 t 27 #S
Slide 51: Consolidating production of dilutables in Kumla
1. Further simplification and harmonization Consolidating production of dilutables in Kumla (Sweden) will increase EBIT by more than 20 MSEK Center of Excellence created Harmonized formats Accelerated performance • In 2016, Kumla received • Center of Excellence for • Additional EBIT potential FUN Li
Slide 52: Our 20 BNOK procurement spend is a large cost saving opportunity
2. Accelerate purchasing savings Our 20 BNOK procurement spend constitutes a large cost saving opportunity OGP in numbers 2018: OGP in umbers 2018: Third party spend Progress 2016-2018 Focus areas 2019-2021 Third party spend (BNOK) 6.0 20.0 +24% $ Improve cost & working capital Cost improvement rate
Slide 53: Moving beyond strict unit pricing – supplier collaboration
2. Accelerate purchasing savings Commodity example: Moving beyond strict unit pricing – Supplier collaboration across multiple value levers Harmonizing Introducing new Reinforcing Driving topline specifications price model sustainability growth • Reduced complexity, • Working capital - • Joint susta
Slide 54: We continue to improve factory efficiency and cut costs
3. Continued cost improvement agenda We continue to improve factory efficiency, cut costs and strengthen capabilities Intensified focus on factory performance …with significant cost improvement improvement projects… potential Factory turn-around projects • FTE reduction through manning Planned proje
Slide 55: Turn-around project in Haraldsby factory
3. Continued cost improvement agenda Recent turn-around project in our Haraldsby factory (Finland) reaffirms the strength of our cost improvement approach Actual Conversion Cost / Kilo development (RTM)… …enabled by • Local team and corporate support functions CC / KG teaming up to reduce cost and e
Slide 56: Target: Reduce working capital by 3% of NSV by 2021
4. Substantially improve our net working capital position Target: Reduce working capital by 3% of NSV by 2021 Working capital freed up by payables Other working capital components Main levers to improve payables Main levers to improve Inventory / Other working capital components • Improve Orkla paym
Slide 57: Our digital roadmap targets four areas across the Supply Chain
5. Strengthen and digitize our Supply Chain capabilities Our digital roadmap targets four areas improving ways of working across the entire Supply Chain Smart Factory & Robotics Supply Chain for the Future E.g. pilot and demonstrate technology that E.g. lead or coordinate initiatives of frontier imp
Slide 58: Continued progress towards sustainable operation
6. Build a responsible and sustainable Supply Chain Continued progress towards sustainable operation, including enhancement of acquired companies’ environmental footprint Energy Greenhouse Gases Water Solid Waste 2020 target: -20% 2020 target: -20% 2020 target: -20% 2020 target: -30% -30% -26% -8% -
Slide 59: Standardizing line start-up and shutdown reduced waste by 55%
6. Build a responsible and sustainable Supply Chain Standardizing production line start-up and shutdown process reduced process waste by 55% Reuse of ketchup significantly reduced start-up and shutdown losses Achieved result and future potential • Waste analysis to minimize material losses in the •
Slide 60: Key actions in making Supply Chain a competitive advantage
Key actions in making Supply Chain a competitive advantage for Orkla 1 4 Further simplification 4-6 Substantially improve -3% Factory our net working and harmonization Working closures per capital position capital / NSV year 2 5 Accelerate 15% Strengthen and digitize our Supply 4-6% purchasing savin
Slide 61: Jotun – A story of growth
Name of Segment, Function, Product Jotun A story of growth Capital Markets Day Orkla - 2018
Slide 62: Jotun's history - 90 proud years of business
Jotun's history - 90 proud years of business Jotun Group History 1926 1930’s – 50’s 1960’s – 70’s 1980’s – 90’s 2000’s Established by Domestic The pioneer International Accelerating Odd Gleditsch sr. growth years expansion growth 62 Capital Markets Day Orkla - 2018
Slide 63: Strongholds has been important
Strongholds has been important - Scandinavia, Middle East and Asia SCA Powder 10% EECA NEA AM Decorative WE 41% Protective SEAP 24% MEIA Marine 25% 2.7 billion 45 40 9,789 USD in 862 million Ltr/Kg countries factories employees revenue 63 Capital Markets Day Orkla - 2018
Slide 64: Geographical foot print has been favourable
