A quarter below expectations

A quarter below expectations

First quarter results 2018

25 April 2018

Peter A. Ruzicka, President & CEO

1

Highlights Q1-18:

Good underlying performance, but offset by timing of Easter, loss of

distribution business and slow start of ice cream season

• Good growth in Foods and Food Ingredients, despite a cold start to the ice cream season

• Timing of Easter impacted growth negatively

• Growth in Confectionery & Snacks offset by loss of distribution agreement

• Cost improvements offset by currency, negative mix and advertising investments

• Jotun continues to grow volume and sales, but rising raw material prices and weak

marine markets weigh on results

• EPS from continued operations NOK 0.68 (0.77)

2

Branded Consumer Goods Q1-18:

Good growth in Foods and Food Ingredients offset by loss of distribution

agreement (BCG adj. growth 0.8%) and Easter timing

3

BCG organic growth

1.1%0.7%

-2.8%

2012 2013 2014 2017

2.8%

2015

0.1%

0.8%

2016

1.8%1.6%

Q1-18

-0.4%

1.7%

Orkla Care

-2.8%

Orkla Food Ingredients

Orkla Confectionery

& Snacks1.5%

1.6%Orkla Foods

Organic growth Q1-18 by business area

All Alternative Performance Measures (APM) are presented in the appendix

Organic Growth adjusted for loss

of C&S distribution business

4

Organic sales growth Underlying growth in fixed costs

2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018

0

-

+


Positive gap in black over red despite temporary fall in organic growth

1Fixed production costs and SG&A5

Improvements pay off and

we see further potential

2014

23.4

2017

21.8

2015 2016 Q1-18

R12M

Fixed costs1 as % of revenues

404

2017

+37%

All

decided

projects

2016 Q1-18

R12M

20152014

295

Annual revenue per factory (NOK million)

Revenue per factory up 37%


Reducing fixed costs by leveraging the One Orkla model


Weaker NOK and SEK vs. EUR and negative mix effects pressure margins

6

-30bps

BCG EBIT

(adj.) margin

Q1-17

10.4%

Other costs1

0bps

-20bps

Variable costsM&A and

FX effects

BCG EBIT

(adj.) margin

Q1-18

9.9%

Underlying margin

development: -30 bps Comment

• M&A marginally dilutive

• Variable cost impacted by

weaker NOK and SEK vs. EUR

and negative mix effects

• Fixed cost reductions offset by

depreciation and advertising

investments

1Other costs include fixed production costs, SG&A and advertising

7


Orkla will grow over time at least in line with the market and continue to

improve underlying margins to deliver on EBIT growth target of 6-9%

100 bps

-100 bps

0% 0 bps

50 bps

-50 bps

4%

2%

-2%

-4%

2015

Q2

2014

Q1

2017

Q2

2015

Q3

2017

Q3

2016

Q3

2017

Q4

2014

Q4

2014

Q2

2018

Q1

2014

Q3

2013

Q4

2016

Q2

2016

Q4

2017

Q1

2015

Q4

2016

Q1

2015

Q1

Underl. EBIT (adj.) margin growth R12M

(right axis)

Organic sales growth R12M

(left axis)

6.8% 6.1%Targeted annual EBIT (adj.) growth of 6-9% in BCG ->

Focus going forwardPeter A. Ruzicka, President & CEO

2

0

• Continued soft market growth – Easter rebound in Q2

• Uncertainty related to raw material prices & FX

• Realise effects from cost improvements and balance

raw material prices and FX through pricing

• Further strengthen our position as a leading branded

consumer goods company

Fundamentals and financial targets remain intact

21

Key takeaways Q1-18

• Good underlying progress

• Loss of distribution contract, Easter and delayed ice

cream season impact sales growth and EBIT (adj.)

• Cost improvements offset by FX and mix in the quarter

• Jotun continues to grow but raw material prices and

weak Marine market weigh on results

• Remain committed to our financial targets

Outlook

Further roll-out of Pauluns in Finland and the Baltics

22

Extended portfolio in

Finland

Gluten free Granola

and snack bars

launched in Lithuania

Granola, Super Müsli

and snack bars

launched in Latvia

Granola and Super

Müsli launched in

Estonia

We continue to meet consumer trends with local brands

23

Vegan formable

mince 4th largest item

in its category

Healthier OLW lentil

chips create category

growth

Successful cleaning

system introduced in

Sweden

Naturli’ extends its

portfolio with plant-

based ice cream

A quarter below expectations

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