Slide 1: Third quarter results 2012
Third quarter results 2012 Oslo, 31 October 2012 ÅGE KORSVOLD, PRESIDENT & CEO
Slide 2: Agenda
Agenda Åge Korsvold, President & CEO • Strategy and highlights Q3-2012 Terje Andersen, CFO • Financial performance Q3-2012 • Sapa • Hydro Power Atle Vidar Johansen, CEO Orkla Foods Nordic • Branded Consumer Goods 2
Slide 3: Important actions to deliver strategy
Important actions to deliver strategy • Agreement to acquire Rieber & Søn • Closing and integration of Jordan • Orkla and Hydro to create the world’s leading aluminium solutions provider (Sapa JV) • Process initiated for divestment of Sapa Heat Transfer • IPO of Borregaard • Reduction of the Share P
Slide 4: Orkla acquires Rieber & Søn - Optimal match for Orkla
Orkla acquires Rieber & Søn -Optimal match for Orkla • Will strengthen Orkla’s position as the leading branded consumer goods company in the Nordic region • Rieber & Søn has strong competencies and leading market positions • Complementary competencies, product categories and production technologies
Slide 5: Rieber & Søn: More than 80% of sales from #1 or #2 positions
Rieber & Søn: More than 80 % of sales from #1 or #2 positions • Sales 2011: NOK 4 293 mill. (70 % in the Nordic region) • EBITDA (NOK mill.): 464 (2011) 642 (2010) 600 (2009) • Enterprise Value (EV): NOK 6.1 bn. • Main categories and market positions: SAUCES, SOUPS AND DRY READY TO MAKE #1 BAKE MIXE
Slide 6: Integration of Jordan
Integration of Jordan • Transaction completed on 31 August • Reported under Orkla Brands Nordic as of 1 September • Purchase price (EV): NOK 1,180 million • Nordic market leader in toothbrushes, dental sticks, dental floss and painting tools • Sales 2011: NOK 900 million EBITDA 2011: NOK 120 million
Slide 7: Orkla and Hydro combine extruded aluminium assets
Orkla and Hydro combine extruded aluminium assets Orkla Hydro Sapa Profiles, Building 50 % Profiles, 100% System and Extruded + NOK 1.8 50% Building Systems 100% and Welded Tubes bn receivable and Precision Tubing Joint Venture • Either party may initiate an IPO after approx. 3 years from closing, a
Slide 8: Creating a stronger company better positioned for value creation
Creating a stronger company better positioned for value creation • Revenues: ~NOK 47 billion • Underlying/adjusted EBITDA: ~NOK 1.9 billion • Annual revenue and cost synergies of NOK 1 billion *Illustrative figures for the new company 2011, unaudited. Underlying/adjusted EBITDA excludes certain spec
Slide 9: The IPO of Borregaard was completed on 18 October
The IPO of Borregaard was completed on 18 October • Orkla sold 81 million shares (81 %) at NOK 21 per share • In addition the Joint Bookrunners have borrowed 12 million shares to cover over-allotment • The over-allotment option is exercisable until 16 November • Orkla’s remaining share of Borregaard
Slide 10: Orkla Group
Orkla Group Fully consolidated One line consolidation Financial assets Foods Nordic Jotun (42.5%) EBITDA R12M Q3-12: NOK 1,418m EBITDA 2011: NOK 1,203m Brands Nordic EBITDA R12M Q3-12: NOK 1,573m Brands International EBITDA R12M Q3-12: NOK 93m Food Ingredients EBITDA R12M Q3-12: NOK 339m Hydro Power
Slide 11: Priority going forward: Execution
Priority going forward: Execution 1. Transactions: Plan, integrate and extract synergies • Integration of Rieber & Søn and Jordan • Complete the JV with Hydro 2. Top-line growth • Focus on organic growth and “real” innovations • Supported by add-on acquisitions 3. Operational excellence • Operationa
Slide 12: Operational highlights Q3-12
