Orkla ASA — Earnings Release 2019

May 7, 2019

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First quarter results 2019

7 May 2019

Peter A. Ruzicka, President & CEO

Disclaimer

This presentation has been prepared by Orkla ASA (the "Company") solely for information purposes. The presentation does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

Certain statements included in this presentation contain various forward-looking statements that reflect management's current views with respect to future events and financial and operational performance. The words "believe," "expect," "anticipate," "intend," "may," "plan," "estimate," "should," "could," "aim," "target," "might," or, in each case, their negative, or similar expressions identify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include but are not limited to the Company's ability to operate profitably, maintain its competitive position, to promote and improve its reputation and the awareness of the brands in its portfolio, to successfully operate its growth strategy and the impact of changes in pricing policies, political and regulatory developments in the markets in which the Company operates, and other risks.

The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.

No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly, neither the Company nor its subsidiary undertakings or any of such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.

Highlights Q1-19: Strong EBIT growth and margin improvement

• Underlying EBIT +9% in BCG*, margin improvement picking up (R12M +0.4%p)
• Broad based organic sales progress for Foods and Confectionery & Snacks
• Earnings in Care in line with last year, but top line decline
• Solid result for Food Ingredients helped by improved ice cream ingredients sales
• Strong improvement for Jotun, operating profit +44% in Q1-19
• Adjusted EPS** from continuing operations NOK 0.85, +21%

3 Note: *Branded Consumer Goods incl. HQ. **All Alternative Performance Measures (APM) are presented in the appendix.

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

¹Adjusted for loss of Wrigley distribution agreement ⁴

Recent strategic acquisitions

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Financial performance

Jens Bjørn Staff, CFO

Branded Consumer Goods Q1-19: Mix of organic and structural growth, limited FX effects

Branded Consumer Goods incl. HQ: Strong EBIT growth and margin improvement

Note: Figures may not add up due to rounding

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

Orkla Foods Broad top and bottom-line growth

	Q1-19	Q1-18
Revenues	3 889	3 852
Organic growth	1.7%
EBIT (adj.)	430	400
EBIT(adj.) growth	7.5%
EBIT(adj.) margin	11.1%	10.4%
Change vs LY	+0.7%-p

• Good organic growth across most markets
• Profit growth from increased sales and cost improvements
• Price increases compensate for continued negative effects of weak SEK and increased raw material prices

Orkla Confectionery & Snacks Good sales and margin development

	Q1-19	Q1-18
Revenues	1,502	1,453
Organic growth	3.6%
EBIT (adj.)	211	187
EBIT(adj.) growth	12.8%
EBIT(adj.) margin	14.0%	12.9%
Change vs LY	+1.1%-p

• Organic growth in largely driven by Norway, Denmark and Finland
• Sales increase in Norway helped by restocking post sugar tax reversal
• Continued positive effects from cost improvements

Orkla Care Stable profit performance in challenging markets

	Q1-19	Q1-18
Revenues	2 071	2 076
Organic growth	-3.0%
EBIT (adj.)	299	298
EBIT(adj.) growth	0.3%
EBIT(adj.) margin	14.4%	14.4%
Change vs LY	Flat

• Challenging market development related to channel leakage away from grocery retail, mainly in Norway
• Turnaround in UK and Poland on track
• Positive impact of cost improvements

11 Revenues and EBIT (adj.) figures in NOK million

Orkla Food Ingredients EBIT (adj) +35% driven by good ice cream ingredients sales and improved product mix

	Q1-19	Q1-18
Revenues	2 291	2 182
Organic growth	1.3%
EBIT (adj.)	77	57
EBIT(adj.) growth	35%
EBIT(adj.) margin	3.4%	2.6%
Change vs LY	+0.8%-p

• Organic growth with strong EBIT(adj.) growth and improved margin
• Strong growth for the ice cream business
• Acquisitions deliver positive effects according to plan
• Improved product mix

