ORKLA ASA Annual Report 2023
Orkla
Contents
Contents | Menu |
1. This is Orkla
Orkla at a glance
Portfolio companies
Highlights 2023
Message from the CEO
2. Goals and strategy
Goals and strategy
3. Board of Directors' Report, Corporate Governance and Executive Renumeration Report
Report of the Board of Directors 2023
Corporate Governance
Salary and other remuneration of senior executives
4. Financial Statements
Annual Financial Statements Orkla group
Notes Orkla group
Annual Financial Statements Orkla ASA
Notes Orkla ASA
Declaration from the Board of Directors of Orkla ASA
Independent Auditor's Report
Historical Key Figures
Alternative Performance Measures (APM)
5. Key Information
Share information
Additional information for valuation purposes
The Board of Directors
The Orkla Management Team
Governing Bodies and Elected Representatives
6. Sustainability
General information
Environmental topics
Social topics
Business ethics topics
Orkla's Taxonomy report for 2023
7. Group Directory
Group Directory
Page 2 | Annual Report 2023 |
Orkla | This is Orkla | Menu |
1. This is Orkla
Page 3 | Annual Report 2023 |
Orkla | This is Orkla | Menu |
ORKLA AT A GLANCE
Orkla ASA is a leading industrial investment company within brands and consumer-oriented businesses. We take a long-term and industrial approach to our investments, where we can contribute to value creation by combining our brand expertise with an investment company mindset.
Sustainable value creation
through active ownership of brands and consumer-oriented companies
Portfolio companies | Orkla ASA | Business service companies |
Independent portfolio companies | A lean Orkla ASA with | The business service companies |
with overall responsibility for | focus on the ownership role | maintain and enhance important |
performance and a clear mandate. | and capital allocation. | synergies. |
Orkla's long history of adapting to change | ||||
1654 | 1986-2010 | 2011-2022 | 2023 | |
Establishment of the | An industrial conglomerate. | A leading company in brands. | An industrial investment company | |
mining company. | Orkla consolidates the Nordic | Invested in branded | focused on brands and consumer-oriented | |
brands industry. | consumer goods and sold | companies. To realise the full potential of | ||
other businesses. | the business, a change was needed. | |||
The portfolio had become too complex, and | ||||
value creation did not match the ambitions. |
Page 4 | Annual Report 2023 |
Orkla | This is Orkla | Menu |
ORKLA AT A GLANCE
Number of employees
in the Orkla Group
19,671
Financial Investments
Hydro | Orkla |
Power | Real Estate |
Average annual return on investment, incl. reinvested dividends, as at 31 December 2023
Last year | 15.7% | 9.9% |
Last 3 years | 1.4% | 34.2% |
Last 5 years | 6.7% | 10.3% |
Last 10 years | 9.9% | 9.1% |
Source: Nasdaq | Orkla | OSEBX |
Ordinary dividend per share
3.00 3.00 3.00 | ||||||||||||||||||||||||
3.00 | 2.75 | |||||||||||||||||||||||
2.50 2.50 2.50 2.50 2.50 2.50 2.60 2.60 2.60 2.60 | ||||||||||||||||||||||||
2.25 2.25 2.25 | ||||||||||||||||||||||||
2.00 | ||||||||||||||||||||||||
2.00 | ||||||||||||||||||||||||
1.50 | ||||||||||||||||||||||||
1.00 | 0.65 | 0.68 | 0.80 0.90 | |||||||||||||||||||||
0.60 | ||||||||||||||||||||||||
0.00 | 00 | 01 | 02 | 031 | 042 | 05 | 06 | 07 | 08 | 09 | 101 | 11 | 12 | 13 | 14 | 15 | 161 | 17 | 18 | 19 | 20 | 21 | 22 | 233 |
1 | Additional dividend per share NOK 5. | 3 | Proposed ordinary dividend. Additional dividend NOK 3 per share. |
2 | Additional dividend per share NOK 1. |
Portfolio companies
(sorted by turnover 2023)
Jotun | Orkla Foods | Orkla Foods | Orkla | Orkla Health | The European |
Europe | Ingredients | Confectionery & | Pizza Company | ||
31.9 | Snacks | ||||
20.3 | 18.7 | 8.9 | 6.4 | 3.0 | |
42.7% ownership | |||||
BNOK | |||||
interest | BNOK | BNOK | BNOK | BNOK | BNOK |
Orkla India | Orkla Home & | Orkla | Health and | Pierre | Lilleborg |
Personal Care | House Care | Sports Nutrition | Robert Group | ||
Group | |||||
2.9 | 2.5 | 1.6 | 1.2 | 0.6 | 0.6 |
BNOK | BNOK | BNOK | BNOK | BNOK | BNOK |
Sales revenues by geographical region
22% 39% 4%
Norway | Nordics | Baltics |
excl. Norway | ||
27% | 7% | |
Rest of Europe | Rest of world |
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Page 6 | Annual Report 2023 |
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Jotun
Jotun is one of the world's leading paints and coatings manufacturers, and combines premium quality with constant innovation and creativity.
