Slide 1: Fourth quarter results 2013
Fourth quarter results 2013 Åge Korsvold, President & CEO
Slide 2: Agenda
Agenda 1. Åge Korsvold, President & CEO Strategy and highlights 2. Terje Andersen, CFO Financial performance 3. Atle Vidar Johansen, CEO Orkla Foods Branded Consumer Goods
Slide 3: Highlights Q4 2013
Highlights Q4 2013 • Sales growth due to acquisitions • Weak underlying performance for BCG • Realisation of cost synergies in Rieber according to plan • Demanding market conditions in Russia, a structured sales process has been initiated • Volume and profit growth for Gränges, strong cash flow from
Slide 4: Allocation of capital 2012 - 2013
Allocation of capital 2012 - 2013 Sale of non-core assets Investing in BCG businesses • Sale of real estate, shares and • Acquisition of Rieber & Søn financial assets ~NOK 7.8 billion ~NOK 6.1 billion • IPO of Borregaard and sale of • Acquisition of Jordan remaining shares ~NOK 3 billion ~NOK 1.1 bi
Slide 5: Rolling 12 months EBITA for Branded Consumer Goods
Rolling 12 months EBITA for Branded Consumer Goods Amounts in NOK millions 3,000 2,900 2,800 2,700 Strategic priorities 2,600 (2013-2016) 2,500 2,400 • Reducing complexity 2,300 • Extracting cost 2,200 synergies and 2,100 improving cash flow 2,000 • Driving organic growth 100 • Improving skill base
Slide 6: Actions in 2013 to strengthen the BCG business
Actions in 2013 to strengthen the BCG business • Orkla Foods companies in Norway, Sweden and Denmark merged from 7 to 3 – Merger of the two existing food companies in Sweden – Integration of Rieber in Norway, Sweden and Denmark • Comprehensive restructuring of Orkla Confectionery & Snacks – Companie
Slide 7: Financial targets announced at Orkla's Investor Day 2013
Financial targets announced at Orkla’s Investor Day 2013 EBIT EBIT Organic Organic (adjusted) (adjusted) revenue revenue margin margin growth growth 2013 2015/2016 2013 From 2016 Orkla Foods 13.0% > 15.0% -4.2% 2-3% Orkla Confectionery & 14.3% > 16.5% -3.1% 2-4% Snacks Orkla Home & 17.3% > 17.5% -1.
Slide 8: Financial Performance
Financial Performance Terje Andersen, CFO
Slide 9: Group income statement
Group income statement Amounts in NOK millions Q4 Q4 FY FY 2012 2013 2012 2013 Operating revenues 8 421 9 478 29 896 33 045 EBITA 1 117 1 026 3 359 3 163 Amortisation intangibles -5 -7 -16 -21 Other income and expenses -267 -13 -433 -860 EBIT 845 1 006 2 910 2 282 Profit/loss from associates and joi
Slide 10: EBITA bridge Q4 2013
EBITA bridge Q4 2013 Amounts in NOK millions 12 1,117 4 4 -108 1,026 -3 EBITA Q4-12 Branded Gränges Hydro Power Financial HQ/other EBITA Q4-13 Consumer Investments 10 Goods
Slide 11: EBITA bridge Q4 2013 – Branded Consumer Goods
EBITA bridge Q4 2013 – Branded Consumer Goods Amounts in NOK millions -21 8 54 -58 951 947 21 EBITA Q4-12 Orkla Foods Orkla Orkla Home Orkla Orkla Food EBITA Q4-13 Confectionery & Personal International Ingredients 11 & Snacks
Slide 12: Group income statement
Group income statement Q4 Q4 FY FY 2012 2013 2012 2013 Operating revenues 8 421 9 478 29 896 33 045 EBITA 1 117 1 026 3 359 3 163 Amortisation intangibles -5 -7 -16 -21 Other income and expenses -267 -13 -433 -860 EBIT 845 1 006 2 910 2 282 Profit/loss from associates and joint ventures 51 - 300 418
Slide 13: Change in net debt 2013
Change in net debt 2013 Amounts in NOK millions -3.2 8.5 7.2 -1.8 1.0 1.2 -3.1 4.8 2.4 Net debt 31 Expansion Cash flow Paid from Sale of shares Paid to Tax, FX effects Net debt 31 Dec 2012 (incl. Rieber from Sapa JV and financial shareholders dividends Dec 2013 and property operations assets receive
