Slide 1: Fourth quarter results 2010
Fourth quarter results 2010 Oslo, 10 February 2011
Slide 2: Agenda
Agenda • Highlights and strategic direction Bjørn M. Wiggen, CEO • Financial performance Terje Andersen , CFO • Sapa Tim Stubbs, CEO Sapa • Orkla Brands Torkild Nordberg, CEO Orkla Brands 22 Developing Third Q4 andquarter full-year people results results - creating 2010 2009 value
Slide 3: Highlights Q4-10
Highlights Q4-10 • Broad based operational improvement in fourth quarter – EBITA NOK 1 322 million (NOK 1 161 million) • Strong results for Orkla Brands – Underlying top line growth • Moderate EBITA growth for Sapa – Seasonally lower volumes and negative one-off effects for Profiles – Strong progres
Slide 4: Strong improvement in EBITA after the financial crisis
Strong improvement in EBITA after the financial crisis Rolling 12 months NOK million 4,302 Figures restated after sale Elkem Silicon-related 4,056 4,190 3,944 3,875 3,783 3,721 3,289 3,322 3,029 2,821 2,719 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 20
Slide 5: Highlights 2010
Highlights 2010 • Improved markets and demand throughout the year, in particular for Sapa and Borregaard • Stable markets for Orkla Brands, however continued growth in profit and margin – EBITA-margin +0.5%p to 12.6% for 2010 • Strong results for the Share Portfolio with a return of 31.8% • Negative
Slide 6: Strategic direction
Strategic direction 6 Developing people - creating value
Slide 7: Developing people - creating value
•77 Developing people - creating value
Slide 8: Strategic direction
Strategic direction: • Portfolio concentrated on a smaller number of areas • Allocate capital to Orkla Brands and Sapa • Continued strong focus on operational improvements • Active ownership 8 Developing people - creating value
Slide 9: Previous structure
Previous structure Orkla Aluminium Orkla Financial Orkla Brands Orkla Materials Orkla Associates* Solutions Investments Foods Nordic Sapa Profiles Share Portfolio Brands Nordic Heat Transfer Real Estate Brands Building System Forests International Food Ingredients Orkla Materials Energy 9 Developing
Slide 10: A more focused Orkla
A more focused Orkla Foods Nordic Sapa Profiles Share Portfolio Brands Nordic Heat Transfer Hydro Power Brands International Building System Food Ingredients 10 Developing people - creating value
Slide 11: Strategic direction Share Portfolio
Strategic direction Share Portfolio: • A more focused share portfolio with active ownership • Develop industrial options over time • Value of the Share Portfolio in the range of NOK 8-10 billion 11 Developing people - creating value
Slide 12: Actions taken to focus strategy
Actions taken to focus strategy Concentrate the portfolio on a Reallocate capital to Orkla Brands smaller number of areas and Sapa 2010 2010 Orkla Brands NOK 1 billion – Divestment of the Borregaard forests NOK 1.7 billion – Investments in Sonneveld – Investments in Kalev – Net divestments in the sh
Slide 13: Dividend
DIVIDEND 13 Developing people - creating value
Slide 14: Over time, Orkla has pursued a dividend strategy focused on predictability and stability
Over time, Orkla has pursued a dividend strategy that focuses on predictability and stability Special dividend 0.80+5.00 Ordinary dividend Dividend in NOK per share 2.50 5.00 5.00 2.25 2.25 2.25 2.00 0.9+1.0 1.50 1.00 1.00 0.65 0.68 0.60 0.50 0.39 0.41 0.32 0.80 0.90 0.23 0.27 0.19 93 94 95 96 97 98
Slide 15: Financial performance Q4-10
FINANCIAL PERFORMANCE Q4-10 Terje Andersen, EVP 15 Developing people - creating value
Slide 16: EBITA improvement for the group Q4-09-Q4-10
