Orkla Asa · OSL:ORK
Orkla Asa — Q2 2023 Earnings Presentation
34 slides from Orkla Asa's earnings presentation, Jul 14, 2023
Slide 1: Second quarter results 2023
14 July 2023 Second 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: Delivered on key transformation milestones
Delivered on key transformation milestones Q3-22 Q4-22 Q1-23 Q2-23 New operating model Implementation of Go live New reporting outlined corporate structure new operating model structure • New organization and ambition for • Provide full year indicative top-line • New organization in operation • Publ
Slide 4: Priorities and timeline for 2023
Priorities and timeline for 2023 3-years plan for each company with focus on value creation with Consolidate plans and take a Capital allocation priorities yearly updates holistic view of the portfolio and guidelines Orkla Foods Europe Full Potential Plan Capital investment guidelines per Portfolio
Slide 5: Summary of financials for the quarter
Summary of financials for the quarter • Broad based EBIT (adj.) growth for portfolio companies • Solid profit improvement from Jotun • Positive progress in cash flow from operations • EPS (adj.) of NOK 1.55 (+17%) Bubble size reflects EBIT (Adj.) R12M per Q2-23. Jotun EBITA according to ownership (4
Slide 6: 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 7: Improved transparency through more comprehensive financial reporting
Improved transparency through more comprehensive financial reporting Rationale Reporting Structure • Enhance external understanding of our Consolidated portfolio companies Ass. businesses • Increase focus and accountability at Orkla Orkla Foods Orkla Orkla Orkla Orkla portfolio company level Europe
Slide 8: Strong group wide performance, offset by lower power prices
Strong group wide performance, offset by lower power prices Key figures Q2-23 Q2-22 ∆ Q2 Operating revenues Group 17,087 14,291 +20% EBIT (adj.) Consolidated Portfolio Companies 1,591 1,237 +29% EBIT (adj.) Financial Investments 305 605 -50% EBIT (adj.) HQ and Business Services -110 -89 Other income
Slide 9: Cash flow from operations for the first six months
Cash flow from operations for the first six months Cash flow from operations as at 30.6 (pre-tax) 2023 2022 Consolidated PortCo’s (incl. HQ and Business Services) EBIT (adj.) 2,829 2,327 Depreciation 1,179 993 Change in net working capital -787 -1,851 Net replacement investments -1,440 -1,416 Consol
Slide 10: Dividend and negative FX-translation increase net debt
Dividend and negative FX-translation increase net debt = 2.3x 22,778 EBITDA* 1,781 1,108 2,991 17,188 287 2,097 1,520 Net debt 31 Cash flow Taxes Financial Dividends Expansion FX effects Net debt 30 December from items & and share capex and June 2023 2022 operations received buyback net M&A dividend
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 Q2-23 YTD Q2-23 • Continued sales growth from price and higher Revenues 8,340 16,106 volumes Revenue growth – fixed • Profit improvement driven by improved gross rate +11% +15% margin, volume growth and go
Slide 13: Orkla Foods Europe: Strong sales and EBIT (adj.) growth
Orkla Foods Europe Strong sales and EBIT (adj.) growth from positive price effects despite continued cost inflation Q2-23 YTD Q2-23 Revenues 5,087 9,990 • Broad-based, price-driven organic growth across all markets offsetting higher input costs Contribution ratio 37.3% 37.6% • Negative volume trend
Slide 14: Orkla Food Ingredients: Sound performance from price-driven growth
Orkla Food Ingredients Sound performance from price-driven revenue growth Q2-23 YTD Q2-23 Revenues 4,860 9,253 • Continued price-driven organic growth, but at a lower pace following stabilising raw material costs Contribution ratio 28.2% 28.0% • EBIT (adj.) growth from positive price effects, EBIT (
Slide 15: Orkla Confectionery & Snacks: Revenue and EBIT (adj.) growth
Orkla Confectionery & Snacks Revenue and EBIT (adj.) growth despite ramp-up issues at the new biscuit factory Q2-23 YTD Q2-23 Revenues 2,098 4,092 • Price-driven top-line growth. Weak volume development Contribution ratio 41.7% 41.8% • The ease in input cost inflation offset by additional EBIT (adj.
