Slide 1: Third quarter results 2010
Third quarter results 2010 Bjørn M. Wiggen, CEO Oslo, 28 October 2010
Slide 2: Agenda
Agenda ¾ Strategic direction ¾ Highlights Q3-10 ¾ Operational and financial performance ¾ Orkla Brands ¾ Orkla Aluminium Solutions ¾ Orkla Materials ¾ Orkla Financial Investments ¾ Outlook 22 Third Q4 andquarter full-year results results 2010 2009
Slide 3: Orkla will remain a diversified portfolio company
Orkla will remain a diversified portfolio company • Concentrate the portfolio on a smaller number of areas • Continue to deliver on both industrial and financial value creation • Reduce exposure to solar over time • Reallocate capital to maximise long-term shareholder value • Structural and operatio
Slide 4: Prioritise value creation through operational improvements and growth in Orkla Brands and Sapa
Prioritise value creation through operational improvements and growth in Orkla Brands and Sapa • Orkla Brands – Strong local market positions – Stable cash generator – Value-creating add-on acquisitions • Sapa – Global leader – Few large competitors – Multi-local model – Growth potential in Asia 4 T
Slide 5: Highlights third quarter 2010
Highlights third quarter 2010 5 Third quarter results 2010
Slide 6: Top-line and profit growth for the group
Top-line and profit growth for the group • EBITA growth for all business areas • Continued profit growth for Orkla Brands • Seasonally weak quarter for Sapa – Flattening markets • Strong profit growth for Elkem Silicon-related – Strong markets and improving prices • Return on Share Portfolio well ab
Slide 7: Strong EBITA improvement for the group
Strong EBITA improvement for the group EBITA performance from Q3-09 to Q3-10 (figures in NOK million) 293 -113* 25 1 166 133 811 17 EBITA Q3 Orkla Brands Orkla Elkem Silicon- Orkla Other EBITA Q3 2009 Aluminium related Materials 2010 Solutions Energy 7 Third quarter results 2010 * NOK 81 million fro
Slide 8: Group income statement
Group income statement Amounts in NOK million Q3-10 Q3-09 Change Operating revenues 16 263 14 088 15 % EBITA 1 166 811 44 % Amortisation intangibles -12 -53 Other revenues and income -15 -94 EBIT 1 139 664 Associates 2 089 - 328 Dividends 60 14 Gains and losses/write-downs Share Portfolio 318 334 Ne
Slide 9: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility NOK billion Net gearing 60 1,40 54 1,20 48 42 1,00 36 0,80 30 0,60 24 18 0,40 12 0,20 6 - 0 -6 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1-10 Q2-10 Q3-10 -0,20 Equity Net interest-bearing liabilities Net gearing Equity portfolio of NOK 11.7 billion
Slide 10: Continued EBITA improvement
Continued EBITA improvement Rolling 12 months NOK million 4,5044,602 4,448 4,240 3,877 3,444 3,522 2,919 2,591 2,376 2,448 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 10 Third quarter results 2010
Slide 11: Orkla Brands
Orkla Brands 11 Third quarter results 2010
Slide 12: Stable Nordic retail markets
Stable Nordic retail markets Volume growth in the Nordic retail trade 15.0 % 10.0 % 5.0 % 0.0 % - 5.0 % - 10.0 % 2008 2009 YTD 2 0 1 0 Norwa y Swe de n De nm a rk F inla nd Norge: "Detaljhandel, bredt vareutvalg med hovedvekt på nærings- og nytelsesmidler " Kilde: HSH/SSB Sverige: "Utveckling i sven
Slide 13: Increasing raw material prices and higher volatility
Increasing raw material prices and higher volatility • Orkla Brands is exposed to a broad Sunflower Oil (EXW Rotterdam), USD/MT range of raw materials • Veg. oils, flour, sugar, meat, cheese, cocoa, fruit and berries, spice, pelagic, tomato, potato • > 20 % is Norwegian raw materials with less volat
