Slide 1: Continued progress in Branded Consumer Goods
1 Continued progress in Branded Consumer Goods Third quarter results 2017 25 October 2017 Peter A. Ruzicka, President & CEO
Slide 2: Highlights Q3-17
Highlights Q3-17: Growth in line with market, but profits still impacted by higher raw material costs • BCG organic growth in line with market growth • Cost programmes proceed according to plan, but higher input costs impact profits • Sapa divestment completed in line with strategy • EPS for continu
Slide 3: Continued growth in line with market
Branded Consumer Goods Q3-17: Continued growth in line with market Organic growth Q3-17 Continued organic growth1 in 3 out of 4 business areas1 1.2% 2.8% Orkla Foods 2.9% 1.8% 1.6% 1.1% 1.2% 0.7% 0.7% Orkla Confectionery 1.3% & Snacks Orkla Care 1.3% Orkla Food Ingredients -0.1% -2.8% 2012 2013 2014
Slide 4: Healthy gap in black over red from good progress in cost programs
Healthy gap in black over red from good progress in cost programs… + 0 - 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017 Organic sales growth1 Underlying growth in fixed costs2 1Reported sales growth adjusted for currency translation effects and structural changes. 4 2Reported growth in SG&A and fi
Slide 5: Further increases in input costs continue to hamper profitability
Branded Consumer Goods Q3-17: …but further increases in input costs in Q3 continue to hamper profitability 1,267 13.2% 13.2% -10bps +20bps +4.6% 1,209 +0.2% EBIT (adj.) FX FX EBIT (adj.) EBIT (adj.) M&A and Underlying EBIT (adj.) Q3-16 adjusted Q3-17 margin FX effects improvement margin growth Q3-16
Slide 6: Financial performance
6 Financial performance Jens Bjørn Staff, CFO
Slide 7: 11% increase in EPS for continuing operations in Q3
11% increase in EPS for continuing operations in Q3 Key figures Q3-17 ∆vs LY YTD -17 ∆vs LY Operating revenues 9,858 5% 28,710 5% EBIT (adj.) 1,267 8% 3,192 7% Other income and expenses 3 -200 EBIT 1,270 23% 2,992 10% Profit/loss from associates and JV 103 -27% 391 -24% Net interest -47 18%1 -123 -1
Slide 8: Reported revenue growth of 4.4%
Branded Consumer Goods Q3-17: Reported revenue growth of 4.4% 9,584 +2.7% +0.5% 9,179 +1.2% BCG operating Organic growth1 FX M&A BCG operating revenues Q3-16 revenues Q3-17 8 Amounts in NOK million. 1Reported growth adjusted for currency translation effects and structural changes
Slide 9: Underlying BCG margin growth driven by cost savings
Underlying BCG margin growth driven by cost savings while higher raw material costs hamper contribution margin Underlying margin development Q3: YTD: +20 bps +20 bps 13.2% 13.2% 11.5% 11.4% -13 bps -10 bps +80 bps +50 bps -60 bps -30 bps BCG EBIT M&A and Variable Other costs BCG EBIT BCG EBIT M&A an
Slide 10: Reducing fixed costs by leveraging the One Orkla model
Branded Consumer Goods Reducing fixed costs by leveraging the One Orkla model Continue to optimise Improvements pay off and factory footprint we see further potential • Average revenues per factory +36% since 2014 23.4 Rationalisation of SG&A • Merging Foods and C&S in Finland 22.0 • Merging Persona
Slide 11: Orkla Foods: A strong quarter after a challenging H1-17
Orkla Foods A strong quarter after a challenging H1-17 Q3 YTD • Organic sales growth driven by higher Revenues 4,007 11,742 volumes in almost all markets Organic growth 2.9% 1.5% • High campaign activity and a rebound in India partly explained stronger growth EBIT(adj.) margin 13.5% 11.6% Change vs
Slide 12: Orkla Confectionery & Snacks: Fewer campaigns in the quarter
Orkla Confectionery & Snacks Fewer campaigns in the quarter Q3 YTD • Lower campaign and launch activity, Revenues 1,525 4,496 especially in Norway, resulted in a lower Organic growth 1.3% 2.8% growth rate vs H1 • Cost improvements in supply chain EBIT(adj.) margin 17.2% 14.5% offset by product mix e
Slide 13: Orkla Care: Profit growth from organic improvement and M&A
Orkla Care Profit growth from organic improvement and M&A Q3 YTD • Contribution from acquired companies Revenues 1,878 5,549 drove total revenue growth to 9% Organic growth 1.3% 1.7% • Organic growth in all segments except House Care EBIT(adj.) margin 17.4% 15.3% Change vs LY -40 bps -10 bps • Margi
Slide 14: Orkla Food Ingredients: Growth in main categories
Orkla Food Ingredients Growth in main categories, but overall performance hampered by weaker sales in ice cream ingredients Q3 YTD • 7% total revenue growth and 5% EBIT Revenues 2,246 6,293 growth driven by several add-ons Organic growth -0.1% -0.5% • Strong sales in several main categories compensa
Slide 15: Orkla Investments: Sapa divestment in line with strategy
