Slide 1: Third quarter results 2014
Third quarter results 2014 30 October 2014 Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 2: Highlights Q3 2014
Highlights Q3 2014 Improving operations and delivering on strategy • Group EBITA improved by 5% to NOK 860 million compared to Q3’13 • Improving operations in Branded Consumer Goods – Organic growth in BCG of 0.4% – BCG operating margin improved by 0.3 percentage points – Strong quarter with both to
Slide 3: Improved EBITA margin driven by Orkla Confectionery & Snacks
Improved EBITA margin driven by Orkla Confectionery & Snacks EBITA margin BCG EBITA margin BCG per business area 12.2% 12.5% 14.0% Orkla Foods 13.6% Orkla 16.1% Confectionery & Snacks 17.9% Orkla 21.0% Home & Personal 20.5% Orkla -1.1% International -0.8% Orkla Food 5.1% Ingredients 5.7% Q3’13 Q3’14
Slide 4: Positive growth in BCG despite challenges in Orkla Foods
Positive growth in BCG despite challenges in Orkla Foods Organic growth1 BCG Organic growth1 BCG per business area in Q3 2.5% Orkla Foods -3.4% 1.1% Orkla 0.9% Confectionery 2.6% 0.4% & Snacks Orkla Home 3.5% -0.5% & Personal -1.2% Orkla -3.4% International -2.8% Orkla Food 4.0% -3.6% Ingredients -3
Slide 5: Solid quarter for Orkla Confectionery & Snacks, challenging in Orkla Foods
Solid quarter for Orkla Confectionery & Snacks, challenging in Orkla Foods Orkla Confectionery & Snacks Orkla Foods • Improved EBITA margin • Reduced EBITA margin – Top-line, realization of synergies from – Top-line, FX, fixed costs restructuring Status • Negative organic growth • Positive organic g
Slide 6: YTD: Nine plants under closure or planned to be closed
YTD: Nine plants under closure or planned to be closed 97 -5 -4 88 Baseline Orkla 2014 Plant closed/undergoing Closure considered, pre- Other plants closure study to be finalised in Q4 6
Slide 7: Examples of innovations and relaunches in Q3
Examples of innovations and relaunches in Q3 PR Sport Young Soft, seamless base-layer for active youngsters 7
Slide 8: Examples of innovations and relaunches in Q3
Examples of innovations and relaunches in Q3 Abba Fisksoppa A healthy and convenient meal – easy to prepare and ready to eat 8
Slide 9: Examples of innovations and relaunches in Q3
Examples of innovations and relaunches in Q3 Polly bar Polly bar filled with Polly peanuts and soft caramel 9
Slide 10: Examples of innovations and relaunches in Q3
Examples of innovations and relaunches in Q3 Chicken soup Tasty chicken soup with noodles 10
Slide 11: Examples of innovations and relaunches in Q3
Examples of innovations and relaunches in Q3 Idun Mors Hjemmebakte Ready to use fillings 11
Slide 12: Gränges – A successful IPO despite challenging markets
Gränges – A successful IPO despite challenging markets • Strong operational improvement from Q1 2013 to Q2 2014 – Increase in EBITA margin by 3%-points to 11% – Strong cash generation ahead of IPO • Gränges well received by investor community, successfully listed on NASDAQ 10 October despite challen
Slide 13: The acquisition of NP Foods will significantly strengthen Orkla's positions in the Baltic markets
The acquisition of NP Foods will significantly strengthen Orkla’s positions in the Baltic markets Amounts in NOK million • NP Foods is a leading Latvian confectionery & Revenues by country (2013A)2 biscuits player – Sales 2013: NOK ~600m1 Estonia 408 73 481 • NP Foods holds #1 positions within: – Ch
Slide 14: Strong revenue and margin growth for Orkla companies located in the Baltic region
Strong revenue and margin growth for Orkla companies located in the Baltic region Amounts in NOK million Operating revenues1 EBITA margin1 (%) 1,022 9.00 898 7.70 763 787 6.40 4.20 2011 2012 2013 RTM 2011 2012 2013 RTM 14 1 Operating revenues and EBITA of Orkla companies with operations in the Balti
Slide 15: Financial Performance