Slide 14: Strong brand positions bases for stable long-term profit trend
Strong brand positions bases for stable long-term profit trend 12 months rolling EBITA 3 200 in NOK million 3 000 2 800 2 600 2 400 2 200 2 000 1 800 1 600 1 400 1 200 Q3-03 Q1-04 Q3-04 Q1-05 Q3-05 Q1-06 Q3-06 Q1-07 Q3-07 Q1-08 Q3-08 Q1-09 Q3-09 Q1-10 Q3-10 14 Third quarter results 2010
Slide 15: Continued profit growth
Continued profit growth • EBITA +2 % compared with Q3-09 Operating revenues Q3-10 Q3-09 Change – Underlying +5 % Orkla Brands 5 804 5 661 3% • Underlying top line on par with Q3-09 Orkla Foods Nordic 2 267 2 377 -5 % Orkla Brands Nordic 1 939 1 890 3% – Market shares maintained Orkla Brands Internat
Slide 16: Orkla Aluminium Solutions
Orkla Aluminium Solutions 16 Third quarter results 2010
Slide 17: Aluminium extrusion – Flattening markets
Aluminium extrusion – Flattening markets North America Extrusion Apparent Consumption 500 z 2008: -11% • Market for profiles flattening out in 450 411 415 z 2009: -19% the US 400 373 388 – Q3-10 on par with Q3-09 350 318 343 325 – Cautious positive short-term outlook for 300 292 293 all segments exc
Slide 18: Continued profit improvement
Continued profit improvement Amounts in NOK million Operating Revenues Q3-10 Q3-09 Change • Negative impact on results in Q3 due to holiday season Orkla Aluminium Solutions 7 024 5 424 29 % Sapa Profiles 5 577 4 120 35 % • Markets in line with last year Sapa HT and BS 1 648 1 507 9% Eliminations - 2
Slide 19: Sapa turnaround
Sapa turnaround Sapa Group EBITA Development by Quarter 500 343 364 298 300 162 117 129 EBITA (MNOK) 92 100 29 -100 -102 -148 -300 -342 -500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 2010 19 Third quarter results 2010
Slide 20: Long-term financial goals
Long-term financial goals Capital Turnover Rate EBITA Margin Return on Capital Employed 3 6% 18% 20 Third quarter results 2010
Slide 21: Orkla Materials
Orkla Materials 21 Third quarter results 2010
Slide 22: Strong markets for Silicon metals and Ferro silicon
Strong markets for Silicon metals and Ferro silicon • Significant increase in Silicon and EU CRU Silicon and FeSi 75% price Ferrosilicon Metals 2900 2500 – Tight supply 2100 EU R/M T 1700 – Reduced export from China 1300 – Slowdown in EU steel production 900 in seasonally weak Q3 500 02 03 04 05 06
Slide 23: Profit shift for the silicon business
Profit shift for the silicon business Quarterly EBITA Elkem Silicon-related excl. Elkem Solar 350 275 228 207 EBITA (MNOK) 150 90 25 29 -50 -31 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2010 23 Third quarter results 2010
Slide 24: Improving markets for Orkla Materials
Improving markets for Orkla Materials Borregaard: • Improved markets for speciality cellulose Operating revenues Q3-10 Q3-09 Change • Lignin volume + 11% compared with Orkla Materials 3 402 2 664 28 % Q3-09 Elkem Siliconrelated 2 211 1 441 53 % Borregaard Chemicals 933 937 0% • Improved production a
Slide 25: Orkla Financial Investments
Orkla Financial Investments 25 Third quarter results 2010
Slide 26: Orkla Financial Investments
Orkla Financial Investments S ha re P o rt f o lio M S C I N o rdic OSEB X S &P 5 0 0 2010 2008-2010 * 2006-2010 ** 21,3% 16,0% 7,8% 4,4% 2,7% 3,9% 3,1% 0,6% -1,8% -7,4% -8,4% -7,2% • Return on Share Portfolio year to date + 21.3%, market value of NOK 11.7 billion • Sale of Orkla’s forest properties
Slide 27: Outlook
Outlook 27 Third quarter results 2010
Slide 28: Outlook