Slide 14: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing liabilities (NOKm) Equity ratio (%) 19 848 19 652 59.1 51.7 53.6 51.8 52.9 10 645 8 496 4 786 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 14
Slide 15: Debt maturity profile
Debt maturity profile Amounts in NOK millions Unutilised credit facilities Drawn amounts Average maturity 3.6 years 7.000 6.000 5.000 4.000 3.000 2.000 1.000 0 2014 2015 2016 2017 2018 2019 2020 2021 Later 15
Slide 16: Gränges – Continued profit improvement over last year
Gränges – Continued profit improvement over last year • Continued volume growth despite slow Key figures Q4-12 Q4-13 2012 2013 automotive market Operating 943 940 3990 3958 revenues • Strong SEK pressure earnings EBITA 74 78 313 337 • Operational efficiency improvements in both Sweden and China EBIT
Slide 17: Hydro Power – Lower production and higher prices in Q4
Hydro Power – Lower production and higher prices in Q4 • EBITA of NOK 97 million in Q4 was positively affected by one-offs • Spot prices were 8% higher in Q4 compared to Q4 2012 • Production was 650 GWh in Q4 compared with 696 GWh last year – Whereof 257 GWh in each quarter is contract production wi
Slide 18: Jotun (42,5%)
Jotun (42,5%) • Solid growth in all segments except Marine Key figures As of As of Change 31/8 2012 31/8 2013 • The decline in Marine, which is due to the Operating revenues 7,686 8,174 6% cyclical downturn in the shipbuilding industry, EBIT 886 1,050 19% has now levelled off • Higher gross margins
Slide 19: Sapa (50/50 joint venture)
Sapa (50/50 joint venture) • Increased demand in North America Pro forma Pro forma 100% basis Q4 2013 Q4 2012 FY 2013 • Stable demand in Europe Operating revenues 9,654 10,132 42,270 – Improved demand in automotive Underlying EBIT -142 -339 -87 – Lower demand in building and construction • Restructu
Slide 20: Branded Consumer Goods
Branded Consumer Goods Atle Vidar Johansen CEO Orkla Foods
Slide 21: Orkla Foods
Orkla Foods Q4-12 Q4-13 2012 2013 • Weaker sales performance in Norway Operating revenues 2,163 2,894 7,972 9,797 – Demanding integration process Organic revenue growth -6.0% -4.2% – Lower contribution from innovations EBITA 368 422 1,144 1,275 EBITA margin 17.0% 14.6% 14.4% 13.0% • Satisfactory per
Slide 22: Integration of Rieber according to plan
Integration of Rieber according to plan • Announced cost synergies of NOK 250-300 million • Run-rate end at year end of more than NOK 150 million – P&L effect in Q4 of approximately NOK 30-35 million • Organic revenue decline of 12.6% in the Nordics in Q4 – Heavy loading in Q4 2012 – Improvement in
Slide 23: Innovations in Orkla Foods
Innovations in Orkla Foods 23
Slide 24: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Q4-12 Q4-13 2012 2013 • Continued challenging market Operating revenues 1,387 1,436 4,794 4,784 conditions in the Nordics Organic revenue growth -2.7% -3.1% EBITA 255 234 787 682 • Sales growth in Denmark EBITA margin 18.4% 16.3% 16.4% 14.3% and the Baltics • Stable deve
Slide 25: Innovations in Orkla Confectionery & Snacks
Innovations in Orkla Confectionery & Snacks 25
Slide 26: Orkla Home & Personal
Orkla Home & Personal • Underlying sales in Q4 somewhat higher Q4-12 Q4-13 2012 2013 than in Q4 2012 Operating revenues 1,221 1,270 4,025 4,770 Organic revenue growth 0.4 % -1.5 % • Strong performance in Lilleborg EBITA 186 194 704 823 – Successful integration of Jordan EBITA margin 15.2% 15.3% 17.5
