Slide 1: Second quarter results 2013
Second quarter results 2013 Oslo, 18 July 2013 ÅGE KORSVOLD, PRESIDENT & CEO
Slide 2: Agenda
Agenda Åge Korsvold, President & CEO • Strategy and highlights Terje Andersen, CFO • Financial performance Atle Vidar Johansen, CEO Orkla Foods • Branded Consumer Goods
Slide 3: Highlights Q2 2013
Highlights Q2 2013 • Unsatisfactory financial performance for Branded Consumer Goods • Restructuring of Branded Consumer Goods progressing as planned • Divestment of non-core assets 3
Slide 4: Financial performance Q2 2013
Financial performance Q2 2013 • Unsatisfactory financial performance for Branded Consumer Goods • Weak top line in June for the Nordic businesses • Lower sales and profit for Rieber • Challenging markets for snacks and biscuits • Weak performance in Russia • Improvement for Home & Personal and Food
Slide 5: Ongoing transition
Ongoing transition • Merger of the Foods companies in each of the Nordic countries Restructuring • Integration of Rieber proceeds as planned of Branded • Merger of the Confectionery & Snacks companies in each of the Nordic Consumer countries Goods • New management team in Home & Personal • New organ
Slide 6: Merger of the Foods companies in each of the Nordic countries
Merger of the Foods companies in each of the Nordic countries • Rieber & Søn has been merged with the existing food companies in Norway, Sweden and Denmark • Cost synergies of NOK 250-300 million when fully implemented • The two existing food companies in Sweden merged in Q1 • Annual cost synergies
Slide 7: Merger of the Confectionery & Snacks companies in each of the Nordic countries
Merger of the Confectionery & Snacks companies in each of the Nordic countries • Potential annual cost synergies of NOK 50-70 million • Management teams in Norway, Sweden and Finland reduced from 7 to 3 • Operational during Q3 2013 Norway Sweden Finland Revenues Revenues Revenues (MNOK): (MNOK): (MN
Slide 8: Orkla Brands Russia
Orkla Brands Russia • Weak performance and write-down of intangibles of NOK 0.4 billion • Remaining book value NOK 0.8 billion • Ongoing restructuring activities • Reduce number of plants from 4 to 3 • Further reduce complexity of product portfolio • Free up capital from sale of property in St. Pete
Slide 9: Sapa (part of future JV)
Sapa (part of future JV) • Approval by European competition authorities • Awaiting approval by Chinese competition authorities • Stand-alone financing for new company secured • 5-year credit facility of EUR 700 million • Write-down of goodwill in Sapa of NOK 1.2 billion 9
Slide 10: Investor Day, London 26 September
Welcome to Orkla’s Investor Day, London 26 September Åge Korsvold Atle Vidar Johansen Bente Brevik Christer B. Åberg Register for the event here Stig Ebert Nilssen Tine Hammernes Leopold Terje Andersen 10
Slide 11: Financial Performance
FINANCIAL PERFORMANCE TERJE ANDERSEN, CFO
Slide 12: Group income statement
Group income statement Amounts in NOK million Q2 Q2 H1 H1 2012 2013 2012 2013 Operating revenues 7 213 7 905 14 282 15 124 EBITA 698 632 1 374 1 228 Amortisation intangibles -3 -3 -7 -10 Other income and expenses -130 -583 -144 -619 EBIT 565 46 1 223 599 Profit/loss from associates 120 130 279 225 D
Slide 13: EBITA bridge Q2 2013
EBITA bridge Q2 2013 698 -13 31 -18 -43 -23 632 EBITA Q2-12 Branded Sapa Heat Hydro Power Financial HQ/other EBITA Q2-13 Consumer Transfer Investments Goods 13
Slide 14: Group income statement
Group income statement Amounts in NOK million Q2 Q2 H1 H1 2012 2013 2012 2013 Operating revenues 7 213 7 905 14 282 15 124 EBITA 698 632 1 374 1 228 Amortisation intangibles -3 -3 -7 -10 Other income and expenses -130 -583 -144 -619 EBIT 565 46 1 223 599 Profit/loss from associates 120 130 279 225 D
Slide 15: Change in net debt first half 2013
Change in net debt first half 2013 11,8 0,3 -0,6 -2,6 4,8 -7,0 2,8 0,7 Net debt 31 Sale of Cash flow Expansion Paid FX effects Tax, Net debt 30 Dec 2012 shares and from (Incl. Rieber dividend dividends Jun 2013 financial operations and property received, net assets for new HQ) financials & other 15
Slide 16: Sapa (part of future JV) - Discontinued operation
Sapa (part of future JV) - Discontinued operation • Profit in Europe impacted by Sapa JV Q2-12 Q2-13 continued weak markets Operating revenues 6 894 6 444 • Volumes down 4% compared to Q2-12 EBITA 161 163 Other income and exp. - 20 -1 240 • Profit improvement for Profiles North America related to pr
Slide 17: Stable margins for Heat Transfer
Stable margins for Heat Transfer Heat Transfer Q2-12 Q2-13 • EBITA negatively affected by Operating revenues 1 102 1 058 the Swedish operations EBITA 102 84 • Increased metal premiums • Negative FX effects due to strong SEK EBITA margin performance: • Measures in place to increase productivity 9% 8%
Slide 18: Hydro Power - Lower production – Higher prices