Financial Performance Jens Bjørn Staff, CFO
Slide 16: Group EBITA improved by 5% to NOK 860 million in Q3
Group EBITA improved by 5% to NOK 860 million in Q3 Amounts in NOK million Key figures Q3-13 Q3-14 YTD-13 YTD-14 Operating revenues 7,508 7,487 20,604 22,095 EBITA 819 860 1,878 2,112 Other income and expenses -193 -47 -780 -7 EBIT 622 807 1,084 2,090 Profit/loss from associates 76 126 299 373 and J
Slide 17: EBITA improvement driven by Orkla Confectionery & Snacks and Orkla Food Ingredients
EBITA improvement driven by Orkla Confectionery & Snacks and Orkla Food Ingredients Amounts in NOK million Branded Consumer Goods: NOK 35 million NOK 9 million increase in underlying EBITA BCG 860 -2 8 16 3 7 819 30 -21 Group Orkla Foods Orkla Orkla Home Orkla Orkla Food Orkla Orkla HQ Group EBITA C
Slide 18: 1.2% revenue growth, 0.4% organic growth in BCG
1.2% revenue growth, 0.4% organic growth in BCG Amounts in NOK million -0.3 % 7,200 1.1 % 7,115 0.4 % BCG operating Organic growth1 FX M&A BCG operating revenues Q3 2013 revenues Q3 2014 18 1 Organic growth has been adjusted for timing of selling days
Slide 19: Orkla Foods – Key financials
Orkla Foods – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) -3.4% -3.6% OG1 OG1 7,707 6,903 971 14.0 13.6 14.6 853 12.6 11.7 11.6 11.0 2,597 2,526 364 343 Q3 YTD Q3 YTD Q1 Q2 Q3 Q4 • Top-line development still • Q3 EBITA and margin affected by a weaker Swe
Slide 20: Orkla Confectionery & Snacks – Key financials
Orkla Confectionery & Snacks – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) 2.6% -0.7% OG1 OG1 3,348 3,454 448 440 17.9 16.1 16.3 13.1 10.8 10.4 9.6 215 1,147 1,202 185 Q3 YTD Q3 YTD Q1 Q2 Q3 Q4 • First quarter with organic growth • EBITA improvement in Q
Slide 21: Orkla Home & Personal – Key financials
Orkla Home & Personal – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) 3.5% 3.3% OG1 OG1 3,500 3,710 629 663 21.0 20.5 17.7 18.0 15.0 15.0 15.3 1,192 1,254 250 257 Q3 YTD Q3 YTD Q1 Q2 Q3 Q4 • Sales growth for 4 out of 5 • Broad-based stable development busi
Slide 22: Orkla International – Key financials
Orkla International – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA -3.4% 1.8% OG1 OG1 2,007 1,728 -8 -5 738 661 -47 -90 Q3 YTD Q3 YTD • Negative top-line development • Stable EBITA level for Orkla Brands Russia despite negative top-line driven by Orkla Brands Russia devel
Slide 23: Orkla Food Ingredients – Key financials
Orkla Food Ingredients – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) 4.0% 4.1% OG1 OG1 4,713 4,272 235 6.2 5.4 5.7 5.6 191 5.1 93 2.8 2.9 1,524 1,638 77 Q3 YTD Q3 YTD Q1 Q2 Q3 Q4 • Strong organic growth • 21% increase in EBITA • More favourable product m
Slide 24: Orkla Investments
Orkla Investments Jens Bjørn Staff, CFO
Slide 25: Gränges presented as Discontinued Operations
Gränges presented as Discontinued Operations • In Q3, Gränges is presented net on a single line as Discontinued Operations in the P&L • The result from Gränges in Q3 was NOK -119 million (NOK 37 million for first three quarters) – The loss in Q3 includes a write-down of net assets • Orkla sells 60-6
Slide 26: Sapa (50/50 joint venture)
Sapa (50/50 joint venture) Amounts in NOK million Orkla’s share of net profit Operating revenues1 Underlying EBIT1 after tax 10.798 11.603 201 44 54 -51 24 -312 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Q4’13 Q1’14 Q2’14 Q3’14 • Market growth of 7% and 1% in • Underlying EBIT for SAPA increased compared to Q3
Slide 27: Jotun (42.5%)
Jotun (42.5%) Amounts in NOK million As of 30 Aug’13 As of 30 Aug’14 Operating revenues EBIT 8,174 8,660 1.050 978 • Good overall growth in Q3 2014 • Increase in costs primarily tied to market development activities in growth markets • All segments growing with improved Decorative sales in Scandinav
