Orkla Asa · OSL:ORK
Orkla Asa — Q2 2019 Earnings Presentation
27 slides from Orkla Asa's earnings presentation, Jul 12, 2019
Slide 1: Second quarter results 2019
1 Second quarter results 2019 12 July 2019 Terje Andersen, Acting 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: Organic sales improvement and profit growth
Highlights: Organic sales improvement and profit growth • Profit improvement for Branded Consumer Goods • Broad based organic sales and profit growth for Foods and Confectionery & Snacks • Profit improvement and continued margin progress for Food Ingredients • Weak performance in Care • Continued sa
Slide 4: Broad based growth across Foods and Confectionery & Snacks
Branded Consumer Goods YTD Q2-19: Broad based growth across Foods and Confectionery & Snacks Organic growth for Branded Consumer Goods Organic growth YTD as of Q2-19 by business area 2.8% 1.0% Orkla Foods 2.4% 1.8% 1.6% Orkla Confectionery 4.5% & Snacks 1.1% 0.9% 0.7% Orkla Care -3.7% 0.4% Orkla Foo
Slide 5: Reduced complexity and increased operational focus in Orkla Care
Reduced complexity and increased operational focus in Orkla Care Orkla Care (~70% of sales) Orkla Care specialised categories (~30% of sales) 5
Slide 6: Financial performance
6 Financial performance Jens Bjørn Staff, CFO
Slide 7: Revenue increase from both organic and structural growth
Branded Consumer Goods Q2-19: Revenue increase from both organic and structural growth BCG revenue, Q2-18 → Q2-19 (MNOK) 2.0% 10,051 1.1% 0.5% 9,705 Q2-18 Organic growth FX M&A Q2-19 7 Amounts in NOK million
Slide 8: Good EBIT growth in BCG offset by more normal HQ cost level
Branded Consumer Goods incl. HQ: Good EBIT growth in BCG1 offset by more normal HQ cost level vs. Q2-18 ∆ Q2 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin 1,030 1.5% 0.3%-p 0.5% 11.2% 1,008 0.3% 11.1% -0.2%-p Q2-18 Underlying FX M&A Q2-19 R12M Underlying M&A R12M growth Q2-18 margin and FX Q2-19 8
Slide 9: Orkla Foods: Broad top- and bottom line growth
Orkla Foods Broad top- and bottom line growth Q2-19 YTD Q2-19 Revenues 4,070 7,959 • Broad based organic growth Organic growth 3.1% 2.4% • Profit growth from higher sales and cost improvements EBIT (adj.) 496 926 • Price increases compensate for EBIT(adj.) growth 13.0% 10.4% continued negative effec
Slide 10: Orkla Confectionery & Snacks: Strong sales and EBIT progress
Orkla Confectionery & Snacks Strong sales and EBIT progress supported by good market growth Q2-19 YTD Q2-19 Revenues 1,519 3,021 • Broad based organic growth, mainly volume driven Organic growth 5.4% 4.5% • Good market growth, especially for EBIT (adj.) 191 402 snacks. Confectionery in Norway back t
Slide 11: Orkla Care: Weak performance in challenging markets
Orkla Care Weak performance in challenging markets Q2-19 YTD Q2-19 Revenues 1,948 4,019 • Challenging in HPC categories in Norwegian grocery retail Organic growth -4.5% -3.7% • Weak performance in Orkla Health, EBIT (adj.) 242 541 notably weight management category EBIT(adj.) growth -8.3% -3.7% • Po
Slide 12: Orkla Food Ingredients: Profit growth from improved portfolio mix
Orkla Food Ingredients Profit growth from improved portfolio mix and revenue management Q2-19 YTD Q2-19 • Slower top line growth compared with Revenues 2,584 4,875 very strong ice cream sales in Q2-18 Organic growth 0.1% 0.6% • Broad based profit growth and increased operating margin EBIT (adj.) 195
Slide 13: Investments - Kotipizza: Solid revenue and profit growth
