Orkla Asa · OSL:ORK
Orkla Asa — Investor Day (September 2015)
117 slides from Orkla Asa's investor day presentation, Sep 11, 2015
Slide 1: Delivering on our strategy and increasing performance
1 Delivering on our strategy and increasing performance Orkla Investor Day London, 11 September 2015
Slide 2: Welcome to Orkla's Investor Day
Welcome to Orkla’s Investor Day Agenda and speakers: 12:00 Delivering on our strategy Peter A. Ruzicka, and increasing performance President & CEO Q&A 12:50 Improving operational efficiency Johan Clarin, across our supply chain EVP Operations and COO Orkla Foods Q&A 13:20 Turnaround increasing perfo
Slide 3: Today's speakers
Today’s speakers Peter A. Ruzicka Stig E. Nilssen President & CEO Orkla ASA EVP & CEO Orkla Home & Personal • Joined Orkla in 2014 • CEO of Axellus (now Orkla Health) • 25 years of experience from the retail since 2006 sector • Extensive experience from home and • MBA and degree in Business personal
Slide 4: Index
Index Presentations Page Delivering on our strategy and increasing performance 5 Improving operational efficiency across our supply chain 25 Orkla Confectionery & Snacks: Turnaround increasing performance 40 Orkla Home & Personal: Successful track record of growing through acquisitions 58 Orkla Food
Slide 5: Delivering on our strategy and increasing performance
5 Delivering on our strategy and increasing performance Peter A. Ruzicka, President & CEO
Slide 6: Delivering on our strategy and increasing performance
Delivering on our strategy and increasing performance Keep the strategy on track Deliver organic growth at least in line with market growth Target annual adj. EBIT growth of 6-9%1 in BCG Maintain a stable dividend of at least NOK 2.50 per share 1Including add-ons, excluding currency effects and larg
Slide 7: Growing the leading Nordic branded consumer goods company
Growing the leading Nordic branded consumer goods company Strengthen Increase presence Enter new position in new in existing markets categories channels Exit non-core 7
Slide 8: Improving operational efficiency is a key priority
Improving operational efficiency is a key priority One Orkla Cost reductions Focused top line initiatives and efficient operations • Fewer, bigger innovations • Centralised supply chain • Innovations launched across • Company mergers countries and business areas • Increased sales force effectiveness
Slide 9: Top line and cost initiatives showing results
Top line and cost initiatives showing results ILLUSTRATIVE YTD at end Q2 2015 Organic sales growth: 2.3% BCG EBIT (adj.) margin increase from 10.4% to 10.9% BCG EBIT (adj.) growth: 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 10.9% 2014 2015 Organic sales growth1 Underlying fixed costs2 1Organic sales
Slide 10: Outperforming OSEBX since Investor Day 2013
Outperforming OSEBX since Investor Day 2013 Orkla share price performance EBIT (adj.) growth of 16 % last two years - indexed against OSEBX NOK million ORKLA OSEBX 3 500 160 EBIT (adj.) R12M 150 140 NOK per share 3 000 130 120 110 2 500 100 90 2 000 80 26.09.13 05.12.13 13.02.14 24.04.14 03.07.14 11
Slide 11: Delivering value through One Orkla
Delivering value through One Orkla One Orkla Creating value as the New strategy Implementing strategy leading Nordic branded consumer goods company 11
Slide 12: Increasing efficiency and lowering costs
Increasing efficiency and lowering costs Continuous improvement One integrated supply chain throughout the value chain Q3-14 Q4-14 Q1-15 Q2-15 BCG production sites R12M fixed costs1 in % of revenues 12 1Fixed costs include both SG&A and fixed production / inventory costs
Slide 13: Extracting synergies while maintaining our local insight
Extracting synergies while maintaining our local insight Market proximity and product tailoring Local Optimised Utilising market proximity Extracting synergies across categories and markets Multinational Synergies 13
Slide 14: Broad portfolio of local brands occupying #1 and #2 positions
Broad portfolio of local brands occupying #1 and #2 positions 14
Slide 15: Superior insight into local consumer preferences
