Slide 1: Fourth quarter results 2011
Fourth quarter q results 2011 Oslo, 9 February 2012 Bjørn M. Wiggen, CEO
Slide 2: Agenda
Agenda • Highlights 2011 Bjørn M. Wiggen, President and CEO • Financial Fi i l performance f Q4 11 Q4-11 Terje Andersen, CFO • Sapa Svein Tore Holsether, CEO Sapa • Orkla Brands Torkild Nordberg, CEO Orkla Brands
Slide 3: 2011 - Delivering on strategy
2011 - Delivering on strategy • Significant capital release through the sale of Elkem and reduction of financial assets (NOK 18 billion) • Large allocation L ll i off capital i l to our shareholders h h ld (NOK 7 7.5 5 billion) billi ) • Extraordinary dividend of NOK 5 per share • Ordinary dividend
Slide 4: 2011 – Overall satisfactory response to challenging markets
2011 – Overall satisfactory y response to challenging markets Orkla Brands • Price increases to compensate for high raw material prices 4 133 3 944 4 041 • Strong turnaround for the Russian operations in H2-11 3 447 Sapa 2 632 • Profiles fil North h America i on track k to reach 6% margin target
Slide 5: Pursuing growth opportunities within Branded Goods
Pursuinggg growth opportunities pp within Branded Goods • Potential targets identified • Focus ocus on o companies co pa es within t existing e st g categories and geographies • Largest synergies in combination with our existing operations • Focus on value creation 5
Slide 6: Status of divestments of industrial and financial assets
Status of divestments of industrial and financial assets Borregaard Share Portfolio REC Internal restructuring of Sale of assets for a total of Orkla will support REC in assets to separate the NOK 4.5 billion in 2011 their work on operational hydro power assets and the improvements and industrial ac
Slide 7: Sapa business plan
Sapa business plan • Orkla will exit Sapa within 2-3 2 3 years – financial goals remain firm • Significant potential for operational improvements • Strengthening of organisation • Restructuring programmes implemented in Profiles • Focus on regaining margin levels in Heat Transfer • Focus on integrat
Slide 8: Dividend
DIVIDEND a Developing people — creating value (33 O R IK L A
Slide 9: A dividend of NOK 2.5 per share is proposed by the Board of Directors
A dividend of NOK 2.5 p per share is proposed by the Board of Directors • Dividend strategy focuses on predictability and stability Dividend NOK per share • Considering a payout ratio when Orkla has become a branded goods company 5.00 • Share buy-backs aim at 5.00 supplementing dividend 2.50 2.25 2.
Slide 10: Outlook 2012
Outlook 2012 • Orkla O kla Brands B ands well ell positioned to counter co nte challenging market conditions • Flat markets expected for Sapa – restructuring will contribute positively • Continued strong performance for Borregaard • Full commitment to deliver on strategic direction 10
Slide 11: Financial performance
FINANCIAL PERFORMANCE TERJE ANDERSEN, CFO 11
Slide 12: Highlights Q4-11
Highlights Q4-11 • Mixed results for Orkla Brands • Weak December sales for some companies in the Nordics • Profit growth for the Russian operations • As expected, a demanding quarter for Sapa • Weak performance by Sapa Heat Transfer Sweden • Continued strong market conditions and results for Borreg
Slide 13: Change in EBITA Q4-10 to Q4-11
Change in EBITA Q4-10 to Q4-11 Amounts in NOK million 1 322 51 -92 -34 -5 5 14 -204* 1 052 Q4-10 Sapa Sapa HT Orkla Borregaard Hydro Other Q4-11 Profiles P fil & BS Brands B d Ch i l Chemicals Power P * Sale of Orkla HQ in Q4-10, gain NOK 196 million 13
Slide 14: Group income statement
Group income statement Amounts in NOK million Q4-11 Q4-10 Change 2011 2010 Change 15 216 15 884 -4% Operating revenues 61 009 57 338 6% 1 052 1 322 -20% EBITA 4 041 3 944 2% -32 -15 Amortisation intangibles -55 -52 -428 506 Other revenues and expenses -1041 330 592 1 813 EBIT 2 945 4 222 - 761 - 866
