Orkla ASA — Earnings Release 2020

May 5, 2020

First quarter results 2020

5 May 2020

Jaan Ivar Semlitsch, 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.

Covid-19 has profound implications for society and our industry

• Our priorities
• ‒ Safeguarding our employees
• ‒ Ensuring supply by safeguarding operations
• ‒ Maintaining strong balance sheet
• Demand implications
• ‒ Out of home consumption significantly down
• ‒ Increased in-home consumption
• ‒ Short-term consumer stockpiling
• Supply chain implications
• ‒ Raw material availability
• ‒ Transportation delays
• ‒ Increased absenteeism

Majority of our business is in branded packaged goods sold through grocery, but approx. 1/4 of sales is exposed to Out of home market

Other channels Out of home Grocery

Strong sales growth largely driven by consumer stockpiling - production proven resilient but significant uncertainty ahead of us

Impact from Covid-19 until now

• Significant demand impact in March with temporary boost from consumer stockpiling
• Limited supply chain disruptions so far with close to normal production & service levels
• Contingency phase and mitigating actions

Navigating uncertainty

• Clear operational priorities → safeguarding our people & securing continued operations
• High level of uncertainty on both demand and supply side
• Prepare for the longer term

5

Financial performance

Harald Ullevoldsæter, CFO

Highlights Q1-20 Sales & profit growth driven by temporary change in consumer behaviour

• Solid increase in net profit for Orkla driven by revenue growth for branded consumer goods
• Strong sales and profit growth in Foods & Care driven by consumer stockpiling and increased in-home consumption
• Negative impact of restrictions in Out of home segments, especially in Food Ingredients & Consumer Investments
• Steady cash flow and solid financial position
• Continued growth and increased profitability for Jotun
• Adjusted EPS* increased by +24% to NOK 1.05

Adj. EPS +24% from profit growth in Branded Consumer Goods and Jotun

Key figures	Q1-20	Q1-19	∆ Q1
Operating revenues BCG	11,316	9,868	+15%
EBIT (adj.) BCG	1,204	1,027	+17%
EBIT (adj.) HQ	-101	-92	-10%
EBIT (adj.) BCG incl. HQ	1,103	935	+18%
EBIT (adj.) Industrial & Financial Investments	40	85	-53%
Other income and expenses	-165	-119
EBIT	978	901	+9%
Profit from associates	213	165	+29%
Net interest and other financial items	-39	-76
Profit before tax	1,152	990	+16%
Taxes	-220	-230
Profit after tax	932	760	+23%
Adjusted EPS cont. operations (NOK)	1.05	0.85	+24%
Reported EPS cont. operations (NOK)	0.92	0.74	+24%

Cash flow from higher earnings partly offset by increased investments and temporarily higher working capital from strong March sales

Cash flow from operations per 31.03 (pre-tax)	Q1-20	Q1-19
Orkla Branded Consumer Goods (BCG, incl. HQ)
EBIT (adj.)	1,103	935
Amort., depr., and impairment	430	382
Change in net working capital	-122	174
Net replacement investments	-601	-353
Total BCG cash from operations (pre OIE)	810	1,138
Cash flow from other income & exp. and pensions	-117	-110
Industrial & Financial Investments	87	-56
Total Orkla cash from operations	780	972

Significant FX effects impact net debt in NOK - continued strong balance sheet and financial flexibility

Funding sources and maturity profile

Business areas

Branded Consumer Goods Q1-20: Foods and Care drove improvement in organic growth

13 All Alternative Performance Measures (APM) are presented in the appendix. 1Adjusted for loss of Wrigley distribution agreement 2Based on new reporting structure

Branded Consumer Goods Q1-20: Weaker NOK and recent M&A add ~9% to total top line growth of ~15%

BCG revenue, Q1-19 → Q1-20 (MNOK)

Branded Consumer Goods incl. HQ:

Profit improvement driven by revenue growth in Foods and Care

Orkla Foods

Strong growth in March across most markets, large stockpiling effects

	Q1-20	Q1-19
Revenues	4,618	3,889
Organic growth	10.8%
EBIT (adj.)	535	430
EBIT (adj.) growth	24.4%
EBIT (adj.) margin	11.6%	11.1%
Change vs LY	0.5%-p

• Good organic growth across most markets driven by significant positive one-off effects from Covid-19
• Profit growth mainly from increased sales
• Higher raw material prices and significant weakening of NOK had negative impact on profits

Orkla Confectionery & Snacks

Organic revenue growth hampered by Denmark and the Baltics

	Q1-20	Q1-19
Revenues	1,602	1,502
Organic growth	2.1%
EBIT (adj.)	209	211
EBIT (adj.) growth	-0.9%
EBIT (adj.) margin	13.0%	14.0%
Change vs LY	-1.0%-p

• Higher grocery sales across the Nordic markets in March offset by reduced listing with one customer in Denmark and demand shortfall in the Baltics