Superior insight into local consumer preferences Utilise technologies and successful Build on strong, local brands innovations across markets Detergents 78% Orkla market share Ketchup 57% Orkla market share Chips 38% Orkla market share 15 Source: Nielsen, R12M as of week 32 2015
Slide 16: Build closer customer relationships
Build closer customer relationships ILLUSTRATIVE Local focus Global focus Nordic revenue1 16 1Estimated Nordic revenues based on 2014 figures. Orkla Branded Consumer Goods incl. Cederroth
Slide 17: Sustainability is a core part of our strategic thinking
Sustainability is a core part of our strategic thinking Nutrition & health: Food safety: Responsible sourcing: Environment: Ensure safe food Develop Minimise our Contribute to a sustainable throughout the environmental healthy lifestyle supply chains supply chain footprint 17
Slide 18: Building on our strong market presence
Building on our strong market presence 18
Slide 19: Status of targets from Investor Day 2013
Status of targets from Investor Day 2013 2016 Target Expected delivery EBIT (adj.) Dilution adjusted for dilution From Inv. margin effects1 effects1 Day in 2013 Orkla Foods 15.0% ~1 pp. 2017 Orkla Confectionery 16.5% ~1 pp. 2017 & Snacks Orkla 17.5% ~2.5 pp. 2016 Home & Personal Orkla 2016 5.7% Food
Slide 20: Updated financial targets 2016 – 2018
Updated financial targets 2016 – 2018 Deliver organic growth at least in line with market growth Target annual adj. EBIT growth of 6-9%1 in BCG 20 1Including add-ons, excluding currency effects and large acquisitions and divestments
Slide 21: Optimising value in Orkla Investments
Optimising value in Orkla Investments Jotun Sapa Financial investments Share portfolio Hydro Power Real estate 21
Slide 22: Solid bottom line growth in Sapa and Jotun
Solid bottom line growth in Sapa and Jotun Operating profit - rolling 12 months Underlying EBIT - rolling 12 months NOK million NOK million 2 000 1 200 1 000 1 500 800 600 1 000 400 200 500 0 0 -200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20151 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2013 2014 2014 2014 2014
Slide 23: Maintaining balanced capital allocation
Maintaining balanced capital allocation Stable dividend of at least NOK 2.50 per share Sustaining an investment grade company • NIBD / EBITDA < 2.5 - 3.0 Clear strategy for allocation of excess capital • First priority is reallocating to Branded Consumer Goods for acquisitions, otherwise extraordina
Slide 24: Delivering on our strategy and increasing performance
Delivering on our strategy and increasing performance Keep the strategy on track Deliver organic growth at least in line with market growth Target annual adj. EBIT growth of 6-9%1 in BCG Maintain a stable dividend of at least NOK 2.50 per share 24 1Including add-ons, excluding currency effects and l
Slide 25: Improving operational efficiency across our supply chain
2 5 Improving operational efficiency across our supply chain Johan Clarin EVP Operations and COO Orkla Foods London, 11 September 2015
Slide 26: Orkla Supply Chain – a great opportunity
Orkla Supply Chain – a great opportunity 8 CONSUMER UNITS million PRODUCED DAILY SUPPLY CHAIN EMPLOYEES FACTORIES COST BASE (NOK BN) 26 5500 103 ~24
Slide 27: Our priorities
Our priorities 1 2 Rationalize manufacturing & W/H Improve our integrated supply chain structure 3 Organisation - Continuous cost competitive position improvements 4 through increased Accelerate purchasing savings efficiency and 5 Strengthen lower costs capabilities 27
Slide 28: In 2014 Orkla started a supply chain transformation
ORGANISATION In 2014 Orkla started a supply chain transformation 2014 2015 2016-2018 - Point of departure - - Gearing-up - - Executing - • Limited strategic • New operating model - • Drive supply chain direction for supply chain moving towards an performance integrated supply chain improvements • Lo
Slide 29: Combining local market insight with higher pace and synergies
ORGANISATION Our ambition is to combine our superior, local market insight with a higher pace and focus on extracting synergies Market proximity and product tailoring Local Optimised Utilising market proximity Extracting synergies across categories and markets Multinational Synergies 29
Slide 30: Orkla currently has a network of 103 factories
