The Leading Nordic Supplier of Branded Consumer Goods. Investor presentation November 2015

Transcription

1 The Leading Nordic Supplier of Branded Consumer Goods Investor presentation November 2015

2 NOK BILLION Orkla today The Leading Nordic supplier of branded consumer goods OPERATING REVENUES 2 EBIT (ADJ.) 2 MARKET VALUE ,000 EMPLOYEES 1 8 MILLION CONSUMER UNITS SOLD DAILY 2 1 Continued operations As of 9 November 2015

3 Branded Consumer Goods: 80% of net sales from the Nordic region Revenues by geographical area 2014 Rest of world Rest of Europe 3% 16% Norway Baltics Finland and Iceland 4% 7% 37% 11% Denmark 22% Sweden 3

4 Business areas Orkla Foods Orkla Confectionery & Snacks Orkla Home & Personal Orkla Food Ingredients Orkla Investments Sapa JV (50%) Jotun (42.5%) Financial Investments Operating revenues: 12.2 Operating revenues: 5.0 Operating revenues: 5.0 Operating revenues: 6.5 Real Estate EBIT (adj.): 1.5 EBIT (adj.): 0.7 EBIT (adj.): 0.9 EBIT (adj.): 0.3 Hydro Power Corporate Centre and Group Functions 4 FY 2014; NOK billion

5 NOK billion Orkla s 3 stages of development through M&A a summary Consolidating Norwegian and Nordic BCG Industry Broader focus Focus on BCG : Consolidating the Norwegian BCG sector : Consolidating the Nordic BCG sector 2000: Establishing Carlsberg Breweries (40% ownership) 2001: Acquisition of Berlingske Acquisitions: Jordan (2012) Rieber (2012) NP Foods (2015) Cederroth (2015) Divestments: Elkem (2011) Borregaard Skoger (2010) REC (2013) Borregaard (2013) Orkla Brands Russia (2014) Acquisitions: Elkem (2005) Sapa (2005) Divestments: Stake in Carlsberg Breweries (2004) Orkla Media (2006) IPO s: Borregaard (2012) Gränges (2014) Establishment of joint ventures: Sapa JV (2013) 5 Revenues BCG Revenues from industrial activities

6 Orkla s transformation New strategic direction to become a focused BCG company Major structural actions executed to implement strategy Operational focus and finalize organizational organisational changes 6

7 Competitive advantage

8 Largest BCG company in Nordics, important partner to the trade Estimated revenues in the Nordics 1 ILLUSTRATIVE Local focus Global focus Nordic revenue 8 1 Based on 2014 figures. Orkla Branded Consumer Goods incl. Cederroth

9 Broad portfolio of local brands with strong positions 9

10 Strong local market positions and opportunities to grow further Examples Fabrics cleaner 79% Biscuits 51% 35% 10% 2 Confectionery 29% 6% Food supplements 1 78% 20% 33% 33% 3 Textiles (grocery) 77% 33% 3 Snacks 28% 32% 40% 43% Frozen pizza 72% 37% 37% Ketchup 76% 56% 33% 48% Preserved vegetables 70% 61% 34% 2 53% Jam/marmalade 48% 47% 41% Caviar (cod roe spread) 77% 64% 10 Source: Nielsen, retail market share R12M per Q Norway: Grocery, Finland: Retail, Sweden: Grocery, Pharmacy and SVH, Denmark: Grocery 2 R12M per Q Per year-end 2014

11 Core markets and competitive environment

12 Attractive markets with growing categories Orkla s categories in the largest markets are growing and GDP in main markets is expected to grow at a stronger / faster rate than Europe Growth in Orkla s categories last twelve months Real GDP; annual change in % Norway Sweden 2.8% 2.9% Baltics* Sweden Denmark Norway Finland EURO area Denmark 0.3% IMF estimate *Weighted average for estimated GDP growth in the Baltics 12 Source: Nielsen week (Nielsen does not provide figures for Finland), IMF World Economic Outlook April 2015