Strategy for the next three years
- Jotun's strategy is well-established and based on three pillars: Four Segments, Organic Growth and Differentiated Approach. The company's strong growth over many years confirms the robustness of its long-term strategy based on a stable ownership structure and strong company culture.
- Jotun aims to maintain high growth and profitability levels in line with or above peers in the global paints and coatings industry. Further, Jotun will continue to develop more sustainable market solutions and ensure compliance with environmental and emission and discharge requirements.
- Going forward, the company will focus on continued strong, profitable growth in the Decorative and Protective segments, maintaining its profitable global #1 position in the Marine segment, and revitalising the Powder segment for renewed growth.
Financial performance | ESG | |||||
Ownership | Revenues | EBITA | ROCE | Number of | Management group, | Reduction of GHG |
interest | (NOK million) | (NOK million) | employees | share of women | emissions since 2016 | |
42.7% | 31,861 6,430 | 35% | 10,349 24% | 21% |
2023 highlights | Key figures | ||
• Jotun achieved all-time high sales and profits in all segments. | Financial | ||
• Sales growth was particularly strong in the Marine and Protective | |||
segments, although the Decorative and Powder segments also | NOK million | 2023 | 2022 |
delivered robust sales growth. | |||
Operating revenues | 31,861 | 27,858 | |
• The company's gross margin improved markedly, with an increasing | |||
Fixed rate growth | 12% | 21% | |
contribution from falling raw material prices. | |||
• Raw material prices started falling in the second half of 2022, and the | |||
EBITA | 6,430 | 3,737 | |
downward trend continued into the first half of 2023. After that, prices | |||
EBITA margin (%) | 20.5% | 13.7% | |
stabilised close to historically low average levels. | |||
• Record revenues are attributable to sales growth, higher gross | |||
Net profit | 4,500 | 2,167 | |
margins and good cost control. | |||
ROCE | 35% | 23% | |
• Jotun continued to invest for future growth, including in a new | |||
regional office and R&D centre in the South East Asia & Pacific region | |||
Equity/assets ratio | 61% | 55% | |
and new factories in Indonesia and Egypt. | |||
Net interest-bearing debt (NIBD) | -1,184 | 1,690 | |
Our view | |||
NIBD/EBITDA | -0.2 | 0.4 | |
• Jotun is a long-term holding for Orkla which has generated significant | |||
returns and NOK 5 billion in dividends over the past five years. | |||
• Orkla will continue to support Jotun's long-term strategy through | ESG | ||
active ownership and in cooperation with the family shareholders. | 2023 | 2022 | |
• Jotun is well-positioned to continue generating value through its | |||
Share of women in management group | 24% | 22% | |
strong brand and solid position in global markets. The company has an | |||
GHG emissions, tCO2e (scope 1 and 2) | 94,000 111,000 | ||
attractive geographical footprint, with >50% sales occurring in high- | |||
growth markets. | |||
Energy efficiency (kWh/tonne) | 121 | 120 | |
• The company's robust corporate culture and experienced | |||
Share of renewable energy | 21% | 3% | |
management team have helped the company to deliver good results | |||
over time. | |||
Page 7 | Annual Report 2023 |
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Orkla Foods Europe
Orkla Foods Europe supplies well-known local brands to consumers in the Nordics, the Baltics and Central Europe, and has market-leading positions in a number of attractive categories.
Financial performance | ESG | |||||
Ownership | Revenues | EBIT (adj.) | ROCE | Number of | Share of women in | Reduction of GHG |
interest | (NOK million) | (NOK million) | employees | management groups | emissions since 2016 | |
100% 20,319 2,259 | 12.4% | 5,554 39% | 62% |
Strategy for the next three years
- Orkla Foods Europe has communicated a number of targets towards 2026: EBIT (adj.) margin of 13-14%, cash conversion above 100%, a return on capital employed of over 15% and annual organic growth of 2-3%.
