Slide 1: Branded Consumer Goods continues to grow
1 Branded Consumer Goods continues to grow Second quarter results 2017 14 July 2017 Peter A. Ruzicka, President & CEO
Slide 2: Continued organic growth, but higher input costs impact profits
Highlights Q2-17: Continued organic growth, but higher input costs impact profits • Sapa divestment in line with strategy • Strengthened Branded Consumer Goods’ position through several acquisitions • Branded Consumer Goods continues to grow, while higher input costs impact profits • EPS for continu
Slide 3: Orkla to sell its interest in Sapa to Hydro
Orkla to sell its interest in Sapa to Hydro Transaction highlights • Agreement to sell our 50% interest in Sapa to Hydro • In line with our strategy of being a leading branded consumer goods company • The transaction values Sapa at a total of NOK 27 billion (on a debt-free basis) • Accounting gain o
Slide 4: Strengthened position in branded consumer goods through M&A
YTD 2017: Strengthened position in branded consumer goods through M&A • Strengthened position in personal care • Building on strong market position in bakery and ice cream ingredients • Strengthening position in fresh doughs and developing platform for growth in organic and vegetarian foods • Divest
Slide 5: Continued growth - in line with market
Branded Consumer Goods YTD 2017: Continued growth - in line with market Organic growth YTD Continued organic growth1 in 3 out of 4 business areas1 2.8% 1.1% Orkla Foods 0.8% 1.8% 1.6% 1.1% 0.7% 0.7% Orkla Confectionery 3.6% & Snacks Orkla Care 2.0% Orkla Food Ingredients -0.7% -2.8% 2012 2013 2014 2
Slide 6: Cost reduction actions continue to show results…
Cost reduction actions continue to show results… + 0 - 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017 Organic sales growth1 Underlying growth in fixed costs2 1Reported growth adjusted for currency translation effects and structural changes. 6 2Underlying fixed costs are growth in SG&A and fixed pro
Slide 7: …but increased input costs hamper EBIT growth and margins
Branded Consumer Goods YTD 2017: …but increased input costs hamper EBIT growth and margins 1,937 10.5% 10.6% -8 bps +12 bps 1,842 +7.1 % -2.0 % EBIT (adj.) FX FX EBIT (adj.) EBIT (adj.) Dilutive Underlying EBIT (adj.) YTD 2016 adjusted YTD 2017 margin effects improvement margin growth YTD 2016 of M&
Slide 8: Financial performance
8 Financial performance Jens Bjørn Staff, CFO
Slide 9: 9% increase in EPS for continuing operations in Q2
9% increase in EPS for continuing operations in Q2 Key figures Q2-16 Q2-17 YTD -16 YTD -17 Operating revenues 9 433 9 771 18 043 18 852 EBIT (adj.) 996 1 025 1 813 1 925 Other income and expenses -81 -116 -111 -203 EBIT 915 909 1 702 1 722 Profit/loss from associates* 123 115 376 288 Net financials
Slide 10: Continued organic growth and contribution from M&A
Branded Consumer Goods Q2-17: Continued organic growth and contribution from M&A 9,505 +3.4% 9,147 +0.7% -0.2% BCG operating Organic growth1 FX M&A BCG operating revenues Q2-16 revenues Q2-17 10 Amounts in NOK million. 1Reported growth adjusted for currency translation effects and structural changes
Slide 11: Orkla Foods: Profit impacted by higher input costs and timing of advertising
Orkla Foods Profit impacted by higher input costs and timing of advertising 2016 2017 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +0.4% OG1 +0.8% OG1 7,385 7,735 840 826 11.7 11.4 10.7 10.9 3,967 3,977 463 434 Q2 YTD Q2 YTD Q2 YTD • Organic growth despite negative Easter effects in Q2 and
Slide 12: Orkla Confectionery & Snacks: Progress in sales and profit
Orkla Confectionery & Snacks Progress in sales and profit 2016 2017 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +4.0% OG1 +3.6% OG1 2,933 2,971 387 12.2 13.0 336 10.8 11.5 1,476 1,527 186 159 Q2 YTD Q2 YTD Q2 YTD • Volume driven organic sales growth • High innovation and campaign activity
Slide 13: Orkla Care: Good progress
Orkla Care Good progress 2016 2017 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +0.3% OG1 +2.0% OG1 3,671 520 13.3 13.5 14.1 14.2 3,284 463 1,629 1,813 216 245 Q2 YTD Q2 YTD Q2 YTD • Revenue growth driven by M&A and organic growth despite negative Easter effects in Q2 • Improved performance
Slide 14: Orkla Food Ingredients: Profit growth driven by add-on acquisitions
Orkla Food Ingredients Profit growth driven by add-on acquisitions 2016 2017 Operating revenues EBIT (adj.) EBIT (adj.) margin (%) -0.9% OG1 -0.7% OG1 3,994 4,047 203 204 6.8 6.8 144 151 5.1 5.0 2,121 2,234 Q2 YTD Q2 YTD Q2 YTD • Exit from contracts with low profitability resulted in negative organi
Slide 15: Orkla Investments: Sapa divestment in line with strategy