Slide 15: Financial flexibility strengthened - net debt reduced by NOK 9 billion
Financial flexibility strengthened - net debt reduced by NOK 9 billion Amounts in NOK billion 19.7 -0.4 2.5 -1.1 13.5 10 6 10.6 -2.4 -7.5 4.5 Net debt CF from Taxes paid Discontinued Company Net sale of Dividend Expansion Net debt 31 Dec 2010 operations Financial operations sales portfolio and share
Slide 16: Significant credit facilities available
Significant credit facilities available Amounts in NOK million Average maturity 8.000 4.1 years 7.000 6.000 Unutilised credit facilities Drawn amounts 5.000 4.000 3 000 3.000 2.000 1 000 1.000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 16
Slide 17: Net gearing 0.31 as of Q4-11
Net gearing 0.31 as of Q4-11 Amounts in NOK billion 60 1.4 50 1.2 1.0 40 08 0.8 30 0.6 20 0.4 10 0.2 0 0.0 -10 -0.2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Equity Net interest-bearing liabilities Net gearing 17
Slide 18: Borregaard – Hydro Power - Jotun
BORREGAARD – HYDRO POWER - JOTUN 18
Slide 19: A strong year for Borregaard
A strong year for Borregaard Amounts in NOK million • Q4 results hit by one-off one off costs Operating revenues Q4-11 Q4-10 Change and production loss due to Borregaard Chemicals 971 967 0% planned maintenance halt EBITA Q4-11 Q4-10 Change • Strong performance for Borregaard Chemicals 80 85 -6% spe
Slide 20: Hydro Power: High production – low prices
Hydro Power High production – low prices • Significant increase in production Amounts in NOK million EBITA Q4-11 Q4-10 Change compared with Q4-10 Hydro Power 87 73 19% EBITA improvement improvement, however EBITA 2011 2010 g Change • lower prices reduce contribution Hydro Power 260 177 47% • Higher
Slide 21: Jotun (42.5%) - Volume growth in 2011
Jotun (42.5%) - Volume growth in 2011 Amounts in NOK million • 11% volume growth in 2011 Jotun as of 30 as of 30 Change Aug 2011 Aug 2010 • Negative margin performance Revenues 8 784 8 044 9% due to challenging market EBIT 814 1 041 -22% conditions and high raw Profit/loss before tax 814 1 032 -21%
Slide 22: Sapa
SAPA SVEIN TORE HOLSETHER, HOLSETHER CEO SAPA 22
Slide 23: Strengthened position in soft markets
Q Strengthened Q4: g p position in soft markets • North American Profiles market overall flat • Market share gain • European Profiles and Heat Transfer markets down in Q4 vs. last year • European Building & Construction market still at low levels 23
Slide 24: Sapa Q4 results hit by weak performance in Heat Transfer
Sapa p QQ4 results hit by y weak performance in Heat Transfer • Volume growth and improved Amounts in NOK million Operating Revenues Q4-11 Q4-10 Change results for Profiles North America Sapa 7 034 7 289 -3% Profiles 5 578 5 519 1% • Weaker market for Profiles Europe Heat Transfer and Building Syste
Slide 25: Actions to improve Heat Transfer
Actions to improve p Heat Transfer defined and under implementation • Price increases implemented • Impact on results as from Q1-12 • Volume transfer from Sweden to China to leverage lower cost position • Operational improvements • Completion of cast house and cold rolling mills to increase producti
Slide 26: Profiles North America continues to strengthen its position
Profiles North America continues to strengthen its position • Continued market share gain Sapa Profiles North America EBITA margin performance • Volume up 11 000 tonnes compared with Q4 4 0% 4.0% last year (+13%) 2.9% • Footprint optimization and productivity improvement -1.7% 2009 2010 2011 26
Slide 27: Unsatisfactory profitability in Profiles Europe
Unsatisfactory y profitability p y in Profiles Europe • Market M k t driven d i volume l reduction d ti Sapa Profiles Europe EBITA margin performance • Down 9% to 96 000 tonnes compared with Q4-10 2.1% 1.9% • Strengthened European organisation • Transfer of learning and experience from the NA operat
