1. No category

1
Third quarter results 2015
30 October 2015
Peter A. Ruzicka, President & CEO
Improved performance in the third quarter
2.3% organic
growth1
15% EBIT (adj.)2
growth in BCG
57% increase
in EPS
2
1Reported
2EBIT
growth adjusted for FX and M&A
(adj.) = Operating profit before other income and expenses
Highlights:
Continued growth in the quarter
• Group EBIT (adj.)1 increased by 13% to NOK ~1 billion
•
Increase of 57% in EPS to NOK 0.80
• Improving performance in Branded Consumer Goods
•
•
2.3% organic growth2
EBIT (adj.) growth of 15% in BCG
• Strong contribution from associates
•
•
All-time high sales and operating profit in Jotun YTD
Continued underlying EBIT growth in Sapa
• Delivering on strategy
•
•
•
3
1EBIT
Continued progress within supply chain restructuring
Cederroth acquisition approved and completed
Integration of NP Foods ongoing
(adj.) = Operating profit before other income and expenses
growth adjusted for FX and M&A
2Reported
Branded Consumer Goods Q3 2015:
Organic growth in three out of four business areas
Organic growth performance1,2
2.5%
2.3%
2.3%
Orkla Foods
1.1%
4.2%
0.7%
Orkla Confectionery
& Snacks
Orkla Home & Personal
Orkla Food Ingredients
-2.8%
2011
4
2012
1Reported
2For
2013
2014
YTD Q3-15
Q3-15
growth adjusted for FX and M&A
organic growth, data before Q4-14 include Orkla Brands Russia
1.2%
-2.6%
4.0%
Examples of innovations and relaunches in Q3 2015:
Orkla Foods: New launch “Pizzabakeriet” in Norway
Examples of innovations and relaunches in Q3 2015:
Orkla Confectionery & Snacks: Hand-cooked crisps
Examples of innovations and relaunches in Q3 2015:
Orkla Home & Personal: wool essentials for the autumn season
7
Branded Consumer Goods Q3 2015:
Margin negatively impacted by dilutive effects from acquisitions
EBIT (adj.) margin change
Q3 2015 per business area
Reported EBIT (adj.) margin
12.6%
12.2%
11.6%
11.8%
Orkla Foods
12.0%
0.9%-p.
Orkla Confectionery
-1.3%-p.
& Snacks
Orkla Home & Personal
-1.3%-p.
Orkla Food Ingredients
2011
8
1RTM
2012
20131
2014
R12M as
of Q3-15
EBIT (adj.) margin diluted due to the acquisition of Rieber
BCG total
0.5%-p.
-0.1 %-p.
Branded Consumer Goods Q3 2015:
EBIT (adj.) growth in line with target
Breakdown of BCG
EBIT (adj.) growth Q3 2015
Weakening NOK1
15%
6%
9%
Reported
EBIT (adj.)
growth
9
1Based
Currency
translation
effects
EBIT (adj.)
growth in
constant
currency
on monthly average exchange rates from Norges Bank
•
Positive currency translation effects
•
Higher input prices, especially for
Norwegian companies
Branded Consumer Goods Q3 2015:
Reducing our factory footprint
One integrated supply chain
Steady pace in factory rationalisation
14
2
2
BCG production sites
10
8
2
2014
Q1-15
Q2-15
Q3-15
Acc. as
of Q3-15
Delivering on strategy
Improved
performance
•
•
•
•
Delivering on •
initiated and
•
ongoing
structural
•
processes
Operational
focus going
forward
11
1EBIT
•
•
Group EBIT (adj.)1 increased by 13%
2.3% organic growth2 in BCG
EBIT (adj.) growth of 15% in BCG
Strong performance from associates
Continued progress in supply chain
restructuring
Cederroth acquisition approved and
completed
Integration of NP Foods ongoing
Activities that drive organic growth and
improve margins
Centralise supply chain and reduce
factory footprint
(adj.) = Operating profit before other income and expenses
growth adjusted for FX and M&A
2Reported
1
2
Financial performance
Jens Bjørn Staff, CFO
Group EBIT (adj.) improved by 13% to NOK ~1 billion in Q3
Amounts in NOK million
Key figures
Q3-14
Q3-15
YTD 14
YTD 15
Operating revenues
7 271
8 381
21 480
23 627
EBIT (adj.)
879
993
2 207
2 507
Other income and expenses
-44
-96
2
-268
EBIT
835
897
2 209
2 239
Profit/loss from associates and JV
126
239
373
1 022
Net financials and other
-54
-67
-215
-117
Profit/loss before tax1
907
1 069
2 367
3 144
Discontinued operations2
-155
-
-98
-
EPS (NOK)
0.51
0.80
1.69
2.50
1From
13
continuing operations
and Orkla Brands Russia are classified as discontinued operations
2Gränges
Broad-based EBIT (adj.) improvement
Amounts in NOK million
Branded Consumer Goods: +NOK 135 million
+29
-5
-16
993
Orkla HQ
Group EBIT
(adj.) Q3-15
+13
+21
+72
879
Group EBIT Orkla Foods
Orkla
Orkla Home Orkla Food
Orkla
(adj.) Q3-14
Confectionery & Personal Ingredients Investments
& Snacks
14
1
5
Branded Consumer Goods
Positive organic growth
Amounts in NOK million
8,064
6.7 %
6.5 %
6,984
2.3 %
BCG operating
revenues Q3-14
Organic growth1
16 1Reported growth adjusted for FX and M&A
FX
M&A
BCG operating
revenues Q3-15
Orkla Foods
Strong performance in Orkla Foods compared with soft third quarter last year
Amounts in NOK million
2014
Operating revenues
+4.2% OG1
EBIT (adj.)