RATIONALIZING OUR STRUCTURE Orkla currently has a network of 103 factories Complexity has increased over time Factory footprint 2015 • Acquisitions have added complexity • Few structural changes made to enable operations across countries Our situation today • Many small factories • Several plants pr
Slide 31: We are rationalizing our production structure
RATIONALIZING OUR STRUCTURE We are rationalizing our production structure Focus and scope will increase Closures announced since 2014 going forward New closures announced per quarter Rationalize production structure Accumulated closures since 2014 12 based on One Orkla: 10 • Category perspective (ce
Slide 32: Consolidating herring production generated NOK ~15 million in EBIT improvement
RATIONALIZING OUR STRUCTURE Consolidating herring production generated NOK ~15 million in EBIT improvement PROJECT EXAMPLE: HERRING MANUFACTURING • Consolidated herring production and reduced the manufacturing footprint • ~80% fixed cost reduction Turku Rymättylä • SKU optimization 2 1 Kungshamn • I
Slide 33: Consolidating warehousing in Denmark
RATIONALIZING OUR STRUCTURE We are consolidating warehousing across business areas. In Denmark this yielded savings of NOK 17 million PROJECT EXAMPLE: WAREHOUSING DENMARK 2014: 5 warehouses 2015: 2 warehouses • We have consolidated the warehouse and distribution set-up across business areas in Denma
Slide 34: Increased pace of factory performance improvement projects
CONTINUOUS COST IMPROVEMENTS Increased pace of factory performance improvement projects since 2014 Focus: Increasing capabilities and Number of factory performance reducing costs improvement projects Local and central resources working 7 together 5 19 Standard tools 1 xxx x and methodologies 2 xx x
Slide 35: Factory performance improvement projects deliver strong results
CONTINUOUS COST IMPROVEMENTS Dedicated factory performance improvement projects deliver strong results PROJECT EXAMPLE: TORO ARNA (Main category is dry products, e.g. soups) Background: Declining 16% reduction in productivity Actions conversion cost Conversion Cost/KG (RTM) Turnaround with three Con
Slide 36: Journey towards more centralised procurement
ACCELERATE PURCHASING SAVINGS We are on a journey towards a more centralised set-up for procurement Cost improvements doubled since 2011 Role of Orkla Procurement 1. Provide a strong category focus and leverage scale 2. Ensure best practice sourcing strategies 2011 2012 2013 2014 E 2015 E 2016 3. De
Slide 37: Further centralization of procurement
ACCELERATE PURCHASING SAVINGS Further centralization of procurement is based on successful consolidation of purchasing in many categories (Annual Spend NOK ‘000) Example – Corrugated Packaging • Total annual spend: NOK 300 million 20 000 • Number of Orkla companies buying: 30 100 000 100 000 20 000
Slide 38: Building capabilities and tracking performance
STRENGTHEN CAPABILITIES By building capabilities and tracking performance we deliver everyday improvements with long-lasting effects • Implement Orkla Production System and training programmes • Set baseline requirements Build • Standardise way of working capabilities • Create and share best practic
Slide 39: Our priorities going forward
Our priorities going forward 1 2 Rationalize manufacturing & W/H Improve our integrated supply chain structure 3 Organisation - Continuous cost competitive position improvements 4 through increased Accelerate purchasing savings efficiency and 5 Strengthen lower costs capabilities 39
Slide 40: Turnaround increasing performance
4 0 Turnaround increasing performance Ann-Beth Freuchen EVP & CEO Orkla Confectionery & Snacks London, 11 September 2015
Slide 41: Strong market positions across the Nordics and Baltics
Strong market positions across the Nordics and Baltics Norway Sweden Finland Denmark Latvia Estonia #2 #1 #1 #1 #1 #2 Snacks #2 #4 #1 #1 Confectionery #1 #1 #4 #1 #1 Biscuits 41
Slide 42: Norway is the largest market for OC&S
Norway is the largest market for OC&S Total Orkla Confectionery & Snacks (OC&S) revenues: ~ NOK 5.5 billion¹ Revenue split by geography² Revenue split by category Other 6% 19% Norway Sweden Snacks Biscuits 16% 34% 41% 16% Finland 14% 11% 37% Latvia 6% Denmark Confectionery Estonia 1Estimate based on