Slide 28: Moderate growth expectations for NA, weak trend continues in Europe
Moderate g growth expectations p for NA, weak trend continues in Europe Expected Development by Geographic Region & End-Use Market 2012 vs. 2011 Distribution Industrial Com. B&C Res. B&C Transport Automotive North America 0% to 5% 0% to 5% 0% to -5% 0% to 5% 5% to 10% 5% to 10% Europe 0% to 5% 0% to
Slide 29: Extrusion levels still below long-term trend
Extrusion levels still below long-term trend Apparent Aluminium Extrusion Consumption 1985 to 2020F 3,500 ktonnes) 3,000 -12% Europe E umption (k 2,500 CAGR 1985-05 = 3.9% 2,000 Apparrent Consu 1,500 -24% North America CAGR 1985-05 = 2.7% 1,000 500 0 1985 1990 1995 2000 2005 2010 2015F 2020 North Am
Slide 30: Short-term outlook
Short-term outlook • Moderate market growth for Profiles North America, while the weak market trend in Europe is expected to continue • Q1 seasonally stronger than Q4 • Positive contribution from renegotiated contracts, however somewhat weaker demand for Heat Transfer • Improved cost base will gradu
Slide 31: Orkla Brands
ORKLA BRANDS TORKILD NORDBERG, NORDBERG CEO ORKLA BRANDS 31
Slide 32: Increased raw material prices offset - weak December volumes
Increased raw material p prices offset - weak December volumes EBITA Rolling 12 months Amounts in NOK million 3,000 2,800 2,600 2,400 2,200 2 000 2,000 1,800 200 0 Q3- Q4- Q1- Q2- Q3- Q3- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4-
Slide 33: Soft markets in Q4
Soft markets in Q4 Amounts in NOK million • Underlying top top-line line growth of 1%, Operating revenues Q4-11 Q4-10 Change related to price increases • Weak December sales in Orkla Brands 6 869 6 980 -2% Orkla Foods Nordic 2 650 2 719 -3% the Nordics Orkla Brands Nordic 2 133 2 176 -2% 2% Orkla Br
Slide 34: High raw material level in 2011 – handled well
High g raw material level in 2011 – handled well 260 • International price levels 240 (FAO) have come down 220 slightly from record levels in Q1 2011, but... 200 FAO price index • ...significant g increase in 180 raw material prices in 2011 compared with 2010 160 140 • Some important raw materials f
Slide 35: Orkla Brands Russia improving
Orkla Brands Russia improving Q4 Q 2011 • Best quarter since the acquisition • Successful merger of SladCo and Krupskaya • Sales growth of 6% • Continuing portfolio upgrade • 11% growth in national • Market shares and distribution retail chains improved d • 1/3 of sales in national retail chains (up
Slide 36: Growth in India
Delhi G Growth th iin India I di Growth Add-ons / Organic Greenfield acquisitions Mumbai • Plan to expand p MTR into neighbouring g g states Andhra Pradesh and Tamil Nadu Reinvest MTR profit in • Andhra advertising & promotion Karnataka Pradesh MTR • Acquired in 2007 • Annual top line growth of ~20%
Slide 37: Examples of innovations in 2011
Examples of innovations in 2011 37
Slide 38: Examples of innovations in Q1 2012
E Examples l off innovations i ti in i Q1 2012 38
Slide 39: Short-term outlook
Short-term outlook • Market conditions still challenging • Volatile raw material prices going forward • Overall modest cost increase expected • Contract production at lower levels than in 2011 Key enablers • Our strong O t positions iti iin a resilient ili t NNordic di market k t offer ff more stabi
Slide 40: Q&A
Q&A • Bjørn M. Wiggen, CEO • Terje Andersen, CFO • Torkild Nordberg, g, CEO Orkla Brands • Svein Tore Holsether, CEO Sapa
Slide 41: Appendix
APPENDIX pe Developing people — creating value (33 O R IK L A
Slide 42: EBITA per segment
EBITA per segment Amounts in NOK million O Operating i profit fi - EBITA 20 2011 20 0 2010 Q Q4-11 Q Q4-10 0 Orkla Group 4041 3944 1 052 1 322 O kl Brands Orkla B d 2784 2967 876 910 Orkla Foods Nordic 1082 1115 357 353 Orkla Brands Nordic 1464 1544 361 411 Orkla Brands International 8 40 87 55 Orkl