Operational highlights Q3-12 • Stable performance for Branded Consumer Goods • Profit growth and overall stable market shares in the Nordics • Weak development in Russia • Sales and profit growth for Orkla Foods Nordic • Profit development for Orkla Brands Nordic in line with last year, adjusted for
Slide 13: Q3-12 Results
Q3-12 RESULTS TERJE ANDERSEN, CFO 13
Slide 14: Structural changes in Q3 impact presentation of group accounts
Structural changes in Q3 impact presentation of group accounts • Sapa Profiles, Building System and Extruded and Welded tubes, Borregaard Chemicals and the shareholding in REC are presented on one line for discontinued operations • The income statement has been restated for 2012 and 2011. The Cash F
Slide 15: Key figures Q3-12
Key figures Q3-12 Q3 12 Q3 11 Change Amounts in NOK million Operating revenues 7 223 7 233 0% EBITA 857 817 5% Amortisation intangibles -4 -2 Other income and expenses -24 -16 EBIT 829 799 Profit/loss from associates 83 61 Dividends received 8 23 Gains, losses and write-downs Share Portfolio 418 - 1
Slide 16: Discontinued operations Q3
Discontinued operations Q3 101 179 71 43 1,500 -1,106 Borregaard Sapa REC Insurance Write down Discontinued gain Elkem of goodwill operations Solar Sapa Q3 2012 16
Slide 17: Robust financial position
Robust financial position • Cash flow from operations was NOK 1,708 million as of Q3 2012 Net interest-bearing liabilities (NOKm) Equity ratio (%) 27 424 51.7 53.6 51.8 52.1 19 848 19 652 47.7 10 645 9 488 2008 2009 2010 2011 as of 2008 2009 2010 2011 as of Q3-12 Q3-12 17
Slide 18: Hydro Power – Low prices impact profit
Hydro Power – Low prices impact profit • Production was 753 GwH in Q3 compared with 733 GwH last year • Spot prices down 45% from Q3 2011 EBITA for Hydro Power (NOK million) Spot prices (NordPool) (NOK/MWh) 93 93 87 518 409 45 45 292 33 279 266 215 154 -13 18 18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 18
Slide 19: Heat Transfer continue to deliver on improvement plan
Heat Transfer continue to deliver on improvement plan Amounts in NOK million Heat Transfer Q3-12 Q3-11 • Heat Transfer is reported as an Operating revenues 948 927 independent segment, according to EBITA 64 28 the new structure EBITA margin performance: • Profit growth and stable volumes 9% 7% 7% 7%
Slide 20: Weak European market impacted Q3 performance for Sapa
Weak European market impacted Q3 performance for Sapa • Sapa Profiles and Building System are presented on the line Discontinued operations, according to the new structure Amounts in NOK million Sapa Profiles and Building System Q3-12 Q3-11 • Continued improvement in North American Operating revenue
Slide 21: Branded Consumer Goods
BRANDED CONSUMER GOODS ATLE VIDAR JOHANSEN, CEO ORKLA FOODS NORDIC 21
Slide 22: Branded Consumer Goods
Branded Consumer Goods • Stable performance for Branded Consumer Goods • Profit growth and overall stable market shares in the Nordics • Weak development in Russia • Underlying sales growth of 1% in the quarter • Market shares in line with last year • Increased raw material prices compensated 22
Slide 23: Branded Consumer Goods EBITA Rolling months
Branded Consumer Goods EBITA Rolling 12 months Amounts in NOK million 3,000 2,900 2,800 2,700 2,600 2,500 2,400 2,300 2,200 2,100 2,000 1,900 100 0 Q1- Q2- Q3- Q3- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- 04 04 04 04
Slide 24: Examples of innovations Q3
Examples of innovations Q3 24
Slide 25: Orkla Foods Nordic
Orkla Foods Nordic Underlying change in revenues (%) 4.0 • Underlying sales and EBITA improvement in Q3 0.8 • EBITA-margin increased from 11.7% in Q3 2011 to 14.9% in Q3 2012 -0.3 -0.9 H1 Q3 • Market shares slightly improved EBITA in NOK million 357 • Stabburet continued its positive 313 277 259 262