Slide 43: Delivering on turnaround ambitions - particularly in Norway
Delivering on turnaround ambitions - particularly in Norway 2013 status 2015 status • Weakening results up to 2013 • Results improving from 2H 2014 • Fundamentally stable markets and • Attractive growth rates and strong leading market positions market positions • Creation of bigger national units by
Slide 44: 2014 marked the start of the turnaround
2014 marked the start of the turnaround EBIT (adj.) (MNOK) Annual organic sales growth1 (%) and EBIT (adj.) margin (%) FY -0.4% 2.3% 15.9 % 16.4 % 1.4% 1.4% 14.2 % 13.9 % 14.4 % 0.5% 766 787 753 690 693 -2.5% -3.6% 2011 2012 2013 H1 H2 H1 2011 2012 2013 2014 RTM 2015 2014 2014 2015 44 1Adjusted for
Slide 45: Sharp turnaround in OC&S' Norwegian business
Sharp turnaround in OC&S’ Norwegian business Change in revenues1 vs. previous year for OC&S Norway 2013 2014 2015 9.5% 6.4% 6.7% 5.8% -1.3% -3.3% -3.8% -5.7% -6.4% -7.1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Strong profit margins maintained throughout turnaround period 45 1Not adjusted for seasonal effects
Slide 46: Three priorities guiding the turnaround in OC&S Norway
Three priorities guiding the turnaround in OC&S Norway 1 Rapid integration 2 Regain top-line growth 3 Deliver on cost savings 46
Slide 47: Three companies merged into one
Three companies merged into one – agile approach to ensure rapid pace 47
Slide 48: Regaining market shares in a very competitive market
Regaining market shares in a very competitive market RTM as of July 2014 RTM as of July 2015 Development in OC&S market share Snacks Confectionery Biscuits 0.8 pp 0.7pp 0.6 pp 0.2 pp -1.2 pp -1.6 pp Market growth : 5.5% Market growth: 6.3% Market growth: 2.4% 48 Source: Nielsen; All growth numbers a
Slide 49: Stronger cooperation with Norway's largest retail chains
Stronger cooperation with Norway’s largest retail chains Approach • Agreements in place to facilitate growth • Set of initiatives to support cooperation, e.g., – Category management – Customer involvement in innovation • Example outcome from cooperation initiatives¹: – NorgesGruppen gaining relative
Slide 50: Sales force restructuring to improve sales execution and efficiency
Sales force restructuring to improve sales execution and efficiency Sales-force costs # of store visits Change programme Combined sales force of Nidar and Sætre/KiMs – New structure Up – New middle Down ~25% management ~20% – Capabilities training – New tools 50
Slide 51: Driving category and share growth in key chocolate segment
Driving category and share growth in key chocolate segment Annual growth in chocolate tablets Comments OC&S growth p.a. large tablets Average market growth over period shown 2014 OC&S launches 18% • Large tablets the largest chocolate segment in Norway 7% 6% • OC&S leveraged strong brand positions t
Slide 52: Reigniting growth in biscuits
Reigniting growth in biscuits Annual growth in biscuits Actions OC&S biscuits Average market 13.2 % growth • Increased product attractiveness by using chocolate brands across 4.9 % categories 2.10% • Winning back consumption frequency in families with stronger brand positions 3.8 % 2013 2014 YTD 201
Slide 53: Leveraging innovations and campaigns across our markets
Leveraging innovations and campaigns across our markets EXAMPLES 53
Slide 54: Improved sales of existing, core portfolio
Improved sales of existing, core portfolio All figures in NOK million ILLUSTRATIVE 1,975 80% of growth from increased sales of existing products – driven by better sales execution ~80% ~20% 1,847 Revenues Growth from Growth from Revenues RTM end Q2 2014 innovations - existing portfolio RTM end Q2 20
Slide 55: Significant reduction in fixed costs since 2013
Significant reduction in fixed costs since 2013 Changes in fixed costs / revenue (%) Comments 25.8 • 4% reduction in fixed 26 costs since 2013 24.8 25 24 • Cost improvements in: 23.5 – Administrative and 23 commercial 22 functions 21 – Supply chain – Sales force 20 2013 2014 RTM 2015 55
Slide 56: Summary of the Norwegian case