• Limited stockpiling effects

• Increased raw material costs partly due to negative currency effects

Orkla Care

Strong sales and profit growth from consumer stockpiling in March

	Q1-20	Q1-19
Revenues	1,688	1,461
Organic growth	11.1%
EBIT (adj.)	297	221
EBIT (adj.) growth	34.4%
EBIT (adj.) margin	17.6%	15.1%
Change vs LY	2.5%-p

• Consumer stockpiling and higher in-home consumption of HPC products
• Improvement for Orkla Health due to increased exports and sales in Norway
• Broad based top line growth for HSNG in both online and offline channels

Orkla Food Ingredients

Negative impact from restrictions in Out of home segments

	Q1-20	Q1-19
Revenues	2,574	2,291	• Large exposure to Out of home markets (bakeries,
Organic growth	-1.3%		ice cream shops & restaurants/cafés) which have experienced a significant fall in sales by end of Q1
EBIT (adj.)	71	77	• Temporary consumer stockpiling in grocery in March
EBIT (adj.) growth	-7.8%		• Profitability significantly impacted by drastically lower sales of ice cream ingredients outside grocery
EBIT (adj.) margin	2.8%	3.4%	• Continued restrictions in the Out of home market will
Change vs LY	-0.6%-p		have material impact in Q2

Orkla Consumer Investments

Out of home slowdown and coronavirus restrictions for the textile segments caused organic sales to decline

	Q1-20	Q1-19
Revenues	927	795
Organic growth	-3.9%
EBIT (adj.)	92	88
EBIT (adj.) growth	4.5%
EBIT (adj.) margin	9.9%	11.1%
Change vs LY	-1.2%-p

• Revenue and profit growth from M&A
• Out of home businesses affected by restaurant sales restrictions. Partly offset by takeaway & home delivery
• Textile business also hampered by restrictions
• Improved Nordic markets for Orkla House Care

Decline in power prices partly offset by increased volume in Hydro Power

Hydro Power Fully consolidated into Orkla's financial statements

Volume	Power prices1	EBIT adj.
(GWh):	(øre/KWh):	(NOK million):
Q1: 645 (476)	Q1: 15.7 (45.7)	Q1: 39 (73)

Financial Investments

Fully consolidated into Orkla's financial statements

Book value real estate: NOK 1.8 billion

Jotun (42.6%) Accounted for using equity method

Closing remarks

Navigating uncertainty – what to expect

• Demand expectations
• ‒ Stockpiling over in March, possible reversal ahead
• ‒ Out of home significantly down (April sales index ranging 40-60)
• ‒ Continued higher in-home consumption of Food & HPC products
• ‒ Long term implications uncertain
• Supply expectations
• ‒ Risk for sourcing disruption (availability & price)
• ‒ Sharp weakening of NOK requires price increases
• ‒ Production proven resilient, remains inherent risk

Building on our strong long term fundamentals

• Immediate priorities
• ‒ Contingency planning to protect our people and operations
• ‒ Strict cash discipline, but building buffer stocks
• ‒ Strong balance sheet and available credit
• ‒ Preparing to endure the situation longer term
• Long term implications
• ‒ Trusted, strong local brands are ever more important
• ‒ Diversified market exposure and supply chain set-up proven resilient
• ‒ No change in Orkla's 2021 financial targets

Q&A

Jaan Ivar Semlitsch, President & CEO Harald Ullevoldsæter, CFO

Appendices

Alternative Performance Measures (APM)

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. 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.

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. Items included in OIE are specified in Note 3. The effective tax rate for OIE is lower than the Group's tax rate in both 2020 and 2019 due to non-deductible transaction costs, write-downs and the effect on profit or loss of the purchase of the remaining equity interest in Orchard Valley in 2020.

If other items of a special nature occur under the company's operating profit or loss, adjustments will also be made for these items. In the first quarter, an adjustment was made for a gain on the sale of the associate Andersen & Mørck.

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 concerns maintenance of existing operations and how large a part of the investments (expansion) is 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 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 Lecora, Easyfood, Confection by Design, Win Equipment, Risberg, Kanakis, Credin Sverige, Vamo, Kotipizza, Anza Verimex and Helga and adjustments for the sale of Glyngøre and SaritaS. Adjustments have also been made for the loss of the distribution agreements with Panzani and OTA Solgryn. In addition, adjustments were made in 2019 for HSNG, Struer, County Confectionery, Werner, Igos, Gorm's and the sale of Mrs. Cheng's.

Continued growth and increased profitability

	Q1-20
Operating income	5,082
Change vs LY	11%
Operating profit	792
Change vs LY	36%

• Sales growth helped by positive FX translation effects
• Earnings driven by both strong sales and improved gross margins
• Considerable uncertainty around the consequences of the coronavirus pandemic going forward

Strong balance sheet and financial flexibility

Net interest-bearing liabilities (NOK million) NIBD / R12 EBITDA

Leasing debt Ex leasing debt