Slide 26: Orkla Brands Nordic
Orkla Brands Nordic Underlying change in revenues (%) • Stable EBITA adjusted for loss of contract 1.2 1.1 production • Lilleborg had sales and profit growth in Q3 • Continued challenging market situation for -0.6 biscuits in Norway and Sweden -1.1 • Pierre Robert Group (textiles) reduced H1 Q3 dist
Slide 27: Orkla Brands International
Orkla Brands International Underlying change in revenues (%) Russia 13.9 • Market and company in transition • Market shift from local distributors to 7.5 7.3 national retailers • Restructuring of production 3.9 • Concentration of product portfolio H1 Q3 India • Solid sales growth in MTR, driven by E
Slide 28: Orkla Food Ingredients
Orkla Food Ingredients Underlying change in revenues (%) 16.5 • Third quarter EBITA amounted to NOK 58 million (NOK 62 million) 9.8 2.6 • Underlying sales decline of 5% • Stockpiling Q3 2011 - tax on saturated fat in Denmark -5.2 H1 Q3 EBITA in NOK million 71 63 67 62 58 34 29 Q1 Q2 Q3 Q4 28 2011 20
Slide 29: Q&A
Q&A • Åge Korsvold, President & CEO • Terje Andersen, CFO • Atle Vidar Johansen, CEO Orkla Foods Nordic
Slide 30: Appendix
APPENDIX people — creating value 1B} O R K L A
Slide 31: Cash flow as of 30 Sept. 2012
Cash flow as of 30 Sept. 2012 Amounts in NOK million Q3-12 Q3-11 2011 Cash flow Industial Activities: Operating profit 1 815 2 006 2 558 Profit/ loss from discontinued operations 393 465 Amortisation, depreciations and impairment ch 698 1 582 2 088 Changes in net working capital, etc. - 297 -2 159 -
Slide 32: Balance sheet as of 30 Sept. 2012
Balance sheet as of 30 Sept. 2012 Amounts in NOK million 30.09.2012 31.12.2011 Intangible assets 10 139 12 801 Property, plant and equipment 9 932 18 058 Financial assets 3 974 5 682 Non-Current assets 24 045 36 541 Assets in discontinued operations 17 972 391 Inventories 4 542 8 047 Receivables 6 7
Slide 33: Operating revenues per segment
Operating revenues per segment Amounts in NOK million Operating revenues Q3 12 Q3 11 Change Orkla Foods Nordic 2 102 2 242 -6 % Orkla Brands Nordic 2 023 1 947 4% Orkla Brands International 494 498 -1 % Orkla Food Ingredients 1 372 1 418 -3 % Eliminations - 62 - 75 Branded Consumer Goods 5 929 6 030
Slide 34: EBITA per segment
EBITA per segment Amounts in NOK million Operating profit - EBITA Q3 12 Q3 11 Change Orkla Foods Nordic 313 262 19 % Orkla Brands Nordic 417 428 -3 % Orkla Brands International - 15 10 Orkla Food Ingredients 58 62 -6 % Branded Consumer Goods 773 762 1% Sapa Heat Transfer 64 28 129 % Hydro Power 45 9
Slide 35: Financial items
FINANCIAL ITEMS people — creating value (93 O R K L A
Slide 36: Net financial items
Net financial items Amounts in NOK million Q3-12 Q3-11 Full year 2011 Net interest expenses -116 -76 -309 Currency gain/loss 2 -11 -17 Other financial items, net -43 - 30 - 74 Net financial items -157 -117 -400 36
Slide 37: Debt maturity profile, Orkla Group
Debt maturity profile, Orkla Group NOK million 9 000 8 000 7 000 Average maturity 6 000 3.2 years 5 000 4 000 3 000 2 000 1 000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Drawn amounts Unutilised credit facilities Gross Interest-bearing liabilities and Unutilised credit facilities, ref. Not
Slide 38: Net gearing 0.30 as of Q3-12
Net gearing 0.30 as of Q3-12 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 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q3- -6 2012 -0.20 Equity Net interest-bearing liabilities Net gearing 38
Slide 39: Funding sources
Funding sources Banks Unutilised credit 6.8 facilities 10.5 13.7 13.1 7.7 9.3 Bonds and CP 5.0 Cash, Cash equivalents and Figures in NOK billion Interest Bearing Assets 39
Slide 40: Orkla
{E} ORKLA