Summary of the Norwegian case Priorities Actions 1. Rapid integration • Agile approach driving pace and organizational involvement 2. Regain top-line growth • Improved cooperation with customers • Innovation focus on core positions • Leveraging brands across categories • Step-change in sales executi
Slide 57: Future priorities and actions
Future priorities and actions 1 Drive growth across all markets – regain share 1. • Core focus in innovation • Closer collaboration with customers • Improved sales execution 2. 2 Reduce costs • Deliver on supply chain streamlining • Realize remaining potential for organizational efficiency 3. 3 Succ
Slide 58: Successful track record of growing through acquisitions
5 8 Successful track record of growing through acquisitions Stig Ebert Nilssen EVP & CEO Orkla Home & Personal London, 11 September 2015
Slide 59: New organization established in 2013 – five categories
New organization established in 2013 – five categories REVENUES 2014 NOK 5.0 bn REVENUES 2014 REVENUES 2014 REVENUES 2014 REVENUES 2014 REVENUES 2014 NOK 1.8 bn NOK 0.5 bn NOK 0.5 bn NOK 1.5 bn NOK 0.6 bn • PERSONAL CARE • PROFESSIONAL • TEXTILES • DIETARY • PAINTING TOOLS • HOME CARE CLEANING SUPPL
Slide 60: Orkla Home & Personal consists of large categories with a strong Nordic base
Orkla Home & Personal consists of large categories with a strong Nordic base Reported revenues in 2014: NOK 5.0 billion Revenues split by country Revenues split by category Professional Other cleaning 11% Health 15% Norway Textiles Finland 30% 4% 11% Denmark 8% 11% Painting 9% 63% tools Sweden 19% 1
Slide 61: Recent history shows ability to combine organic and structural growth
Recent history shows ability to combine organic and structural growth Figures in NOK billion CAGR: 7.0% 61
Slide 62: Growth opportunities combining new markets and new categories
Orkla Home & Personal sees several growth opportunities combining new markets and new categories Orkla Home & Personal presence pre Cederroth acquisition Category Home care Personal care Health Textiles (grocery) Painting tools New (related) categories Strong #1, clearly larger than #2 In the market
Slide 63: Rationale for acquisitions
Orkla Home & Personals rationale for profitable acquisitions • Balancing organic growth with structural growth • Competitive M&A advantage from critical mass • Strong market positions / brands – key success factor 63
Slide 64: Acquired growth in Orkla Health
Acquired growth in Orkla Health Main rationale 1 Leverage economies of scale in existing markets and organizations 2 Increased presence in pharmacies 3 Increased presence in new categories • Gut health • Joint health 2012 20141 2015 64 1Owner share 16.7%
Slide 65: Acquiring Jordan in 2012
Acquiring Jordan in 2012 Home & Personal House Care Care (painting tools) Revenues 2012 Revenues 2012 NOK 0.4 billion NOK 0.5 billion 65
Slide 66: Increased presence outside Norway within home and personal care
Increased presence outside Norway within home and personal care • Complementary portfolio with Lilleborg in Product portfolio examples Norway • International platform Revenues 2012 by Revenues 2012 geography by category Home Care Norway 10% ROW 37% 36% 5% 5% 17% 90% Netherlands Poland Nordics Oral C
Slide 67: Successful integration of Jordan in Lilleborg
Successful integration of Jordan in Lilleborg 1. Integration process according to plan 2. Lilleborg has gained useful experience from integrating Jordan that is helpful in Cederroth integration INTERNATIONAL SALES HOME CARE SKUS REDUCED BY CAGR ≈ 13% 50% *FURTHER REDUCTION IN PROGRESS *Excl. Nordics
Slide 68: New growth with Cederroth 2016–2018
New growth with Cederroth 2016–2018 • Strengthening Nordic base Product portfolio • Wound Care new category examples • Growth possibilities in several channels • Cederroth strong in Sweden & Lilleborg strong in Norway Revenues 2014 Revenues 2014 by geography by category House- RoW Other hold Spain 5
Slide 69: Integration of Cederroth in existing business units
Integration of Cederroth in existing business units Home & personal Wound Care Dietary supplements care (New business unit) Weight management Revenues 2014: Revenues 2014: Revenues 2014: NOK 1.0 bn NOK 0.3 bn NOK 0.3 bn 69 Note: Revenues according to Orkla’s definition, including Asan and Allévo
