Orkla Asa · OSL:ORK
Orkla Asa — Investor Day (September 2013)
148 slides from Orkla Asa's investor day presentation, Sep 26, 2013
Slide 1: Orkla Investor Day
Orkla Investor Day London - 26 September 2013
Slide 2: Welcome to Orkla's Investor Day
Welcome to Orkla’s Investor Day Speakers Åge Korsvold President & CEO Atle Vidar Johansen Orkla ASA EVP & CEO Orkla Foods Bente Brevik Christer Åberg CEO Orkla EVP & CEO Orkla Foods Norge Confectionery & Snacks Stig Ebert Nilssen Tine Hammernes Leopold EVP & CEO Orkla Group Commercial Director & Hom
Slide 3: Agenda
Agenda 13.00 Orkla Group Åge Korsvold, President & CEO Orkla ASA 14.00 Orkla Foods Atle Vidar Johansen, EVP & CEO Orkla Foods Orkla Foods Norge Bente Brevik, CEO Orkla Foods Norge 15.00 - 15.30 Break 15.30 Orkla Confectionery & Snacks Christer Åberg, EVP & CEO Orkla Confectionery & Snacks 16.10 Orkl
Slide 4: Presentations
Presentations Transforming Orkla into a Branded Consumer Goods business Page 5 Orkla Foods Page 33 Orkla Confectionery & Snacks Page 75 Orkla Home & Personal Page 94 Appendices Financial Performance Page 136 4
Slide 5: Transforming into a Branded Consumer Goods business
Transforming into a Branded Consumer Goods business Åge Korsvold – President and CEO
Slide 6: Agenda
Agenda 1. Introduction 2. Market environment 3. How to drive value 4. Strategic priorities and financial targets
Slide 7: Business overview
1. INTRODUCTION Business overview CORE: NON-CORE Branded Consumer Goods (BCG) • Orkla Foods • Sapa JV (50%) • Orkla Confectionery & Snacks • Gränges (Sapa Heat Transfer) • Orkla Home & Personal • Hydro power • Orkla Food Ingredients • Real estate • Orkla International • Financial assets Associated c
Slide 8: Financial performance BCG
1. INTRODUCTION Financial performance BCG Rolling 12 months EBIT (adjusted) EBIT (adjusted) margin1 12.5% 3,300 12.0% 11.8% 11.4% 11.4% 11.0% 3,000 2,700 2,400 2,100 1,800 1,500 Q4 Q4 Q4 Q4 Q4 2008 2009 2010 2011 2012 RTM H1 2008 2009 2010 2011 2012 2013 8 1 Adjusted for other income and expenses
Slide 9: Orkla has sustainable competitive advantages in BCG
1. INTRODUCTION Orkla has sustainable competitive advantages in BCG Strong local brands Superior local consumer insight, skills and capacity Local scale and complete local value chains Ability to attract and develop the best leaders Attractive buyer of local businesses Strong position in
Slide 10: Transforming Orkla is well under way
1. INTRODUCTION Transforming Orkla is well under way Achievements Strategic priorities (2012-2013) (2013-2016) • New vision and strategy • Reducing complexity Driving value • Unified branding • Extracting cost synergies and in BCG improve cash flow • New structure and management team • Driving organ
Slide 11: Goals
1. INTRODUCTION Goals We will complete ongoing and future integration processes successfully We will achieve best-in-class margins and cash flows We will generate organic growth, gain market share and drive category growth We will have the best leaders that ”live” our values and winning beha
Slide 12: Orkla is the #1 BCG company in the Nordics
2. MARKET ENVIRONMENT Orkla is the #1 BCG company in the Nordics… Estimated revenues in the Nordics ILLUSTRATIVE Local focus Global focus Nordic revenue 12
Slide 13: Unprecedented portfolio of strong market positions
2. MARKET ENVIRONMENT …with an unprecedented portfolio of strong market positions… and opportunities to grow further Retail Market Share; RTM per July/September 2013 Examples Fabrics cleaner 81% Biscuits 51% 38% 11% Confectionery 30% 6% Food supplements 77% 35% 49% 29% Textiles (grocery) 78% 29% Sna
Slide 14: Nordics – Attractive core markets
2. MARKET ENVIRONMENT Nordics – Attractive core markets GDP growing at a stronger/faster rate than Europe… … and consumer spending in Orkla’s core categories is high Real GDP; annual change in % Norway Average monthly consumer spending on food, grocery & Sweden personal care; 2013 Denmark Finland €
Slide 15: Nordic retail markets – consolidated
2. MARKET ENVIRONMENT Nordic retail markets – consolidated Others Bergendahls Others Ica 4% 4% 6% 11% NorgesGruppen Axfood 39% 19% 51% Ica 23% Rema 1000 20% 22% Coop Coop Rema 1000 Lidl Others Others 8% 5% 7% 8% Suomen Lähikauppa SuperGros 8% Coop 36% 12% 45% Coop Kesko 35% Dansk Supermarked 36% 15
Slide 16: Private label penetration
2. MARKET ENVIRONMENT Private label penetration Private Label market shares in the grocery trade 2009 2012 31% 33% 22% 24% 21% 18% 20% 17% 11% 13% Norway Sweden Denmark Finland Europe1 16 | 1 Europe – Belgium, France, Germany, Italy, Netherlands, Spain, UK; Source: AC Nielsen
Slide 17: Local scale is a reality
2. MARKET ENVIRONMENT Local scale is a reality Retail Market Share; RTM per July/September Examples Dry sauces (NO) Orkla Pizza (NO) Ketchup (NO) Private Label Textiles (NO) Other Caviar (SE) Savory pie (SE) Home care (NO) Pickles (NO) Herring and anchovis (SE) Pickles (SE) Food supplements (NO) Ket
Slide 18: Vision
3. HOW TO DRIVE VALUE Vision Improving everyday life with healthier and more enjoyable local brands 18
