Slide 1: Second quarter results 2014
Second quarter results 2014 17 July 2014 Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 2: Highlights Q2 2014
Highlights Q2 2014 Improving operations and delivering on initiated processes • Group EBITA improved by 19% to NOK 751 million compared to Q2’13 • EBITA margin in Branded Consumer Goods improved by 0.8 percentage points – NOK 55 million improvement in underlying EBITA • Adjusted organic growth of 0.
Slide 3: Overall positive growth in BCG. Improving operational margin
Overall positive growth in BCG. Improving operational margin Adj. organic growth BCG1 EBITA margin 0.9% 9.8% 9.0% -3.9% Q2’13 Q2’14 Q2’13 Q2’14 • Positive adjusted organic growth in three out of • Improved margins in four business areas five business areas – Synergy realisation and cost programmes •
Slide 4: Optimisation of BCG production structure in progress
Optimisation of BCG production structure in progress 1 Boyfood (FI) – Herring production, Orkla Foods – Production at Rymättylä closed down and consolidated at Kungshamn in Q2 2 2 Lierne (NO) – Lefse flatbread production, Orkla Foods – Decision made to close plant and transfer production to Stranda
Slide 5: Orkla Foods – Key developments
Orkla Foods – Key developments Adj. organic Top-line still challenging, adj. organic growth of growth1 -4.6% Broad based underlying EBITA and margin EBITA improvement • Synergy effects Rieber & Søn realised according to plan • Field sales force projects in Norway and Sweden • Decision made to close
Slide 6: Orkla Foods – Innovation highlights
Orkla Foods – Innovation highlights Grandiosa and Toro Relaunch of ketchup range Abba Middagsklart Gluten-free versions of popular More environmentally-friendly Cross-market launches of dinners; Grandiosa pizza and bottles, appealing design and successful dinner solution in Toro Lasagne user-friendl
Slide 7: Orkla Confectionery & Snacks – Key developments
Orkla Confectionery & Snacks – Key developments Adj. Still challenging, but signs of improvement (-1.2% in organic Q2 vs -3.8% in Q1) growth1 growth EBITA Weaker margins due to increased raw material cost • Focus still on integration in Norway and Sweden • New sales organisation implemented in Norwa
Slide 8: Orkla Confectionery & Snacks – Innovation highlights
Orkla Confectionery & Snacks – Innovation highlights Ballerina Chokladmousse New Energy Nøttebar Kockarnas Chipskamp Technology driven innovation A brand new chocolate bar with Exciting limited edition across markets in core lots of nuts to give new energy initiatives in core segment biscuits segmen
Slide 9: Orkla Home & Personal – Key developments
Orkla Home & Personal – Key developments Adj. Strong, broad based adjusted organic growth (4.5%) organic on par with long term target of 3-5% growth1 Positive development for most companies. Stable EBITA EBITA margin • Improvements in Lilleborg Profesjonell mainly due to new contracts in the Industr
Slide 10: Contracts between Orkla/Lilleborg and Unilever signed
Contracts between Orkla/Lilleborg and Unilever signed • New agreements have been signed for a period of five years1, securing a seamless continuation of the contractual arrangements • The new agreements include the following main elements; – Continued right to supply of finished goods from Unilever
Slide 11: Orkla Home & Personal – Innovation highlights
Orkla Home & Personal – Innovation highlights OMO Aktiv & Sport PR Shape Collection Nutrilett Protein Shape For training and outdoor New and unique shaping Protein powders, bars and garments – effective from 30°C collection – comfortable drinks – help maintain a shaping for everyday wear healthy die
Slide 12: Orkla International – Key developments
Orkla International – Key developments Adj. Strong adjusted organic growth rate of 5.8%. organic 20.0% organic growth in MTR growth Underlying EBITA improvement in Orkla Brands EBITA Russia, Vitana, Felix Austria, MTR and Delecta • Agreement signed to sell Delecta in Poland • Decision made to increa