Slide 70: Cederroth generates significant market positions and geographic diversity
Integration of Cederroth will generate significant market positions and diversify geographic presence Geographic revenue split Orkla Home & Personal revenue split before Cederroth ROW 15% Norway Finland 1.1 4% 3.1 3.2 0.4 0.7 Denmark 8% 0.1 9% 64% 0.2 0.2 0.4 Sweden 0.4 0.2 0.6 0.4 Orkla Home & Pers
Slide 71: Increased channel diversity
Increased channel diversity Orkla Home & Personal before Orkla Home & Personal after Channel split Channel split Grocery outside Norway Grocery outside 10% Norway 20% 45% Non-Grocery 45% Non-Grocery 45% Grocery Norway 35% Grocery Norway Pharmacy Pharmacy Sales Sales (MNOK) (NOK million) Pharmacy Sal
Slide 72: One common go-to-market organization
Intention One common go-to-market organization Country manager G&A Local Marketing: Local Marketing: Local Marketing: Home & Sales Health Wound Care Personal Care Strong local sales and go-to-market organizations, working closely with central marketing in Lilleborg and Orkla Health. 72
Slide 73: Synergy potential minimum NOK 70-80 million
Synergy potential minimum NOK 70-80 million Top-line synergies: Cost synergies: 1. Critical mass in go-to-market capability 1. Procurement and supply chain improvements 2. Innovation and product development 2. More efficient organizational set-up 3. Access to new markets and channels 73
Slide 74: Successful track record of growing through acquisitions
Successful track record of growing through acquisitions 1. Long experience with integrating acquisitions with complementary product portfolios 2. Several attractive growth opportunities in new markets Solid base for and new categories future growth 3. Acquisition of Cederroth in line with growth str
Slide 75: A winning business model
7 5 A winning business model Pål Eikeland EVP & CEO Orkla Food Ingredients London, 11 September 2015
Slide 76: More than just ingredients
More than just ingredients Production, sale and distribution of ingredients and products to the European bakery market Founded in • Artisan bakeries • Industry and semi industry 1999 Customers • Retail 45 companies in 22 • Products and ingredients for the countries bakery and confectionery industry
Slide 77: Artisan bakeries and industry are our main customer segments
Artisan bakeries and industry are our main customer segments % Share of revenue Artisan bakeries Industry In store bakeries 37% 30% 5% Ice cream shops Retailers 8% 20% 77
Slide 78: Our bakery products
Our bakery products BREAD MIX MARGARINE/OIL SERVICE ARTICLES DIVIDING OIL COMMODITIES YEAST SOURDOUGH IMPROVERS 78
Slide 79: Our confectionery products
Our confectionery products CAKE MIXES MARGARINE/OIL SERVICE ARTICLES CHOCOLATE FROZEN CAKES JAM FILLINGS & CREAM MARZIPAN 79
Slide 80: Our ice cream products
Our ice cream products DECORATIONS AND INCLUSIONS TOPPINGS TOPPINGS CONES ACCESSORIES WAFFLES DECORATIONS AND TOPPINGS AND ACCESSORIES ACCESSORIES 80
Slide 81: From a Nordic focus to European position
We have moved from a Nordic focus to European position position… 1999 2003 2014 4 countries 10 countries 22 countries • • • • •• • ••••• ••••• •• ••• •• • • •• ••• • • •• • • • • • • • • • • • •• • • • • • •• •• • • • ••• • • • • Net sales (NOK million) CAGR 6 534 5 998 +10% 5 392 5 435 4 560 3 670
Slide 82: Strong growth through acquisitions and organic growth
.. and delivered strong growth through a mix of acquisitions and organic growth Net sales, NOK million 7000 6000 5000 4000 Cz 3000 50% 2000 Regal sold 1000 50% 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 82
Slide 83: Our competitive advantage – played locally, won as a team
Our competitive advantage – the game is played locally, but won as a team Sales and distribution Category production Flow of knowledge Flow of products • Offering knowledge and • Close to the customer through concepts, not just products our No 1 S&D companies • Access to own product • Scale in our p
Slide 84: A system of 45 companies in 22 countries
A system of 45 companies in 22 countries Independent companies with a strong culture and proud heritage Category companies Develop and produce world class product assortment Sales and distribution companies Develop world class sales 84