EBIT (adj.) margin (%)
+3.4% OG1
8,861 9,428
2,900 3,261
Q3
2015
1.022
357
YTD
1.140
12.3
13.2
11.5 12.1
429
Q3
YTD
Q3
YTD
•
Broad-based growth across geographies
and channels
•
Sales growth and continuous efforts to drive savings programmes led to
broad-based profit and margin expansion
•
Driven by both volume and price. Positive
contribution from new launches and the
distribution of Tropicana juice
•
The weaker NOK increased purchasing costs and put pressure on margins
•
Results compared with soft Q3 2014 performance
•
Front-loaded campaign programme H2 -15
17 1Reported growth adjusted for FX and M&A
Orkla Confectionery & Snacks
Growth in Orkla Confectionery & Snacks
Amounts in NOK million
2014
Operating revenues
+1.2% OG1
EBIT (adj.) margin (%)
+1.9% OG1
3,539
529
3,995
448
217
1,228 1,452
Q3
EBIT (adj.)
2015
YTD
• Organic growth mainly driven by
Denmark, as well as Norway and
Sweden
18 1Reported growth adjusted for FX and M&A
Q3
17.7
16.4
12.7 13.2
238
YTD
Q3
YTD
• 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 Q2
Orkla Home & Personal
Mixed picture in Orkla Home & Personal
Amounts in NOK million
2014
Operating revenues
-2.6% OG1
EBIT (adj.)
EBIT (adj.) margin (%)
-1.3% OG1
3,710 3,894
661
1,254 1,410
Q3
2015
256
YTD
• Weak organic sales performance in
Q3 caused by Lilleborg and Pierre
Robert Group
• Improvement for Orkla Health but
markets remain challenging
19 1Reported growth adjusted for FX and M&A
Q3
677
20.4 19.1
17.8 17.4
269
YTD
Q3
YTD
• Profitability in all segments negatively affected by a weak NOK
• Margin in Q3 and YTD diluted by the inclusion of Cederroth
Orkla Food Ingredients
Continued strong progress in Orkla Food Ingredients
Amounts in NOK million
2014
Operating revenues
+4.0% OG1
EBIT (adj.)
EBIT (adj.) margin (%)
+3.6% OG1
298
5,483
4,713
1,638 1,989
Q3
2015
• Broad-based sales growth
• Strong market positions, stable raw
material prices and improved
product mix
20 1Reported growth adjusted for FX and M&A
4.8
225
90
YTD
6.0
5.5
5.4
119
Q3
YTD
Q3
YTD
• 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 Q4
2
1
Orkla Investments
22
Share portfolio
Real estate
Hydro Power
Sapa (50%)
Jotun (42.5%)
Orkla Investments
Financial investments
Sapa (50/50 joint venture)
Solid underlying EBIT growth in Sapa
Amounts in NOK million
2014
Operating revenues
2015
Orkla’s share of
net profit after tax
Underlying EBIT
106
42,536
34,493
1,279
707
11,603 13,907
Q3
54
54
404
201
YTD
Q3
YTD
Q3
YTD
• Strong demand in North
America
• Positive contributions from improvement programmes and
restructuring efforts
• Stable demand in Europe
• Positive currency effects
• Restructuring agenda continues ahead of plan
23
47
Jotun (42.5%)
Growth across all segments and regions in Jotun
Amounts on 100% basis in NOK million
Operating revenues
2014
2015
Operating profit
1,630
10,753
8,660
978
January-August
• Improved sales volumes with growth across all
segments and regions
• Strong growth in the Marine Coatings segment
24
January-August
• Increased margins from cost improvements
• Positive currency translation effects on both
sales and profit
Hydro Power
Historically low power prices
2014
GWh produced
Spot prices (NOK/MWh)
2015
EBIT (adj.) (NOK million)
891
715 688
609 558
568
252 246
211
680
263
73
264
5856
177
123
Q1
Q2
Q3
Q1
Q4
Q2
Q3
27
Q4
• All time high production
volumes in Q3
• Power prices at the lowest level
in 15 years
• Substantial snow melting
and rainy summer in Q3
• Volume sold on spot market is
exposed to regional prices in
NO1 (Oslo) and NO2
(Kristiansand)
25 Source: Nord Pool Spot, Monthly System Price
46
39
Q1
Q2
22
Q3
Q4
• Extremely low power prices in
the quarter resulted in lower
EBIT (adj.)
