奥尔克拉公司资本市场更新-进展报告

Capital Markets Update - progressreport It has been 18 months since Orkla's last CMD andtheir CMU event yesterday in Oslo provided a progress reporton their achievements. We thought the update wasconstructive to their equity story, though short-term costpressures remain. Next catalyst, CEO will be presenting at aconference next week. ORK.OL/ORK NOUNDERWEIGHTEuropean ConsumerStaplesNEUTRALPrice TargetNOK 92.00Price (28-May-25)NOK 115.40Potential Upside/Downside-20.3%Source: Bloomberg, Barclays Research European Consumer Staples Patrick Folan+44 (0)20 7773 1712patrick.folan@barclays.comBarclays, UK Our view:This Capital Markets Update (CMU) was a chance for Orkla to showcase their progressreport since their last CMD in 2023 on how the portfolio configuration of theirdifferentsegmentshas developed, update on their financial targets, and their priorities for capital allocation goingforward. While there wasn't a whole lot new to share from the CMU, it is hard to argue with theprogress Orkla has made despite the tougher macro that has created a few headwinds forthem. We thought this was constructive to their equity story for a few reasons. Warren Ackerman+44 (0)20 3134 1903warren.ackerman@barclays.comBarclays, UK First, as we already know, they have divested Pierre Robert Group, Lilleborg, and Hydro Power.This is key to their strategy, and they still plan to transform, or in our view likely exit, their otherbusinesses, including House Care and Health & Sports Nutrition. We think focusing on their coreareas, which are more attractive from a growth and margin perspective, is key to the equitystory. Secondly, even in their core portfolio they are not taking their eyeoffthe ball and arelooking at ways to continue to simplify the business and improve their portfolio focus (e.g,, tailcutting of c20% of SKUs across Food). Lastly, their capital allocation journey has been successfulwith leverage hitting c2x while providing excess capital to shareholders. Considering it has been18 months since their strategy announcement, we see this as solid progress, but note there ismore work to do. Below we have listed our progress report for their "Anchor, Grow and build,and Transform or exit" strategy for their portfolio companies. Tara Phadnis+44 (0)20 7773 0709tarani.phadnis@barclays.comBarclays, UK What's new: Orkla moved its Home & Personal Care division to the Anchor category,from its initialposition in the Transform or exit category.Home & Personal Care performance has beenimproving, having posted solid Q1-25 growth (+6.8%) with increased market shares in thegrocery sector across the Nordic markets. Improvement was attributed to new productlaunches, continued higher advertising spend behind “hero brands,” and ashiftin focustowards more profitable products, alongside refinement of formulations and improvementprocurement work. To us, this is a good sign that progress is being made on the category andalso shows Orkla can change course when their "transform" action delivers an improvedbusiness performance and can fit in their company vision, which is looking more like a Staplescompany as their strategy unfolds. As a reminder, at its last CMD in 2023 Orkla announced a (then) new strategic framework,splitting the business divisions into three categories: Grow and build, Anchor, and Transform orexit as mentioned above, aiming to help in prioritising capital to the most productive parts ofthe portfolio by trimming their 12 portfolio companies to 10. The target to 2026 is to havebetween 7-9 portfolio companies and there was no ruling out an exit of either of the tworemaining companies in the Transform or exit category (Orkla House Care and Health & SportsNutrition Group). FIGURE 2. Progress being made on Orkla's strategic framework Orkla also said it continues to see some input cost pressure, mainly in cocoa.The Snacksbusiness (c14% of group sales) sawsofteningdemand last quarter following high cocoa prices,with volumes down -4.1%. The CEO Nils Selte stated that this volume elasticity impact they areobserving varies by market, with the Balticssufferingmore than Scandinavian markets as theconsumer has lower tolerance for pricing. Bright spots for the company include that it still hasmaintained its #1 or #2 position in the markets and categories that it has always held leadingpositions in, and that private label share continues to be relatively low across all categories. Itwas also good to hear that the challenges in their Biscuit business are being addressed, withmore capacity coming on stream and significant growth potential still to play for. Overall, OrklaSnacks is still on track to achieve its 2026 targets, which we think could be challengingconsidering their confectionery exposure. Elsewhere, Orkla still on track to deliver in most categories: •Orkla's Ingredients business isshiftingfocus more towards Eastern European markets,where it sees significant growth potential.90% of Ingredients’ revenues already come fromout