13 Consolidated Nordic grocery markets Others 4% Bergendahls Others 6% 4% Coop Ica 31% NorgesGruppen 41% Axfood 20% 51% Ica 24% Rema 1000 Coop 20% Aldi/Lidl Others 6% 15% 38% Coop Suomen Lähikaupat Others Lidl 7% 8% 7% 33% Kesko Reitan 10% Dansk Supermarked 32% S-group 46% 13 Source: Nielsen (2015: NO, SE, DK), Statistics Finland (2015: FI)

14 Leading local Orkla brands compete well with global brands Detergents 8% 78% Orkla (NO) P&G Pizza 23% 69% Orkla (NO) Dr. Oetker Ketchup 35% 57% Orkla (SE) Heinz Biscuits 9% 35% Orkla (SE) Mondelez Chips 9% 36% Orkla (DK) Estrella 14 Source: Nielsen Detergents RTM as of Aug/Sept 2015, frozen pizza and ketchup RTM as of week , biscuits and chips as of week

15 Private label is growing, but slowly Private label market shares in the grocery trade % 23% 25% 25% 22% 25% 13% 14% Norway Sweden Denmark Finland 1 15 Source: Nielsen 1 Finland 2014: RTM per October 2014

16 Focus going forward

17 No change in strategy but focus on improving operation Future growth and value creation from a focused Nordic based BCG company Strategy Focus on organic growth as the key long-term value driver Going from a very decentralized model to a more optimized model Leveraging on our substantial local size, skills and insights Deliver on initiated and ongoing structural processes Operational focus Focus on activities that drive organic growth and improve margins Strong innovation programmes More cross-market initiatives Increasing sales force effectiveness Building relations with our customers Optimizing production structure 17

18 Updated financial targets Deliver organic growth at least in line with market growth Target annual adj. EBIT growth of 6-9% 1 in BCG 18 1 Including add-ons, excluding currency effects and large acquisitions and divestments

19 Delivering value through One Orkla One Orkla New strategy Implementing strategy Creating value as the leading Nordic branded consumer goods company 19

20 Increasing efficiency and lowering costs One integrated supply chain Continuous improvement throughout the value chain Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 BCG production sites R12M fixed costs 1 in % of revenues 20 1 Fixed costs include both SG&A and fixed production / inventory costs

21 Extracting synergies while maintaining our local insight Market proximity and product tailoring Local Optimised Utilising market proximity Extracting synergies across categories and markets Multinational 21 Synergies

22 Operational focus: Stronger innovations from the restructured units Focus on core brands Central innovation board New growth platforms Optimization of innovation processes Marketing spend / digital strategy 22

23 Operational focus: Innovation driven growth through packaging 600 Example: fish spread in Norway; revenue NOK millions % % Source: Nielsen

24 Operational focus: Rolling out successful launches across countries Same product different brand 24

25 Operational focus: Building relations with customers based on common interests 25

26 Hydro Power Real estate Share portfolio Jotun Sapa Optimising value in Orkla Investments Financial investments 26

27 Capital allocation and historical dividends

28 Maintaining balanced capital allocation Stable dividend of at least NOK 2.50 per share Sustaining an investment grade company NIBD / EBITDA < Clear strategy for allocation of excess capital First priority is reallocating to Branded Consumer Goods for acquisitions, otherwise extraordinary dividend or share buy-backs will be considered 28

29 Dividends Amounts in NOK Special dividend Ordinary dividend

30 Financial information

31 Branded Consumer Goods Q3 2015: Organic growth in three out of four business areas Organic growth performance 1,2 2.5% 2.3% 2.3% 1.1% 0.7% Orkla Foods 4.2% Orkla Confectionery & Snacks 1.2% Orkla Home & Personal -2.6% Orkla Food Ingredients 4.0% -2.8% YTD Q3-15 Q Reported growth adjusted for FX and M&A 2 For organic growth, data before Q4-14 include Orkla Brands Russia

32 Branded Consumer Goods Q3 2015: Margin negatively impacted by dilutive effects from acquisitions Reported EBIT (adj.) margin EBIT (adj.) margin change Q per business area 12.2% 12.6% 11.6% 11.8% 12.0% Orkla Foods Orkla Confectionery & Snacks -1.3%-p. 0.9%-p. Orkla Home & Personal -1.3%-p. Orkla Food Ingredients 0.5%-p R12M as of Q3-15 BCG total -0.1 %-p RTM EBIT (adj.) margin diluted due to the acquisition of Rieber

