Slide 1: A quarter below expectations
1 A quarter below expectations First quarter results 2018 25 April 2018 Peter A. Ruzicka, President & CEO
Slide 2: Highlights Q1-18
Highlights Q1-18: Good underlying performance, but offset by timing of Easter, loss of distribution business and slow start of ice cream season • Good growth in Foods and Food Ingredients, despite a cold start to the ice cream season • Timing of Easter impacted growth negatively • Growth in Confecti
Slide 3: Branded Consumer Goods Q1-18: organic growth
Branded Consumer Goods Q1-18: Good growth in Foods and Food Ingredients offset by loss of distribution agreement (BCG adj. growth 0.8%) and Easter timing BCG organic growth Organic growth Q1-18 by business area 2.8% Orkla Foods 1.6% 1.8% 1.6% 1.1% 0.7% 0.8% Orkla Confectionery -2.8% 1.5% & Snacks 0.
Slide 4: Positive gap in black over red despite temporary fall in organic growth
Branded Consumer Goods Q1-18: Positive gap in black over red despite temporary fall in organic growth + 0 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018 Organic sales growth Underlying growth in fixed costs 4
Slide 5: Reducing fixed costs by leveraging the One Orkla model
Branded Consumer Goods Q1-18: Reducing fixed costs by leveraging the One Orkla model Improvements pay off and Revenue per factory up 37% we see further potential 23.4 404 21.8 +37% 295 2014 2015 2016 2017 Q1-18 All 2014 2015 2016 2017 Q1-18 R12M decided R12M projects Fixed costs1 as % of revenues An
Slide 6: Weaker NOK and SEK vs. EUR and negative mix effects pressure margins
Branded Consumer Goods Q1-18: Weaker NOK and SEK vs. EUR and negative mix effects pressure margins Underlying margin 10.4% development: -30 bps Comment -20bps -30bps 9.9% • M&A marginally dilutive 0bps • Variable cost impacted by weaker NOK and SEK vs. EUR and negative mix effects • Fixed cost reduc
Slide 7: Orkla will grow at least in line with the market
Branded Consumer Goods Q1-18: Orkla will grow over time at least in line with the market and continue to improve underlying margins to deliver on EBIT growth target of 6-9% Organic sales growth R12M Underl. EBIT (adj.) margin growth R12M (left axis) (right axis) 4% 100 bps 2% 50 bps 0% 0 bps -2% -50
Slide 8: Financial performance
8 Financial performance Jens Bjørn Staff, CFO
Slide 9: Growth in EBIT offset by reduced profit from associates
Growth in EBIT offset by reduced profit from associates and temporarily high financial items Key figures Q1-18 Q1-17 ∆vs LY Operating revenues 9,711 9,081 7% EBIT (adj.) BCG 942 921 2% EBIT (adj) Orkla Investments 54 61 -11% EBIT (adj) HQ/Other business -99 -82 -21% EBIT (adj.) 897 900 0% Other inco
Slide 10: 7.5% revenue growth mainly from FX and M&A
Branded Consumer Goods Q1-18: 7.5% revenue growth mainly from FX and M&A +7.5% 9,497 +3.8% 8,834 +0.8% +3.6% +0.1% BCG operating Organic growth FX M&A BCG operating revenues Q1-17 revenues Q1-18 Organic Growth adjusted for loss of C&S distribution business 10 Amounts in NOK million
Slide 11: Orkla Foods
Orkla Foods Broad-based growth, partly offset by timing of Easter Q1-18 Q1-17 Revenues 3,852 3,758 • Good growth partly offset by timing of Easter, especially in Norway Organic growth 1.6% • Last year’s higher prices on raw EBIT (adj.) 400 392 materials compensated for through pricing, but input cos
Slide 12: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Sales decline from loss of distribution contract Q1-18 Q1-17 Revenues 1,453 1,444 • Organic growth affected by loss of Wrigley distribution contract Organic growth -2.8% • Good sales progress outside Norway EBIT (adj.) 187 201 • Fewer trade campaigns in Norway EBIT(adj.)