EBITA improvement for the group Q4-09-Q4-10 EBITA performance from Q4-09 to Q4-10 (figures in NOK million) 26 1 322 39 207* -185* 38 36 1 161 EBITA Orkla Brands Sapa Borregaard Hydro Power Orkla Other EBITA Q4-09 Chemicals Financial Q4-10 Investments 16 Developing people - creating value * NOK 153 m
Slide 17: Group income statement
Group income statement Amounts in NOK million Q4-10 Q4-09 Change 2010 2009 Change 15 884 13 497 18 % Operating revenues 57 338 50 233 14 % 1 322 1 161 14 % EBITA 3 944 3 029 30 % -15 -60 Amortisation intangibles -52 -213 506 2 975 Other revenues and expenses 330 2871 1 813 4 076 EBIT 4 222 5 687 - 8
Slide 18: Cash flow as of end 2010
Cash flow as of end 2010 31.12.2010 31.12.2009 Industry division: Operating profit 2 940 2 125 Amortisations, depreciations and write-downs 2 503 2 653 Changes in net working capital -1 462 2 197 Net replacement expenditure -1 512 -1 173 Cash flow from operations 2 469 5 802 Financial items, net - 5
Slide 19: Net gearing 0.42 – Equity ratio 53.6%
Net gearing 0.42 – Equity ratio 53.6% NOK billion Net gearing 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 -6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 -0,20 Equity Net interest-bearing liabilities Net gearing 19 Developing people - creating value
Slide 20: Investments
INVESTMENTS 20 Developing people - creating value
Slide 21: Improved markets for Borregaard Chemicals
Improved markets for Borregaard Chemicals Amounts in NOK million Operating revenues Q4-10 Q4-09 Change • Improvements for all main segments in fourth quarter Borregaard Chemicals 967 960 1% • Tight supply and higher prices EBITA Q4-10 Q4-09 Change lead to satisfactory progress for speciality cellulo
Slide 22: Hydro Power
Hydro Power Amounts in NOK million • Lower EBITA compared with last year Operating revenues Q4-10 Q4-09 Change Hydro Power 604 405 49 % • 2009 figures include NOK 153 million from sold power plants EBITA Q4-10 Q4-09 Change • Satisfactory profit in line with last year Hydro Power 73 258 72 % for Borr
Slide 23: Orkla Financial Investments 2010: NOK 4.7 billion increase in net asset value
Orkla Financial Investments 2010: NOK 4.7 billion increase in net asset value • Return on Share Portfolio in 2010 + 31.8% • Gain on asset sale (forestry and real estate) NOK 1.5 billion • Cash contribution from Financial Investments in 2010: NOK 5 billion • Return above benchmark every year for the
Slide 24: Share Portfolio 6.4%-points above market
Share Portfolio 6.4%-points above of market S ha re P o rt f o lio M S C I N o rdic OSEB X S &P 5 0 0 2010 2008-2010 2006-2010 3 1.8 % 2 5.4 % 18 .3 % 15.1% 8 .2 % 5.0 % 5.7% 2 .3 % 0 .1% - 2 .7% - 3 .6 % - 2 .9 % • Market value of the Share Portfolio NOK 11.7 billion 24 Developing people - creating
Slide 25: Jotun and REC
Amounts in NOK million Jotun YTD T2-10 YTD T2-09 Change REC Q4-10 Q4-09 Change Revenues 4 874 2 545 92 % Revenues 8 044 7 811 3% EBITDA 1 836 595 209 % EBIT 1 041 858 21% EBIT 1 134 -1 121 Profit/loss before tax 1 032 782 32% Profit/loss before tax 1 226 -864 25 Developing people - creating value
Slide 26: Sapa
Sapa Tim Stubbs, CEO 26 Developing people - creating value
Slide 27: In 2010 EBITA improved by NOK 1.1 billion
In 2010 EBITA improved by NOK 1.1 billion Sapa Group Volume & EBITA Development by Year 1500 1200 1041 954 757 1000 800 Volume (ktonnes) 744 EBITA (MNOK) 574 500 400 1.7% 2.7% -397 0 0 -1.8% -500 -400 2008 2009 2010 Market recovering from historic lows Volume Work on strategic initiatives delive
Slide 28: Markets recovering but volumes still significantly below mid-cycle levels