33 Orkla Foods Strong performance in Orkla Foods compared with soft third quarter last year Amounts in NOK million Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +4.2% OG % OG 1 8,861 9, ,900 3, Q3 YTD Q3 YTD Q3 YTD Broad-based growth across geographies and channels Driven by both volume and price. Positive contribution from new launches and the distribution of Tropicana juice Sales growth and continuous efforts to drive savings programmes led to broad-based profit and margin expansion The weaker NOK increased purchasing costs and put pressure on margins Results compared with soft Q performance Front-loaded campaign programme H Reported growth adjusted for FX and M&A

34 Orkla Confectionery & Snacks Growth in Orkla Confectionery & Snacks Amounts in NOK million Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +1.2% OG % OG 1 3,539 3, ,228 1, Q3 YTD Q3 YTD Q3 YTD Organic growth mainly driven by Denmark, as well as Norway and Sweden EBIT (adj.) growth in Q3 mainly driven by strong sales performance in Denmark The acquisition of NP Foods had a dilutive effect on EBIT (adj.) margin from Q Reported growth adjusted for FX and M&A

35 Orkla Home & Personal Mixed picture in Orkla Home & Personal Amounts in NOK million Operating revenues EBIT (adj.) EBIT (adj.) margin (%) -2.6% OG 1-1.3% OG 1 3,710 3, ,254 1, Q3 YTD Q3 YTD Q3 YTD Weak organic sales performance in Q3 caused by Lilleborg and Pierre Robert Group Profitability in all segments negatively affected by a weak NOK Margin in Q3 and YTD diluted by the inclusion of Cederroth Improvement for Orkla Health but markets remain challenging 35 1 Reported growth adjusted for FX and M&A

36 Orkla Food Ingredients Continued strong progress in Orkla Food Ingredients Amounts in NOK million Operating revenues EBIT (adj.) EBIT (adj.) margin (%) +4.0% OG % OG 1 4,713 5, ,638 1, Q3 YTD Q3 YTD Q3 YTD Broad-based sales growth Strong market positions, stable raw material prices and improved product mix Main driver of the EBIT growth was the organic revenue growth supported by positive translation effects from a weak NOK Strong season for the ice cream ingredients business in Q3, opposite effect expected in Q Reported growth adjusted for FX and M&A

37 Sapa (50/50 joint venture) Solid underlying EBIT growth in Sapa Amounts in NOK million Operating revenues Underlying EBIT Orkla s share of net profit after tax 42,536 34,493 1, ,603 13, Q3 YTD Q3 YTD Q3 YTD Strong demand in North America Stable demand in Europe Positive contributions from improvement programmes and restructuring efforts Positive currency effects Restructuring agenda continues ahead of plan 37

38 Jotun (42.5%) Growth across all segments and regions in Jotun Amounts on 100% basis in NOK million Operating revenues Operating profit 8,660 10, ,630 January-August Improved sales volumes with growth across all segments and regions Strong growth in the Marine Coatings segment January-August Increased margins from cost improvements Positive currency translation effects on both sales and profit 38

39 Hydro Power Historically low power prices GWh produced Spot prices (NOK/MWh) EBIT (adj.) (NOK million) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All time high production volumes in Q3 Substantial snow melting and rainy summer in Q3 39 Source: Nord Pool Spot, Monthly System Price Power prices at the lowest level in 15 years Volume sold on spot market is exposed to regional prices in NO1 (Oslo) and NO2 (Kristiansand) Extremely low power prices in the quarter resulted in lower EBIT (adj.)

40 Strong balance sheet and financial flexibility Net interest bearing debt (NOK million) Net gearing 10,645 4,786 8,496 5,661 8, Q3-15 Q3-14 Q4-14 Q1-15 Q2-15 Q

41 Debt maturity profile Amounts in NOK million Average maturity 3.6 years 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Later Unutilised credit facilities Drawn amounts 41

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