Slide 85: Creating value through independent companies, synergies and structural growth
Creating value through independent companies, synergies and structural growth 10-20% 3 Structural growth • Strengthen the Orkla Food Ingredients network through acquisitions 20% 2 Synergy • Flow of products; leveraging on the European exploration wide S&D companies • Flow of knowledge 60-70% 1 Indep
Slide 86: Strong financial performance since 2012
Strong financial performance since 2012 Operating Revenues (MNOK) EBIT (adj.) (MNOK) EBIT (adj.) margin (%) +10% +25% 5.3 5.1 6 534 346 4.6 4.4 5 998 4.1 5 435 273 +14% +33% 221 3 494 179 3 075 135 2012 2013 2014 H1 H1 2012 2013 2014 H1 H1 2012 2013 2014 H1 H1 14 15 14 15 14 15 86
Slide 87: Winning with customers locally and internationally
Winning with customers locally and internationally 87
Slide 88: Growing with local consumers and customers
8 8 Growing with local consumers and customers Atle Vidar Nagel-Johansen EVP & CEO Orkla Foods London, 11 September 2015
Slide 89: 85% of revenues from the Nordics, unmatched positions
85% of revenues from the Nordics, unmatched positions in many categories Sales split by geography Sales split by category Meals: Ready, Austria India dry, canned, Other Czech Republic 5% components 3% 13% Baltics 3% 4% 26% Finland Pizza 6% Norway 10% 39% Denmark 9% Jam 5% 13% Sauces 10% Desserts/sna
Slide 90: Value creation model built on local brands, insights and scale
Our value creation model is built on local brands, local insights and scale advantages Local brands • Superior local consumer understanding Local insight • Superior trade and category understanding • National cost advantages and competitive strength in sales and Scale advertising advantages • Attrac
Slide 91: Structural initiatives 2013 - 2015
Structural initiatives 2013 - 2015 Acquisitions Structural changes • National food companies established in all markets • Orkla Foods International’s businesses in Austria, Czech Republic and India incorporated in Orkla Foods • Divestment of Orkla Brands Russia (RUS) and Delecta (PL) 91
Slide 92: Successful integration and synergy effects from Rieber & Søn
Successful integration and synergy effects from Rieber & Søn Run rate Accumulated gross P/L effect 350 300 Transaction completed 250 May-13 NOK million 200 150 100 50 0 2012 2013 2014 2015 2016 ~NOK 350 million realized in gross synergies 92
Slide 93: Re-established organic growth and recovering margins
Re-established organic growth and recovering margins since acquisition of Rieber & Søn Organic sales growth1 EBIT (adj.) margin2 3.2% 3.1% 13.5% 13.2% 1.6% 12.3% 12.4% 11.9% -1.2% -4.6% 2011 2012 2013 2014 RTM 2011 2012 2013 2014 RTM H1 H1 2015 2015 Dilution effect of 1.5 – 2.0 percentage points fro
Slide 94: We pay close attention to local and global consumer trends
We pay close attention to local and global consumer trends HEALTHY LIVING CONVENIENCE INDULGENCE SOCIAL LOCALNESS RESPONSIBILITY 94
Slide 95: In Norway palm oil has been a key consumer concern
In Norway palm oil has been a key consumer concern HEALTHY LIVING Heavy focus in media on products containing palm oil and the need for transparency 95
Slide 96: Early responder to consumer demand for eliminating palm oil
Orkla was an early responder to consumer demand for elimination of palm oil HEALTHY LIVING HEALTHY LIVING In less than a year we could present to the Our brand Nugatti consumer a product was highlighted as a free from palm oil product containing the “dangerous fat” 96
Slide 97: Meeting the growing vegetarian trend by acquiring Anamma
Meeting the growing vegetarian trend by acquiring Anamma HEALTHY LIVING “Real men eat salad” Orkla Foods has acquired Anamma 97
Slide 98: Strong preference for local brands and products
Strong preference for local brands and products LOCALNESS 98
Slide 99: Promoting local production and local ingredients
Promoting local production and local ingredients LOCALNESS 99
Slide 100: Meeting customers' need for exclusive products
