Orkla Asa · OSL:ORK
Orkla Asa — Investor Day (November 2005)
45 slides from Orkla Asa's investor day presentation, Nov 29, 2005
Slide 1: Welcome to Capital Markets Day
Welcome to Capital Markets Day 29 November 2005
Slide 2: Agenda
Agenda Group strategy 1.00 p.m. Orkla film 1.10 p.m. Group strategy Dag J. Opedal, CEO Roar Engeland, Executive Vice President Strategy/Corp. Dev. 2.10 p.m. Q&A 2.25 p.m. Break Branded Consumer Goods 2.45 p.m. Orkla Foods and Orkla Brands Torkild Nordberg, Managing Director Orkla Brands Atle V.Johan
Slide 3: Renewed focus and vision
Renewed focus and vision Good track …well positioned …creates exciting record… business… opportunities Shareholder value creation Solid recent results Proactive structural Dynamic strategy Strong market positions development Disciplined management Growth prospects Operational excelle
Slide 4: Returning value to shareholders
Returning value to shareholders 4
Slide 5: Substantial shareholder value created
Substantial shareholder value created Value of NOK 1 invested 31.12.82, dividend reinvested ORKLA OSEBX S&P 500 230 216x 180 130 80 21x 30 16x YTD 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 -20 YTD: 25 November 2005 5
Slide 6: Orkla share performance (I)
Orkla share performance (I) 800 700 600 Orkla 500 Berkshire Hathaway 400 GE 300 200 100 0 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Dividend reinvested 6
Slide 7: Orkla share performance (II)
Orkla share performance (II) 800 700 Orkla 600 500 P&G 400 Nestlé 300 Alcoa 200 100 0 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Dividend reinvested 7
Slide 8: Dividend distribution and share buy backs
Dividend distribution and share buy backs 4.00+25.00 NOK 7.9 billion paid as dividend 2003/2004 20 % of market capitalisation Share buy backs in 2001-2004 3.5 % of market capitalisation 4.50+5.00 NOK 3.25 3.40 2.50 3.00 1.13 1.36 1.58 1.93 2.03 0.93 1993 1994 1995 1996 1997 1998 1999 2000 20
Slide 9: Structural development
Structural development
Slide 10: Value creation through M&A
Value creation through M&A NOK billion Elkem EBITA Industry division Sales Industry division Sapa 5 60 Divestment Carlsberg Breweries Carlsberg Breweries 50 4 Berlingske Pripps Ringnes 40 100 % 3 Abba and Procordia 30 2 Nora Industrier 20 Borregaard 1 10 0 0 Pro 1982 1984 1986 1988 1990 1992 1994 19
Slide 11: Value creation through divestments
Value creation through divestments Year Company/Business unit Industry 1991 Orkla real estate Real estate 1995 Norgro Animal feed 1995 Helly Hansen (50 %) Clothing 1996 Abba in Denmark and in Germany Seafood 1996 Frionor (51 %) Frozen products 1996 Hansa Beverages 1997 Ringstads Ferskvare Fresh meat
Slide 12: Value creation through portfolio development
Value creation through portfolio development Speciality Materials Branded Consumer Goods Revenues NOK billion 6.9 16.8 26.0 34.1 45.4 32.1 54.8 13 24 20 20 20 16 51 9 11 49 9 25 13 Distribution of 18 22 33 0 revenues, per cent 16 15 15 Media 21 14 0 Beverages 11 12 Brands 48 41 40 32 Foods 27 26 23
Slide 13: Strong business portfolio
Strong business portfolio 13
Slide 14: Orkla ASA business structure
Orkla ASA Branded Consumer Speciality Materials Financial Goods Investments Orkla Foods Elkem Portfolio Orkla Brands Sapa Orkla Finans Orkla Media Borregaard Real Estate 14
Slide 15: Well positioned business – Solid recent results
Well positioned business – Solid recent results (NOK billion) 2002 2003 2004* 2005** Revenues 43.0 45.4 32.1 54.8 EBITDA 5.9 6.2 3.9 6.7 EBITA 3.7 3.8 2.7 4.5 Net profit (after min.int) 1.6 1.9 3.0 5.3 Market Cap 24.6 30.7 41.0 51.2 P/E 15.3 16.2 13.6 9.7 P/E Industry adjusted*** 8.6 7.6 12.4 13.2 N
Slide 16: Improved visibility in segment reporting
Improved visibility in segment reporting Business segment Revenues EBITA-margin Orkla Foods* Orkla Brands* Orkla Media* Elkem* Sapa* Borregaard* 13.7 6.3 8.5 9.2 12.4 4.3 9% 17+% 4.6+% 12+ % 4% 7+ % OF Nordic Energy** Energy** 8.6 1.4 0.3 11.5+% 40 % 40+ % OF Ingredients Primary Aluminum Chemicals 2
