Orkla Asa · OSL:ORK
Orkla Asa — Investor Day (September 2013)
32 slides from Orkla Asa's investor day presentation, Sep 26, 2013
Slide 1: Orkla Investor Day
Orkla Investor Day London - 26 September 2013
Slide 2: Welcome to Orkla's Investor Day
Welcome to Orkla’s Investor Day Speakers Åge Korsvold President & CEO Atle Vidar Johansen Orkla ASA EVP & CEO Orkla Foods Bente Brevik Christer Åberg CEO Orkla EVP & CEO Orkla Foods Norge Confectionery & Snacks Stig Ebert Nilssen Tine Hammernes Leopold EVP & CEO Orkla Group Commercial Director & Hom
Slide 3: Agenda
Agenda 13.00 Orkla Group Åge Korsvold, President & CEO Orkla ASA 14.00 Orkla Foods Atle Vidar Johansen, EVP & CEO Orkla Foods Orkla Foods Norge Bente Brevik, CEO Orkla Foods Norge 15.00 - 15.30 Break 15.30 Orkla Confectionery & Snacks Christer Åberg, EVP & CEO Orkla Confectionery & Snacks 16.10 Orkl
Slide 4: Presentations
Presentations Transforming Orkla into a Branded Consumer Goods business Page 5 Orkla Foods Page 33 Orkla Confectionery & Snacks Page 75 Orkla Home & Personal Page 94 Appendices Financial Performance Page 136 4
Slide 5: Transforming into a Branded Consumer Goods business
Transforming into a Branded Consumer Goods business Åge Korsvold – President and CEO
Slide 6: Agenda
Agenda 1. Introduction 2. Market environment 3. How to drive value 4. Strategic priorities and financial targets
Slide 7: Business overview
1. INTRODUCTION Business overview CORE: NON-CORE Branded Consumer Goods (BCG) • Orkla Foods • Sapa JV (50%) • Orkla Confectionery & Snacks • Gränges (Sapa Heat Transfer) • Orkla Home & Personal • Hydro power • Orkla Food Ingredients • Real estate • Orkla International • Financial assets Associated c
Slide 8: Financial performance BCG
1. INTRODUCTION Financial performance BCG Rolling 12 months EBIT (adjusted) EBIT (adjusted) margin1 12.5% 3,300 12.0% 11.8% 11.4% 11.4% 11.0% 3,000 2,700 2,400 2,100 1,800 1,500 Q4 Q4 Q4 Q4 Q4 2008 2009 2010 2011 2012 RTM H1 2008 2009 2010 2011 2012 2013 8 1 Adjusted for other income and expenses
Slide 9: Orkla has sustainable competitive advantages in BCG
1. INTRODUCTION Orkla has sustainable competitive advantages in BCG Strong local brands Superior local consumer insight, skills and capacity Local scale and complete local value chains Ability to attract and develop the best leaders Attractive buyer of local businesses Strong position in
Slide 10: Transforming Orkla is well under way
1. INTRODUCTION Transforming Orkla is well under way Achievements Strategic priorities (2012-2013) (2013-2016) • New vision and strategy • Reducing complexity Driving value • Unified branding • Extracting cost synergies and in BCG improve cash flow • New structure and management team • Driving organ
Slide 11: Goals
1. INTRODUCTION Goals We will complete ongoing and future integration processes successfully We will achieve best-in-class margins and cash flows We will generate organic growth, gain market share and drive category growth We will have the best leaders that ”live” our values and winning beha
Slide 12: Orkla is the #1 BCG company in the Nordics
2. MARKET ENVIRONMENT Orkla is the #1 BCG company in the Nordics… Estimated revenues in the Nordics ILLUSTRATIVE Local focus Global focus Nordic revenue 12
Slide 13: Portfolio of strong market positions
2. MARKET ENVIRONMENT …with an unprecedented portfolio of strong market positions… and opportunities to grow further Retail Market Share; RTM per July/September 2013 Examples Fabrics cleaner 81% Biscuits 51% 38% 11% Confectionery 30% 6% Food supplements 77% 35% 49% 29% Textiles (grocery) 78% 29% Sna
Slide 14: Nordics – Attractive core markets
2. MARKET ENVIRONMENT Nordics – Attractive core markets GDP growing at a stronger/faster rate than Europe… … and consumer spending in Orkla’s core categories is high Real GDP; annual change in % Norway Average monthly consumer spending on food, grocery & Sweden personal care; 2013 Denmark Finland €
Slide 15: Nordic retail markets – consolidated
2. MARKET ENVIRONMENT Nordic retail markets – consolidated Others Bergendahls Others Ica 4% 4% 6% 11% NorgesGruppen Axfood 39% 19% 51% Ica 23% Rema 1000 20% 22% Coop Coop Rema 1000 Lidl Others Others 8% 5% 7% 8% Suomen Lähikauppa SuperGros 8% Coop 36% 12% 45% Coop Kesko 35% Dansk Supermarked 36% 15
Slide 16: Private label penetration
2. MARKET ENVIRONMENT Private label penetration Private Label market shares in the grocery trade 2009 2012 31% 33% 22% 24% 21% 18% 20% 17% 11% 13% Norway Sweden Denmark Finland Europe1 16 | 1 Europe – Belgium, France, Germany, Italy, Netherlands, Spain, UK; Source: AC Nielsen
Slide 17: Local scale is a reality
2. MARKET ENVIRONMENT Local scale is a reality Retail Market Share; RTM per July/September Examples Dry sauces (NO) Orkla Pizza (NO) Ketchup (NO) Private Label Textiles (NO) Other Caviar (SE) Savory pie (SE) Home care (NO) Pickles (NO) Herring and anchovis (SE) Pickles (SE) Food supplements (NO) Ket