Slide 19: We drive value through four strategic pillars
3. HOW TO DRIVE VALUE We drive value through four strategic pillars Local Brands Customers Operations People & Innovations & Marketplace & Efficiency & Leadership The strongest brands The preferred supplier The most efficient consumer The best employees and the best innovations to drive category gro
Slide 20: Proud history of innovation driven growth
1. Local Brands & Innovations Orkla has a proud history of innovation driven growth… Example: fish spread in Norway; revenue NOK millions 600 500 400 +405% 300 200 +106% 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20 | Source: AC Nielsen grocery
Slide 21: Leveraging our advantages, we can do much better
1. Local Brands & Innovations … by leveraging our advantages, we can do much better INNOVATION BASED ON SUPERIOR LOCAL INSIGHTS 21
Slide 22: Customers & Marketplace
2. Customers & Marketplace Driving growth through point-of-purchase execution Building long-term relationship with customers Largest and highest rated field sales force Improve effectiveness and efficiency through point-of-purchase excellence 22
Slide 23: Capturing value with new BCG organization
3. Operations & Efficiency Capturing value with new BCG organization responsible Orkla Orkla Home & Orkla Orkla Food Orkla Foods Confectionery Personal International Ingredients & Snacks P&L Integrating and merging companies New management teams Restructuring Reorganized and performance Drive synerg
Slide 24: Restructuring synergies of NOK 400-500 announced
3. Operations & Efficiency Restructuring synergies of NOK 400-500 announced Estimated yearly effects from restructuring synergies, NOK millions Expected 2013 Expected run-rate P&L effect end of 2013 Rieber integration 250-300 Confectionery & Snacks integration 50-70 Food Sweden integration 30-40 IT
Slide 25: Further cost improvements
3. Operations & Efficiency Further cost improvements • Optimize business support Continuous • Yearly continuous improvement of NOK ~150 million improvement • Centralize procurement spend (54% in 2014) and leverage on market procurement scale Procurement • Current base of NOK ~18 billion scale • Incr
Slide 26: Leadership and winning behaviors
4. People & Leadership Leadership and winning behaviors The right organization with the best leaders • Leadership • Performance management and incentive programs Investment in people through extensive capability program • Talent management • Orkla capability building We will have the best leaders th
Slide 27: Strategic priorities going forward
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Strategic priorities going forward • Reduce complexity Transform the BCG • Extract cost synergies and improve cash flow business • Drive organic growth • Improve skill base • Strong balance sheet and financial flexibility Add on investments • Several att
Slide 28: Financial targets
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Financial targets EBIT EBIT Organic Organic (adjusted)1 (adjusted)1 revenue revenue margin margin growth growth R12M pr Q2 2015/2016 YTD pr Q2 From 2016 Orkla Foods 13.9% > 15.0% -1.12% 2-3% Orkla Confectionery & 15.4% > 16.5% -3.6% 2-4% Snacks Orkla Hom
Slide 29: Orkla Food Ingredients
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Orkla Food Ingredients • Primarily serves the bakery industry (B2B) Customers • 20% of NSV Nordic retail • Reorganized 1H 2013 Structure – Product BUs – Nordic Sales & Distribution • Strengthen Scandinavian Core Strategy • Strengthen position in mixes an
Slide 30: BCG activities outside Nordic
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS BCG activities outside Nordic • Baltic defined as home market (Nordic) Baltic • Below critical mass East-Europe • Review strategic options • Comprehensive restructuring ongoing Russia • Review strategic options mid 2014 • MTR is value accretive India • R
Slide 31: Allocation of capital and dividend policy
4. STRATEGIC PRIORITIES AND FINANCIAL TARGETS Allocation of capital and dividend policy • Grow BCG in the Nordics organically, and through add-on investments • Strong balance sheet and financial flexibility • Remain an Investment Grade company (NIBD below 2.5-3*EBITDA) • Maintain dividend at NOK 2.5
Slide 32: To sum up
To sum up How do we reduce costs and How do we grow? improve cash flows? • Realize cost restructuring synergies • Innovate based on superior local • Integrate smaller companies and insight add-ons • Driving growth through point-of- • Continuous improvements and purchase execution optimize business s
Slide 33: Improving performance from increased local scale
Improving performance from increased local scale Atle Vidar Johansen EVP & CEO, Orkla Foods
Slide 34: Improving performance from increased local scale
Improving performance from increased local scale • Building on unmatched market positions • Reaching 2016 targets • Achieving top line growth through improved innovation and scale 34
Slide 35: Improving performance from increased local scale