Orkla Investments Sapa divestment in line with strategy Fully consolidated into Orkla financial statements Accounted for using equity method Volume (GWh): Jotun (42.5%) Hydro Power Q3: 722 (724) YTD: 1,994 (1,945) Power prices1 (NOK/MWh): Q3: 266.63 (234.62) YTD: 267.75 (228.71) EBIT adj. (NOK milli
Slide 16: Jotun (42.5%)
Jotun (42.5%) Continued volume growth, but higher raw material prices impact profits Q3-17 comments • Continued volume growth and increase in operating revenue year over year • Negative currency translation effects and pressure on prices impact topline growth • Good performance in Decorative Paints,
Slide 17: Strong cash flow generation YTD
Strong cash flow generation YTD Cash from operations (excl. financial investments) Cash flow per 30.9 2017 2016 Operating profit 2,975 2,715 Amort., depr., and impairment 915 874 Change in net working capital -371 -592 Net replacement expenditures -743 -1,040 Cash from operations 2,776 1,957 17
Slide 18: Focus going forward
1 8 Focus going forward Peter A. Ruzicka, President & CEO
Slide 19: Delivering on our strategy through One Orkla
Delivering on our strategy through One Orkla Key takeaways Q3-17 • Continued growth - in line with market • Cost improvements from working as One Orkla • EBIT growth impacted by higher raw material prices • Sale of 50% share in Sapa completed Outlook • Continued soft market growth • Uncertainty rela
Slide 20: Launch of Smash! in Sweden under local brand
Launch of Smash! in Sweden under local brand 20
Slide 21: Naturli' plant based spread awarded three prizes
Naturli’ plant based spread awarded three prizes 21
Slide 22: New environmentally friendly home and personal care brand
New environmentally friendly home and personal care brand Good cleaning power Largely plant based Non-allergenic 100% recycled plastic Made from wind power Swan labelled 22
Slide 23: Q&A
2 3 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 24: Appendices
‘Orkla Appendices
Slide 25: Group income statement
Group income statement Change Change Q3-16 Q3-17 in % YTD 2016 YTD 2017 in % Operating revenues 9,429 9,858 5% 27,472 28,710 5% EBIT (adj.) 1,178 1,267 8% 2,991 3,192 7% Other income and expenses -149 3 -260 -200 EBIT 1,029 1,270 23% 2,731 2,992 10% Profit/loss from associates* 141 103 -27% 517 391
Slide 26: Orkla Foods and Orkla Confectionery & Snacks
Key figures: Orkla Foods and Orkla Confectionery & Snacks Orkla Foods Q3-16 Q3-17 Change YTD -16 YTD -17 Change R12M Operating revenues 3,905 4,007 102 11,290 11,742 452 15,928 EBIT (adj.) 512 540 28 1,352 1,366 14 1,982 EBIT (adj.) margin 13.1 % 13.5 % 40 bps 12.0 % 11.6 % -40 bps 12.4 % Cash flow
Slide 27: Orkla Care and Orkla Food Ingredients
Key figures: Orkla Care and Orkla Food Ingredients Orkla Care Q3-16 Q3-17 Change YTD -16 YTD -17 Change R12M Operating revenues 1,726 1,878 152 5,010 5,549 539 7,279 EBIT (adj.) 307 327 20 770 847 77 1,033 EBIT (adj.) margin 17.8 % 17.4 % -40 bps 15.4 % 15.3 % -10 bps 14.2 % Cash flow from operation
Slide 28: Net financial items
Net financial items FY 2016 Q3-16 Q3-17 Net interest expenses -177 -40 -47 Currency gain/loss -4 1 1 Result from Share Portfolio and dividends 248 40 0 Other financial items, net -179 -15 -15 Net financial items -112 -14 -61 28 Amounts in NOK million
Slide 29: Statement of financial position
Statement of financial position 31.12.2016 30.09.2017 Intangible assets 18 343 19 363 Property, plant and equipment 11 038 11 323 Investments in associates and joint ventures etc. 13 148 4 121 Non-current assets 42 529 34 807 Inventories 5 195 5 722 Inventory of development property 70 74 Trade rece
Slide 30: Cash flow
Cash flow YTD 2016 YTD 2017 Operating profit 2 715 2 975 Amortisation, depreciation and write-downs 874 915 Change in net working capital -592 -371 Net replacement expenditures -1 040 -743 Cash flow from operations 1 957 2 776 Cash flow from operations, Financial Investments -129 -149 Tax -436 -457
Slide 31: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing debt (NOK million) Net gearing 8 496 0.28 7 805 8 056 7 978 0.23 0.24 0.21 5 661 0.18 2013 2014 2015 2016 Q3-17 2013 2014 2015 2016 Q3-17 31
Slide 32: Debt maturity profile
Debt maturity profile Average maturity 3.1 years 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2017 2018 2019 2020 2021 2022 2023 2024 2025- Unutilised credit facilities Drawn amounts 32 Amounts in NOK million
Slide 33: Funding sources
Funding sources 1.8 5.3 Unutilised credit facilities Banks 4.9 Bonds and CP Cash, cash equivalents and interest bearing assets 4.9 33 Amounts in NOK billion
Slide 34: Your friend in everyday life