Slide 18: Vision
3. HOW TO DRIVE VALUE Vision Improving everyday life with healthier and more enjoyable local brands 18
Slide 19: We drive value through four strategic pillars
3. HOW TO DRIVE VALUE We drive value through four strategic pillars Local Brands Customers Operations People & Innovations & Marketplace & Efficiency & Leadership The strongest brands The preferred supplier The most efficient consumer The best employees and the best innovations to drive category gro
Slide 20: Orkla has a proud history of innovation driven growth
1. Local Brands & Innovations Orkla has a proud history of innovation driven growth… Example: fish spread in Norway; revenue NOK millions 600 500 400 +405% 300 200 +106% 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20 | Source: AC Nielsen grocery
Slide 21: Leveraging our advantages, we can do much better
1. Local Brands & Innovations … by leveraging our advantages, we can do much better INNOVATION BASED ON SUPERIOR LOCAL INSIGHTS 21
Slide 22: Customers & Marketplace: point-of-purchase execution
2. Customers & Marketplace Driving growth through point-of-purchase execution Building long-term relationship with customers Largest and highest rated field sales force Improve effectiveness and efficiency through point-of-purchase excellence 22
Slide 23: Capturing value with new BCG organization
3. Operations & Efficiency Capturing value with new BCG organization responsible Orkla Orkla Home & Orkla Orkla Food Orkla Foods Confectionery Personal International Ingredients & Snacks P&L Integrating and merging companies New management teams Restructuring Reorganized and performance Drive synerg
Slide 24: Restructuring synergies of NOK 400-500 announced
3. Operations & Efficiency Restructuring synergies of NOK 400-500 announced Estimated yearly effects from restructuring synergies, NOK millions Expected 2013 Expected run-rate P&L effect end of 2013 Rieber integration 250-300 Confectionery & Snacks integration 50-70 Food Sweden integration 30-40 IT
Slide 25: Further cost improvements
3. Operations & Efficiency Further cost improvements • Optimize business support Continuous • Yearly continuous improvement of NOK ~150 million improvement • Centralize procurement spend (54% in 2014) and leverage on market procurement scale Procurement • Current base of NOK ~18 billion scale • Incr
Slide 26: Leadership and winning behaviors
4. People & Leadership Leadership and winning behaviors The right organization with the best leaders • Leadership • Performance management and incentive programs Investment in people through extensive capability program • Talent management • Orkla capability building We will have the best leaders th
Slide 27: Strategic priorities going forward
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Strategic priorities going forward • Reduce complexity Transform the BCG • Extract cost synergies and improve cash flow business • Drive organic growth • Improve skill base • Strong balance sheet and financial flexibility Add on investments • Several att
Slide 28: Financial targets
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Financial targets EBIT EBIT Organic Organic (adjusted)1 (adjusted)1 revenue revenue margin margin growth growth R12M pr Q2 2015/2016 YTD pr Q2 From 2016 Orkla Foods 13.9% > 15.0% -1.12% 2-3% Orkla Confectionery & 15.4% > 16.5% -3.6% 2-4% Snacks Orkla Hom
Slide 29: Orkla Food Ingredients
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Orkla Food Ingredients • Primarily serves the bakery industry (B2B) Customers • 20% of NSV Nordic retail • Reorganized 1H 2013 Structure – Product BUs – Nordic Sales & Distribution • Strengthen Scandinavian Core Strategy • Strengthen position in mixes an
Slide 30: BCG activities outside Nordic
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS BCG activities outside Nordic • Baltic defined as home market (Nordic) Baltic • Below critical mass East-Europe • Review strategic options • Comprehensive restructuring ongoing Russia • Review strategic options mid 2014 • MTR is value accretive India • R
Slide 31: Allocation of capital and dividend policy
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Allocation of capital and dividend policy • Grow BCG in the Nordics organically, and through add-on investments • Strong balance sheet and financial flexibility • Remain an Investment Grade company (NIBD below 2.5-3*EBITDA) • Maintain dividend at NOK 2.5
Slide 32: To sum up
To sum up How do we reduce costs and How do we grow? improve cash flows? • Realize cost restructuring synergies • Innovate based on superior local • Integrate smaller companies and insight add-ons • Driving growth through point-of- • Continuous improvements and purchase execution optimize business s