- Improved profitability, increased cash flow and organic growth are key priorities in Orkla Foods Europe's strategy for the period to 2026.
- A number of significant steps have been taken to deliver on the company's objectives, including a comprehensive purchasing programme, optimisation of inventory and investment in core categories and brands.
2023 highlights
- Orkla Foods Europe's operating revenues increased by 14.0%. Adjusted for structural changes and currency effects, organic growth amounted to 6.6%. While progress was made in all markets driven from price increases, the volume trend was negative.
- The profit performance was positive, with growth totaling 14.5%. Adjusted for structural changes and currency effects, the underlying EBIT (adj.) growth amounted to 8.5%. Cost increases continued to be felt for key input factors, necessitating further price increases in all markets. Profit growth was driven by sales growth and significant cost improvements.
- Major cost reduction projects have been completed across Norway, Sweden and the Czech Republic during 2023. In the Czech Republic, a major restructuring project was implemented to counteract significantly increased costs and reduced volumes. One factory was closed, one was sold and two more are currently being discontinued.
- Through targeted efforts to reduce inventory and prioritise investments, the company achieved strong operational cash flow of NOK 2,861 million for the year, while the return on capital employed ended at 12.4%, up from 11.7% in 2022.
Our view
- The market for local brands in the Nordics, the Baltics and Central Europe has proven to be stable and resilient, even in volatile times, delivering robust, attractive underlying growth over time.
- Orkla Foods Europe's leading and traditional positions in multiple local markets allow the company to meet local flavour and quality demands while leveraging economies of scale.
- The strategy for the period to 2026 envisages substantial value creation driven by concrete, ongoing improvements in areas including category profitability, capital efficiency and profitable organic growth.
Key figures
Financial
NOK million | 2023 | 2022 |
Operating revenues | 20,319 | 17,820 |
Organic growth | 6.6% | 7.2% |
EBIT (adj.) | 2,259 | 1,973 |
Underlying EBIT (adj.) growth | 8.5% | -9.5% |
EBIT (adj.) margin | 11.1% | 11.1% |
ROCE | 12.4% | 11.7% |
Cash conversion | 127% | 47% |
ESG
2023 | 2022 | |
Share of women in management groups, portfolio | 39% | 37% |
company and companies | ||
GHG emissions, tCO2e (scope 1 and 2) | 52,008 | 81,814 |
Share of recyclable packaging, % of tonnes | 97% | 98% |
Share of revenues from healthier products | 19% | 19% |
Definitions of Alternative Performance Measures (APM) are described on page 183
Page 8 | Annual Report 2023 |
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Orkla Food Ingredients
Orkla Food Ingredients supplies ingredients to a broad range of customers in the bakery, ice cream and plant-based markets, and has a leading position in Europe and a growth platform in the USA.
Strategy for the next three years
- Orkla Food Ingredients is developing a leading European and US food ingredients company addressing a large, diverse and resilient market.
- Based on strong national positions, the objective is to continue gaining local market shares by offering tailored solutions.
- In the period to 2026, Orkla Food Ingredients will grow operating profits faster than revenues by leveraging common capabilities, exploiting economies of scale throughout the value chain and boosting cross-company sales.
- Orkla Food Ingredients will maintain its focus on organic and structural growth and on extracting synergies.
1 In fourth quarter Orkla announced a sale of a 40% stake in Orkla Food Ingredients to investment funds affiliated with Rhône. The parties are awaiting final approval from relevant authorities before signing.
Financial performance | |||
Ownership | Revenues | EBIT (adj.) | ROCE |
interest | (NOK million) | (NOK million) | |
100%1 | 18,661 | 1,166 | 10.8% |
2023 highlights
- Organic sales growth amounted to 8.7%, with the primary driver being price.
- Underlying EBIT (adj.) growth totalled 6.9% across the bakery, ice cream and plant-based segments.
- The company continued to make operational investments to increase its growth capacity and strengthen prioritised categories.
- The cash conversion was solid at 106%.
- The company continued the roll-out of its common ERP system. Currently, 25% of operating revenues are on the same platform, but projects are ongoing to roll the system out to a further 9% of the portfolio.
- Orkla Food Ingredients acquired the US-based company Denali in
the fourth quarter of 2022, and successfully integrated the company in 2023. - In the fourth quarter 2023, Orkla announced a partnership with Rhône, a global private equity firm. Under the agreement, investment funds affiliated with Rhône will acquire 40% stake in Orkla Food Ingredients.