Orkla Investments Sapa divestment in line with strategy Fully consolidated into Orkla financial statements Volume (GWh): Hydro Power Q2: 735 (674) investments YTD: 1,271 (1,221) Financial Power prices1 (NOK/MWh): Book value real Q2: 256.71 (223.40) estate: YTD: 268.31 (225.76) NOK 1.5 billion EBIT a
Slide 16: Improved underlying EBIT in Sapa
Sapa (50/50 joint venture - discontinued operations) Improved underlying EBIT in Sapa 2016 2017 Orkla’s share of Sales volume (kmt) Underlying EBIT net profit after tax 715 714 1,692 585 528 1,375 366 359 804 914 319 273 Q2 YTD Q2 YTD Q2 YTD • Strong performance in all business areas • Positive effe
Slide 17: Weaker markets in shipping and offshore impact profits
Jotun (42.5%) Weaker markets in shipping and offshore impact profits Q2-17 comments • Weaker markets in shipping & offshore newbuilding and negative currency effects • Satisfactory performance in Decorative Paints with profit in line with last year • Weaker market in combination with increasing raw
Slide 18: Dividend payment main driver behind increased debt in Q2
Dividend payment main driver behind increased debt in Q2 -1.3 9.3 +0.4 +2.6 7.8 +0.6 -0.8 0.0 Net debt 31 Expansion Cash flow Sale of Net paid to Tax, FX effects Net debt 30 March 2017 and sale of from shares and shareholders dividends June 2017 companies operations financial received, net assets fi
Slide 19: Focus going forward
1 9 Focus going forward Peter A. Ruzicka, President & CEO
Slide 20: Delivering on our strategy through One Orkla
Delivering on our strategy through One Orkla Key takeaways YTD 2017 • Continued growth - in line with market • Cost improvements from working as One Orkla • Margin impacted by higher raw material prices Outlook • Continued soft market growth • Price increases implemented to compensate for higher inp
Slide 21: Test winner - no harmful ingredients
Test winner - no harmful ingredients 21 Photo: Colourbox
Slide 22: Q&A
2 2 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 23: Appendices
‘Orkla Appendices
Slide 24: Group income statement
Group income statement Q2-16 Q2-17 YTD 2016 YTD 2017 Operating revenues 9 433 9 771 18 043 18 852 EBIT (adj.) 996 1 025 1 813 1 925 Other income and expenses -81 -116 -111 -203 EBIT 915 909 1 702 1 722 Profit/loss from associates* 123 115 376 288 Interests, net -47 -39 -97 -76 Other financial items,
Slide 25: Net financial items
Net financial items FY 2016 Q2-16 Q2-17 Net interest expenses -177 -47 -39 Currency gain/loss -4 -10 -1 Result from Share Portfolio and dividends 248 74 3 Other financial items, net -179 -115 -20 Net financial items -112 -98 -57 25 Amounts in NOK million
Slide 26: Statement of financial position
Statement of financial position 31.12.2016 30.06.2017 Intangible assets 18 343 19 548 Property, plant and equipment 11 038 11 518 Investments in associates and joint ventures etc. 13 148 4 438 Non-current assets 42 529 35 504 Assets held for sale 0 8 106 Inventories 5 195 5 714 Inventory of developm
Slide 27: Cash flow
Cash flow YTD 2016 YTD 2017 Operating profit 1 678 1 717 Amortisation, depreciation and write-downs 533 625 Change in net working capital -564 -298 Net replacement expenditures -760 -484 Cash flow from operations 887 1 560 Cash flow from operations, Financial Investments -97 -84 Tax -307 -365 Divide
Slide 28: Sapa (joint venture) – Figures on 100% basis
Sapa (joint venture) – Figures on 100% basis Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Sales volume (kmt) 366 340 310 355 359 Operating revenues (NOK million) 14 071 13 141 12 210 14 323 15 309 Underlying EBIT (NOK million)1 804 487 335 778 914 Excluded items: Unrealised derivative positions (NOK million) 116 5
Slide 29: Sapa (joint venture) – Key financials by business area
Sapa (joint venture) – Key financials by business area Extrusion Europe Q2-16 Q2-17 Extrusion North America Q2-16 Q2-17 Volume (kmt) 157 155 Volume (kmt) 155 151 Sales (NOKm) 5 468 5 999 Sales (NOKm) 5 234 5 753 Underlying EBITDA (NOKm) 425 416 Underlying EBITDA (NOKm) 362 466 1 1 Underlying EBIT (N
Slide 30: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing debt (NOK million) Net gearing 9 292 0.28 0.27 8 496 8 056 7 805 0.23 0.24 5 661 0.18 2013 2014 2015 2016 Q2-17 2013 2014 2015 2016 Q2-17 30
Slide 31: Debt maturity profile
Debt maturity profile Average maturity 3.3 years 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2017 2018 2019 2020 2021 2022-2026 Unutilised credit facilities Drawn amounts 31 Amounts in NOK million
Slide 32: Funding sources
Funding sources 1.4 5.5 Unutilised credit facilities Banks 5.5 Bonds and CP Cash, cash equivalents and interest bearing assets 5.2 32 Amounts in NOK billion
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