Slide 1: Second quarter results 2012
Second quarter results 2012 Oslo, 20 July 2012 ÅGE KORSVOLD, PRESIDENT & CEO
Slide 2: Agenda
Agenda Åge Korsvold, President & CEO • Strategy and highlights Q2-2012 Terje Andersen, CFO • Financial performance Q2-2012 • Branded Consumer Goods • Borregaard and Hydro Power Svein Tore Holsether, CEO Sapa • Sapa 2
Slide 3: Implementation of Orkla's strategy continues
Implementation of Orkla’s strategy continues • New organisational structure and Group Executive Board to support Orkla’s strategic direction • Acquisition of Jordan • In line with Orkla’s strategy • Borregaard - Divestment process on track • Reduction of the Share Portfolio continues • Orkla’s owner
Slide 4: Highlights Q2-12
Highlights Q2-12 • Stable performance for Branded Consumer Goods in the Nordic region. Loss of contract production H2-11 • Further restructuring to strengthen the Russian operations • Continued weak European markets for Sapa • Satisfactory development for Profiles North America and Heat Transfer • F
Slide 5: Acquisition of Jordan - In line with Orkla's growth strategy
Acquisition of Jordan -In line with Orkla’s growth strategy • Purchase price (EV): NOK 1,180 million • Nordic market leader in toothbrushes, dental sticks, dental floss and painting tools • Sales 2011: NOK 900 million EBITDA 2011: NOK 120 million • Synergy potential 5
Slide 6: Q2-12 Results
Q2-12 RESULTS TERJE ANDERSEN, CFO 6
Slide 7: Key figures Q2-12
Key figures Q2-12 Q2-12 Q2-11 Change H1-12 H1-11 Change Amounts in NOK million Operating revenues 15 145 15 897 -5 % 29 937 30 897 -3 % EBITA 992 1 079 -8 % 1 880 1 865 1% Amortisation intangibles -11 -7 -22 -14 Other income and expenses -216 -369 -256 -435 EBIT 765 703 1 602 1 416 Profit/loss from
Slide 8: Strong financial flexibility and expansion capacity
Strong financial flexibility and expansion capacity Net interest-bearing liabilities (NOKm) Equity ratio (%) 27 424 53.6 51.7 51.8 51.0 19 848 47.7 19 652 10 645 10 693 2008 2009 2010 2011 as of 2008 2009 2010 2011 as of Q2-12 Q2-12 8
Slide 9: Branded Consumer Goods
BRANDED CONSUMER GOODS 7 Developing people — creating value (93 O R K L A
Slide 10: Stable performance for Branded Consumer Goods
Stable performance for Branded Consumer Goods • Stable Nordic markets • Overall market shares in line with last year • Profitability affected by timing of Easter and loss of contract production • Raw material prices still high 10
Slide 11: Orkla Foods Nordic
Orkla Foods Nordic Underlying change in revenues (%) 0.8 • Market shares in line with last year • Loss of contract production hit top-line growth by 2.5%-points in the first half -0.3 -0.9 • Underlying EBITA in line with last year when adjusted for timing of Easter H1 H2 • Continued top-line and pro
Slide 12: Orkla Brands Nordic
Orkla Brands Nordic Underlying change in revenues (%) 1.2 • Market shares on par with last year • Volume growth in the retail sector, more 0.2 challenging in B2B • Loss of contract production for Lilleborg Profesjonell -0.6 • Continued positive development for H1 H2 Chips Group EBITA in NOK million
Slide 13: Orkla Brands International
Orkla Brands International Underlying change in revenues (%) 10.6 Russia 7.3 7.5 • Further restructuring to strengthen cost position • Reduction from 4 to 3 factories • Moving towards national distribution • Increased advertising investments H1 H2 EBITA in NOK million India 87 • 23% sales growth in
Slide 14: Orkla Food Ingredients
Orkla Food Ingredients Underlying change in revenues (%) 9.8 • Satisfactory performance in challenging 8.6 markets • Underlying profit growth of 8% 2.6 in the quarter • Good development especially in Norway and Sweden H1 H2 • Prices for main raw materials stabilised EBITA in NOK million • Structural
Slide 15: Examples of innovations H1-12
Examples of innovations H1-12 15
Slide 16: Borregaard and Hydro Power
BORREGAARD AND HYDRO POWER 16
Slide 17: Strong trend continued for Borregaard
Strong trend continued for Borregaard EBITA Rolling 12 months Amounts in NOK million 550 500 450 400 350 300 250 200 150 100 50 0 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 17
Slide 18: Hydro Power – Significant reduction in prices - Normal production
Hydro Power – Significant reduction in prices - Normal production Production for Hydro Power (GWh) Spot prices (NordPool) (NOK/MWh) 639 675 664 518 409 292 279 266 215 Q2-11 Normal Q2-12 production Q2 Q1 Q2 Q3 Q4 2011 2012 18 18
Slide 19: Sapa
SAPA SVEIN TORE HOLSETHER, CEO SAPA 19
Slide 20: Q2 performance impacted by weak European market
Q2 performance impacted by weak European market • Positive development in Heat Transfer although affected by weak Amounts in NOK million Operating Revenues Q2-12 Q2-11 Change European market Sapa 7 963 8 307 -4 % Profiles 6 272 6 656 -6 % • Continued improvement in North Heat Transfer and Building S