Slide 28: Hydro Power
Hydro Power 2013 2014 Volume produced Spot prices (NOK/MWh) EBITA (NOK million) 741 609 583 650 312 97 294 285 263 296 545 568 252 77 211 58 326 42 46 39 -3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Higher volumes compared with • Lower spot prices compared • Profit in Q2 2013 partly Q3 2013 with Q3 last
Slide 29: Capital structure
Capital structure Jens Bjørn Staff, CFO
Slide 30: Change in net debt YTD 2014
Change in net debt YTD 2014 Amounts in NOK billion 8.5 0.3 8.3 0.4 0.3 -2.3 1.3 0.2 Net debt 31 Expansion Cash flow Sale of shares Net paid to Tax, dividends FX effects Net debt 30 December and sale of from and financial shareholders received, net September 2013 companies operations assets financial
Slide 31: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest bearing debt (NOK million) Net gearing 19,652 0.33 0.31 0.28 0.28 0.24 10,645 8,496 8,329 4,786 2010 2011 2012 2013 Q3’14 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 • Average maturity 3.6 years • Average interest cost: 3.0% (3.4% YTD) 31
Slide 32: Outlook
Outlook Peter A. Ruzicka, President & CEO
Slide 33: Operational focus going forward
Operational focus going forward • Future growth and value creation as a focused Nordic based BCG company • Organic growth as the key long-term value driver Strategy • Going from a very decentralised model to a more optimised model • Leveraging on our substantial local presence, skills and insights •
Slide 34: Q&A
Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 35: Appendices
‘Orkla Appendices
Slide 36: Group income statement
Group income statement Amounts in NOK million Q3'13 Q3'14 YTD'13 YTD'14 Operating revenues 7,508 7,487 20,604 22,095 EBITA 819 860 1,878 2,112 Amortisation intangibles -4 -6 -14 -15 Other income and expenses -193 -47 -780 -7 EBIT 622 807 1,084 2,090 Profit/loss from associates and joint ventures 76
Slide 37: Net financial items
Net financial items Amounts in NOK million FY 2013 Q3'13 Q3'14 Net interest expenses -351 -98 -73 Currency gain / loss -1 0 -5 Other financial items, net -113 -27 -13 Net financial items -465 -125 -91 37
Slide 38: Statement of financial position
Statement of financial position Amounts in NOK million 31.12.2013 30.09.2014 Intangible assets 15 402 13 782 Property, plant and equipment 11 651 9 548 Investments in associates and joint ventures etc. 11 042 11 333 Non-current assets 38 095 34 663 0 Operations held for sale 0 4 337 Inventories 4 83
Slide 39: Cash flow
Cash flow Amounts in NOK million YTD'13 YTD'14 Operating profit 1 292 2 138 Amortisation, depreciation and write-downs 1 235 737 Change in net working capital - 760 - 922 Net replacement expenditures - 566 - 606 Cash flow from operations, industrial activities 1 201 1 347 Cash flow from operations,
Slide 40: Sapa (joint venture) – Pro forma information (100%)
Sapa (joint venture) – Pro forma information (100%) Amounts in NOK million Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Sales volume (1000 tonnes) 311 346 360 345 314 359 368 350 Revenues 9,654 10,367 10,974 10,798 10,132 11,346 11,544 11,603 Underlying EBITDA1 154 304 508 328 -43 440 641 492 Und
Slide 41: Historical dividends
Historical dividends Amounts in NOK 5,00 5,00 2,50 2,50 2,50 2,50 2,25 2,25 2,25 2,00 1,50 1,00 2,50 0,39 0,41 0,50 0,60 0,65 0,68 0,19 0,23 0,27 0,32 0,80 0,90 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Special dividend Ordinary dividend 41
Slide 42: Debt maturity profile
Debt maturity profile Amounts in NOK million 6,537 5,561 1,289 920 978 826 755 378 13 2014 2015 2016 2017 2018 2019 2020 2021 Later Unutilised credit facilities Drawn amounts 42
Slide 43: Funding sources
Funding sources Amounts in NOK billion 2.1 Unutilised credit facilities 6.9 Banks Bonds and CP 5.1 Cash, cash equivalents and interest bearing assets 5.3