Capital Markets Day 2023

On the 29 November 2023, Orkla hosted a Capital Markets Day in London, where we announced a target for Total Shareholder Return of 12-14% per year, as well as financial targets for the portfolio companies in the period 2024–2026.

Please find relevant presentation materials below.

Link to Webcast

Key messages from the CMD

At the Capital Markets Day on 29 November 2023, Orkla announced a target for Total Shareholder Return of 12-14% per year, as well as financial targets for the portfolio companies in the period 2024–2026.

On 1 March 2023 Orkla implemented a new operating model and established 12 autonomous Portfolio Companies.

Orkla is a leading industrial investment company, with focus on strong brands and consumer-oriented companies.

“We are developing a company combining the very best elements from two worlds: building on our DNA of developing brands and combining this with an investment company mindset. It is this combination that will make us truly unique. As an industrial investment company our ultimate goal and KPI is to deliver a minimum annual total shareholder return in the range of 12–14% in the period 2024–2026,” says Nils K. Selte, Orkla’s President and CEO.

Value creation at Orkla consists mainly of four building blocks: the 11 consolidated portfolio companies, Jotun (42.7% ownership), financial assets, and structural opportunities.

Focus for the Portfolio Companies will be their individual financial targets in the period 2024–2026. The value creation potential for Orkla’s consolidated portfolio companies is estimated to be NOK 40–45 bn.

This represents in the period 2023–2026 for the consolidated portfolio companies:

an underlying EBIT (adj.) CAGR of 8–10%
a margin expansion in the range of 1.5–2.0 percentage points
a ROCE improvement from 10% to 13%

Orkla will maintain a financial and business risk profile consistent with an investment grade credit quality, and a net debt to EBITDA ratio of 2.5. Orkla’s first priority is to pay out a stable and increasing dividend over time, and secondly to invest in current business and M&A. Any excess capital will be returned to shareholders either by an extraordinary dividend or large share buy-back programmes.

Orkla has set clear ambitions for its sustainability work, including requirements for its Portfolio Companies. The goal is to enable a responsible transition towards net-zero and sustainable production and consumption. By 2030 greenhouse gas emissions from Orkla’s own operations are to be reduced by 70% (Scope 1 & 2). All food companies are to create positive health impacts towards 2030. Orkla will achieve a balance in gender representation in management teams by 2026.

As part of the process of reducing complexity in the portfolio and a more disciplined capital allocation, Orkla has created a framework to categorise the Portfolio Companies in three groups:

Grow and build	Anchor	Transform or exit
Orkla Food Ingredients	Jotun (42.7% ownership)	Orkla Home & Personal Care
Orkla Health	Orkla Foods Europe	Orkla House Care
Orkla India	Orkla Confectionery & Snacks	Health and Sports Nutrition Group
The European Pizza Company		Pierre Robert Group
		Lilleborg

“The “Grow and build” category consists of companies where we aim to grow organically and/or through M&A. The companies in the “Anchor” category are seen as significant cash generators. These companies operate in more stable categories, and are vital to ensure yearly dividend, handling of debt, and fueling Orkla’s “Grow and build” companies. The final category is “Transform or exit”. These are companies where we will work on a plan to either transform or exit within a limited time frame,” says Mr Selte.