Slide 21: Actions taken in Heat Transfer generate positive development in Q2
Actions taken in Heat Transfer generate positive development in Q2 • Improved performance in Finspång and Sapa Heat Transfer Shanghai EBITA margin performance • Price increases implemented 9% 8% • Volume transfer from Sweden to 7% 8% 7% China • Cost optimisation and productivity improvements in prog
Slide 22: Improved trend in Profiles North America continues
Improved trend in Profiles North America continues • Favourable market development Sapa Profiles North America EBITA margin in % • Volume up 10% compared with Q2-11 5.0 • Strengthened position 4.0 2.9 • Continued operational improvements and production optimisation -1.7 2009 2010 2011 H1-12 22
Slide 23: Unsatisfactory profitability for Profiles Europe
Unsatisfactory profitability for Profiles Europe • Weak European markets Sapa Profiles Europe EBITA margin in % • Market-driven volume reduction of 10% compared with Q2-11 • Price pressure in standard 2.1 2.2 segments 1.9 • European restructuring on track but impact not enough to mitigate weak marke
Slide 24: North American market growth, further weakening in Europe
North American market growth, further weakening 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 -5% -5% to -
Slide 25: Short-term outlook
Short-term outlook • Continued market growth in North America but at a slower pace • Q3 seasonally weaker for all Business segments, especially in Europe • Heat transfer markets expected to be flat overall • Existing restructuring programmes on track, further restructuring needed 25
Slide 26: Q&A
Q&A • Åge Korsvold, President & CEO • Terje Andersen, CFO • Svein Tore Holsether, CEO Sapa
Slide 27: Appendix
APPENDIX of Developing people — creating value (93 O R K L A
Slide 28: FAO Food Price Index
FAO Food Price Index 240 220 200 180 160 140 120 100 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 28
Slide 29: Largest holdings in the Share Portfolio as of June 2012
Largest holdings in the Share Portfolio as of 30 June 2012 Amounts in NOK million Principal holdings Industry * Market value Share of Share of equity portfolio (%) (%) Tikkurila Oyj Materials 294 8% 6,6 % Kongsberg Gruppen Industry 227 6% 1,7 % Amer Sports Consumer Goods 222 6% 2,7 % Pharmaq Holding
Slide 30: Operating revenues and EBITA per segment
Operating revenues and EBITA per segment Amounts in NOK million Amounts in NOK million Operating revenues Q2-12 Q2-11 Change Operating profit - EBITA Q2-12 Q2-11 Change Orkla Group 15 145 15 897 -5 % Orkla Group 992 1 079 -8 % Branded Consumer Goods 5 662 6 008 -6 % Branded Consumer Goods 587 626 -6
Slide 31: Cash flow as of June 2012
Cash flow as of 30 June 2012 Amounts in NOK million Q2-12 Q2-11 2011 Cash flow Industial Activities: Operating profit 1 477 1 457 3 023 Amortisation, depreciations and impairment charges 967 1 051 2 088 Changes in net working capital, etc. - 888 -2 160 -1 094 Net replacement expenditure - 861 - 665
Slide 32: Balance sheet as of June 2012
Balance sheet as of 30 June 2012 Amounts in NOK million 30.6.2012 31.12.2011 Intangible assets 12 616 12 801 Property, plant and equipment 18 142 18 058 Financial assets 4 683 5 682 Non-Current assets 35 441 36 541 Assets in discontinued operations 0 391 Inventories 7 936 8 047 Receivables 11 189 10
Slide 33: Currency translation effects
Currency translation effects Amounts in NOK million Revenues Q2-12 H1-12 Orkla Foods Nordic -35 -72 Orkla Brands Nordic -25 -51 Orkla Brands International -22 -40 Orkla Food Ingredients -42 -84 Sapa 169 97 Borregaard -5 -12 Total 40 -162 EBITA Q2-12 H1-12 Orkla Foods Nordic -4 -7 Orkla Brands Nordic
Slide 34: Financial items
FINANCIAL ITEMS «| Developing people — creating value (93 O R K L A
Slide 35: Net financial items
Net financial items Amounts in NOK million Q2-12 Q2-11 Full year 2011 Net interest expenses -109 -99 -378 Currency gain/loss -11 -1 -34 Other financial items, net -11 -7 - 34 Net financial items -131 -107 -446 35
Slide 36: Debt maturity profile, Orkla Group
Debt maturity profile, Orkla Group NOK million 9 000 8 000 7 000 Average maturity 6 000 3.6 years 5 000 4 000 3 000 2 000 1 000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Drawn amounts Unutilised credit facilities Gross Interest-bearing liabilities and Unutilised credit facilities, ref. Not
Slide 37: Net gearing 0.33 as of Q2-12
Net gearing 0.33 as of Q2-12 60 1.40 54 1.20 48 1.00 42 36 0.80 30 0.60 24 18 0.40 12 0.20 6 - 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q2-2012 -6 -0.20 Equity Net interest-bearing liabilities Net gearing 37
Slide 38: Funding sources
Funding sources Banks Unutilised credit 8.5 facilities 10.5 14.2 13.1 7.9 9.3 5.8 Bonds and CP Cash, Cash equivalents and Figures in NOK billion Interest Bearing Assets 38
Slide 39: {E} ORKLA
{E} ORKLA