Improving performance from increased local scale • Building on unmatched market positions • Reaching 2016 targets • Achieving top line growth through improved innovation and scale 35
Slide 36: Building on unmatched market positions
Building on unmatched market positions • Strong and well-known local brands with mainly #1 market positions • Superior in serving the local consumer needs and preferences • Local business model with significant scale advantage 36
Slide 37: A broad portfolio with 80% of revenues from Norway and Sweden
A broad portfolio with 80% of revenues from Norway and Sweden Revenues 2012, proforma incl. Rieber for the full year: NOK 10.7 billion Geographical Sales Category sales split channel sales split sales split Meals: ready, Baltics Other Out-of-home canned,dry, Sauces Finland components 2% 6% 14% 13% 2
Slide 38: Strong #1 brands with long heritage
Strong #1 brands with long heritage 38
Slide 39: #1 market positions in Norway
#1 market positions in Norway Market share Position Orkla vs. Multinationals 78% Soups Dry 96% #1 Ketchup 19% Casseroles 95% #1 Sauces dry 91% #1 Orkla Foods Heinz 79% Mackerel 90% #1 Frozen pizza 79% #1 Pizza 16% Ketchup 78% #1 Canned dinner 73% #1 Orkla Foods Dr. Oetker Sweet spread 70% #1 48% Jam
Slide 40: #1 market positions in Sweden
#1 market positions in Sweden Market share Position Orkla vs. Multinationals 55% Cod roe spread 77% #1 35% Pies 77% #1 Ketchup Dilutables 71% #1 Fruit and berry drinks 69% #1 Orkla Foods Heinz Pickled herring 64% #1 Frozen pies and cakes 63% #1 Pickled cucumber 63% #1 36% 28% Ketchup 55% Pizza #1 Fr
Slide 41: Solid market positions in Denmark
Solid market positions in Denmark Market share Position Orkla vs. Multinationals 43% 37% #1 Pickled vegetables 52% Ketchup Marmelade 43% #1 Ketchup 43% #1 Orkla Foods Heinz Fresh pasta 42% #1 Salad spreads 27% #1 62% Tuna 15% #2 Mustard 13% Pickled herring 13% #2 Orkla Foods Unilever 41 Source: AC N
Slide 42: Solid market positions in Finland
Solid market positions in Finland Market share Position Pickled herring 73% #1 Pickeled vegetables 54% #1 Ketchup 40% #1 Dilutables 34% #1/2 Pizza 33% #1/2 42 Source: Company estimates
Slide 43: Local brands based on local insight are winners
Local brands based on local insight are winners Local brands Local • Superior local consumer understanding insight • Superior trade and category understanding Local • Cost advantages and competitive strength in sales and advertising scale • Attracting the best people • Flexible local value chain 43
Slide 44: Improving performance from increased local scale
Improving performance from increased local scale • Building on unmatched market positions • Reaching 2016 targets • Achieving top line growth through improved innovation and scale 44
Slide 45: Orkla Foods' targets for 2016
Orkla Foods’ targets for 2016 Organic • Focus on growing core brands and categories growth • Launch new products outside existing categories 2-3 % • Increase cross-country innovations EBIT • Realise the full synergy potential from Rieber margin • Improve cost efficiency throughout the value chain >
Slide 46: Track record of positive EBIT margin performance
Track record of positive EBIT margin performance RTM EBIT (adjusted)1 in NOK million EBIT margins (adjusted) 2 1,200 14.3% 14.4% 14.0% 13.9% 1,150 12.9% 1,100 1,050 1,000 950 900 850 800 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q2 2013 2009 2010 2011 2012 RTM H1 2013 •Consolidation of Rieber will lower EBIT
Slide 47: Rieber & Søn and Orkla are a perfect match
Rieber & Søn and Orkla are a perfect match • Similar strategy and focus – Strong positions – Local consumer insight and taste preferences – Multi-local model • Complementary + – Competence – Products and categories – Technology • Overlapping geographies 47
Slide 48: 2013: Restructuring to reach the 2016 targets
2013: Restructuring to reach the 2016 targets NOK • Integrating the Nordic Rieber & Søn business units with the existing 250-300 million1 Orkla Foods companies NOK • Successfully merged Abba Seafood and Procordia 30-40 million NOK 10-15 • Changed production structure for Orkla Foods Danmark million
Slide 49: Rieber: Realising cost synergies well on track
Rieber: Realising cost synergies well on track Expected cost synergies of MNOK 250-3001, whereof ~50% to be realized in 2013 Run-rate effect realized per end of Split cost synergies year 100% 12% 100% 42% 80% 50% 46% 2013 2014 2015 FTE- Purchasing Other Total payroll 49 1. Synergies for the Orkla Gr
Slide 50: Improving performance from increased local scale
Improving performance from increased local scale • Building on unmatched market positions • Reaching 2016 targets • Achieving top line growth through improved innovation and scale 50
Slide 51: Organic sales growth
Organic sales growth1 3,7% 2,4% 2,0% 0,5% -1,3% -1,5% -1,9% -2,3% 2010 2011 2012 H1 2013 Retail channel All channels 51 1. Adjusted for acquired and divested companies and currency translation effects. Divested bakery business exluded for all years.