Our view
- The ingredients market is large and fragmented, and features attractive underlying growth.
- Orkla Foods Ingredients is a leading European solutions provider with a competitive advantage thanks to its multi-local model, which selectively combines production and distribution.
- The company has a proven track record of achieving consistent growth, as well as an experienced, entrepreneurial management team motivated to deliver ongoing growth.
- Orkla Foods Ingredients has a robust strategy in place for accelerating its value creation through both organic and structural growth.
ESG | ||
Number of | Share of women in | Reduction of GHG |
employees | management groups | emissions since 2016 |
4,128 | 35% | 55% |
Key figures
Financial
NOK million | 2023 | 2022 |
Operating revenues | 18,661 | 14,682 |
Organic growth | 8.7% | 20.5% |
EBIT (adj.) | 1,166 | 853 |
Underlying EBIT (adj.) growth | 6.9% | 27.7% |
EBIT (adj.) margin | 6.2% | 5.8% |
ROCE | 10.8% | 10.6% |
Cash conversion | 106% | 25% |
Organic growth from volume/mix | -0.4% | 3.9% |
ESG
2023 | 2022 | |
Share of women in management groups, portfolio | 35% | 35% |
company and companies | ||
GHG emissions, tCO2e (scope 1 and 2) | 24,935 | 33,500 |
Share of recyclable packaging, % of tonnes | 98% | 94% |
Share of certified high-risk raw materials | 70% | 54% |
Page 9
Definitions of Alternative Performance Measures (APM) are described on page 183
Annual Report 2023
Orkla | This is Orkla |
Menu |
Orkla Confectionery & Snacks
Orkla Confectionery & Snacks offers well-known local brands in the confectionery, snacks and biscuit segments to consumers in the Nordics and Baltics.
Strategy for the next three years
- Win with heroes: Unlock the growth potential of hero brands through sharper portfolio prioritisation. Investment in 40% of brands is to drive >80% of growth.
- Release funds for brand investment: The company will finance brand investment through more aggressive cost optimisation throughout the value chain, and by boosting system value through harmonisation and complexity reduction.
-
Develop critical capabilities and evaluate the current operating model:
The company will build strong commercial capabilities to bolster the physical and mental availability of its brands to consumers. It will also review the current operating model to secure optimised strategy execution throughout the value chain.
Financial performance | |||
Ownership | Revenues | EBIT (adj.) | ROCE |
interest | (NOK million) | (NOK million) | |
100% | 8,880 | 1,013 | 9.9% |
2023 highlights
- The company experienced price-driventop-line growth on the back of cost increases.
- Cash conversion was lower than budgeted (at ~50%) due to investment in a new biscuit factory. Overall operational cash conversion was in line with adopted plans.
- A new biscuit factory - the most advanced in Northern Europe - was opened outside Riga, Latvia.
- The recently acquired subsidiary Bubs Godis AB achieved strong growth, illustrating its potential to become a future growth engine.
Our view
- The company is a leading player in the confectionery, snacks and biscuit segments in the Nordics and Baltics, and has attractive opportunities to grow its brands from challenger positions in certain markets and through expansion into new markets.
- Over the next three years, the company will deliver growth, focus on ambitious cost-reduction initiatives to improve margins, fund brand investments and secure capital flows to Orkla.
ESG | |||||
Number of | Share of women in | Reduction of GHG | |||
employees | management groups | emissions since 2016 | |||
3,033 | 43% | 58% | |||
Key figures | |||||
Financial | |||||
NOK million | 2023 | 2022 | |||
Operating revenues | 8,880 | 7,578 | |||
Organic growth | 9.2% | 5.2% | |||
EBIT (adj.) | 1,013 | 989 | |||
Underlying EBIT (adj.) growth | -4.5% | -9.2% | |||
EBIT (adj.) margin | 11.4% | 13.1% | |||
Organic growth from volume/mix | -2.2% | -3.0% | |||
ROCE | 9.9% | 11.7% | |||
Cash conversion | 50% | 19% | |||
ESG | 2023 | 2022 | |||
Share of women in management groups, portfolio | 43% | 46% | |||
company and companies | |||||
GHG emissions, tCO2e (scope 1 and 2) | 29,007 | 36,211 | |||
Share of recyclable packaging, % of tonnes | 98% | 95% | |||
Definitions of Alternative Performance Measures (APM) are described on page 183
Page 10 | Annual Report 2023 |
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Orkla ASA published this content on 21 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2024 07:23:03 UTC.
