Orkla Asa · OSL:ORK
Orkla Asa — Q1 2021 Earnings Presentation
33 slides from Orkla Asa's earnings presentation, Apr 29, 2021
Slide 1: First quarter results 2021
First quarter results 2021 29 April 2021 Jaan Ivar Semlitsch, 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 for the quarter
Highlights for the quarter PHOTO • Impact of Covid-19 still significant • Organic growth and margin improvement for Branded Consumer Goods • Indication of recovery for Orkla Food Ingredients • Important delivery on structural agenda 3
Slide 4: Solid first quarter against strong comparables
Solid first quarter against strong comparables • Group EBIT(adj.)* growth of 13% • Strong performance for Branded Consumer Goods, Jotun and Hydro Power • Adjusted EPS* increased by +21% to NOK 1.27 in Q1 4 *All Alternative Performance Measures (APM) are presented in the appendix
Slide 5: Three strategic initiatives to boost growth going forward
Three strategic initiatives to boost growth going forward Plant based Out of Home Health • Orkla Alternative Proteins • Follow the consumer • Develop health concepts • Revenue of BNOK 3 by 2025 • Convenient solutions • New sales channels • Category and market growth • B2B and D2C • Digital presence
Slide 6: Several M&A transactions in line with strategy announced and closed during Q1
Several M&A transactions in line with strategy announced and closed during Q1 with a total value of approx. BNOK 4.9 Transactions closed during Q1 Transaction announced during Q1 • Revenue of BNOK 1.1 • Revenue of MNOK 862 • Building on strong local position • Subscription-based health and in Southe
Slide 7: Maintain M&A strategy going forward, focus on three dimensions
Maintain M&A strategy going forward, focus on three dimensions; Consumer trends in Increase exposure in Geographic footprint core and adjacent new sales channels in home markets and categories and business models adjacent geographies 7
Slide 8: Financial performance
Financial performance Harald Ullevoldsæter, CFO
Slide 9: Adj. EPS +21% from profit growth in Branded Consumer Goods and good contribution from Jotun
Adj. EPS +21% from profit growth in Branded Consumer Goods and good contribution from Jotun Key figures Q1-21 Q1-20 ∆ Q1 Operating revenues BCG 11,276 11,316 -0.4% EBIT (adj.) BCG 1,288 1,204 +7% EBIT (adj.) HQ -80 -101 EBIT (adj.) BCG incl. HQ 1,208 1,103 +9.5% EBIT (adj.) Orkla Industrial & Financ
Slide 10: Positive cash flow from operations in the quarter
Positive cash flow from operations in the quarter Cash flow from operations per 31.3 (pre-tax) YTD Q1-21 YTD Q1-20 Orkla Branded Consumer Goods (BCG, incl. HQ) EBIT (adj.) 1,208 1,103 Depreciation 441 430 Change in net working capital -515 -122 Net replacement investments -652 -601 Total BCG cash fr
Slide 11: Continued strong balance sheet and financial flexibility after completed M&A transactions
Continued strong balance sheet and financial flexibility after completed M&A transactions in the period = 1.0x 7,848 EBITDA 1,819 573 6,380 406 447 263 Net debt 31 Cash flow Taxes & Dividends Expansion FX effects Net debt 31 December from financial and share capex and March 2021 2020 operations item
Slide 12: Branded Consumer Goods
A ‘Orkla Branded Consumer Goods
Slide 13: Volatile development for Branded Consumer Goods through 2020
Branded Consumer Goods Volatile development for Branded Consumer Goods through 2020 2019 organic growth full year 1.3% 2020 organic growth full year 1.6% YTD 2021 5.4% 3.8% 1.9% 1.5% 1.3% 0.9% 1.0% 0.5% -3.8% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 13
Slide 14: Organic top line growth on top of a strong Q1 2020
Branded Consumer Goods Organic top line growth on top of a strong Q1 2020 BCG revenue, Q1-20 → Q1-21 (MNOK) 0.5% 11,316 0.5% 11,276 -1.4% Q1-20 Organic growth FX M&A Q1-21 14 Amounts in NOK million
Slide 15: Organic growth of 0.5% with significant variations between business areas
Branded Consumer Goods Organic growth of 0.5% with significant variations between business areas in both Q1’20 and Q1’21 Organic growth for Branded Consumer Goods Organic growth Q1-21 by business area Foods -4.7% 5.4% Confectionery 6.9% & Snacks Care 4.2% 1.6% 1.6% 1.3% Food 0.4% 0.5% -2.0% Ingredie
Slide 16: Underlying EBIT (adj) growth driven by Confectionery & Snacks and Consumer Investments