Slide 52: Innovation is clearly the key growth driver
Innovation is clearly the key growth driver Main • Health/Nutrition trends in • Indulgence our markets • Convenience Product • Taste upgrades/ • Nutrition improve- ments • Packaging Our innovation is always based on local consumer and category insight 52
Slide 53: Two examples showing new growth platforms through innovation
Two examples showing new growth platforms through innovation Abba Middagsklart! Pauluns •Helping consumers eat more fish • The launch of a cross category health brand 53
Slide 54: Focusing on local consumer insights
Focusing on local consumer insights Starting with local consumer insight… …developing products consumers prefer to buy • 7 of 10 Swedes want to increase their • ABBA Middagsklart! makes it easy to fish consumption cook fish that everybody likes • Difficult to cook fish properly • Focus on: 1. Great
Slide 55: Rolling out successful launches
Rolling out successful launches Launch wave 1 Launch wave 2 Launch wave 3 Launch wave 4 • Just add salmon • Bigger pack size • Just add cod • New varieties • New taste variety • New geographies 55
Slide 56: ABBA Middagsklart generating additional revenue
Resulting in ABBA Middagsklart generating additional revenue 80 70 60 Value (SEK million) 50 40 30 20 10 0 2011 2012 RTM W3213 56 | Source: AC Nielsen
Slide 57: Launching a new cross-category healthy brand
Launching of a new cross-category healthy brand Starting with local consumer insight… …establishing a brand consumers prefer to buy • Sales of healthy food were increasing • Core of the brand – ”Bara bra mat” • Shift from diet focus to other health • Clear health benefit benefits • Building credibil
Slide 58: Creating a wide product range
Creating a wide product range Cereals Granola Juice Müsli Coconut water Porridge 58
Slide 59: Impressive value growth and high brand awareness
Resulting in impressive value growth and high brand awareness Value growth, SEK million Brand awareness, % 140 90 80% 80 120 +43% 70 100 60 +30% 80 50 +65% 60 40 30 40 20 20 10 0 0 2010 2011 2012 2013 2008 2010 2011 2012 2013 59 Source: 2008 TNS, resp 2010 och v.9-10 2013 Scandinfo
Slide 60: Returning Rieber to organic growth
Returning Rieber to organic growth • Growth has been negatively impacted by the long period of uncertainty But we are now going to... • Focus on the core portfolio under the Toro brand • Innovate from complementary competence and technologies • Build on a management team with proven track record 60
Slide 61: Achieving top line growth through improved innovation and scale
Achieving top line growth through improved innovation and scale Bente Brevik, CEO Orkla Foods Norge
Slide 62: Slide 62
Slide 63: Financial performance 1987 - 2012
Financial performance 1987 - 2012 Net sales value (NOK million) EBITA (NOK million) EBITA Net sales value 63
Slide 64: We are able to create volume growth
We are able to create volume growth 2010 2011 12 10 Change in volume shares (%) 8 6 4 2 0 -2 -4 -6 -8 -10 Total market Privat label Other Orkla Foods Norge 64 Source: AC Nielsen RTM. Changes in volume shares (%)
Slide 65: Innovation is the core of what we do
Innovation is the core of what we do 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0% New launches Line extensions Re-launches Total innovation 65 Share of Orkla Foods Norge’s revenues that comes from launches the last three years
Slide 66: 500 000 000
500 000 000 66
Slide 67: Rieber's superior #1 market positions
Rieber’s superior #1 market positions.. 120 % 100 97 95 90 80 79 78 70 60 54 40 49 36 20 0 Dry sauces Dry soups Dry Frozen Sweet Frozen Ketchup Dressing Jam casseroles pizza bread ready to eat spread meals 67 Source: AC Nielsen grocery market shares, YTD as of week 36 2013
Slide 68: A perfect match with Orkla's #1 market positions
..are a perfect match with Orkla’s #1 market positions 120 % 100 97 95 90 80 79 78 70 60 54 40 49 36 20 0 Dry sauces Dry soups Dry Frozen Sweet Frozen Ketchup Dressing Jam casseroles pizza bread ready to eat spread meals 68 Source: AC Nielsen grocery market shares, YTD as of week 36 2013
Slide 69: Local brands and taste are the winners
Local brands and taste are the winners 120 % 100 97 95 90 80 79 78 70 60 54 40 49 36 33 20 18 20 14 7 1 5 1 0.5 0 Dry sauces Dry soups Dry Frozen Sweet Frozen Ketchup Dressing Jam casseroles pizza bread ready to eat spread meals 69 Source: AC Nielsen grocery market shares, YTD as of week 36 2013
Slide 70: Mature markets don't exist
-Mature markets don’t exist
Slide 71: Significant growth in market shares
Significant growth in market shares 50 % 50 % 45 % 43 % 45 % 42 % 40 % 41 % 40 % 40 % 40 % 39 % 36 % 35 % 34 % 35 % 34 % 33 % 35 % 35 % 30 % 30 % 25 % 25 % 20 % 20 % 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Stabburet Stabburet Chilled kjølt Total Stabburet Stabburet Leverpostei Le
Slide 72: Income synergies
Income synergies.. ..through sharing competencies and technologies 72
Slide 73: Slide 73
Slide 74: Improving performance from increased local scale
Improving performance from increased local scale • Building on unmatched market positions • Reaching 2016 targets • Achieving top line growth through improved innovation and scale 74