Slide 13: Orkla Care
Orkla Care Profit growth from acquisitions Q1-18 Q1-17 Revenues 2,076 1,858 • Total revenue growth of 12% driven by M&A Organic growth -0.4% • Organic growth impacted by timing of EBIT (adj.) 298 275 Easter EBIT(adj.) growth 8.4% • EBIT margin diluted by M&A and higher input costs from weakened NOK
Slide 14: Orkla Food Ingredients
Orkla Food Ingredients Good performance in most companies, but profit hampered by a weak start to the ice cream season Q1-18 Q1-17 Revenues 2,182 1,813 • Good organic top line growth in many key markets and categories Organic growth 1.7% • Fewer sales days and poor ice cream EBIT (adj.) 57 53 season
Slide 15: Orkla Investments
Orkla Investments Progress for Hydro Power, another tough quarter for Jotun Hydro Power Fully consolidated into Orkla financial statements Volume (GWh): Power prices1 EBIT adj. (NOK Q1: 482 (536) (øre/KWh): million): Q1: 37.2 (28.0) Q1: 59 (54) Financial Investments Fully consolidated into Orkla fin
Slide 16: Jotun (42.6%)
Jotun (42.6%) Continued growth, but weak Marine results and higher raw material prices impact profit Q1-18 comments • Continued growth in both volume and operating revenues in all segments except Marine • Operating profit significantly impacted by weak market in Marine and sharp increase in raw mate
Slide 17: Cash flow generation impacted by working capital build-up
Cash flow generation impacted by seasonal working capital build-up and higher replacement investments Cash from operations (excl. financial investments) Cash flow per 31.03 Q1-18 Q1-17 Operating profit 873 806 Amort., depr., and impairment 302 327 Change in net working capital -574 -162 Net replacem
Slide 18: Changes in net debt Q1-18
Changes in net debt Q1-18 150 642 441 4 182 515 14 Net debt 31 Expansion Net paid to Cash flow Tax, dividends FX effects Net debt 31 December and sale of shareholders from received, net March 2018 2017 companies operations financial & other items 18 Amounts in NOK million
Slide 19: Financial calendar
Financial calendar: Investor Day 31 October 2018 Event Date Q2-2018 13 July 2018 Q3-2018 25 October 2018 Investor Day 31 October 2018 (London) Q4-2018 6 February 2019 19
Slide 20: Focus going forward
2 0 Focus going forward Peter A. Ruzicka, President & CEO
Slide 21: Fundamentals and financial targets remain intact
Fundamentals and financial targets remain intact Key takeaways Q1-18 • Good underlying progress • Loss of distribution contract, Easter and delayed ice cream season impact sales growth and EBIT (adj.) • Cost improvements offset by FX and mix in the quarter • Jotun continues to grow but raw material
Slide 22: Further roll-out of Pauluns in Finland and the Baltics
Further roll-out of Pauluns in Finland and the Baltics Gluten free Granola Granola, Super Müsli Granola and Super Extended portfolio in and snack bars and snack bars Müsli launched in Finland launched in Lithuania launched in Latvia Estonia 22
Slide 23: We continue to meet consumer trends with local brands
We continue to meet consumer trends with local brands Vegan formable Healthier OLW lentil Successful cleaning Naturli’ extends its mince 4th largest item chips create category system introduced in portfolio with plant- in its category growth Sweden based ice cream 23
Slide 24: Q&A
2 4 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 25: Appendices
‘Orkla Appendices
Slide 26: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) EBIT (adj.) EBIT (adj.) is operating profit or loss before other income and expenses (OIE). The main purpose of this performance measure is to identify material non-recurring items and items substantially relating to other periods to ensure that the changes in
Slide 27: Group income statement
Group income statement Change in Change in Q1-17 Q1-18 MNOK % Operating revenues 9,081 9,711 630 7% EBIT (adj.) 900 897 -3 0% Other income and expenses -87 -27 60 EBIT 813 870 57 7% Profit from associates* 173 86 -87 -50% Net financial items -3 -70 -67 . Profit/loss before taxes 983 886 -97 -10% Tax
Slide 28: Key figures: Orkla Foods and Confectionery & Snacks
Key figures: Orkla Foods and Orkla Confectionery & Snacks Orkla Foods Q1-17 Q1-18 Change Operating revenues 3,758 3,852 94 EBIT (adj.) 392 400 8 EBIT (adj.) margin 10.4 % 10.4 % 0.0 ppt Orkla Confectionery & Q1-17 Q1-18 Change Snacks Operating revenues 1,444 1,453 9 EBIT (adj.) 201 187 -14 EBIT (adj
Slide 29: Key figures: Orkla Care and Food Ingredients
Key figures: Orkla Care and Orkla Food Ingredients Orkla Care Q1-17 Q1-18 Change Operating revenues 1,858 2,076 218 EBIT (adj.) 275 298 23 EBIT (adj.) margin 14.8 % 14.4 % -0.4 ppt Orkla Food Ingredients Q1-17 Q1-18 Change Operating revenues 1,813 2,182 369 EBIT (adj.) 53 57 4 EBIT (adj.) margin 2.9
Slide 30: Net financial items
Net financial items FY-17 Q1-17 Q1-18 Net interest expenses -149 -37 -50 Currency gain/loss -3 1 2 Result from Share Portfolio and dividends 54 52 - Other financial items, net -78 -19 -22 Net financial items -176 -3 -70 30 Amounts in NOK million
Slide 31: Statement of financial position
Statement of financial position 31.12.2017 31.03.2018 Intangible assets 19,921 19,899 Property, plant and equipment 11,683 11,567 Investments in associates and joint ventures etc. 4,108 3,870 Non-current assets 35,712 35,336 Inventories 5,684 5,699 Inventory of development property 113 115 Trade rec
Slide 32: Cash flow
Cash flow FY-17 Q1-17 Q1-18 Operating profit 4,423 806 873 Amortisation, depreciation and write-downs 1,313 327 302 Change in net working capital 18 -162 -574 Gain from operations moved to Investments and sold entities -299 -1 -1 Net replacement expenditures -1,050 -240 -382 Cash flow from operation
Slide 33: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing debt (NOK million) Net gearing 7,805 8,056 0.23 0.24 5,661 0.18 642 0.02 14 0.00 2014 2015 2016 2017 Q1-18 2014 2015 2016 2017 Q1-18 33
Slide 34: Debt maturity profile
Debt maturity profile Average maturity 4.6 years 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2018 2019 2020 2021 2022 2023 2024 2025- Unutilised credit fasilities Drawn amounts 34 Amounts in NOK million
Slide 35: Funding sources
Funding sources 3.5 4.4 Unutilised credit facilities Banks Bonds and CP Cash, cash equivalents and interest bearing assets 2.5 2.6 35 Amounts in NOK billion
Slide 36: Your friend in everyday life