The Orkla Group

1
The Orkla Group
2
Agenda
Orkla Group
Performance and strategic direction
Operational excellence
Long term value creation
3
Major steps in Orklas development
Orkla Grube-Aktiebolag -gt Orkla Industrier
Orkla
Orkla Borregaard
1654
1986
1991

• Mining operations 1654
• Orkla Industrier established 1904
• Mining discountinued 1987
• 333 years ( Kongberg/Røros)

• Merger with Borregaard 1986
• Orklas first exposure to brands
• The modern Orkla appears
• Branded consumer goods
• Chemicals
• Financial investments

• Merger with Nora Industrier 1991
• Agreements with Volvo 95-97
• Procordia Food/Abba
• Pripps Ringnes
• Establishment of Carlsberg
• Breweries 2000
• Divestment of Carlsberg Breweries 2004
• Bid on Elkem 2005

4
Orkla structure
Sales pro forma - 04 56,000 EBITA pro forma
04 4,700
Orkla ASA
Branded Consumer Goods
Financial Investments
Speciality Materials
Orkla Foods
Elkem
Portfolio
Orkla Brands
Sapa
Orkla Finans
Borregaard
Real Estate
Orkla Media
5
Growth through acquisitions last few quarters
Divestments
Acquisitions
(NOK billion)
Branded Consumer Goods
Speciality Materials
Revenues -17 26 EBITA -1.3 2.2 Cash
in/out 17.5 Approx. -11 Dividend 03/04 -7.9
6
Branded Consumer Goods - Organisation
Jam and marmalade
Newspapers
Industrial Detergents
Baking Ingredients
- Scandinavia
Home/ Personal Care
Seafood
- Eastern Europe
Biscuits
Ready Meals
Magazines (HM 50)
Confectionery
Direct Marketing
Bread and Bakery Products
Household Textiles
Pizza
Dietary Supplements
Sauces
Snacks (Chips)
Vegetables
Potato products
Other
7
Nordic exposure
Branded Consumer Goods

• Orkla regards the Nordic region as its domestic
  market
• Leading supplier of grocery products to Nordic
  households
• Foods and Brands 80 of turnover from number 1
  positions
• Leading national, regional and local newspapers

8
International exposure
Branded Consumer Goods

• Orkla Foods
• Supplier of leading local brands to the Eastern
  European market
• Local management
• Building economy of scale
• Orkla Media
• Leading regional and local newspapers in Poland,
• Total 23 market share

9
Speciality Materials strong positions in global
niches
Speciality Materials
2004 in NOK billions
Elkem Sales 22,0 EBITA
1,8Employees 11 000
Borregaard Sales 6,2EBITA
0,4Employees 3 000

• Main Products (in of Total Sales)
• Aluminium profiles and Heath-exchanger strips (56
  )
• Speciality Products Silicon Metals and
  Ferrosilicon (27 )
• Aluminium billets and ingots (11 )
• Hydroelectric power

• Main Products (in of Total Sales)
• Lignin-based binding and dispersing agents (32 )
• Speciality cellulose (39 )
• Fine Chemicals (12 )
• Hydroelectric power

2004
10
Geographical exposure
Speciality Materials
11
Agenda
Orkla Group

• Performance (share, industry, portfolio)
• Shareholder issues
• Position for future value creation

Performance and strategic direction
Operational excellence
Long term value creation
12
Orkla has created substantial shareholder value
Value of NOK 1 invested 31.12.82
212x
20x
9x
YTD 8 August 2005
13
Orkla seen in perspective
Annual total return rolling 5 years
14
Growth by acqusitions and restructuringsNOK bill
Acquisition of Elkem/sapa
Establishing Carlsberg Breweries and acquisition
of Berlingske
Acquisition of remaining shares in Pripps Ringnes
Acquisition of Abba and establishing Pripps
Ringnes
Merger with Nora Industrier
Merger with Borregaard
15
Orkla seen in a perspective Norwegian Nordic
- International
Other
Other Western Europe
CEE
Other Nordic
Norway
1992
2004
2004 pro forma
Including Elkem/Sapa
16
Industry ROCE has consistently been higher than
todays WACC
17
Orklas dividend policy
NOK per share
5.00
29.00

• Shareholders should have a stable, steady
  increase in dividends, provided that the
  underlying development of the business is
  satisfactory

An additional dividend of NOK 25 per share was
also paid for 2003. Besides an ordinary
dividend of NOK 4.50, the Board of Directors
proposes an additional dividend of NOK 5.00 per
share.
18
VISION
Orkla will create superior values to the benefit
of our shareholders, employees and the
communities in which we operate We shall
operate better and grow faster than our
competitors