Slide 75: Turnaround case with significant potential
Turnaround case with significant potential Christer Åberg EVP & CEO, Orkla Confectionery & Snacks
Slide 76: Turnaround case with significant potential
Turnaround case with significant potential • Weakening results in recent years (especially 2013) – a turnaround case • Fundamentally stable markets, leading market positions and strong heritage brands • Potential to turnaround the business through clear revenue & cost initiatives 76
Slide 77: One of the largest Nordic confectionery & snacks companies
One of the largest Nordic confectionery & snacks companies Net revenue 2012: NOK 4.8 bn. Confectionery Snacks Biscuits NOK 1.8 bn. (37 %) NOK 2.2 bn. (46 %) NOK 0.8 bn. (17 %) • Chocolate confectionery • Potato chips • Sweet biscuits • Sugar confectionery • Cheese snacks • Savory / food biscuits • P
Slide 78: Norway and Sweden are the largest markets
Norway and Sweden are the largest markets Revenues (NOK bn.) per company and share of total Orkla C&S revenues NOK 2 bn. (41 %) NOK 0.8 bn. (17 %) Confectionery: NOK 1,200m Confectionery: NOK 350m Snacks: NOK 470m Snacks: NOK 410m Biscuits: NOK 300m Biscuits: NOK 60m NOK 1.1 bn. (22 %) NOK 0.2 bn. (
Slide 79: Local #1 brands with long heritage
Local # 1 brands with long heritage – over 90 years Top 5 brands (revenues) per category Confectionery Snacks Biscuits (1936) (1965) (1963) • # 2 milk chocolate in NO • # 1 snacks brand in DK, # 2 in NO • # 1 biscuit brand in SE (1988) (1967) (1968) • Unique sweet & salty combination • # 1 snacks br
Slide 80: Strong positions but competition is increasing
Strong positions… but competition is increasing Market share vs. nearest competitor and PL (largest markets) Country Orkla Competitor Private Label Confect. NO 30 % 35 % (Mondelez) 2% EST (Kalev) 38 % 10 % (Fazer) NA SE 36 % 18 % (Estrella) 23 % Snacks DK (KiMs) 45 % 8 % (Frito Lay) 25 % NO 29 % 32
Slide 81: 2% stable market growth despite health trends
2 % stable market growth despite health trends Retail volume (‘000 tonnes) indulgence1 categories, Nordic countries The 90’s: The 00’s: 2013: Low fat diets Glycemic Index Clean Eating & Superfoods Bodies of supermodels like Kate Low Carb High Fat Less sugar & high protein Moss are worshiped “Strong
Slide 82: Per capita consumption in the Nordics among the highest in Europe
Per capita consumption in the Nordics among the highest in Europe - but still potential to grow Per capita consumption (kg) 2012 Orkla not present Orkla home market Confectionery 13.3 11.7 11.2 10.9 10.8 10.8 10.8 10.4 10.3 8.4 8.0 8.0 6.6 6.0 5.7 5.6 5.2 5.0 4.4 4.3 3.2 3.0 2.3 2.3 GER IRL FIN AUS
Slide 83: Local brands based on deep consumer insight are winners
Local brands based on deep consumer insight are winners Market characteristics Orkla competitive advantages Deep local consumer understanding Mainly local • Local organizations & value chain that can easily meet local needs preferences • E.g. chocolate taste, snacks spices & salt levels Local # 1 br
Slide 84: Weakened top and bottom line development in recent years
Weakened top and bottom line development in recent years Organic sales growth1 RTM EBIT (NOK million) EBIT margin (adjusted)2 2.5% 17.8% 18.0% 900 1.8% 15.9% 16.4% 15.4% 1.4% 800 0.5% 700 600 500 -3.6% Q4 Q4 Q4 Q4 2009 2010 2011 2012 RTM H1 2009 2010 2011 2012 H1 2013 2009 2010 2011 2012 2013 84 1.
Slide 85: What has caused this drop in results?
What has caused this drop in results? • Not enough focus on core business (# 1 and # 2 positions) and too many small scale innovations - while competition step-up • Nordic retailers now at European Private Label levels (snacks & biscuits in all markets except Norway) • Margin pressure – combination
Slide 86: Reaching our targets 2016
Reaching our targets 2016 Organic growth 2-4 % • Turnaround will require clear revenue growth and cost reducing initiatives • Improvement will be gradual EBIT margin > 16.5 % 86
Slide 87: Growing the top line - Overall
Growing the top line - Overall Must-Win Battles Actions • Back to growth on our core business – local # 1 and # 2 positions Regain focus • Further focus on where and how we make brand investments on core • Simplify brand portfolio and overall assortment • Increased cross-country & cross-category foc
Slide 88: Growing the top line – Innovation with focus on core
Growing the top line – Innovation with focus on core Example: Stratos – # 2 chocolate brand in Norway • Core product: Milk chocolate with air bubbles • Launched in 1936 Different formats: Small & big Different taste variants: Crunchy, in Across categories: bars, rolls, bags, mini bars etc. mixed bag
Slide 89: Growing the top line - The Baltic markets
Growing the top line - The Baltic markets Three very different markets: Estonia, Latvia, Lithuania • Different nationalities, languages, history, religions, national sports… • Different taste preferences, cuisine etc. Orkla C&S’s strength: Respond to local consumer and market specifics • Consumers’
Slide 90: Attractive Baltic economies
Growing the top line – Attractive Baltic economies Real GDP growth (annual change, %) Latvia Lithuania Estonia 8.3% 5.9% 5.5% 5.6% 4.2% 3.6% 3.3% 3.2% 3.0% 3.0% 1.5% -0.9% 2010 2011 2012 2013E • Baltic economies among the fastest growing in EU • Category growth above economic growth (5-7 % historic