Hydro Power - Lower production – Higher prices • Profit growth partly ascribable to sale of real estate • Production was 583 GWh in Q2 compared with 664 GWh last year EBITA for Hydro Power (NOK million) Spot prices (NordPool) (NOK/MWh) 85 312 77 292 294 275 215 46 45 33 154 -3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 19: Jotun (42.5%)
Jotun (42.5%) Amounts in NOK million Jotun as of 30 as of 30 Change • Weaker top line for marine, solid Apr 2012 Apr 2013 growth for other segments Revenues 3 653 3 901 7% EBIT 432 517 20 % • Cold weather in Scandinavia has contributed to lower sales in the region • Improved profitability driven by
Slide 20: Branded Consumer Goods
BRANDED CONSUMER GOODS ATLE VIDAR JOHANSEN, CEO ORKLA FOODS
Slide 21: Branded Consumer Goods
Branded Consumer Goods EBITA Rolling 12 months Amounts in NOK million 3,000 2,900 2,800 2,700 2,600 2,500 2,400 2,300 2,200 2,100 2,000 100 0 Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- 05 05 05 05 06 06 06 0
Slide 22: Integration of Rieber
Integration of Rieber • Transaction closed on 26 April • Operations in Norway, Sweden and Denmark fully integrated in the existing food companies in each country • Man-year reductions carried out as planned and new management teams established • Cost synergies estimated to be NOK 250-300 million whe
Slide 23: Lower sales and profit for Rieber
Lower sales and profit for Rieber • Sales decline of 10% year to date • Proforma EBITA in the first half NOK 43 million, down NOK 8 million from 2012 • Lower HQ cost partly offset the weak sales performance • Rieber consolidated in Orkla from 1 May 2013 • Profit contribution from Rieber (May & June)
Slide 24: Orkla Foods
Orkla Foods Key figures (NOK million) • Unsatisfactory quarter • Weak performance for Rieber Q2-12 Q2-13 H1-12 H1-13 • Lower contribution from Operating revenues 1 938 2 382 3 836 4 306 innovations in Stabburet, Organic revenue growth ex. Rieber -2.3 % -1.1 % compared to a strong Q2-12 Organic reven
Slide 25: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Key figures (NOK million) • Major restructuring process to establish C&S company in each Q2-12 Q2-13 H1-12 H1-13 of Norway, Sweden and Finland Operating revenues 1 140 1 101 2 269 2 201 • Increased growth potential Organic revenue growth -4.8 % -3.6 % • Cost synergies EB
Slide 26: Orkla Home & Personal
Orkla Home & Personal Key figures (NOK million) • Positive development in Lilleborg and Axellus Q2-12 Q2-13 H1-12 H1-13 • Profit growth Operating revenues 863 1 097 1 788 2 308 • Increased market shares Organic revenue growth -4.8 % -2.2 % EBITA 131 165 302 379 • Underlying sales decline mainly rela
Slide 27: Orkla International
Orkla International Sales and profit decline in Russia Key figures (NOK million) • Sales decline in both traditional and modern trade Q2-12 Q2-13 H1-12 H1-13 • Write down of remaining intangibles, Operating revenues 471 584 923 990 booked as other income and expenses Organic revenue growth -8.3 % -7
Slide 28: Orkla Food Ingredients
Orkla Food Ingredients Key figures (NOK million) • Good underlying improvement in Q2-12 Q2-13 H1-12 H1-13 the bakery segment in Norway Operating revenues 1 308 1 415 2 540 2 748 and Denmark Organic revenue growth 0.6 % 1.3 % EBITA 68 77 98 114 • EBITA growth mainly related to acquired companies EBIT
Slide 29: Q&A
Q&A • Åge Korsvold, President & CEO • Terje Andersen, CFO • Atle Vidar Johansen, CEO Orkla Foods
Slide 30: Appendices
APPENDICES people — creating value (93 O R K L A
Slide 31: Cash flow
Cash flow Amounts in NOK million Full year 2012 H1 2012 H1 2013 Operating profit 2 910 1 223 599 Amortisation, depreciations and impairment charges 969 476 901 Changes in net working capital, etc. 1 028 285 - 477 Net replacement expenditure - 796 - 384 - 319 Cash flow from operations 4 111 1 600 704
Slide 32: Balance sheet
Balance sheet Amounts in NOK million 31.12.2012 30.6.2013 Intangible assets 10 069 15 054 Property, plant and equipment 9 601 12 048 Financial assets 3 686 3 505 Non-Current assets 23 356 30 607 Assets in discontinued operations 13 740 14 075 Inventories 4 243 4 981 Receivables 5 357 6 450 Shares an
Slide 33: Net financial items
Net financial items Amounts in NOK million FY 2012 Q2-12 Q2-13 Net interest expenses -389 -90 -105 Currency gain/loss -18 -12 -4 Other financial items, net - 82 2 -25 Net financial items -489 -100 -134 33
Slide 34: Debt maturity profile, Orkla Group
Debt maturity profile, Orkla Group NOK million 9 000 8 000 7 000 Average maturity 6 000 3.3 years 5 000 4 000 3 000 2 000 1 000 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 Drawn amounts Unutilised credit facilities 34
Slide 35: Net gearing 0.41 as of Q2-13
Net gearing 0.41 as of Q2-13 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 Q2-13 -6 -0.20 Equity Net interest-bearing liabilities Net gearing 35
Slide 36: Funding sources
Funding sources Unutilised credit Banks 7.9 facilities 10.5 10. 13.1 4 6.99.33.1 Bonds and CP Cash, Cash equivalents and Interest Bearing Assets Figures in NOK billion 36