Orkla Asa · OSL:ORK
Orkla Asa — Q1 2019 Earnings Presentation
28 slides from Orkla Asa's earnings presentation, May 7, 2019
Slide 1: First quarter results 2019
1 First quarter results 2019 7 May 2019 Peter A. Ruzicka, 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 Q1-19: Strong EBIT growth and margin improvement
Highlights Q1-19: Strong EBIT growth and margin improvement • Underlying EBIT +9% in BCG*, margin improvement picking up (R12M +0.4%p) • Broad based organic sales progress for Foods and Confectionery & Snacks • Earnings in Care in line with last year, but top line decline • Solid result for Food Ing
Slide 4: Broad based growth across Foods and Confectionery & Snacks
Branded Consumer Goods Q1-19: Broad based growth across Foods and Confectionery & Snacks Organic growth for Branded Consumer Goods Organic growth Q1-19 by business area 2.8% Orkla Foods 1.7% 1.8% 1.6% Orkla Confectionery 3.6% & Snacks 0.9% 0.7% Orkla Care -3.0% 0.4% Orkla Food 2014 2015 2016 2017 20
Slide 5: Recent strategic acquisitions
Recent strategic acquisitions Our growth priorities Recent acquisitions in line with strategy Sweden AB 5
Slide 6: Financial performance
6 Financial performance Jens Bjørn Staff, CFO
Slide 7: Mix of organic and structural growth, limited FX effects
Branded Consumer Goods Q1-19: Mix of organic and structural growth, limited FX effects BCG revenue, Q1’18 –> Q1’19 (MNOK) 1.6% 9,687 0.9% -0.4% 9,497 Q1-18 Organic growth M&A FX Q1-19 7 Amounts in NOK million
Slide 8: Strong EBIT growth and margin improvement
Branded Consumer Goods incl. HQ: Strong EBIT growth and margin improvement ∆ Q1 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin Underlying margin growth: +0.4pp 9.3% 0.8% 925 843 -0.5% 11.2% 11.0% -0.2pp Q1-18 Underlying FX M&A Q1-19 R12M Variable Other M&A R12M growth 1 Q1-18 costs costs and FX Q1-
Slide 9: Orkla Foods: Broad top and bottom-line growth
Orkla Foods Broad top and bottom-line growth Q1-19 Q1-18 Revenues 3 889 3 852 • Good organic growth across most markets Organic growth 1.7% • Profit growth from increased sales and EBIT (adj.) 430 400 cost improvements EBIT(adj.) growth 7.5% • Price increases compensate for continued negative effect
Slide 10: Orkla Confectionery & Snacks: Good sales and margin development
Orkla Confectionery & Snacks Good sales and margin development Q1-19 Q1-18 Revenues 1,502 1,453 • Organic growth in largely driven by Norway, Denmark and Finland Organic growth 3.6% • Sales increase in Norway helped by re- EBIT (adj.) 211 187 stocking post sugar tax reversal EBIT(adj.) growth 12.8%
Slide 11: Orkla Care: Stable profit performance in challenging markets
Orkla Care Stable profit performance in challenging markets Q1-19 Q1-18 Revenues 2 071 2 076 • Challenging market development related to channel leakage away from grocery Organic growth -3.0% retail, mainly in Norway EBIT (adj.) 299 298 • Turnaround in UK and Poland on track EBIT(adj.) growth 0.3% •
Slide 12: Orkla Food Ingredients: EBIT (adj) +35%
Orkla Food Ingredients EBIT (adj) +35% driven by good ice cream ingredients sales and improved product mix Q1-19 Q1-18 Revenues 2 291 2 182 • Organic growth with strong EBIT(adj.) growth and improved margin Organic growth 1.3% • Strong growth for the ice cream EBIT (adj.) 77 57 business EBIT(adj.) g
Slide 13: Investments - Kotipizza
Investments - Kotipizza Continued good growth for Kotipizza NOK million Q1-19 Q1-18 Net sales 159 140 • Continued strong growth in R12M chain sales** with 18% growth (7% like for like) Change vs LY 14% • EBIT (adj.) negatively affected by timing of EBIT (adj.) 13.4 13.1 marketing campaigns Change vs
Slide 14: Investments - Jotun (42.6%)
Investments - Jotun (42.6%) A strong start to the year with continued growth and improving margins Q1-19 Q1-18 Operating income 4,563 4,117 • Continued growth in operating revenues Change vs LY 11% • Strong improvement in Protective Coatings and good growth in Decorative Paints Operating profit 580
Slide 15: Adj. EPS +21% following improvements in like-for-like earnings
Adj. EPS +21% following improvements in both like-for-like earnings from consolidated businesses and contribution from associates Key figures Q1-19 Q1-18 ∆ Q1 Operating revenues 10,176 9,711 +5% EBIT (adj.) BCG 1,017 942 +8% EBIT (adj.) HQ -92 -99 EBIT (adj.) BCG incl. HQ 925 843 +10% EBIT (adj.) Or
Slide 16: Closing remarks
1 6 Closing remarks Peter A. Ruzicka, President & CEO
Slide 17: Strong start to the year, but challenging markets in Care
Strong start to the year, but challenging markets in Care Key takeaways • Underlying EBIT +9% in BCG and margin improvement (R12 +0.4%p) • Broad based organic sales progress in Foods and Confectionery & Snacks • Earnings in Care in line with last year, but top line decline • Solid result in Food Ing
Slide 18: We continue to grow in on-trend categories through strong local brands
We continue to grow in on-trend categories through strong local brands Captain Kombucha Naturli’ vegan chicken Grandiosa Take Away A fermented tea-based health Meat-free alternatives based on Improved recipe and new design drink – without preservatives or peas – packaging made from - fantastic consu
Slide 19: Q&A
1 9 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 20: Appendices
‘Orkla Appendices
Slide 21: 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 22: 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. If other items of a special nature occur under the company’s operating profit or loss, adjustments will also be made fo
Slide 23: Orkla Investments
Orkla Investments Record-high result for Hydro Power, a strong start to the year for Jotun Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/KWh): (NOK million): Q1: 476 (482) Q1: 45.7 (37.2) Q1: 73 (59) Financial Investments Fully consolidat
Slide 24: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) Net gearing 7,805 8,056 0.23 0.24 5,608 0.16 3,037 0.09 3,964 0.12 14 0.00 2015 2016 2017 2018 Q1’19 2015 2016 2017 2018 Q1-19 Leasing debt Ex leasing debt Net gearing Net gearing ex leasing debt 24
Slide 25: Changes in net debt Q1-19
Changes in net debt Q1-19 5,608 4 1,447 972 158 430 1,820 3,037 Net debt 31 Expansion Net paid to Cash flow Tax, FX effects Interest Net debt 31 December and sale of shareholders from dividends bearing debt March 2019 2018 companies & share operations received, net following purchases financial & IF
Slide 26: Debt maturity profile
Debt maturity profile Average maturity 3.9 years 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2019 2020 2021 2022 2023 2024 2025- Unutilised credit facilities Drawn amounts (ex leasing) 26 Amounts in NOK million
Slide 27: Funding sources
Funding sources 1.5 Unutilised credit facilities Banks 5.7 Bonds and CP 3.5 Cash, cash equivalents and interest bearing assets 2.0 27 Amounts in NOK billion
Slide 28: Your friend in everyday life