Slide 91: Make Baltics really matter
Growing the top line - Make Baltics really matter • Net revenues (2012): NOK 240 million (+ 40 % 2010-12) • Key markets: Estonia • # 1 (38 % share) within confectionery (chocolate & sugar) • # 1 within biscuits (11 % share) • Net revenues (2012): NOK 85 million (+ 10 % 2010-12) • Key markets: Latvia
Slide 92: Cut costs by NOK 300 million in 2014-16
Cut costs by NOK 300 million in 2014-16 • Reduce overhead costs and improve go-to-market edge (2013-16) – Integration of companies in Norway, Sweden & Finland – from 7 to 3 (NOK 50-70 million) – Significant reduction of senior leadership & changes were required • Improve product cost & value (2014-1
Slide 93: Turnaround case with significant potential
Turnaround case with significant potential Gradual improvements towards 2016 target • 2-4 % organic growth • >16.5 % EBIT margin Growing the top line • Regain focus on our local core # 1 and # 2 positions • Fewer and more focused innovations – further initiatives across categories • One face to the
Slide 94: Continuing to grow our local market leadership
Continuing to grow our local market leadership Stig Ebert Nilssen EVP & CEO Orkla Home & Personal
Slide 95: Continuing to grow our local market leadership
Continuing to grow our local market leadership • #1 positions in the Nordic region • Local winning concepts • Strong platform for future growth • Nutrilett: our fast growing slimming brand 95
Slide 96: Continuing to grow our local market leadership
Continuing to grow our local market leadership • #1 positions in the Nordic region • Local winning concepts • Strong platform for future growth • Nutrilett: our fast growing slimming brand 96
Slide 97: #1 positions in all product categories
#1 positions in all product categories • Stable markets • High margins • Strong brand loyalty • Strong Nordic purchasing power Personal Care Home Care Health Textiles 97
Slide 98: Strong Nordic platforms for future growth
Strong Nordic platforms for future growth Personal Care Home Care Health Textiles Sales • Grocery • Grocery • Grocery • Grocery channels: • Pharmacy • B2B • Pharmacy • Home improvement • Health shops retailers • DTC • Convenience • Sport / Fitness • B2B Home markets: Companies: 98
Slide 99: Large categories with sales mainly in the Nordic market
Large categories with sales mainly in the Nordic market Revenues 2012, proforma incl. Jordan: NOK 4,720 million Geographical sales split: Category sales split: Personal Care Other 14% 20% Finland Norway 4% Home Care Denmark 7% 41% 9% Sweden 66% 28% Health 11% Textiles 99 Note: Reported revenues in 2
Slide 100: #1 local brands with long heritage
#1 local brands with long heritage – going back 150 years Jordan (1837) Möllers (1854) Dr. Greve (1899) SanaSol (1933) Blenda (1935) Lano (1936) Zalo (1952) Pierre Robert (1956) Omo (1961) Sun (1966) Jif (1977) Gerimax (1981) Nutrilett (1989) Maxim (1991) Define (2001) 100
Slide 101: Unique home and personal care #1 positions in Norway
Unique home and personal care #1 positions in Norway Market share Position Orkla vs Competition Home Care Home Care 71% #1 Fabrics cleaner 81% #1 Orkla, Lilleborg (71%) Colgate Palmolive (5%) Cleaners 62% #1 P&G (3%) Dishwash 79% #1 Unilever (3%) Fabrics cond. 62% #1 Private Label (8%) Other (10%) P
Slide 102: #1 Nordic market positions in House Care
#1 Nordic market positions in House Care Market share Position Orkla vs Competition House Care Nordics Nordics 55% #1 #1 Orkla, Jordan (55%) Norway 75% Flügger / Stiwex (10%) Sweden 48% #1 Alfort & Cronholm (7%) Denmark 62% #1 QPT (5%) Sokeva (5%) Finland 33% #1 Private Label (11%) Other (7%) 102 So
Slide 103: #1 market positions in food supplements
#1 market positions in food supplements Market share Position Orkla vs Competition Nordics Nordics 57% #1 Norway 77% #1 Orkla, Axellus (57%) Midsona (16%) Denmark 49% #1 Cederroth (16%) Sweden 35% #1 Private Label (1%) #1 Other (10%) Finland 29% Source: Grocery markets AC Nielsen per July for Denmar
Slide 104: Strong grocery positions in textiles
Strong grocery positions in textiles Market shares Norway Pierre Robert Group (78%) Springhill Textile (6%) Kari Traa / Active Brands (5%) Private Label (6%) Other (5%) Market shares Sweden Orkla, Pierre Robert (29%) Springhill Textiles (16%) Triumph (1%) ICA, My wear (PL) (42%) Other private labels
Slide 105: Local brands based on local insight are winners
Local brands based on local insight are winners Local brands • Better local consumer understanding Local insight • Better trade and category understanding • Flexible local value chain Local scale • Dominant in sales and advertising 105
Slide 106: Continuing to grow our local market leadership
Continuing to grow our local market leadership • #1 positions in the Nordic region • Local winning concepts • Strong platform for future growth • Nutrilett: our fast growing slimming brand 106
Slide 107: Technology driven local innovation generating category growth
Technology driven local innovation generating category growth Insight targeted towards convenience trend – self dissolving capsules with highly concentrated liquid detergent 11 10 9 8 7 6 Market share 5 4 3 2 1 0 1 3 5 7 9 11 13 15 17 Months after release 107 Source: AC Nielsen, 22.04.12-11.08.13, T