• A broad competence base giving a broad frontier
  of opportunities
• A competent and motivated workforce in a
  demanding organisation
• with a sound culture
• Differentiated products obtaining preferences and
  loyalty

Our 3 most important competitive advantages
19
Orklas strategy

• To strengthen our competitive advantage through
• Specialized products
• Strong market positions
• Competent organization and healthy company
  culture
• And with continued focus on
• Operational excellence
• And continued structural growth

20
Strategic Direction Industrial growth

• Priorities
• Branded Consumer Goods
• Focus on growth and internationalisation
• Continued specialisation in Speciality Materials
• Longer term Open to value-creating structural
  solutions
• Limited allocation of new capital to the
  financial portfolio

21
Basic thinking

• How does Orklas structure support profitable
  growth?
• Provides a broad frontier of opportunities within
  our core competencies
• Allows for a healthy opportunism in allocating
  funds to the best performers
• As we expand geographically, the broadness of our
  product portfolio will be reduced

22
Orklas operational goal

• The Orkla share is to yield an annual return that
  is 25 higher than that of the Oslo Stock
  Exchange on a rolling five-year basis
• e.g. OSEBX 10 p.a. ? Orkla 12.5 p.a.
• Industrial activities Growth and continuous
  improvements are to add economic value each year
• Return on existing and new activities above WACC
  target 14-15

23
Agenda
Orkla Group
Performance and strategic direction

• Organisational development
• Market positions

Operational excellence
Long term value creation
24
Orkla Foods

• Leading supplier of grocery products to Nordic
  households
• 85 of the revenues from the Nordic market
• 80 of sales from number 1 positions
• Supplier of leading local brands to the Eastern
  European market
• Local management
• Building economy of scale

Revenues (NOKm)
25
Foods
Positions - examples

• Norway Sweden Denmark Finland
• Frozen pizza 1 1 - 1
• Ketchup 1 1 1 1
• Dressings 1 1 - 2
• Pickled vegetables 1 1 1 1
• Jam/Marmalade 1 1 1 -
• Kaviar (fish roe spread) 3 1 1 1
• Marzipan 1 1 1 1

26
Direction of development
Foods

• Nordic region
• Consolidate and rationalise
• Innovation and organic growth
• Growth through acquisitions
• Central and Eastern Europe
• Establish a solid and profitable platform
• Consolidate present position
• Further acquisitions

27
Orkla Brands

• Strong brands and positions
• 93 of sales from the Nordic markets
• More then 80 of sales from number 1 positions
• Successful innovation ability

Revenues (NOKm)
28
Brands
Positions - examples

• Norway Sweden Denmark Finland
• Detergents 1 - - -
• Personal Care 1 - - -
• Biscuits 1 1 - 3
• Confectionery 1 - - -
• Cod Liver Oil 1 - 3 1
• Household Textiles 1 1 - 3
• Snacks (40) 2 1 1 -

29
Direction of development More of the same
Brands

• Maintain profitability and organic growth through
  innovation
• Further develop Nordic platforms

30
Orkla Media

• Leading national, regional and local newspapers
  in Norway, Denmark and Poland
• Strong market positions
• Weak profitability in Denmark about to turn

Revenues (NOKm)
31
Direction of development Turnaround
Media

• Major task in coming years Improve existing
  operations
• Continued cost-cutting and consolidation
• Co-operation with others when profitable
• Product development

32
Business portfolio
Other products Silicon Metal, Ferrosilicon,
Carbon, Materials, Calcium carbide. Mainly number
1 positions in the world
Downstream aluminium Sapa Profiles, Heat
transfer. Among the 3 largest in Europe
EBITA 2004 MNOK 1,876
Energy Production capacity 3.5 TWh. Major player
in Nordic power market
Primary Aluminium Elkem Aluminium 50 Extrusion
ingots, Rolling ingots, Foundry ingots. Among the
3 largest in Europe
33
Financial performance (Q2 2005)
EBITDA
2 781
738
635
Note Excluding restructuring costs and
non-recurring items. Manganese excluded from
30 June 1999. Chrome excluded from 1 January
2001. Sapa included from 1 September
2002. IFRS accounting principles from 2005.
34
Elkem in a nutshell
Profiles
Heat transfer
35
The solar initiatives