Investments - Kotipizza Continued good growth for Kotipizza

NOK million	Q1-19	Q1-18
Net sales	159	140	• Continued strong growth in R12M chain sales** with 18% growth (7% like for like)
Change vs LY	14%
EBIT (adj.)	13.4	13.1	• EBIT (adj.) negatively affected by timing of marketing campaigns
Change vs LY	2%
			• Ready to scale Social Burger Joint with new
EBIT (adj.) margin	8.4%	9.4%	restaurants during the year
Change vs LY	-1%-p

*Kotipizza was consolidated as of February 2019 meaning figures only reflect two months (February and March) 13 **Chain sales are defined as gross sales to consumers from all owned and franchise operated restaurants in the Kotipizza Group

Investments - Jotun (42.6%)

A strong start to the year with continued growth and improving margins

	Q1-19	Q1-18
Operating income	4,563	4,117
Change vs LY	11%
Operating profit	580	403
Change vs LY	44%

• Continued growth in operating revenues
  • Strong improvement in Protective Coatings and good growth in Decorative Paints
  • Marine Coatings continued to improve from cyclical low level
• Earnings growth driven by strong sales growth, improved gross margins and good cost control

Adj. EPS +21% following improvements in both like-for-like earnings from consolidated businesses and contribution from associates

Key figures	Q1-19	Q1-18	∆ Q1
Operating revenues	10,176	9,711	+5%
EBIT (adj.) BCG	1,017	942	+8%
EBIT (adj.) HQ	-92	-99
EBIT (adj.) BCG incl. HQ	925	843	+10%
EBIT (adj.) Orkla Investments	95	54	+76%
Other income and expenses	-119	-27
EBIT	901	870	4%
Profit from associates	165	86	+92%
Net interest and other financial items	-76	-70
Profit before tax	990	886	+12%
Taxes	-230	-176
Profit after tax	760	710	+7%
Adjusted EPS cont. operations (NOK)	0.85	0.70	+21%
Reported EPS cont. operations (NOK)	0.74	0.68	+9%

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Closing remarks

Peter A. Ruzicka, President & CEO

Strong start to the year, but challenging markets in Care

Key takeaways

• Underlying EBIT +9% in BCG and margin improvement (R12 +0.4%p)
• Broad based organic sales progress in Foods and Confectionery & Snacks
• Earnings in Care in line with last year, but top line decline
• Solid result in Food Ingredients helped by improved ice cream ingredients season
• Strong improvement in Jotun, operating profit +44% in Q1-19
• Adjusted EPS** from continuing operations NOK 0.85, +21%

We continue to grow in on-trend categories through strong local brands

Captain Kombucha A fermented tea-based health drink – without preservatives or artificial sweeteners or flavours

Naturli' vegan chicken Meat-free alternatives based on peas – packaging made from 50% reused plastic

Grandiosa Take Away

Improved recipe and new design - fantastic consumer feedback

Q&A

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Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO

Appendices

Organic growth

Organic growth shows like-for-like turnover growth for the Group's business portfolio and is defined as the Group's reported change in operating revenues adjusted for effects of the purchase and sale of companies and currency effects. In the calculation of organic growth, acquired companies will be excluded 12 months after the transaction date. Sold companies will be excluded pro forma 12 months prior to the transaction date. Currency effects are neutralised by translating this year's turnover at last year's exchange rates.

Organic growth is included in segment information and used to identify and analyse the turnover growth in the existing business portfolio. Organic growth provides an important picture of the Group's ability to carry out innovation, product development, correct pricing and brand-building.

EBIT (adj.)

EBIT (adj.) shows the Group's current operating profit before items that require special explanation, and is defined as reported operating profit or loss before "Other income and expenses" (OIE). These include M&A costs, restructuring or integration expenses, any major gains and write-downs on both tangible and intangible assets, and other items that only to a limited degree are reliable measures of the Group's current profitability. EBIT (adj.) margin and growth are derived figures calculated in relation to operating revenues.