Slide 43: Income statement
Income statement Amounts in NOK million Q4 2011 Q4 2010 1.1.-31.12 1.1. 31.12 1.1.-31.12 1.1. 31.12 2011 2010 Operating revenues 15 216 15 884 61 009 57 338 Operating expenses -13 706 -14 094 -55 107 -51 582 Depreciation and write-down property, plant and equipment - 458 - 468 -1 861 -1 812 Amortisa
Slide 44: Cash flow as of 31 Dec 2011
Cash flow as of 31 Dec 2011 Amounts in NOK million 2011 2010 Cash flow Industial Activities: Operating profit 3 023 2 940 Amortisation, depreciations and impairment charg 2 088 2 503 Changes in net working capital, etc. -1 094 -1 462 Net replacement expenditure -1 557 -1 512 Cash flow from operation
Slide 45: Balance sheet as of 31 Dec 2011
Balance sheet as of 31 Dec 2011 Amounts in NOK million 31.12.2012 31.12.2010 Intangible assets 12 801 12 960 Property, plant and equipment 18 058 17 730 Financial assets 5 682 10 985 Non-Current assets 36 541 41 675 Assets held for sale/discontinued operations 391 13 891 Inventories 8 047 7 102 Rece
Slide 46: Significant sales from the Share Portfolio in 2011
Significant sales from the Share Portfolio in 2011 • Net sales of NOK 4.5 billion in 2011 Investment portfolio OSEBX MSCI Nordic S&P 500 • Market value of the Share Portfolio 19.5% NOK 5.5 billion at year end 16.3% 14.1% 13.1% • 89% off the h portfolio f l is invested d in the Nordic region and 77%
Slide 47: Largest holdings in the Share Portfolio as of 31 Dec 2011
Largest holdings in the Share Portfolio as of 31 Dec 2011 A Amounts t in i NOK million illi Principal holdings Industry Market value Share of portfolio Share of (%) equity (%) Amer Sports Consumer Goods 447 8% 5.3 % Tikkurila Oyj Materials 314 6% 7.2 % Kongsberg Gruppen Industry 304 5% 2.2 % Ekornes
Slide 48: REC – Q4 and 2011 reporting
REC – Q4 and 2011 reporting - Orkla’s holding: 39.7% Amounts in NOK million Amounts in NOK million REC Q4 11 Q4-11 Q4 10 Q4-10 Ch Change REC 2011 2010 Change Ch Revenues 2 865 4 874 -41% Revenues 13 366 13 776 -3% EBITDA 178 1 836 EBITDA 2 867 3 532 -19% EBIT* * -2 738 1 134 EBIT* * -9 508 1 018 Pro
Slide 49: Currency translation effects
Currency translation effects Amounts ou ts in NOK O million o Revenues Q4-11 YTD Q4-11 Orkla Brands -172 - 188 Sapa -244 244 -1 1 192 Borregaard -17 - 57 Total -433 -1 437 EBITA Q4-11 Q4 11 YTD Q4 Q4-11 11 Orkla Brands -19 -8 Sapa -3 -57 Borregaard -4 4 -8 8 Total -26 -73 49
Slide 50: Financial calendar
Financial calendar • 19 April 2012 - Annual General Meeting • 20 April 2012 - Share quoted ex-dividend* • 3 May 2012 - Dividend payment payment* • 3 May 2012 - First quarter results 2012 • 20 July 2012 - Second quarter results 2012 • 31 October 2012 - Third quarter results 2012 * If the dividend pro
Slide 51: Financial items
FINANCIAL ITEMS Developing people — creating value (33 O R IK L A
Slide 52: Net financial items
Net financial items Amounts in NOK million Q4-11 Q4-10 Full year 2011 Net interest expenses -99 -54 -378 Currency gain/loss -11 2 -34 Other financial items, net -14 - 24 - 34 Net financial items -124 -76 -446 52
Slide 53: Significant credit facilities available
Significant credit facilities available Amounts in NOK million Average maturity 8.000 4.1 years 7.000 6.000 Unutilised credit facilities 5.000 Drawn amounts 4.000 3.000 2.000 1.000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 53
Slide 54: Net gearing 0.31 as of Q4-11
Net gearing 0.31 as of Q4-11 Amounts in NOK billion 60 1,4 50 12 1,2 1,0 40 0,8 30 0,6 20 0,4 10 0,2 0 0,0 -10 -0,2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Equity Net interest-bearing liabilities Net gearing 54
Slide 55: Funding sources
Funding sources Banks 20% 5.6 Unutilised credit 15.1 facilities 53% 7.9 Bonds and CP 28% Amounts in NOK billion 55
Slide 56: Orkla
{E} ORKLA