Outlook • Overall stable Nordic retail markets for Brands – Demanding market conditions in Russia, Baltics, Out-of-Home channels and export – Rising raw material prices • Low visibility for Sapa in Q4 • Markets for the silicon and the speciality cellulose business remain strong – Positive effects on
Slide 29: Q&A
Q&A ¾ Bjørn M. Wiggen, CEO ¾ Terje Andersen, CFO ¾ Roar Engeland, EVP ¾ Torkild Nordberg, EVP 29 29 Third Q4 andquarter full-year results results 2010 2009
Slide 30: Appendix
Appendix 30 Third quarter results 2010
Slide 31: Financial calendar
Financial calendar 10 February 2011 - Fourth quarter results 2010 14 April 2011 - Annual General Meeting 2011 15 April 2011 - Share quoted ex. dividend 5 May 2011 - First quarter results 2011 20 July 2011 - Second quarter results 2011 27 October 2011 - Third quarter results 2011 31 Third quarter res
Slide 32: Cash flow as of Sep 2010
Cash flow as of 30 Sep 2010 Amounts in NOK million 30.9.2010 30.9.2009 Industry division: Operating profit 2 740 1 191 Amortisations, depreciations and write-downs 1 911 1 933 Changes in net working capital -2 811 821 Net replacement expenditure -1 152 - 830 Cash flow from operations 688 3 115 Finan
Slide 33: Balance sheet as of Sep 2010
Balance sheet as of 30 Sep 2010 Balance 30.9.2010 31.12.2009 Intangible assets 15 787 14 731 Property, plant and equipment 24 670 24 694 Financial assets 11 270 15 922 Non-Current assets 51 727 55 347 Assets held for sale 382 Inventories 8 541 7 531 Receivables 14 418 16 568 Share Portfolio etc. 11
Slide 34: Largest holdings in the Share Portfolio as of Sep 2010
Largest holdings in the Share Portfolio as of 30 Sep 2010 Amounts in NOK million Principal holdings Industry * Market value Share of Share of portfolio (%) equity (%) Tomra Systems Industrials 805 7% 15,3 % Amer Sports Consumer Discretionary 495 4% 5,4 % XXL Holding AS Retail 446 4% 15,5 % Elekta B
Slide 35: Currency translation effects
Currency translation effects Amounts in NOK million Revenues Q3-10 YTD Q3-10 Orkla Brands -142 -460 Orkla Aluminium Solutions -234 -1 318 Elkem 20 -16 Borregaard -5 -41 Total -361 -1 835 EBITA Q3-10 YTD Q3-10 Orkla Brands -14 -37 Orkla Aluminium Solutions -2 -41 Elkem 4 6 Borregaard 0 2 Total -12 -7
Slide 36: Jotun and REC
Amounts in NOK million Jotun T2-10 T2-09 Change REC Q3-10 Q3-09 Change Revenues 3 783 2 071 83 % Revenues 4 404 4 075 8% EBITDA 827 449 84 % EBIT 595 519 15 % EBIT 155 46 Profit/loss before tax 584 476 23 % Profit/loss before tax -1 003 -398 36 Third quarter results 2010
Slide 37: Appendix: Financial items
Appendix: Financial items 37 Third quarter results 2010
Slide 38: Net financial items
Net financial items Amounts in NOK million Q3-10 Q3-09 Full year 2009 Net interest expenses -152 -193 -883 Currency gain/loss -15 12 15 Other financial items, net -5 -9 - 84 Net financial items -172 -190 -952 38 Third quarter results 2010
Slide 39: Debt maturity profile
Debt maturity profile NOK million Average maturity 9 000 4.5 years 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2021 Drawn amounts Unutilised credit facilities 39 Third quarter results 2010
Slide 40: Net gearing 0.54 as of Q3-10
Net gearing 0.54 as of Q3-10 NOK billion Net gearing 60 1,40 54 1,20 48 42 1,00 36 0,80 30 0,60 24 18 0,40 12 0,20 6 - 0 -6 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1-10 Q2-10 Q3-10 -0,20 Equity Net interest-bearing liabilities Net gearing 40 Third quarter results 2010
Slide 41: Funding Sources
Funding Sources Unutilised credit facilities 24% 8.1 Banks 49% 17.0 9.4 Bonds and CP 27% Figures in NOK billion 41 Third quarter results 2010
Slide 42: Third quarter results 2010
42 Third quarter results 2010