Investments - Kotipizza Solid revenue and profit growth for Kotipizza NOK million Q2-19 YTD Q2-19** Revenues 260 418 • Continued strong growth in YTD** chain sales*** with 17% growth (8% LFL) Change vs LY* 19.3% 16.5% • EBIT (adj.) driven by strong sales EBIT (adj.) 22 35 growth and cost control. Q2
Slide 14: Investments - Jotun: Solid sales and profit growth
Investments - Jotun (42.6%) Solid sales and profit growth NOK million YTD Q2-19 Operating income 9,472 • Continued growth in operating revenues Change vs LY 7.5% driven by price increases and growth in Protective and Marine Coatings • Offshore and Marine markets picking up Operating profit 1,349 Cha
Slide 15: Adj. EPS +5% following profit growth in BCG and Jotun
Adj. EPS +5% following profit growth in Branded Consumer Goods and strong improvement in Jotun Key figures Q2-19 Q2-18 ∆ Q2 Operating revenues BCG 10,051 9,705 +4% EBIT (adj.) BCG 1,124 1,050 +7% EBIT (adj.) HQ -94 -42 EBIT (adj.) BCG incl. HQ 1,030 1,008 +2% EBIT (adj.) Orkla Investments 79 111 -29
Slide 16: Improvement in net working capital YTD'19 for BCG incl. HQ
Net working capital: Improvement in net working capital YTD’19 for BCG incl. HQ R12M Net working capital / R12M Net sales 13.5 13.0 12.5 12.0 11.5 Dec’17 Dec’18 Jun’18 Jun’19 16 Figures include Orkla’s Branded Consumer Goods business incl. HQ
Slide 17: Higher M&A activity drives increase in Net Interest Bearing Debt
Higher M&A activity drives increase in Net Interest Bearing Debt 9,361 1,447 164 2,909 2,582 3,037 450 Net debt 31 Post tax cash Net paid to Expansion FX effects Interest Net debt 30 December flow from shareholders capex and bearing debt June 2019 2018 operations net M&A following IFRS 16* Amounts i
Slide 18: Closing remarks
1 8 Closing remarks Terje Andersen, Acting President & CEO
Slide 19: Key takeaways: Organic sales improvement and profit growth
Organic sales improvement and profit growth Key takeaways • Profit improvement for Branded Consumer Goods • Broad based organic sales and profit growth for Foods and Confectionery & Snacks • Profit improvement and continued margin progress for Food Ingredients • Weak performance in Care • Continued
Slide 20: Q&A
2 0 Q&A Terje Andersen, Acting President & CEO Jens Bjørn Staff, CFO
Slide 21: Appendices
‘Orkla Appendices
Slide 22: 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 the calc
Slide 23: 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 tax rate for OIE in 2019 is lower than the Group’s tax rate due to h
Slide 24: Orkla Investments: Strong performance in Jotun, lower volumes in Hydro Power
Orkla Investments Strong performance in Jotun, lower volumes in Hydro Power Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/KWh): (NOK million): Q2: 519 (615) Q2: 34.6 (37.4) Q2: 69 (97) YTD: 995 (1,097) YTD: 40.1 (37.3) YTD: 142 (156) Fina
Slide 25: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) NIBD / R12 EBITDA1 9,361 1,6x 1,5x 7,805 8,056 1,2x 3,037 7,784 0,5x 14 0,0x 2015 2016 2017 2018 Q2’19 2015 2016 2017 2018 Q2-19 Leasing debt Ex leasing debt 25 1) Net Interest Bearing Debt excluding leasin
Slide 26: Current debt maturity profile
Current debt maturity profile Debt maturity -> average maturity 3.6 years Funding sources 5 000 1.2 5.2 4.5 4 000 4.5 3 000 Unutilised credit facilities 2 000 Banks Bonds and CP 1 000 Cash, cash equivalents and interest bearing assets 0 2019 2020 2021 2022 2023 2024 2025- Unutilised credit facilitie
Slide 27: Your friend in everyday life