Slide 108: Strong market leadership for Define driven by local insight
Strong market leadership for Define driven by innovations based on local insight 300 900 #1 Grocery sales value Hair Care category (NOK million) 800 Grocery sales value Define (NOK million) 250 700 200 600 500 150 400 100 300 200 50 100 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 109: Increase grocery penetration by expanding the Textile category
Increase grocery penetration by expanding the Textile category 2011 Revenues in Norway (NOK million): 539 2013 2012 2010 516 495 2009 448 2008 391 2007 316 2006 2012 7,9 % 16,3 % Textiles in grocery 92,1 % 83,7% Textiles other channels 109 Source: GFK Total market Norway 2006 - 2012
Slide 110: Revenue management - Growing a mature category
Revenue management - Growing a mature category by clearly differentiating price and quality offers • 16% sales growth from 2009 – 2013 – More than doubling sales for the Ultimate product Revenues interior brushes (NOK million) High 80 70 Price 60 Index Ultimate 50 130 40 Price 30 Perfect Price 20 In
Slide 111: Möller's cod liver oil – upgrading an iconic brand
Möller’s cod liver oil – continously upgrading an iconic brand The leading health brand for 160 years Revenues (NOK million) 350 300 250 200 150 100 2007 2008 2009 2010 2011 2012 E 2013 111
Slide 112: Tailor made local trade and consumer campaigns
Tailor made local trade and consumer campaigns driving demand 112
Slide 113: Continuing to grow our local market leadership
Continuing to grow our local market leadership • #1 positions in the Nordic region • Local winning concepts • Strong platform for future growth • Nutrilett: our fast growing slimming brand 113
Slide 114: Significant growth possibilities
Significant growth possibilities Recent performance: Financial Target 2016: Rolling 12 months operating revenues (NOK million) 5,000 4,500 4,000 Organic growth 3,500 3-5 % 3,000 Q4 Q4 Q4 Q4 Q2 2008 2009 2010 2011 2013 Organic sales growth1 2008 2009 2010 2011 2012 Average 6.8% -1.4% 4.8% 1.1% 1.0% 2
Slide 115: Sustainable profitability
Sustainable profitability Recent performance: Financial Target 2016: Rolling 12 months adjusted EBIT1 (NOK million) 800 700 600 500 400 EBIT margin 31.12.08 31.12.09 31.12.10 31.12.11 30.6.13 > 17.5 % EBIT margin (adjusted)1 19.4% 19.5% 17.4% 16.7% 17.4% 17.3% 18.1%2 18.4%2 16.0%2 2008 2009 2010 201
Slide 116: Well positioned for future growth
Well positioned for future growth • Health, well being and beauty a sustainable macro trend • Aging population wanting to stay young longer • Nordic citizens in general having high disposable income and purchasing power • High investments in home improvements • Nordic consumer seeking premium produc
Slide 117: Our future priorities
Our future priorities are: • Continue growing organically • Expand into new markets and sales channels • Further improve efficiencies and operational excellence 117
Slide 118: Continue growing organically
Continue growing organically • Grow core business through innovation – more of the best • Improve sharing of best practices within Orkla and Home & Personal 118
Slide 119: Wide expansion possibilities: new markets
Wide expansion possibilities • Existing products into new markets • Structural growth Category presence per geography Category Home care Personal care Dietary supplements Textiles (grocery) Painting tools STRONG #1, clearly larger than #2 GOOD #1 or #2, same size as #1 or #2 In the market Not in the
Slide 120: Wide expansion possibilities: new sales channels
Wide expansion possibilities • Existing products into new sales channels Category presence per sales channel Home Web Health Conv- Sport/ Category Grocery Pharmacy B2B impr. shops shops enience Fitness retailers Home care Personal care Health Textiles Full presence Present Partly present Not present
Slide 121: Further improve efficiencies and operational excellence
Further improve efficiencies and operational excellence • Complete synergy realization from acquisitions in 2012 • Continue product portfolio streamlining • Increase cross category / country cooperation and synergies • Further leverage on existing cost base – organic and structural • Execute operati
Slide 122: Continuing to grow our local market leadership
Continuing to grow our local market leadership • #1 positions in the Nordic region • Local winning concepts • Strong platform for future growth • Nutrilett: our fast growing slimming brand 122
Slide 123: Our fast growing slimming brand
Our fast growing slimming brand Tine Hammernes Leopold Commercial Director & CEO Home markets Axellus Group
Slide 124: Nutrilett is a long running success story
Nutrilett is a long running success story Organic Revenues MNOK CAGR 21% 350 300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ORKLA aquired CollettPharma, of wich Nutrilett was a brand in 2005. Organic CAGR for Nutrilett in the years following is 21%.
Slide 125: Effective products based on science
Effective products based on science The effect of Nutrilett powder diets has been proven, documented, and published in 20 clinical studies.