Even though markets are recovering volumes are still significantly below mid-cycle levels Apparent Aluminium Extrusion Consumption 1985 to 2020F Europe CAGR 1985-05 3 500 = 3.9% Apparent Consumption (ktonnes) 3 000 -15% 2 500 North America CAGR 1985-05 = 2.7% 2 000 -25% 1 500 1 000 500 0 1985 1990 1
Slide 29: Market for Sapa Profiles North America down from Q3 to Q4
Market for Sapa Profiles North America down from Q3 to Q4 North American Extrusion Consumption European Extrusion Consumption 500 900 Apparent Consumption (ktonnes) Apparent Consumption (ktonnes) 450 800 415 762 764 411 400 388 376 700 676 350 644 350 321 326 320 598 599 609 308 600 293 300 282 537
Slide 30: Seasonally weak markets impact results in the fourth quarter
Seasonally weak markets impact results in the fourth quarter • Profiles business hit by seasonally weak Operating Revenues Q4-10 Q4-09 Change market in Q4 Sapa 7 289 5 592 30 % – Volumes down 14,000 tonnes from Q3-10 Profiles 5 519 4 189 32 % Heat Transfer and Building System 1 980 1 501 32 % • Nega
Slide 31: One Sapa – the roadmap to 6% EBITA
One Sapa – the roadmap to 6% EBITA Toward Solutions Entrepreneurial, local businesses with national / global overlay Enter new markets to enhance footprint and capitalise on growing markets World Class Operations World Class Purchasing Stability and continuous Leverage synergies in improveme
Slide 32: Further savings potential identified
Further savings potential identified • Reduction of above-plant costs • Cross utilisation of assets • Optimisation of footprint • Potential NOK 250 million annualised 32 Developing people - creating value
Slide 33: Sapa has a clear intention to grow and establish new businesses in Asia
Sapa has a clear intention to grow and establish new businesses in Asia • Doubled the capacity of Heat Transfer Shanghai and capacity to be further increased in first half 2011 • Acquired the Vietnamese extruder Vijalco • Established green field fabrication plant in India • Several other development
Slide 34: Short-term outlook
Short-term outlook • Market for Profiles North America continuing to gain strength with exception of building and construction • Markets for Profiles Europe a “two-part” story with growing strength in North while South remains difficult • Building System still facing tough building and construction
Slide 35: Orkla Brands
ORKLA BRANDS Torkild Nordberg, EVP 35 Developing people - creating value
Slide 36: Steady, strong growth in EBITA over time
Steady, strong growth in EBITA over time EBITA - Rolling 12 months NOK million 3,000 2,800 2,600 2,400 2,200 2,000 1,800 200 0 Q4- Q2- Q4- Q2- Q4- Q2- Q4- Q2- Q4- Q2- Q4- Q2- Q4- Q2- Q4- 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 36 Developing people - creating value
Slide 37: Highlights 2010
Highlights 2010 • EBITA of NOK 2 967 million – Underlying EBITA growth of 7% versus 2009 • EBITA-margin 12.6% – Underlying growth of 0.7%p • Improved quality of earnings versus 2009 – Volume growth, increased marketing investments and improved market shares • Challenging markets outside the Nordics
Slide 38: Underlying profit growth also for Q4-10
Underlying profit growth also for Q4-10 • Satisfactory results in Q4-10 Operating revenues Q4-10 Q4-09 Change • Underlying top line growth of 3%, Orkla Brands 6 980 6 324 10 % Orkla Foods Nordic 2 719 2 658 2% primarily related to volume/mix Orkla Brands Nordic 2 176 2 085 4% • Improved market share
Slide 39: Outlook 2011
Outlook 2011 • Overall stable retail markets • Demanding increases in raw material prices • Bakers is in a sales process • Expected to be sold in first half of 2011 Facts raw materials: • Orkla Brands is exposed to a broad range of raw materials • Vegetable oils, flour, sugar, meat, cheese, cocoa, f