Slide 13: Orkla Food Ingredients – Key developments
Orkla Food Ingredients – Key developments Adj. organic Solid adjusted organic growth rate of 8.5% growth EBITA EBITA improvement of 30% • Positive effects from internal improvement projects; – Increased focus on value added propositions to customers Activities – Broad based cost improvements • Posit
Slide 14: Financial Performance
Financial Performance Jens Bjørn Staff, CFO
Slide 15: Group EBITA improved by 19% to NOK 751 million in Q2
Group EBITA improved by 19% to NOK 751 million in Q2 Amounts in NOK million Key figures Q2-13 Q2-14 H1-13 H1-14 Operating revenues 7,905 8,459 15,124 16,765 EBITA 632 751 1,228 1,487 Other income and expenses -583 59 -619 24 EBIT 46 805 599 1,502 Profit/loss from associates 130 192 225 248 and JV Pr
Slide 16: Broad based EBITA improvement in BCG
Broad based EBITA improvement in BCG Amounts in NOK million Branded Consumer Goods: NOK 120 million NOK 55 million increase in underlying EBITA BCG 751 -1 0 23 26 -10 11 70 632 Group Orkla Foods Orkla Orkla Home Orkla Orkla Food Orkla Orkla HQ Group EBITA Confectionery & Personal International Ingre
Slide 17: 10% revenue growth, 0.9% adjusted organic growth in BCG
10% revenue growth, 0.9 % adjusted organic growth in BCG Amounts in NOK million 7,175 1.6 % 4.4 % 3.0 % 6,524 0.9 % BCG operating Organic growth FX M&A Other BCG operating revenues Q2 2013 revenues Q2 2014 17
Slide 18: Orkla Foods – Key financials
Orkla Foods – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) -4.6% -3.7% adj. OG1 adj. OG1 5,181 628 14.0 14.6 4,306 12.6 489 11.7 11.6 11.0 2,382 2,633 333 263 Q2 H1 Q2 H1 Q1 Q2 Q3 Q4 • Development in underlying • Broad-based underlying EBITA and margin im
Slide 19: Orkla Confectionery & Snacks – Key financials
Orkla Confectionery & Snacks – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) -1.2% -2.5% adj. OG1 adj. OG1 2,201 2,252 263 16.1 16.3 225 13.1 10.8 10.4 9.6 1,101 1,138 119 109 Q2 H1 Q2 H1 Q1 Q2 Q3 Q4 • Signs of improvement in Q2 • High raw material costs •
Slide 20: Orkla Home & Personal – Key financials
Orkla Home & Personal – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) 4.5% 3.2% adj. OG1 adj. OG1 2,308 2,456 406 21.0 379 17.7 18.0 15.0 15.0 15.3 1,097 1,176 165 176 Q2 H1 Q2 H1 Q1 Q2 Q3 Q4 • Stable or positive development • Stable or positive developmen
Slide 21: Orkla International – Key financials
Orkla International – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA 5.8% 4.7% adj. OG adj. OG 1,346 990 -14 584 686 -40 -42 -82 Q2 H1 Q2 H1 • 20.0% organic growth in India • EBITA level for Orkla Brands Russia improved, but still weak. Increased raw material prices and low
Slide 22: Orkla Food Ingredients – Key financials
Orkla Food Ingredients – Key financials Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) 8.5% 4.2% adj. OG adj. OG 3,075 2,748 142 6.2 5.4 5.6 114 5.1 100 1,415 1,624 77 2.8 2.9 Q2 H1 Q2 H1 Q1 Q2 Q3 Q4 • Volume driven growth • Product mix • More favourable product mix • Rec
Slide 23: Orkla Investments
Orkla Investments Jens Bjørn Staff, CFO
Slide 24: Gränges – Continued profit improvement over last year
Gränges – Continued profit improvement over last year Amounts in NOK million 2013 2014 Operating revenues EBITA EBITA margin (%) 2,068 2,157 235 10.7 11.1 9.5 8.4 7.9 8.3 169 1,058 1,067 118 84 Q2 H1 Q2 H1 Q1 Q2 Q3 Q4 • Volume growth in H1 • Margin improvement driven by cost reduction in Sweden (cos
Slide 25: Sapa (50/50 joint venture)
Sapa (50/50 joint venture) Amounts in NOK million Operating revenues1 Underlying EBIT1 Share of net profit after tax 10.974 11.544 350 44 211 -35 -51 -312 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Sept.’13 Q4’13 Q1’14 Q2’14 • Second consecutive quarter of • Realisation of synergies and restructuring on track