2
6
Net debt
Change in net debt 2015
Amounts in NOK billion
8.9
0.4
0.5
2.2
2.2
2.6
5.7
0.2
Net debt 31
December
2014
27
Expansion
and sale of
companies
Cash flow
from
operations
Sale of shares Net paid to Tax, dividends
and financial shareholders received, net
assets
financial &
other
FX effects
Net debt 30
September
2015
2
8
Summary
Peter A. Ruzicka, President & CEO
Summary
Delivering on our strategy and increasing performance
Keep the strategy on track
Deliver organic growth at least in line
with market growth
Target annual adj. EBIT growth of 6-9%1 in BCG
Maintain a stable dividend of at least NOK 2.50 per share
29
1Including
add-ons, excluding currency effects and large acquisitions and divestments
3
0
Q&A
Peter A. Ruzicka, President & CEO
Jens Bjørn Staff, CFO
3
1
Appendices
Group income statement
Amounts in NOK million
Q3-14
Q3-15
YTD-14
YTD-15
7 271
879
-44
8 381
993
-96
21 480
2 207
2
23 627
2 507
-268
835
126
-68
14
897
239
-78
11
2 209
373
-238
23
2 239
1 022
-159
42
Profit/loss before taxes
Taxes
907
-207
1 069
-240
2 367
-505
3 144
-550
Profit/loss for the period continuing operations
Profit/loss from discontinued operations
700
-155
829
0
1 862
-98
2 594
0
Profit/loss for the period
545
829
1 764
2 594
Earnings per share diluted (NOK)
0.51
0.80
1.69
2.50
Operating revenues
EBIT (adj.)
Other income and expenses
EBIT
Profit/loss from associates and joint ventures
Interests, net
Other financial items, net
32
Net financial items
FY 2014
Q3-14
Q3-15
Net interest expenses
Currency gain/loss
Result from Share Portfolio and dividends
Other financial items, net
-363
0
93
-93
-68
-2
29
-13
-78
-3
36
-22
Net financial items
-363
-54
-67
33
Balance sheet
Amounts in NOK million
31.12.2014
30.09.2015
Intangible assets
Property, plant and equipment
Investments in associates and joint ventures etc.
Non-current assets
14 598
9 484
13 026
37 108
17 450
10 256
12 587
40 293
Assets held for sale
Inventories
Inventory of development property
Trade receivables
Other receivables
Shares and financial assets
Cash and cash equivalents
Current assets
Total assets
22
3 873
200
4 413
1 147
734
2 615
13 004
50 112
22
4 824
188
5 242
586
1 192
1 105
13 159
53 452
Paid-in equity
Earned equity
Non-controlling interests
Equity
1 993
29 066
245
31 304
1 992
29 709
411
32 112
Provisions
Non-current interest-bearing liabilities
Current interest-bearing liabilities
Trade payables
Other current liabilities
Equity and liabilities
3 699
8 510
598
3 221
2 780
50 112
4 083
10 310
370
3 711
2 866
53 452
34
Cash flow
Amounts in NOK million
YTD-14
YTD-15
Operating profit
Amortisation, depreciation and write-downs
Change in net working capital
Net replacement expenditures
2 257
691
- 918
- 587
2 165
841
- 283
- 659
Cash flow from operations
Cash flow from operations, Financial Investments
Tax
Dividends received, net financial and other
1 443
45
- 354
459
2 064
127
- 668
240
Cash flow before capital transactions
Paid to shareholders, net purchase/sales own shares
1 593
-2 345
1 763
-2 666
Cash flow before expansion
Expansion investments
Sold and acquired companies
Net purchases/sales shares and financial assets
- 752
- 65
499
204
- 903
- 236
-1 952
225
Net cash flow
Currency translations net interest-bearing liabilities
- 114
281
-2 866
- 401
Change in net interest-bearing liabilities
Net interest-bearing liabilities
- 167
8 329
3 267
8 928
35
Sapa (joint venture) – figures on 100% basis
Amounts in NOK million
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
350
322
353
358
341
11 561
11 890
14 134
14 494
13 895
201
-55
392
483
404
66
-79
-145
-158
-95
Other excluded items
-70
-546
-47
-260
-135
Sum excluded items
-4
-624
-191
-418
-230
EBIT
198
-679
201
65
174
Net income (attributable to majority)
107
-719
89
14
109
Sales volume (1,000 tonnes)
Revenues (NOK million)
Underlying EBIT
Excluded items:
Unrealised derivative positions
36
Strong balance sheet and financial flexibility
Net interest bearing debt (NOK million)
0.28
10,645
37
0.24
0.18
0.19
Q4-14
Q1-15
5,661
4,786
2012
0.28
8,928
8,496
2011
Net gearing
2013
2014
Q3-15
Q3-14
Q2-15
Q3-15
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
1,000
500
0
2015
2016
2017
2018
Unutilised credit facilities
38
2019
2020
Drawn amounts
2021
Later
Funding sources
Amounts in NOK billion
1.8
4.3
5.4
5.3
Unutilised credit facilities
Banks
Bonds and CP
Cash, cash equivalents
and interest bearing assets
40