Slide 40: Example of innovations launched in 2010
Example of innovations launched in 2010 40
Slide 41: Example of innovations launched in Q1 2011
Example of innovations launched in Q1 2011 41
Slide 42: Q&A
Q&A Bjørn M. Wiggen, CEO Terje Andersen, CFO Tim Stubbs, CEO Sapa Torkild Nordberg, CEO Orkla Brands 42 42 Developing Third Q4 andquarter full-year people results results - creating 2010 2009 value
Slide 43: Appendix
Appendix 43 Developing people - creating value
Slide 44: Financial calendar
Financial calendar 14 April 2011 - Annual General Meeting 2011 15 April 2011 - Share quoted ex. dividend 29 April 2011 - Dividend payment 5 May 2011 - First quarter results 2011 20 July 2011 - Second quarter results 2011 27 October 2011 - Third quarter results 2011 44 Developing people - creating va
Slide 45: Cash flow as of 31 Dec 2010
Cash flow as of 31 Dec 2010 31.12.2010 31.12.2009 Industry division: Operating profit 2 940 5 191 Amortisations, depreciations and write-downs 2 503 2 653 Gain, sale of hydro power assets/sold companies -3 066 Changes in net working capital -1 462 2 197 Net replacement expenditure -1 512 -1 173 Cash
Slide 46: Balance sheet as of 31 Dec 2010
Balance sheet as of 31 Dec 2010 Amounts in NOK million 31.12.2010 31.12.2009 Intangible assets 12 960 14 731 Property, plant and equipment 17 730 24 694 Financial assets 10 985 15 922 Non-Current assets 41 675 55 347 Assets in discontinued operations 13 891 Inventories 7 102 7 531 Receivables 10 380
Slide 47: Currency translation effects
Currency translation effects Amounts in NOK million Revenues Q4-10 YTD Q4-10 Orkla Brands 35 -425 Sapa 118 -1 200 Saudefaldene Borregaard 7 -34 Total 160 -1 659 EBITA Q4-10 YTD Q4-10 Orkla Brands 3 -34 Sapa 10 -31 Saudefaldene Borregaard 1 3 Total 14 -62 47 Developing people - creating value
Slide 48: Largest holdings in the Share Portfolio as of 31 December 2010
Largest holdings in the Share Portfolio as of 31 December 2010 Amounts in NOK million Principal holdings Industry * Market value Share of Share of portfolio (%) equity (%) Tomra Systems Industrials 888 7% 15.3 % Amer Sports Consumer Discretionary 538 4% 5.2 % Enter Select ** Fund 374 3% 0.0 % Kongsb
Slide 49: Sale of Elkem
Sale of Elkem • An agreement to sell Elkem’s Silicon-related business to China National Bluestar was announced in January 2011 – The transaction covers the following divisions: Silicon Materials, Foundry Products, Carbon and Elkem Solar • Enterprise value for Orkla of NOK 12.5 billion – All cash dea
Slide 50: Financial items
Financial items 50 Developing people - creating value
Slide 51: Net financial items
Net financial items Amounts in NOK million Q4-10 Q4-09 Full year 2010 Net interest expenses -53 -130 -242 Currency gain/loss 2 -8 -12 Other financial items, net -25 - 58 - 73 Net financial items -76 -196 -327 51 Developing people - creating value
Slide 52: Debt maturity profile
Debt maturity profile •NOK million Average maturity 4.3 years 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Drawn amounts Unutilised credit facilities 52 Developing people - creating value
Slide 53: Net gearing 0.42 as of Q4-10
Net gearing 0.42 as of Q4-10 NOK billion Net gearing 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 -6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 -0,20 Equity Net interest-bearing liabilities Net gearing 53 Developing people - creating value
Slide 54: Funding Sources
Funding Sources Unutilised credit facilities 38% 10.9 12.5 Banks 33% 9.4 Bonds and CP 29% Figures in NOK billion 54 Developing people - creating value
Slide 55: Developing Third quarter
55 Developing Third quarter people results - creating 2010 value