Slide 26: Jotun (42.5%)
Jotun (42.5%) Amounts in NOK million As of 30 Apr’13 As of 30 Apr’14 Operating revenues EBIT 3,901 4,091 517 435 • 5% growth in T1 • Increase in costs primarily tied to market investments in growth markets • All segments growing with improved Decorative sales in Scandinavia and improving conditions
Slide 27: Hydro Power
Hydro Power 2013 2014 Volume produced Spot prices (NOK/MWh) EBITA (NOK million) 741 609 583 650 312 97 294 285 296 545 252 77 168 58 326 39 42 -3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • High precipitation in Q1, high • Low spot prices in Q2 • Profit in Q2 2013 partly volumes in H1 ascribable to sale o
Slide 28: Capital structure
Capital structure Jens Bjørn Staff, CFO
Slide 29: Change in net debt H1 2014
Change in net debt H1 2014 Amounts in NOK billion 9.3 -0.1 0.1 8.5 0.3 -2.5 1.4 0.1 Net debt 31 Expansion Cash flow Sale of shares Dividends Tax, dividends FX effects Net debt 30 December and sale of from and financial paid received, net June 2014 2013 companies operations assets financial & other 2
Slide 30: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest bearing debt (NOK million) Net gearing (%) 0.41 19,652 0.33 0.31 0.28 0.24 10,645 8,496 9,250 4,786 2010 2011 2012 2013 Q2’14 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 • Avg. maturity 3.6 years • Avg. interest cost: 3.6% 30
Slide 31: Outlook
Outlook Peter A. Ruzicka, President & CEO
Slide 32: Operational focus going forward
Operational focus going forward • Future growth and value creation from a focused Nordic based BCG company • Focus on 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
Slide 33: Q&A
Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 34: Appendices
‘Orkla Appendices
Slide 35: Group income statement
Group income statement Amounts in NOK million Q2'13 Q2'14 H1'13 H1'14 Operating revenues 7 905 8 459 15 124 16 765 EBITA 632 751 1 228 1 487 Amortisation intangibles -3 -5 -10 -9 Other income and expenses -583 59 -619 24 EBIT 46 805 599 1 502 Profit/loss from associates and joint ventures 130 192 22
Slide 36: Net financial items
Net financial items Amounts in NOK million FY 2013 Q2'13 Q2'14 Net interest expenses -375 -105 -93 Currency gain/loss -1 -4 2 Other financial items, net -117 -25 -22 Net financial items -493 -134 -113 36
Slide 37: Statement of financial position
Statement of financial position Amounts in NOK million 31.12.2013 30.06.2014 Intangible assets 15 402 15 221 Property, plant and equipment 11 651 11 174 Investments in associates and joint ventures etc. 11 042 11 388 Non-current assets 38 095 37 783 0 Operations held for sale 0 259 Inventories 4 836
Slide 38: Cash flow
Cash flow Amounts in NOK million H1'13 H1'14 Operating profit 594 1 544 Amortisation, depreciation and write-downs 885 589 Change in net working capital - 482 - 332 Net replacement expenditures - 337 - 439 Cash flow from operations, industrial activities 660 1 362 Cash flow from operations, Orkla Fi
Slide 39: Sapa (joint venture) – Pro forma information (100%)
Sapa (joint venture) – Pro forma information (100%) Amounts in NOK million Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Sales volume (1000 tonnes) 343 311 346 360 346 314 359 368 Revenues 10,414 9,654 10,367 10,974 10,797 10,132 11,346 11,544 Underlying EBITDA1 365 154 304 508 328 -43 440 641 Und
Slide 40: 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 40
Slide 41: Debt maturity profile
Debt maturity profile Amounts in NOK million 5,582 4,508 2,918 1,461 1,314 978 755 391 13 2014 2015 2016 2017 2018 2019 2020 2021 Later Unutilised credit facilities Drawn amounts 41
Slide 42: Funding sources
Funding sources Amounts in NOK billion 2.3 6.3 Unutilised credit facilities Bonds and CP Banks Cash, cash equivalents and interest bearing assets 6.1 5.6