Meeting customers’ need for exclusive products GÅRDLYKKE – controlled brand in Coop Denmark Mrs. Cheng only in Dansk Supermarket A range of dry food products launched under Beauvais Brand – only in Coop Denmark 100
Slide 101: Key priorities for growth
Key priorities for growth NEW MARKETS 1 • Grow the core Stronger growth programs for our prioritized categories, brands & SKUs driving category growth and gaining WHERE TO PLAY New growth market share ”Adjacent” 2 • New Growth EXISTING MARKETS Initiate and launch successful concepts/ products outsid
Slide 102: Innovation is a driver of growth in the pizza category
GROW THE CORE Innovation is a driver of growth in the pizza category Frozen pizza growth in sales value1 3.9% 2014 2015 Sum new launches in period Category ex new launches 102 Source: Nielsen per week 33 2015, 1R12M per August
Slide 103: Orkla Foods has a strong innovation programme for 2015
GROW THE CORE Orkla Foods has a strong innovation programme for 2015 103
Slide 104: Profitable growth in Finland
GROW THE CORE Local products, active campaigning and packaging innovations generate profitable growth in Finland BRANDING FINNISH NEW PACAKGING IN STORE ORIGIN ACTIVATION 6.3 % category growth – 19.9% growth for Felix Maku “There are no such things as mature categories” 104
Slide 105: Continue to realize growth from the health trend in new categories
NEW GROWTH Continue to realize growth from the health trend in new categories 2010 2011 2012 2013 2014 R12M Target 2016 2017 2018 April 2015 2015 105 Source: company data
Slide 106: Introducing Pauluns Super porridge
NEW GROWTH Continue to realize growth from the health trend in new categories Introducing Pauluns Super porridge 106
Slide 107: Pastella Vegetable Pasta made from 40% vegetables
NEW GROWTH Pastella Vegetable Pasta made from 40% vegetables Driving category growth and winning market shares +14% 100 87 44% 37% 30% 25% 33% 31% YTD July 2014 YTD Jul 15 Pastella +36% Private Label -5% 107 Source: Nielsen week 32 2015 Other +8%
Slide 108: Pastella Vegetable Pasta being launched in several markets
CROSS COUNTRY Pastella Vegetable Pasta being launched in several markets 108
Slide 109: Primary Nordic go-to-market partner for PepsiCo
NEW GROWTH The primary Nordic go-to-market partner for PepsiCo A portfolio of attractive brands… … in the Nordic markets 4 109
Slide 110: Growing with local consumers and customers
Growing with local consumers and customers 1. Resuming EBIT growth and improved margin following the years of Rieber integration 2. Keeping ahead of competition through our proximity to the market, customers and consumers 3. The winning formula for growth • Growing the core product range • Launching
Slide 111: Closing remarks and Q&A
1 1 1 Closing remarks and Q&A Peter A. Ruzicka, President & CEO
Slide 112: Your friend in everyday life
Your friend in everyday life
Slide 113: Driving value creation through One Orkla
Driving value creation through One Orkla Plant costs – Integrated supply chain increases cost cutting potential – Ongoing review of manufacturing and warehousing structure – Strong turnaround in Orkla Confectionery & Snacks Norway – Potential in other markets – Acquisitions give access to new channe
Slide 114: Delivering on our strategy and increasing performance
Delivering on our strategy and increasing performance Keep the strategy on track Deliver organic growth at least in line with market growth Target annual adj. EBIT growth of 6-9%1 in BCG Maintain a stable dividend of at least NOK 2.50 per share 114 1Including add-ons, excluding currency effects and
Slide 115: Contact us
Contact us Mattias Orrenius SVP Investor Relations Tel.: +47 983 66 334 Email: mattias.orrenius@orkla.no Elise Andersen Heidenreich Senior Communications & IR Advisor Tel.: +47 951 41 147 Email: elise.andersen.heidenreich@orkla.no Jens Bjørn Staff Executive Vice President and Chief Financial Officer
Slide 116: Disclaimer – important information
Disclaimer – important information We have prepared this document solely for information purposes. You should not rely upon it or use it to form the definitive basis for any decision, contract, commitment or action whatsoever, with respect to any proposed transaction or otherwise. Neither we nor any
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