Geographical foot print has been favourable Sales EBITA Sales per region 21 000 2100 2017 2007 MEIA 18 000 1800 NEA 15 000 1500 SEAP 12 000 1200 SCA 9 000 900 WE 6 000 600 EECA 3 000 300 AM 0 0 64 Capital Markets Day Orkla - 2018
Slide 65: 3 Elements has affected profitability lately
3 Elements has affected profitability lately Newbuilding sales - Marine Offshore sales - Protective Raw material cost NOK million at year end NOK million at year end Weighted average - Indexed 3 371 100 2 945 90 2 072 1 168 894 80 611 70 2015 2016 2017 2015 2016 2017 2015 2016 2017 65 Capital Market
Slide 66: A story of growth
A story of growth Excellent people working in a unique corporate culture….. ….The Penguin Spirit A long term strategy that stays firm… ….Focus on segments and growth Unique geographical footprint accelerates growth….. …..based on a strong position at home 66 Capital Markets Day Orkla - 2018
Slide 67: Jotun targets a 85 bill USD market
Jotun targets a 85 bill USD market… …out of 135 bill USD market Decorative Paints Powder Coatings Protective Coatings Marine Coatings Jotun Group 2% 3% 8% 23% 3% LOCAL GLOBAL 67 Capital Markets Day Orkla - 2018
Slide 68: Jotun is well positioned in fast growing economies
Jotun is well positioned in fast growing economies Top growing economies Main drivers for paint & coatings next 30 years China Egypt India Pakistan • GDP growth Indonesia Iran Brazil Philippines Russia Vietnam • Population Mexico Bangladesh Turkey Malaysia Saudi Arabia South Africa Nigeria 68 Capita
Slide 69: Jotun – fastest growing last 15 years amongst peers
Jotun – fastest growing last 15 years amongst peers SALES GROWTH INDEX Peer Group - 2002-2017 450 400 350 Jotun demonstrates organic growth better than our peers 300 250 Organic growth offer good control of risks and costs 200 Organic growth enables Jotun to 150 maintain existing culture 100 69 Capi
Slide 70: What has been the strategy?
What has been the strategy ? 4 SEGMENTS ORGANIC GROWTH DIFFERENTIATED APPROACH 70 Capital Markets Day Orkla - 2018
Slide 71: From strategy to implementation - Vietnam
From strategy to implementation - Vietnam An example of organic growth Sales USD million at year end 100 CAGR – 26% 80 60 40 • Import started in 1993 20 • Sales office established 1994 – - Marine and Protective segment 2003 2005 2007 2009 2011 2013 2015 2017 • Factory opened 1997 EBITA USD million a
Slide 72: Attractive Paints and Coatings industry
Attractive Paints and Coatings industry… …where Asia is becoming more important Paints & Coatings market to double in 15 Years • Attractive industry. • Outgrowing GDP growth (~2%) • Asia-Pacific will dominate 4,5% yoy • Environmental focussed growth • M&A activity will remain high 72 Capital Markets
Slide 73: Digitalisation binds Jotun closer together
Jotun strategy Digitalisation binds Jotun closer together TODAY ….in search for efficient solutions – Global ERP solution – Matrix – Collaboration platform – From products to solutions • Computerized tinting system • Hull Performance Solutions (HPS) • SeaStock Management Solution – Port prediction •
Slide 74: Organic growth has created value
Organic growth has created value Volume growth Manageable cost growth in % of sales 15% 40% 10% 38% 36% 5% 8% Avg. 34% 0% 32% 34% Avg. -5% 30% 2003 2005 2007 2009 2011 2013 2015 2017 2003 2005 2007 2009 2011 2013 2015 2017 EBITA (%) ROCE 15% 35% 11% Avg. 30% 22% Avg. 25% 10% 20% 15% 5% 10% 2003 2005
Slide 75: …and the profitable organic growth continues…
…and the profitable organic growth continues… • Proven track record • Organic growth strategy stays firm • Excellent geographical footprint • Strong corporate culture Jotun Protects Property 75 Capital Markets Day Orkla - 2018
Slide 76: Capital Markets Day Orkla - 2018
76 Capital Markets Day Orkla - 2018
Slide 77: Improving financial returns
7 7 Improving financial returns Jens Bjørn Staff, CFO
Slide 78: We continue to create shareholder value by improving returns
We continue to create shareholder value – by improving returns on our existing business and by actively managing our portfolio Organic growth >= market Grow underlying EBIT U.EBIT %** >1.5pp by 2021 Generate strong cash flow Deliver shareholder value M&A + Portfolio Improve asset efficiency Manageme
Slide 79: We have delivered solid earnings growth since 2014
We have delivered solid earnings growth since 2014 Annual underlying EBIT +5% since 2014 Underlying EBIT margin +1.5pp since 2014 +1.5pp 4,740 11.8 12.0 3% 2% 3,379 5% -1.3%-p 1.9%-p -0.5%-p 2014 Underlying M&A FX RTM Q3 growth 2018 2014 M&A Variable Other RTM Q3 and FX cost costs 2018 79 Figures in