Slide 17: Strategic direction (I)
Strategic direction (I) Foods & Brands Continue to grow profitably through innovation and acquisitions in existing and new categories in • Nordic • CEE • CIS Media Based on strong national positions; Decide next moves that will further enhance competitive strength Financial A cash generator and a fl
Slide 18: Strategic direction (II)
Strategic direction (II) Elkem Growth/invest: Hydro power and solar Stable cash flow: Primary Aluminium Consolidation/restructuring: Silicon related Sapa - Operational improvement in Profiles and Building Systems - Growth in Heat Transfer Borregaard Regain profitability in industrial operations in a
Slide 19: Value creation approach
Value creation approach
Slide 20: Our mindset
Our mindset The only winning strategy…. ….. is to recognise the patterns of change, ….. and to adapt and become proactive, ..... and try to influence the course of change to your advantage 20
Slide 21: Strategy for value creation
Strategy for value creation Orkla creates profitable growth within Branded Consumer Goods Speciality Materials Financial Investments Orkla pursues growth and long-term value creation through Innovation Operational improvements Structural development Financial Investments complement
Slide 22: The importance of being a moving target
The importance of being a moving target Static target Moving target 22
Slide 23: Orkla's value creation formula is…
Orkla’s value creation formula is….. • Organic Top line • M&A growth • Categories ...to be a moving target • Continuous Cost + capital on multiple fronts… reduction • Redesign • Structural • Mgmt. dev. Building strong organisations • Functional skills • A learning org. 23
Slide 24: Operational governance - Industrial activities
Operational governance - Industrial activities Orkla ASA Strategic core Corporate competencies staffs Orkla Foods Orkla Brands Orkla Media Elkem Sapa Borregaard 24
Slide 25: New Executive Board
New Executive Board Group Dag J. Opedal (46) CEO Business areas Torkild Nordberg (48) Branded Consumer Goods Bjørn M. Wiggen (46) Media Ole Enger (57) Speciality Materials Anders Berggren (40) Financial Investments Corporate Development Roar Engeland (45) Strategy/Corporate development Inger J. Solh
Slide 26: Orkla Board of Directors
Orkla Board of Directors Ole Enger, Speciality Materials Dag J. Opedal, CEO Roar Engeland, Strategy/Corp. Dev. Inger J. Solhaug, Mkt/Innovation BCG Hilde Myrberg, Corporate staffs Terje Andersen, CFO Branded Consumer Goods Speciality Materials Financial Investments Orkla Foods Elkem Portfolio Atle V
Slide 27: Dynamic ownership model
Dynamic ownership model
Slide 28: Orkla's industrial strategy
Orkla’s industrial strategy Based on Specialised products Strong market positions Competent organisation and healthy company culture And with strong focus on Operational excellence….. …. and continued structural development 28
Slide 29: Orkla: Active industrial ownership
Orkla: Active industrial ownership Enabling and functional skills Financial capacity A competent organisation 29
Slide 30: Skills and capabilities
Skills and capabilities Enabling skills • Strategy/M&A and capabilities • Governance • Performance culture • Financial competence/capacity Functional skills • Marketing & innovation • Sales • Lean manufacturing/logistics • Technology 30
Slide 31: A lean, "activist" corporate centre
A lean, “activist” corporate centre Jointly define strategic direction for each unit Actively interact with the investment community Engage management in improvement processes Ensures an improvement-oriented culture and a value driven incentive system (EVA) Strong competence in M&A and res
Slide 32: Strong financial capacity