Slide 27: Innovations in Orkla Home & Personal
Innovations in Orkla Home & Personal 27
Slide 28: Orkla International
Orkla International • Sales and profit decline in Q4-12 Q4-13 2012 2013 Orkla Brands Russia Operating revenues 716 916 2,133 2,644 – Continued weak performance in Q4 Organic revenue growth -11.6% -7.2% – Structured sales process initiated EBITA 62 4 -5 -86 • Organic sales growth of 12% in India – Gr
Slide 29: Orkla Food Ingredients
Orkla Food Ingredients Q4-12 Q4-13 2012 2013 • Organic sales growth Operating revenues 1,523 1,726 5,435 5,998 Organic revenue growth 2.2% 2.1% • Broad based EBITA improvement EBITA 76 97 233 288 EBITA margin 5.0% 5.6% 4.3% 4.8% • Positive effects from internal improvement projects EBITA margin (%):
Slide 30: Key priorities for 2014
Key priorities for 2014 • Grow the top line – Strong innovation programmes – More cross-market initiatives – Improved in-store execution – Improved positions in trade • Realise and extract more cost synergies – NOK 250 – 300 million from Rieber: ~80% run-rate end of 2014 – NOK 50 – 70 million from r
Slide 31: Q&A
Q&A Åge Korsvold, President & CEO Terje Andersen, CFO Atle Vidar Johansen, CEO Orkla Foods
Slide 32: Appendices
‘Orkla Appendices
Slide 33: Cash flow
Cash flow Amounts in NOK million 2012 2013 Operating profit 2 635 2 307 Amortisation, depreciation and write-downs 943 1 503 Change in net working capital 457 - 155 Cash flow from operating act. bef. net replacement exp. 4 035 3 655 Net replacement expenditures - 701 - 880 Cash flow from operations,
Slide 34: Balance sheet
Balance sheet Amounts in NOK million 31.12.2012 31.12.2013 Intangible assets 10 069 15 402 Property, plant and equipment 9 601 11 651 Investments in associates and joint ventures etc. 3 686 11 042 Non-current assets 23 356 38 095 Assets in discontinued operations 13 740 Inventories 4 243 4 836 Recei
Slide 35: EBITA bridge 2013
EBITA bridge 2013 Amounts in NOK million 24 4 119 3,359 -297 -46 3,163 EBITA 2012 Branded Gränges Hydro Power Financial HQ/other EBITA 2013 Consumer Goods Investments 35
Slide 36: EBITA bridge 2013 – Branded Consumer Goods
EBITA bridge 2013 – Branded Consumer Goods Amounts in NOK million 2,982 -81 119 55 -105 131 2,863 EBITA 2012 Orkla Foods Orkla Orkla Home Orkla International Orkla Food EBITA 2013 Confectionery & Personal Ingredients & Snacks 36
Slide 37: Sapa (joint venture) – Pro-forma information (100%)
Sapa (joint venture) – Pro-forma information (100%) 37 1. Similar to Orkla’s reported EBITDA
Slide 38: Historical dividends
Historical dividends Special dividend Ordinary dividend 2.50 2.50 2.50 2.25 2.25 2.25 2.00 1.50 0.68 0.39 0.41 0.50 0.60 0.65 0.19 0.23 0.27 0.32 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13* 38 * Proposed dividend
Slide 39: Net financial items
Net financial items FY 2013 Q4-12 Q4-13 Net interest expenses -375 -78 -95 Currency gain/loss -1 -5 1 Other financial items, net -117 -27 -45 Net financial items -493 -110 -139 39
Slide 40: Net gearing 0.28 as of Q4-13
Net gearing 0.28 as of Q4-13 60 1.40 54 1.20 48 1.00 42 36 0.80 30 0.60 24 18 0.40 12 0.20 6 - 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -6 -0.20 Equity Net interest-bearing liabilities Net gearing 40
Slide 41: Funding sources
Funding sources Banks 4.2 5.0 Unutilised credit 10.5 8.013.1 facilities 11.2 6.77.0 Bonds and CP 9.3 2.4 2.0 Cash, Cash equivalents and Interest Bearing Assets Figures in NOK billion 41