Slide 80: We are prioritising margin growth short-term
We are prioritising margin growth short-term 1 2 Reduce SKU Improve price complexity management 3 4 Optimise Select resources exits 80
Slide 81: We will achieve further reductions in SG&A
We will achieve further reductions in SG&A… BCG incl. HQ, cost breakdown 2017 (NOK billion), % of revenues 38,5 50% 15% 4% 4% 15% 4,3 Revenues Cost of Conversion Logistics Advertising SG&A EBIT (adj.) materials cost cost cost 81 Figures include Orkla’s Branded Consumer Goods businesses including HQ
Slide 82: …and this is how we reduce costs
…and this is how we reduce costs 2017: Ongoing: Foods and Confectionery & Snacks Finland Foods Central Europe 82
Slide 83: Investing in our future infrastructure - ONE common ERP
Investing in our future infrastructure - ONE common ERP Scope of project Enabled opportunities • ~30 different ERP solutions • Implementing SAP S4 Hana • Lack of common templates and • Common solution, master data & master data harmonised processes • Facing end of support 2017: 2018: 2019: 2019-2022
Slide 84: M&A has contributed significantly to our 9% CAGR since 2014
M&A has contributed significantly to our 9% CAGR since 2014 Recent strategic acquisitions BCG revenue, 2014 – Q3 2018 (BNOK) CAGR 40 6% 2 CAGR 7 2% 29 2 2014 Organic M&A FX LTM Q3 growth 2018 84 Figures include Orkla’s Branded Consumer Goods businesses
Slide 85: Examples of M&A value creation & lessons learned
Examples of M&A value creation & lessons learned Under- Platform / Growth cases performing synergy cases NSV CAGR*: Double digit Single digit Negative Synergies/NSV: Minor 5-10% 85 *Average annual growth in NSV since acquisition
Slide 86: This is how we manage our assets
This is how we manage our assets Priorities in existing portfolio Acquisitions / divestments • Differentiated approach • Improve growth profile • Invest for growth < - > Run for cash • Local scale & strength • Reduce complexity What to expect • Existing portfolio: Prioritise profitability over growt
Slide 87: Step change improvement in working capital efficiency
Step change improvement in working capital efficiency R12 Net Working Capital / R12 Net Sales NWC / NSV -3pp by 2021 87 Figures include Orkla’s Branded Consumer Goods businesses including HQ
Slide 88: ERP & restructuring investments inflate capex next 3-4 yrs
ERP & restructuring investments inflate capex next 3-4yrs Total R12 capex / R12 Net sales Comment • Replacement capex historically in line with depreciation at ~3% • Factory footprint inflates capex short term with longer term efficiency • 1 ERP requires front loaded capex • Capex temporarily increa
Slide 89: We have increased returns even with high M&A activity
We have increased returns even with high M&A activity ROCE pre-tax*, Orkla BCG incl. HQ 14.5% M&A goodwill 14.0% 13.7% 13.5% One Orkla agenda 13.0% 12.5% 12.0% Q1 14 Q3 18 Over time 89 *(R12 EBIT adj. / average R12 capital employed (goodwill at historical cost))
Slide 90: Allocating excess capital to M&A and One Orkla initiatives
We will continue to allocate excess capital to M&A and One Orkla initiatives Retain investment grade Prioritised use of capital • Switching to long term dividend growth policy 3.0 above > NOK 2.60 per share2 Maximum level over time 2.5 • Maintain firm investment grade credit quality 2.0 – Net intere
Slide 91: We continue to create shareholder value by improving returns
We continue to create shareholder value – by improving returns on our existing business and by actively managing our portfolio Organic growth >= market Grow underlying EBIT U.EBIT %** >1.5pp by 2021 Generate strong cash flow Deliver shareholder value M&A + Portfolio Improve asset efficiency Manageme
Slide 92: Changes to external reporting from 2019
Changes to external reporting from 2019 • Branded Consumer Goods including HQ new reporting unit • Disclose development in Underlying EBIT margin for BCG incl. HQ which is applicable for the margin improvement target of >1.5pp by 2021 • Disclose development in Underlying EBIT for BCG incl. HQ • Disc
Slide 93: Your friend in everyday life
Your friend in everydayelife
Slide 94: Contact us
Contact us Thomas Ljungqvist SVP Investor Relations Tel.: +47 48 25 96 18 Email: thomas.ljungqvist@orkla.no Elise Andersen Heidenreich IR & Communications Manager Tel.: +47 951 41 147 Email: elise.andersen.heidenreich@orkla.no Jens Bjørn Staff Executive Vice President and Chief Financial Officer (CF
Slide 95: Slide 95