Slide 126: Superior taste wins loyal consumers
Superior taste wins loyal consumers Benchmark for taste: Consumers prefer Nutrilett bars over competition Finland 62% of Finnish bar users prefer Nutrilett Norway 63% of Norwegian bar users prefer Nutrilett Sweden 46% of Swedish bar users prefer Nutrilett Research conducted by Ipsos MMI as, March 20
Slide 127: Continuous innovation increases value and volume
Continous innovation increases value and volume Superior products Wide consumer group High frequency
Slide 128: Competitive edge in continuous improvements
Competitive edge in continuous improvements
Slide 129: Profitable combination of scale and local presence
Profitable combination of scale and local presence Synergy in brand Economy of scale Strong local sales building and insight sourcing and marketing teams It works Sweden Norway Finland Helps you Quick and reach your convenient goals weightloss Denmark Poland The weight loss expert
Slide 130: Acting fast on local consumer trends
Acting fast on local consumer trends Adapted to special Adapted to unique Adapted to new Danish Polish Swedish taste preference consumer needs consumer trends
Slide 131: Local scale drives large volumes
Local scale drives large volumes
Slide 132: Local scale drives large volumes
Local scale drives large volumes
Slide 133: Strong market leadership across the Nordics
Strong market leadership across the Nordics Revenue split per market Market Market shares Norway Norway 78%* #1 Sweden Denmark Sweden 51%* #1 Finland Poland Finland 39%** #1 Denmark 20%** #2 Launced in Denmark * YTD feb 2013 ** 2012 figures and Poland in 2012
Slide 134: Orkla's competitive advantage secures future growth for Nutrilett
Orkla’s competitive advantage secures future growth for Nutrilett Organic Revenues MNOK CAGR 21% 350 300 • #1 in the Nordics 250 Strong brand • High growth over 13 years 200 • Value created from operating rapid change 150 Local insight based on local trends 100 • Strong trade relations 50 Local scal
Slide 135: Well positioned for future growth
Well positioned for future growth • #1 positions in attractive Nordic markets • Track record demonstrates ability to grow further develop strong local capabilities and culture • Utilize synergies to improve profitability • Several attractive growth opportunities for the longer term – new markets a
Slide 136: Appendices – Financial Performance
Appendices Financial Performance
Slide 137: Orkla Group - Branded Consumer Goods
Orkla Group - Branded Consumer Goods Average organic sales growth* of 3% the last 5 years, driven by price Organic sales growth1 6.5% 3.7% 1.9% 1.7% -0.1% -2.3% 2008 2009 2010 2011 2012 RTM H1 2013 137 1. Adjusted for acquired and divested companies, currency translation effects and contract product
Slide 138: Orkla Group - Branded Consumer Goods
Orkla Group - Branded Consumer Goods Strong local brand positions, high margin level in the Nordics EBIT margin (adjusted) % 20 1 18 Orkla Home & Personal 16 Orkla Confectionery & Snacks 2 14 Orkla Foods 12 12 Orkla BCG average 10 8 6 4 Orkla Food Ingredients 2 0 Orkla International 2008 2009 2010 2
Slide 139: Orkla Group - Branded Consumer Goods
Orkla Group - Branded Consumer Goods Gross margin Cash conversion1 32% 32% 100% 99% 31% 78% 2011 2012 RTM H1 2010 2011 2012 2013 139 1. Cash flow from operations / EBIT (adjusted).
Slide 140: Orkla Foods
Orkla Foods Organic sales growth1 3,7% 2,4% 2,0% 0,5% -1,3% -1,5% -1,9% -2,3% 2010 2011 2012 H1 2013 Retail channel All channels 140 1. Adjusted for acquired and divested companies and currency translation effects. Divested bakery business exluded for all years.
Slide 141: Orkla Foods
Orkla Foods RTM EBIT (adjusted) in NOK million EBIT margins (adjusted)1 1,200 14.3% 14.4% 14.0% 13.9% 1,150 12.9% 1,100 1,050 1,000 950 900 850 800 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q2 2013 2009 2010 2011 2012 RTM H1 2013 •Consolidation of Rieber will lower EBIT margin by around 1.5 - 2% points 141 1.
Slide 142: Orkla Foods
Orkla Foods Gross margin Cash conversion1 33% 32% 105% 29% 88% 81% 2011 2012 RTM H1 2010 2011 2012 2013 142 1. Cash flow from operations / EBIT (adjusted).
Slide 143: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Organic sales growth1 RTM EBIT (NOK million) EBIT margin (adjusted)1 2.5% 17.8% 18.0% 900 1.8% 16.4% 15.9% 1.4% 15.4% 0.5% 800 700 600 -3.6% 500 2009 2010 2011 2012 H1 Q4 Q4 Q4 Q4 2009 2010 2011 2012 RTM 2013 2009 2010 2011 2012 H1 2013 143 1. Divested bakery business ex
Slide 144: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Gross margin Cash conversion1 36% 36% 35% 101% 101% 76% 2011 2012 RTM H1 2010 2011 2012 2013 144 1. Cash flow from operations / EBIT (adjusted).
Slide 145: Orkla Home & Personal
Orkla Home & Personal Rolling 12 months operating revenues (NOK million) 5,000 4,500 4,000 3,500 3,000 Q4 Q4 Q4 Q4 Q2 2008 2009 2010 2011 2013 Organic sales growth1 2008 2009 2010 2011 2012 Average 6.8% -1.4% 4.8% 1.1% 1.0% 2.5% 145 1. Adjusted for acquired and sold companies, currency translation e
Slide 146: Orkla Home & Personal
Orkla Home & Personal RTM adjusted EBIT1 (NOK million) EBIT margin (adjusted) 800 19.5% 19.4% 750 17.4% 17.4% 16.7% 700 650 600 18.1%1 18.4%1 17.3% 550 16.0%1 500 450 400 31.12.08 31.12.09 31.12.10 31.12.11 30.6.13 2008 2009 2010 2011 2012 146 1. Adjusted for contract production to the process chemi
Slide 147: Orkla Home & Personal
Orkla Home & Personal Gross margin Cash conversion1 51% 50% 117% 49% 95% 88% 2011 2012 RTM H1 2010 2011 2012 2013 147 1. Cash flow from operations / EBIT (adjusted).
Slide 148: Orkla Investor Day
Orkla Investor Day London - 26 September 2013