Slide 1: Third quarter results 2023
26 October 2023 Third quarter results 2023
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: Orkla announces Orkla Food Ingredients partnership with Rhône
Orkla announces Orkla Food Ingredients partnership with Rhône Orkla Food Ingredients («OFI») growth journey Objectives with the OFI partner search Since its formation in 1999, OFI has grown Find co-owner with capital and resources to drive revenues 9x to become a leading food accelerated growth and
Slide 4: Partnership enabled by Orkla's operating model
Partnership enabled by Orkla’s operating model ▪ Rhône to support OFI’s strategy with incremental industry experience ▪ OFI set to benefit from Rhône’s resources and network for delivery of strategy ▪ Rhône has substantial experience from working in partnerships and shares Orkla’s value creation amb
Slide 5: Summary of financials for the quarter
Summary of financials for the quarter • Group EBIT (adj.) decline of 14%, driven by Hydro Power • Improved Cash flow from operations for the group • Underlying EBIT (adj.) growth for eight out of twelve portfolio companies • Continued strong profit improvement from Jotun and Orkla India • Adjusted E
Slide 6: Preliminary Agenda - Capital Markets Day 2023
Preliminary Agenda - Capital Markets Day 2023 Part 1 will address why and how the new operating 12.00 Welcome & Strategy model will increase value creation, including the Nils K. Selte, President & CEO new strategy Our approach to active ownership Øyvind Torpp, EVP & Investment Executive Part 2 will
Slide 7: Financial performance
Harald Ullevoldsæter, CFO Financial performance All Alternative Performance Measures (APM) are presented in the appendix All figures in MNOK unless otherwise stated
Slide 8: Group wide progression from last year offset by lower power prices
Group wide progression from last year offset by lower power prices Key figures Q3-23 Q3-22 ∆ Q3 Operating revenues Group 16,783 14,752 +14% EBIT (adj.) Consolidated Portfolio Companies 1,772 1,530 +16% EBIT (adj.) Financial Investments 244 777 -69% EBIT (adj.) HQ and Business Services -109 -84 Other
Slide 9: Cash flow from operations for the first nine months
Cash flow from operations for the first nine months Cash flow from operations as at 30.9 (pre-tax) 2023 2022 Consolidated PortCo’s (incl. HQ and Business Services) EBIT (adj.) 4,492 3,773 Depreciation 1,790 1,504 Change in net working capital -338 -2,794 Net replacement investments -1,934 -2,081 Con
Slide 10: Dividend, M&A and negative FX-translation increase net debt
Dividend, M&A and negative FX-translation increase net debt = 2.0x 19,940 EBITDA* 1,122 1,336 17,188 3,101 4,786 340 1,639 Net debt 31 Cash flow Taxes Financial Dividends Expansion FX effects Net debt 30 December from items & and share capex and September 2022 operations received buyback net M&A 202
Slide 11: Portfolio Companies
Portfolio Companies All Alternative Performance Measures (APM) are presented in the appendix All figures in MNOK unless otherwise stated
Slide 12: Jotun: Continued strong sales and earnings growth
Jotun (42.7% - Associated company) Continued strong sales and earnings growth Jotun 100% basis YTD Aug-23 YTD Aug-22 Revenues 21,589 18,243 • Continued sales growth from price increases and higher volumes Revenue growth – fixed rate +14% +20% • Profit improvement driven by improved gross EBITA 4,754
Slide 13: Orkla Foods Europe: Sales and EBIT (adj.) growth from price effects
Orkla Foods Europe Sales and EBIT (adj.) growth from positive price effects despite high underlying inflation Q3-23 YTD Q3-23 Revenues 4,825 14,815 • Broad-based, price-driven organic growth across most markets offsetting higher input costs Contribution ratio 38.4% 37.8% • Negative volume trend in r
Slide 14: Orkla Food Ingredients: Reported EBIT (adj.) increase
Orkla Food Ingredients Reported EBIT (adj.) increase from structural growth and FX Q3-23 YTD Q3-23 • EBIT (adj.) increase from structural growth and Revenues 4,654 13,907 positive currency translation effect Contribution ratio 28.3% 28.1% • Continued price driven organic growth, but lower versus pre
Slide 15: Orkla Confectionery & Snacks: new biscuit factory challenges
Orkla Confectionery & Snacks Profit growth for confectionery and snacks categories offset by challenges in the new biscuit factory Q3-23 YTD Q3-23 Revenues 2,169 6,261 • Challenges with ramp-up of new biscuit factory led to both lower sales and higher cost level – Contribution ratio 41.2% 41.5% expe
Slide 16: Orkla Health: Growth driven by top-line improvement
Orkla Health Growth in the quarter for Orkla Health driven by top-line improvement Q3-23 YTD Q3-23 • Organic sales growth driven by price increases Revenues 1,611 4,803 across markets and NutraQ volume growth Contribution ratio 56.6% 57.9% • EBIT (adj.) improvement driven by the strong sales develop