Slide 16: Orkla Health: EBIT (adj.) growth driven by top-line growth
Orkla Health EBIT (adj.) growth in the quarter driven by top-line growth Q2-23 YTD Q2-23 Revenues 1,578 3,192 • Organic growth driven by price, but also volume growth for Oral Care, Riemann and NutraQ. Contribution ratio 58.8% 58.6% However, volume decline in grocery in Norway EBIT (adj.) 231 496 •
Slide 17: Orkla India: Strong EBIT (adj.) growth
Orkla India Strong EBIT (adj.) growth despite softer sales growth and inflation effects Q2-23 YTD Q2-23 Revenues 718 1,390 • Good organic growth across all business units driven by price with negative volume performance Contribution ratio 35.5% 34.6% • Growth in core categories spices and masalas, f
Slide 18: Orkla Home & Personal Care: growth driven by price effects
Orkla Home & Personal Care EBIT (adj.) growth driven by price effects Q2-23 YTD Q2-23 Revenues 595 1,187 • Broad-based revenue growth across markets stemming from price effects Contribution ratio 40.2% 40.0% • Contribution ratio hampered by higher input costs EBIT (adj.) 63 108 and weakening of NOK
Slide 19: The European Pizza Company
The European Pizza Company Solid consumer sales growth in main markets continued. EBIT (adj.) decline due to restructuring costs in Germany Q2-23 YTD Q2-23 Revenues 760 1,450 • Underlying consumer sales1) growth was 3%, offset by closed outlets in Germany EBIT (adj.) 55 116 • Organic growth positive
Slide 20: Improvements in the troubled UK market
Orkla House Care Health and Sports Nutrition Pierre Robert Group Lilleborg Group Improvements in the Negative earnings Organic growth of 1.6%, Time lag on price troubled UK turned positive market decline in increases from market in H1-23 grocery H2-22 cost surge • EBIT (adj.) 39 MNOK (Q2) • EBIT (ad
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: Third quarter 2023 26 October 2023 Capital Markets Day 2023 29 November 2023
Slide 25: Appendices
Appendices
Slide 26: Financial Investments: lower power prices impact Hydro Power
Financial Investments Lower power prices compared to extraordinary levels in 2022 and introduction of windfall taxes impact Hydro Power results 2 Hydro Power Fully consolidated into Orkla’s financial statements Volume Power prices1 EBIT adj. (GWh): (øre/kWh): (NOK million): Q2: 596 (579) Q2: 87,6 (1
Slide 27: Continued progress for the three prioritized growth initiatives
Continued progress for the three prioritized growth initiatives Reported Full-year baseline (2021) YTD Q2-23 (YoY)* Consumer Health Revenue Growth Grow at least 50% by 2025 BNOK 4.6** 16% Consumer sales Growth Out of Home MEUR ~337 **/*** 24% A European leader in pizza franchise No of outlets No of
Slide 28: Sound financial profile
Sound financial profile Net interest-bearing liabilities (NOK million) NIBD / R12M EBITDA 22,778 2.3x 2.0x 17,188 1.8x 1.5x 12,758 20,600 1.0x 0.9x 6,551 6,380 15,217 10,834 3,037 4,895 4,893 2018 2019 2020 2021 2022 Q2-23 2019 2020 2021 Q2-22 2022 Q2-23 Leasing debt Ex leasing debt Amounts in NOK m
Slide 29: Funding sources and maturity profile
Funding sources and maturity profile Debt maturity → average maturity 3.2 years Funding sources (in BNOK) MNOK 8,000 1.5 5.9 7,000 6,000 5,000 12.3 4,000 9.9 3,000 2,000 1,000 Unutilised credit facilities Banks 0 Bonds and CP 2023 2024 2025 2026 2027 2028 - Cash, cash equivalents and interest bearin
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 AB, Da Grasso, Khell-Food, Denali Ingredients, Lofoten Marine Oils, Healthspan and Hadecoup, and the winding-up of Hamé Food
Slide 34: Orkla
A, ‘Orkla