• REC acquires ASiMi to secure feedstock for
  Scanwafers expansion and improve solar grade
  silicon position
• The silane gas and polysilicon for electronics
  plant in Butte, USA will gradually be converted
  into a silane gas and solar grade silicon plant
• The acquisition is financed through a
  convertible bond issue of USD 140 million, a term
  loan facility of USD 140 million from the three
  major shareholders of REC and RECs own funds
• Elkems participation in the financing expected
  to be about NOK 450 million - total investments
  and loans to REC expected to reach about NOK 900
  million after the ASiMi financing
• REC plans an IPO/listing of its shares on the
  Oslo Børs in 1H 2006

• Significantly increased development activity in
  2005
• Decision on whether to build an industrial plant
  will be taken in late 2005

36
Chemicals Borregaard

• Leading global positions in specialised
  wood-based chemical products
• Strong niche positions in fine chemicals
• Divesting non-core activities reduces revenues
  and improves profitability

Revenues (NOKm)
37
Direction of development Dual track
Chemicals

• Continued concentration on differentiated
  positions that can be further developed and
  specialised
• Grow within wood-based chemicals
• Divest positions where we are not - or cannot
  become - market leaders and achieve satisfactory
  returns
• Examples so far
• Oil and fats
• Power utilities
• Ethanol-based products
• Steel drums
• Polymers
• Paper pulp

38
Financial Investments

• Portfolio market value approx. NOK 13 billion
• 48 invested outside Norway
• 17 in unlisted companies
• Long-term superior returns compared with indices
• Synergies with Industry area
• Own research with focus on identifying
  value-creating companies rather than valuation
  only

39
Direction of development
Financial Investments

• Exposure
• Long-term perspective
• Nordic focus
• Increased degree of concentration
• Limited allocation of new capital to the
  portfolio
• Annual return that is 2 percentage points higher
  than the Oslo Stock Exchange Benchmark Index on a
  rolling three-year basis

40
Agenda
Orkla Group
Performance and strategic direction
Operational excellence
Long term value creation
41
Long-term value creation through operational
excellence

• High-quality of organisation
• Attitudes Commercial culture
• Skills Core competencies
• Management Talent and training
• Organic top-line and margin growth
• Differentiated products
• Innovation
• Continuous improvements
• Cost-cutting
• Quality enhancement

42
Creating competitive advantageby building a
strong organisation
Corporate Culture
Management Development
Core Competencies
43
Improving capabilities along the value chain
44
Developing capability in Orkla

• Oriented towards the central elements in the
  value chain
• Normative and tools based in our core areas.
  This is the Orkla way
• Concentrating on the areas where it is important
  to offer own programs
• General knowledge are bought externally

Common course activities at Orkla
45
Improvement through organic top line growth

• Value-creating innovation
• Improved advertising

Growth NSV
Strong brands
100
Brands
Generic / bulk
Time
46
Strong brands create a platform for continued
development of new products Case Grandiosa
47
Improvement through cost saving programmes

• Continuous improvement
• Step-by-step changes and daily improvements
• Focus in all business areas
• Redesign
• Significant improvement programmes within current
  structure
• Changes in processes and down-scaling of staff
• Structural projects
• Efficient production increased capacity
  utilisation
• Closure of plants and transfer of production

48
Examples of cost reduction programmes in Orkla

• Man-years reduced Man-years reduced in
• Berlingske 01-03 650 21
• Orkla Foods 03-04 1,000 15
• Abba 140 24
• Borregaard 00-02 205 16

49
Long-term value creation through acquisitive
growth

• Based on core competencies
• Branded consumer goods
• Specialised wood-based chemicals products
• Exploiting frontier of opportunities
• Commercial opportunism
• Gives growth advantages
• Exploiting two-legged structure
• Positioning opportunities
• Flexible reserve of capital

50
Acquisition criteria designed to create value

• Expected return above pre-tax WACC 9.7
• Within prioritised geography/product areas
• Differentiated products with potential for market
  leadership
• Strong local management
• Clear development plan / list of specific
  value-adding actions in areas where Orkla has
  credible execution capacity in the local market

51

• Broad competence and business base
• create many opportunities

• Expertise
• Differentiated
• products
• No. 1 or 2
• Geography

• Expertise
• Differentiated
• products
• No. 1 or 2
• Geography

Orkla Foods
Orkla Brands
Orkla Media
Chemicals
Elkem
Turnover approx.
Turnover approx.
Turnover approx.
Turnover approx.
Turnover approx.
NOK 22 bn
NOK 13 bn
NOK 6 bn
NOK 8 bn
NOK 4 bn
Financial investment expertise
52
Summary

• Orkla has created substantial shareholder value
• Market leader of grocery products to the Nordic
  region
• Strong brands and successful innovation ability
• An organisation with a strong culture and a
  long-term approach