Strong financial capacity Capital allocation to best projects NOK billion 16 Capital allocation 15 - Best project within strategy wins Large opportunity set 6.7 - Desist from “expensive” projects Net interest bearing debt Market value portfolio EBITDA WACC 7 % after tax 32
Slide 33: Orkla is a strong and competent organisation
Orkla is a strong and competent organisation Leadership • Performance orientation Culture Competence • Commitment to profitable growth • On the job training • A long-term, proactive approach • Orkla Academy 33
Slide 34: Employee development: Critical success factor
Employee development: Critical success factor Our ambitions: Recruitment - To be among the best Development of expertise - Systematic training - On the job - Orkla Academy 34
Slide 35: Competence building is business oriented and systematic
Competence building is business oriented and systematic • CEO Competence board • Group executive management • Human resources director Company culture Functional skills Leadership development • Introduction programmes • Orkla Brand Academy • Management programmes • Follow-up programmes • Orkla Sales
Slide 36: Proven operational improvement capabilities
Proven operational improvement capabilities 36
Slide 37: Strategic core competencies
Strategic core competencies Orkla ASA Strategic core Corporate staffs competencies Corporate Development Orkla Foods Orkla Brands Orkla Media Elkem Sapa Borregaard Strategy/M&A Roar Engeland Marketing/Innovation Inger J. Solhaug Production/Logistics Frode Marthinsen Purchasing Pål Eikeland 37
Slide 38: Strategy / M&A / Restructuring
Strategy / M&A / Restructuring Closely connected to Closely connected to Orkla’s industrial operations Orkla Corporate the capital market Development Branded Consumer Goods Orkla Financial Investments Speciality Materials Financial institutions M&A expertise and capacity Î 90 deals since 2
Slide 39: Innovation is at the heart of organic growth
Innovation is at the heart of organic growth I II III IV Activity- Activity- Become Become Innovation Innovation WAKE WAKE UP UP CALL CALL driven driven systematic systematic culture culture 39
Slide 40: Important innovation sources
Important innovation sources Consumer needs Raw materials / Ingredients Leading markets Trends Key players and brands Production process Restaurant/take away Packaging 40
Slide 41: Both "flair" and mechanics are needed to uncover consumer needs
Both “flair” and mechanics are needed to uncover consumer needs FLAIR MECHANICS Creativity Tools Judgement Templates Empathy Stage gate Spotting trend-shifts Innovation board Breaking compromises Guidelines Out of the box thinking Budgets 41
Slide 42: Production and logistics: Orkla Foods example
Production and logistics: Orkla Foods example Cost improvements 2002-2005 in NOK million 40 20 540 10 50 20 200 90 110 Stabburet Abba Procordia Beauvais Felix Abba OF OF Bakers Orkla Foods Ingredients International total 42
Slide 43: Purchasing: Our ambitions are moving to the right
Purchasing: Our ambitions are moving to the right Achieved: NOK 450 million last 3 years “Laggards” “Laggards” “Improvers” “Improvers” “Leaders” “Leaders” “Pioneers” “Pioneers” Market pricing Price Down Cost Down Cost out Systematic Purchasing Cost Management Strategies 43
Slide 44: Orkla and Elkem's experience deployed across the total group
Orkla and Elkem’s experience deployed across the total group Ambition: Cost base reduction NOK 2 billion 2006-2008 300 2 000 400 300 NOK million 300 200 500 Orkla Foods Orkla Brands Orkla Media Elkem Sapa Borregaard Orkla Group 44
Slide 45: Orkla's value creation formula
Orkla’s value creation formula • Organic Top line • M&A growth • Categories To be a moving target • Continuous Cost + capital on multiple fronts reduction • Redesign • Structural • Mgmt. dev. Building strong organisations • Functional skills • A learning org. 45