DnB Nordic Retail/Consumer Conference 2016 - Free Download PDF

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DnB NordicRetail/ConsumerConference 2016Peter A. Ruzicka6 September 2016

Transition from conglomerate to leading Branded ConsumerGoods companyIndustrial conglomeratewith strong BCG portfolioNew strategic direction in 2011 tobecome a leading BCG companyBCG portfolioReallocating capital into BCGKeep the strategy on track Continue to reallocate capital toBranded Consumer GoodsIndustrial assetsExits and sales Focus on organic growth as thekey long-term value driver Going from a very decentralizedmodel to a more optimised model Leverage on our substantial localsize, skills and insights2

A leading Nordic based Branded Consumer goods companyOrklaFoodsOrklaConfectionery tsSapa JV (50%)Jotun (42.5%)Financial Investments(NOK billion)(NOK billion)(NOK billion)(NOK billion)Sales: 13.3EBIT (adj.): 1.7Sales: 5.8EBIT (adj.): 0.8Sales: 5.5EBIT (adj.): 0.9Sales: 7.6EBIT (adj.): 0.4Real EstateEBIT (adj.) margin:12.8%EBIT (adj.) margin:14.5%EBIT (adj.) margin:15.9%EBIT (adj.) margin:5.4%Hydro PowerCorporate Centre and Group Functions3 Note: Full-year figures 2015

Extracting synergies while strengthening our local insightMarketproximityand producttailoringLocalOptimisedUtilising marketproximityExtracting synergiesacross categories andmarketsMultinationalSynergies4

Several growth initiatives has turned a negative trendOrganic growth performance12.8%Organic growth performance YTD 201612.8%2.5% Building stronger relations withour customers1.1% More cross-market initiatives0.7% Innovation programmes built onsuperior local consumer andcustomer insight Explore opportunities forincreased export h adjusted for currency translation effects and structural changes

Top line growth initiativesIncreased collaboration with customersNutrilettBreakfast Bar forCoop NorgePizzabakeriet forNorgesGruppenA range of TOROproducts launchedunder Beauvais brand –only in Coop Denmark6

Top line growth initiativesSeveral cross-border innovations7

Top line growth initiativesWe respond to long-term consumer trendsOrganic/EcoIndulgenceNatural – «Free From»Ethics & EnvironmentHealth & WellbeingConvenience

Ongoing cost improvements produce resultsSeveral cost measuresimplemented and ongoingIllustrative graph-Simplified organisational structurewithin business areas-Increased sales force efficiency-Supply chain restructuring ongoing-20092010201120122013Organic sales growth191Reported2014Organisational structure changedSimplifying manufacturing footprintCAPEX more focused on efficiencyand innovationIntegration programmes of acquiredcompanies2015 YTD-16Underlying fixed costs2growth adjusted for currency translation effects and structural changes.fixed costs are growth in SG&A and fixed production / inventory costs, adjusted for M&A and currency translation effects.2Underlying

Rationalise production structure based on One OrklaFromTo Supply chain responsibilitymoved from local companies toBusiness Area / Group Consolidating production One factory percategory/geography 19 closures announced Increased CAPEX directed toinnovation Securing long-termcompetitiveness Ability to adapt to localconsumer and customerneedsComplex footprintExternal benchmarkRevenue, MNOK (est)618 000# Factories68 70030 0004697097Rev / factory1 317982309EVAExpansion investments excl. Acq.Orkla BCG:CAPEX excluding acquisitions & EVA [MNOK]Net replacement and env. investments-56%1.072Capex not directed toinnovation1.03886314264666720112012Low utilization within in samecategory of plantUnderutilized assets& poor 52013RTM Oct 14Low operationalperformance There is potential to increase production capacity utilization Current effective production time is 20% of available timeIn many different categories we have significant over capacity leading tounder utilized factories that continuously drives CAPEXTotal utilization of capacity production time in Orkla factoriesHours per week, percent of available timeProducerad volym och ledig kapacitet i Norden och Baltikum för majonnäs och dressingar [ton]Total OEE 55%Ledig kapacitetESTIMATEWe pay fix costsfor this timeProducerad volymN/A2 900100%66%108We pay salariesfor this and quality lossEffectiveproduction time55332 500Site 1Site 21Site 3Site 4Site 5Site 6Available timeTotaltUnused timeStructure141012Plannedproduction timeProductivity

Significant EBIT growth recent years – target to grow furtherBranded Consumer Goods – R12M EBIT (adj.)NOK million4 5004 000Deliver organicgrowth at least inline with marketgrowth3 5003 0002 500Target annual adj.EBIT growth of 69%1 in BCG2 0001 5002010 2011 2012 2013 2014 20151112016-2018 target - Including add-ons, excluding currency effects and large acquisitions anddivestments

M&A is still part of how Orkla creates valueIncrease presencein existing markets12Enter newcategoriesSelected acquisitions and divestments 2014-2016Strengthenposition in newchannelsExit non-core

Strong improvement in associated companiesR12M underlying EBITDA (NOK billion)3.5Operating profit (NOK 313Q21620112012201320142015 RTM T12016

Maintaining balanced capital allocationStable dividend of at least NOK 2.50 per shareSustaining an investment grade company NIBD / EBITDA 2.5 - 3.0Clear strategy for allocation of excess capital First priority is reallocating to Branded Consumer Goods foracquisitions, otherwise extraordinary dividend or share buy-backs willbe considered14

Our targets 2016-2018:Delivering on our strategy and accelerating performanceKeep the strategyon trackTarget annual adj.EBIT growth of 69%1 in BCGDeliver organicgrowth at least inline with marketgrowthMaintain a stabledividend of at leastNOK 2.50 per share15 1Including add-ons, excluding currency effects and large acquisitions and divestments


2015 YTD-16. Organic sales growth. 1. Underlying fixed costs. 2. 1. Reported growth adjusted for currency translation effects and structural changes. 2. Underlying fixed costs are growth in SG&A and fixed production / inventory costs, adjusted for M&A and currency translation effe cts. -