Branded Consumer Goods incl. HQ Underlying EBIT (adj) growth driven by Confectionery & Snacks and Consumer Investments ∆ Q1 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin 9.7% 2.1% 1,208 0.6%-p 0.1%-p 11.9% -2.4% 11.2% 1,103 Q1-20 Underlying FX M&A Q1-21 R12M Q1-20 Underlying M&A and FX R12M Q1-21
Slide 17: Orkla Foods: Organic decline and lower profit facing a very strong Q1-20
Orkla Foods Organic decline and lower profit facing a very strong Q1-20 Q1-21 Q1-20 Revenues 4,299 4,618 • Organic sales decline in Q1 for most markets except Norway and India Organic growth -4.7% 10.8% • Decline driven by last year’s positive Covid-19 stockpiling effects in March EBIT (adj.) 507 53
Slide 18: Orkla Confectionery & Snacks: High market growth and positive phasing of sales
Orkla Confectionery & Snacks High market growth and positive phasing of sales between quarters Q1-21 Q1-20 • Good market growth in the Nordic grocery Revenues 1,701 1,602 channel Organic growth 6.9% 2.1% • Sales growth positively affected by timing of Easter and re-stocking in trade due to removal o
Slide 19: Orkla Care: Good revenue growth on top of strong comparables
Orkla Care Good revenue growth on top of strong comparables Q1-21 Q1-20 Revenues 1,814 1,688 • Strong growth in health categories and digital sales for HSNG Organic growth 4.2% 11.1% • Still challenging in wound care segment due to prolonged Covid-19 restrictions EBIT (adj.) 296 297 EBIT (adj.) grow
Slide 20: Orkla Food Ingredients: Covid-19 restrictions in Out of Home hampered growth
Orkla Food Ingredients Covid-19 restrictions in Out of Home segment continued to hamper growth at beginning of 2021 Q1-21 Q1-20 • Negative organic growth in quarter related to Revenues 2,546 2,574 continued Covid-19 restrictions in several Organic growth -2.0% -1.3% markets negatively impacting Out
Slide 21: Orkla Consumer Investments: Strong growth in painting tools and pizza restaurant sales
Orkla Consumer Investments Continued strong growth in painting tools and pizza restaurant sales Q1-21 Q1-20 Revenues 1,023 927 • Sales growth across markets for painting tools as Organic growth 15.4% -3.9% home improvement activity remains high • Resilient Kotipizza franchise with restaurant sales E
Slide 22: Continued growth and increased profitability for Jotun
Orkla Industrial & Financial Investments - Jotun (42.6%) Continued growth and increased profitability for Jotun Jotun 100% basis Q1-21 • Sales growth in Decorative, Protective and Revenues 5,485 Powder segments. Continued slowdown in Marine Coatings Revenue growth 8% • Earnings growth driven by incr
Slide 23: Closing remarks
‘Orkla Closing remarks
Slide 24: Continued optimism going forward
Continued optimism going forward Summing up Q1 Outlook • Growth on strong comparables • Still uncertainty • Jotun continues strong performance • Continue the focus on • Several M&A transactions completed – Profitable organic growth agenda – M&A agenda 24
Slide 25: Q&A
Q&A Jaan Ivar Semlitsch, President & CEO Harald Ullevoldsæter, CFO
Slide 26: Save the date: Orkla Capital Markets Day
Save the date Orkla Capital Markets Day 23 November 2021
Slide 27: Appendices
Appendices
Slide 28: 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 calculat
Slide 29: 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 effective tax rate for OIE is lower than the Group’s tax rate in bot
Slide 30: Significant increase in power prices partly offset by lower volume in Hydro Power
Orkla Industrial & Financial Investments Significant increase in power prices partly offset by lower volume in Hydro Power Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/KWh): (NOK million): Q1: 477 (645) Q1: 48,9 (15,3) Q1: 86 (39) Financ
Slide 31: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) NIBD / R12 EBITDA 7,848 1,0x 1,0x 0,9x 6,551 6,380 0,5x 3,037 6,369 4,895 4,893 14 0,0x 2017 2018 2019 2020 Q1 2021 2017 2018 2019 2020 Q1 2021 Leasing debt Ex leasing debt 31 Amounts in NOK million
Slide 32: Funding sources and maturity profile
Funding sources and maturity profile Debt maturity → average maturity 3.5 years Funding sources (in BNOK) MNOK 4,500 1.5 4,000 3,500 3.3 6.3 3,000 2,500 2,000 4.6 1,500 1,000 Unutilised credit facilities 500 Banks 0 Bonds and CP 2021 2022 2023 2024 2025 2026- Cash, cash equivalents and interest bear
Slide 33: Slide 33