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Growth drivers, financial targets and outlook

The Abba Middagsklart range of sauces for oven-baked salmon was launched in Sweden in 2012. It enables busy families with young children to enjoy fish dinners not only at weekends, but also during the week. The range is now being launched in the other Nordic countries, as Glyngøre NemFisk in Denmark, Abba AteriaValmis in Finland and TORO Middagsklar in Norway.

The Abba Middagsklart range of sauces for oven-baked salmon was launched in Sweden in 2012. It enables busy families with young children to enjoy fish dinners. The range is now being launched in the other Nordic countries, as Glyngøre NemFisk in Denmark, Abba AteriaValmis in Finland and TORO Middagsklar in Norway.

Orkla's growth drivers, financial targets and outlook.

Growth drivers

  • Organic growth
  • Mergers and acquisitions (add-on acquisitions)
  • Margin improvements

Operational focus

  • Deliver on initiated and ongoing structural processes
  • Focus on activities that drive organic growth and improve margins
    - Strong innovation programmes
    - More cross-market initiatives
    - Increase sales force effectiveness
    - Strengthen relations with our customers
  • Optimising production structure

Updated financial targets 2016-2018 announced at Orkla’s Investor Day 2015

  • Deliver organic growth at least in line with market growth
  • Target annual adj. EBIT growth of 6-9%1 in BCG

1Including add-ons, excluding currency effects and large acquisitions and divestments

Outlook

Source: Orkla's 34th quarter 2016 report

In the markets in which Orkla has a presence, growth is expected to remain moderate in the years ahead, with some variation from one market to another.

Orkla continues to face strong competition from imported international brands and retailers’ private labels. Consequently, Orkla must continue to take steps to secure its competitiveness and its position in the future. Efforts to optimise and rationalise the supply chain so as to exploit economies of scale and reduce costs will continue.

Overall, the global commodity prices to which Orkla is exposed have risen somewhat in the recent past. However, prices vary substantially from one commodity group to another, and the uncertainty attached to future commodity price trends is generally high.

The different business areas are exposed to currency risk to varying degrees, and there is uncertainty as to exchange rate trends going forward. Many of Orkla’s Norwegian companies do a substantial share of their purchasing in Norwegian krone, thereby reducing the overall impact of fluctuations in the exchange rate of the Norwegian krone against other currencies.

The strategy of being a leading branded consumer goods company, with the Nordic and Baltic regions as main markets in addition to selected geographies, remains unchanged. Orkla aims to deliver organic2 growth in turnover that at least matches market growth and growth in annual adjusted EBIT (adj.)3 of 6–9% in Branded Consumer Goods in the period 2016–2018.

2 Adjusted for currency translation effects and structural changes

3 Operating profit before other income and expenses

Financial risk, risk management and internal control

Disclosure of Orkla’s financial risks within the business areas, and the management of these risks.

The Group’s risk management is carried out by the financial staffs and is designed to ensure that all risk that is significant for Orkla’s goals is identified, analysed, effectively dealt with and exploited across business areas and professional disciplines.

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