EBIT (adj.) is the Group's key financial figure, internally and externally. The figure is used to identify and analyse the Group's profitability from normal operations and operating activities. Adjustment for items in OIE which to a limited degree are reliable measures of the Group's current operating profit or loss increases the comparability of profitability over time, and EBIT (adj.) is used as a basis for and indicator of the Group's future profitability.

Change in underlying EBIT (adj.)

Change in underlying EBIT (adj.) shows like-for-like EBIT (adj.) growth for the Group's business portfolio and is defined as the Group's reported change in EBIT (adj.) adjusted for effects of the purchase and sale of companies and currency effects. In calculating the change in underlying EBIT (adj.), acquired companies will be included pro forma 12 months before the transaction date. Sold companies will be excluded pro forma 12 months prior to the transaction date. Currency effects are neutralised by calculating this year's turnover at last year's currency exchange rates. Comparative figures are not restated when implementing IFRS 16, but the effects of the new accounting standard are neutralised in the calculation. Underlying EBIT (adj.) margin and change therein are derived figures calculated in relation to operating revenues.

Underlying EBIT (adj.) growth is used for internal management purposes, including for identifying and analysing underlying profitability growth in the existing business portfolio, and provides a picture of the Group's ability to develop growth and improve profitability in the existing business. The measure is important because it shows the change in profitability on a comparable structure over time. Underlying EBIT (adj.) growth is a heavily weighted factor in determining executive remuneration.

Alternative Performance Measures (APM)

Earnings per share (adj.)

Earnings per share (adj.) show earnings per share adjusted for other income and expenses (OIE) after estimated tax. If other items of a special nature occur under the company's operating profit or loss, adjustments will also be made for these items. There were no such items in the first quarter of 2019 or in 2018.

Net replacement and expansion investments

When making decisions regarding investments, the Group distinguishes between replacement and expansion investments. Expansion investments are the part of overall reported investments considered to be investments in either new geographical markets or new categories, or which represent significant increases in capacity.

Net replacement investments include new leases, and are reduced by the value of sold fixed assets to sales value.

The purpose of this distinction is to show how large a part of the investments (replacement) mainly concern maintenance of existing operations and how large a part of the investments (expansion) are investments which must be expected to generate increased contributions to profit in future, exceeding expectations of normal operations.

Net interest-bearing liabilities

Net interest-bearing liabilities, together with equity, constitute the Group's capital. Net interest-bearing liabilities are the sum of the Group's interest-bearing liabilities and interest-bearing receivables. Interest-bearing liabilities include bonded loans, bank loans, other loans, lease liabilities and interest-bearing derivatives. Interest-bearing receivables include liquid assets, interest-bearing derivatives and other interest-bearing receivables.

Net interest-bearing liabilities are the Group's primary management parameter for financing and capital allocation, and is used actively in the Group's financial risk management strategy. The statement of cash flows (Orkla format) therefore shows the change in net interest-bearing liabilities at Group level.

Structure (acquired and sold companies)

Structural growth includes adjustments for the acquisition of the businesses Struer, HSNG, Werners, County's and Igos, and for the sale of Mrs. Cheng's.

Orkla Investments Record-high result for Hydro Power, a strong start to the year for Jotun

Hydro Power Fully consolidated into Orkla's financial statements

Volume (GWh): Q1: 476 (482) Power prices¹ (øre/KWh): Q1: 45.7 (37.2) EBIT adj. (NOK million): Q1: 73 (59)

Financial Investments

Fully consolidated into Orkla's financial statements

Book value real estate: NOK 1.9 billion

Jotun (42.6%) Accounted for using equity method

Strong balance sheet and financial flexibility

Changes in net debt Q1-19

Debt maturity profile

Average maturity 3.9 years

26 Amounts in NOK million

Funding sources

Unutilised credit facilities Banks Bonds and CP Cash, cash equivalents and interest bearing assets