Slide 1: Third quarter results 2020
Third quarter results 2020 29 October 2020 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: Good performance in Q3, continued high level of uncertainty
Good performance in Q3, continued high level of uncertainty • Resilient performance in the quarter despite challenging environment due to the coronavirus pandemic • We deliver on our short-term priorities • Long term strategic growth and efficiency initiatives maintained • Acquisition of Eastern Con
Slide 4: Orkla doubles its size in India through the acquisition of and merger with Eastern
Orkla doubles its size in India through the acquisition of and subsequent merger with Eastern • Indian branded foods market and spice category growing at double digit rates • Orkla has strong track record in India since acquisition of MTR Foods in 2007 • MTR and Eastern are highly complementary with
Slide 5: Good growth in grocery retail, gradual recovery in Out of home eating
Highlights Q3-20 Good growth in grocery retail, gradual recovery in Out of home eating • Operating profit for Branded Consumer Goods incl. HQ improved by 15% • Strong market growth in grocery retail • Gradual recovery in Out of home eating, but still uncertainty going forward • Continued profit impr
Slide 6: Financial performance
Financial performance Harald Ullevoldsæter, CFO
Slide 7: Adj. EPS +24% from profit growth in Branded Consumer Goods and Jotun
Adj. EPS +24% from profit growth in Branded Consumer Goods and Jotun Key figures Q3-20 Q3-19 ∆ Q3 Operating revenues BCG 11,781 10,649 +11% EBIT (adj.) BCG 1,625 1,428 +14% EBIT (adj.) HQ -54 -64 +16% EBIT (adj.) BCG incl. HQ 1,571 1,364 +15% EBIT (adj.) Industrial & Financial Investments 0 80 Other
Slide 8: Strong cash flow from higher earnings
Strong cash flow from higher earnings Cash flow from operations per 30.09 (pre-tax) YTD Q3-20 YTD Q3-19 Orkla Branded Consumer Goods (BCG, incl. HQ) EBIT (adj.) 3,894 3,347 Amortisation and depreciation 1,329 1,162 Change in net working capital 159 73 Net replacement investments -1,605 -1,217 Total
Slide 9: Continued strong balance sheet and financial flexibility after dividend payment and completed M&A
Continued strong balance sheet and financial flexibility after dividend payment and completed M&A =1.1x EBITDA 852 7,956 6,551 896 3,771 2,664 764 Net debt 31 Cash flow Taxes & Net paid to Expansion FX effects Net debt 30 December from financial shareholders capex and September 2019 operations items
Slide 10: Branded Consumer Goods
A ‘Orkla Branded Consumer Goods
Slide 11: Positive FX translation effects added 6% to total revenue growth of 11%
Branded Consumer Goods Q3-20: Positive FX translation effects added 6% to total revenue growth of 11% BCG revenue, Q3-19 → Q3-20 (MNOK) 6.3% 0.6% 11,781 3.8% 10,649 Q3-19 Organic growth FX M&A Q3-20 11 Amounts in NOK million
Slide 12: Solid growth driven by both price and volume
Branded Consumer Goods: Solid growth driven by both price and volume Organic growth for Branded Consumer Goods Organic growth Q3-20 by business area YTD as of Q3-20: +1.8% Foods 3.7% 5.4% Confectionery 4.5% 3.8% & Snacks 1.8% 1.6% Care 11.5% 1.3% 0.4% Food -1.5% Ingredients Consumer 7.2% Investments
Slide 13: Profit improvement from growth in grocery and cost improvements
Branded Consumer Goods incl. HQ: Profit improvement from growth in grocery and cost improvements ∆ Q3 U.EBIT (adj.), MNOK ∆ R12M U.EBIT (adj.) margin 6.2% 1.3% 1,571 0.5%-p 0.0%-p 11.6% 7.6% 11.1% 1,364 Q3-19 Underlying FX M&A Q3-20 R12M Q3-19 Underlying M&A R12M Q3-20 growth margin and FX 13 Note:
Slide 14: Business areas
<A ‘Orkla Business areas
Slide 15: Broad-based organic growth in grocery channel