Slide 17: Orkla India: Strong EBIT (adj.) growth
Orkla India Strong EBIT (adj.) growth consequent to good price and volume led sales growth, despite inflation effects Q3-23 YTD Q3-23 Revenues 773 2,163 • Good organic sales growth across all business units driven by price increases with positive volume Contribution ratio 37.7% 35.7% performance EBI
Slide 18: Orkla Home & Personal Care: Strong EBIT growth in Norway
Orkla Home & Personal Care Strong EBIT (adj.) growth from sales increase in Norway Q3-23 YTD Q3-23 Revenues 648 1,835 • Strong revenue growth in Norway, due to both price and volume Contribution ratio 39.0% 39.7% • EBIT (adj.) growth from revenue increase and cost EBIT (adj.) 80 188 improvements ver
Slide 19: The European Pizza Company: Solid consumer sales growth
The European Pizza Company Solid consumer sales growth in main markets continued Q3-23 YTD Q3-23 • Underlying consumer sales growth was +2.2% in third quarter. Main markets had solid +7.2% growth Revenues 752 2,202 (Excl. Germany) EBIT (adj.) 78 194 • Organic growth driven by increased dough and EBI
Slide 20: Growth supported by Non-Nordic markets
Orkla House Care Health and Sports Nutrition Pierre Robert Group Lilleborg Group Growth supported by Ongoing process for Price offsets weak Volume growth in a Non-Nordic warehouse relocation volumes challenging markets and automation quarter • EBIT (adj.) 40 MNOK (Q3), • EBIT (adj.) 9 MNOK (Q3), • E
Slide 21: Closing remarks
Nils K. Selte, President & CEO Closing remarks
Slide 22: Mission & values
MISSION & VALUES Creating sustainable value through active ownership of brands and consumer companies Brave | Inspiring | Trustworthy
Slide 23: Q&A
Nils K. Selte, President & CEO Harald Ullevoldsæter, CFO Q&A
Slide 24: Upcoming events
Upcoming events: Capital Markets Day 2023 29 November 2023 Fourth quarter 2023 8 February 2024
Slide 25: Appendices
Appendices
Slide 26: Financial Investments: Hydro Power results
Financial Investments High precipitation and lower power prices drives lower Hydro Power results from exception level same period last year Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/kWh): (NOK million): NO1 Q3: 179 (117) NO1 Q3: 19.3
Slide 27: Continued progress for the three prioritized growth initiatives
Continued progress for the three prioritized growth initiatives Reported Full-year baseline (2021) YTD Q3-23 (YoY)* Consumer Health Revenue Growth Grow at least 50% by 2025 BNOK 4.6** 19% Consumer sales Growth Out of Home MEUR ~337 **/*** 4% A European leader in pizza franchise No of outlets No of o
Slide 28: Sound financial profile
Sound financial profile Net interest-bearing liabilities (NOK million) NIBD / R12M EBITDA 19,940 2.0x 1.8x 17,188 1.5x 12,758 1.0x 0.9x 17,825 6,551 6,380 15,217 10,834 3,037 4,895 4,893 2018 2019 2020 2021 2022 Q3-23 2019 2020 2021 2022 Q3-23 Leasing debt Ex leasing debt Amounts in NOK million 28
Slide 29: Funding sources and maturity profile per Q3-23
Funding sources and maturity profile per Q3-23 Debt maturity → average maturity 3.0 years Funding sources (in BNOK) MNOK 7,000 1.5 6,000 8.6 5,000 12.7 4,000 3,000 6.7 2,000 1,000 Unutilised credit facilities Banks 0 Bonds and CP 2023 2024 2025 2026 2027 2028 2029 - Cash, cash equivalents and intere
Slide 30: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Contribution ratio Contribution ratio is calculated by dividing the contribution margin by operating revenues. Operating revenues minus variable operating expenses constitute the contribution margin. Variable operating expenses are reported on the financial sta
Slide 31: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Change in underlying EBIT (adj.) Change in underlying EBIT (adj.) shows like-for-like EBIT (adj.) growth for the group’s business portfolio and is defined as the group’s reported change in EBIT (adj.) adjusted for effects of the purchase and sale of companies a
Slide 32: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Return on Capital Employed (ROCE) cont. Average capital employed is at all times an average of the closing balance for the five last reported quarters. ROCE shows the return that the Orkla group receives on the capital invested in the various consolidated portf
Slide 33: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) Structure (acquisitions and disposals) Structural growth includes adjustments for the acquisition of the businesses Norstamp, Bubs Godis, Da Grasso, Khell-Food, Denali Ingredients, Lofoten Marine Oils, Healthspan and Hadecoup, and the winding-up of Hamé Foods i
Slide 34: Orkla
A, ‘Orkla