Orkla Foods Broad-based organic growth in grocery channel Q3-20 YTD Q3-20 Revenues 4,474 13,430 • Continued growth in grocery across most markets related to the coronavirus Organic growth 3.7% 4.5% • Lower Out of home consumption with negative EBIT (adj.) 683 1,824 impact on sales, some improvement
Slide 16: Higher sales from market growth in the Nordics
Orkla Confectionery & Snacks Higher sales from market growth in the Nordics Q3-20 YTD Q3-20 Revenues 1,783 5,109 • Good sales growth in Nordic grocery and earlier seasonal sales Organic growth 4.5% 3.6% • Continued lower sales in Denmark from reduced EBIT (adj.) 332 782 listings and reduced demand i
Slide 17: Greater emphasis on cleaning and personal care drive growth
Orkla Care Greater emphasis on cleaning and personal care drive growth Q3-20 YTD Q3-20 Revenues 1,752 5,083 • Still strong market driven growth in Home & Personal Care and Health categories Organic growth 11.5% 9.3% • Challenging in sunscreen and wound care EBIT (adj.) 276 816 segment due to coronav
Slide 18: Gradual recovery in Out of home consumption during the quarter
Orkla Food Ingredients Gradual recovery in Out of home consumption during the quarter Q3-20 YTD Q3-20 Revenues 2,819 7,862 • Diminishing negative volume impact from the Organic growth -1.5% -6.5% coronavirus through the quarter • Earnings growth supported by profit protection EBIT (adj.) 193 365 mea
Slide 19: Solid growth driven by rise in home improvement activity and resilient pizza franchise in Finland
Orkla Consumer Investments Solid growth driven by rise in home improvement activity and resilient pizza franchise in Finland Q3-20 YTD Q3-20 Revenues 1,051 2,878 • Continued strong growth in painting tool sales across markets, UK back to growth post shut Organic growth 7.2% -1.4% down in Q2. Expecti
Slide 20: Power prices remain at historically low levels
Orkla Industrial & Financial Investments Power prices remain at historically low levels (av. 5.2 øre/KWh in Q3) Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/KWh): (NOK million): Q3: 853 (627) Q3: 5.2 (32.7) Q3: -3 (78) YTD: 2,182 (1,622)
Slide 21: Closing remarks
<A ‘Orkla Closing remarks
Slide 22: Committed to take long term view in an uncertain environment
Committed to take long term view in an uncertain environment • Uncertainty related to the coronavirus pandemic expected to continue in the short to medium term • We will execute on our long-term growth ambitions: • Execute on strategic M&A • Adapt quickly to changes in consumer trends • Accelerate i
Slide 23: Q&A
Q&A Jaan Ivar Semlitsch, President & CEO Harald Ullevoldsæter, CFO
Slide 24: Appendices
Appendices
Slide 25: 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 26: 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 27: Investments - Jotun (42.6%): Continued strong profit growth helped by FX translation effects
Investments - Jotun (42.6%) Continued strong profit growth helped by FX translation effects YTD Aug-20 Operating income 13,916 • Reported growth positively impacted by FX translation effects YTD, underlying growth 1% Change vs LY 8% • Underlying sales growth in Decorative Paints helped by home impro
Slide 28: Funding sources and maturity profile
Funding sources and maturity profile Debt maturity → average maturity 3.4 years Funding sources (in BNOK) MNOK 6,000 5,500 2.4 5,000 4,500 3.3 7.7 4,000 3,500 3,000 2,500 5.5 2,000 1,500 Unutilised credit facilities 1,000 Banks 500 Bonds and CP 0 2020 2021 2022 2023 2024 2025- Cash, cash equivalents
Slide 29: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOK million) NIBD / R12 EBITDA 8,056 7,956 1,5x 6,551 1,1x 1,0x 3,037 6,441 0,5x 4,895 14 0,0x 2016 2017 2018 2019 Q3-20 2016 2017 2018 2019 Q3-20 Leasing debt Ex leasing debt 29 Amounts in NOK million
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