Welcome to this fourth quarter presentation from Orkla. Before I give the highlights, I would like to say that as we have seen from the press release, the board has appointed a new CEO. He will be presented in the press conference at 9:00 A.M. So in this session, we will focus on the results, and also that will be the case in the subsequent Q&A. Overall, the fourth quarter results were relatively weak. EBITDA at NOK 1,026 million. The Consumer goods Business reported an increase in revenues of about 18% to NOK 8.2 billion as a consequence of the acquisitions last year. However, we report flat EBITDA at NOK 951 million compared to NOK 947 million last year. The financial performance continues to show significant variation between different business units and operating entities. Orkla Foods reports EBITDA of NOK 422 million compared to NOK 368 million last year.
The performance in Norway is not satisfactory, while Sweden continues to report good progress. The underlying revenue development in Norway is negative throughout the portfolio. Rieber synergies continue to come in accordance with plan. We remain confident that we will extract NOK 250 million-NOK 300 million in synergies as previously announced. Orkla Confectionery & Snacks continues to be affected by the ongoing restructuring. EBITDA is NOK 234 million compared to NOK 255 million last year. Denmark and the Baltics show good progress, while Sweden and Norway are still faced with a very competitive market situation. A cost program is in place and expected to yield about NOK 300 million during the next three years. Orkla Home & Personal is positively affected by the successful integration of Jordan. EBITDA is NOK 194 million compared to NOK 186 million last year. Orkla Food Ingredients reports a broad-based and satisfactory development.
Sales growth is 13%. EBITDA is NOK 97 million compared to NOK 78 million last year. Finally, inside Orkla International, there are significant variances in performance. MTR in India and Felix Austria continue to outperform. The big negative development is in Russia, where Orkla Brands Russia reports negative top-line development of 18% for the year and 20% for the quarter. While the restructuring of the production facilities, which we have told you about in the last few quarters, have generated cost improvements, pretty much in accordance with plan. These are more than offset by significant margin pressure and reduced volumes. The Orkla Brands business in Russia is a result of acquisitions done in 2005 and 2006. Unfortunately, Orkla has not been able to successfully develop the Russian business, and as a consequence, a structured sales process has been initiated.
Outside the core, Gränges reports slightly improved EBIT of NOK 78 million, primarily due to increased sales to the Chinese automotive industry and improved performance at the Swedish plant in Finspång. Cash flow for operations is a highly satisfactory NOK 432 million for the year. The board has announced a dividend of NOK 250 per share for 2013, and the share will go ex-dividend on April 10th when we have our general meeting. It's important to keep results in perspective, given that Orkla is undergoing significant change. Let me remind me of the significant reallocation of capital that has happened in the last two years. Orkla has in that period, released financial resources of about NOK 12.7 billion through sales of various non-core assets. NOK 7.3 billion has been reinvested predominantly in Rieber and Jordan. Significantly improving the platform from which Orkla expected to generate growth in the future.
In addition, Orkla has returned NOK 5.4 billion to shareholders through dividends and share buybacks in 2012. As a consequence of the acquisitions, Orkla has been able to generate synergies and improved financial performance from a larger base. We already see that 12 months rolling EBITDA for the consumer goods business is increasing. Going forward, Orkla has four strategic priorities. First, reduce complexity, which we will continue to do by restructuring and simplifying our organization. Secondly, extract cost synergies and improve cash flow, which, as you know, is an ongoing process, but where results are coming in pretty much in accordance with plans. Thirdly, drive organic growth, which requires improved performance in many parts of the value chain inside Orkla. We have programs in place. We know what we need to do. However, the reality is, of course, that implementation takes time.
Finally, we need to improve Orkla's skill base. Orkla has vast experience and competence inside its organization, but in our drive for performance, there are always ways to improve, and we constantly need to look for new skills and new ways to improve performance. Specifically, I would like to remind you what organization changes we have done inside the consumer goods business. First, we have merged seven food companies into three companies in Norway, Sweden, and Denmark, including the integration of Rieber and Stabburet, creating a NOK 4.3 billion business in Norway. We have merged seven confectionery snacks companies into three companies in Norway, Sweden, and Finland, and we have successfully integrated Jordan into the Orkla Home & Personal organization. Lastly, we have started the process by which support functions will be upgraded and rationalized so that we can improve the quality of delivery at a significantly reduced cost.
At our capital markets day in September, we announced our financial targets, which we expect to achieve during this three-year transitory period. EBIT margins improvements to levels between 15%-17.5%, and organic revenue goals between 2%-5% in the different business units. Needless to say, Orkla management is committed to deliver those financial targets in the two to three years to come. With that, I leave the floor to Mr. Andersen, the CFO.
Thank you. I will take you through financial statement and also comment on some of the non-core business units. Starting with the P&L, group's operating revenues increased by 12.5% in the quarter, mainly ascribable to the acquisition of Rieber. Here, currency translations effects impacted revenues positively by about NOK 500 million, and approximately 86% of the turnover came from branded consumer goods. Reported EBITDA was down NOK 91 million in the quarter. The negative difference is largely attributable to property sales in 2012. Gränges continued to deliver volume and profit growth in fourth quarter, while EBITDA increase for Hydro was related to positive one-offs. Total EBITDA for the Branded Consumer Goods, as you see, in line with last year. Currency translation effects impacted EBITDA positively by about NOK 50 million in the quarter. This slide show a more detailed breakdown of the development for branded consumer goods.
For Orkla Foods, we see a positive impact from the acquisition of Rieber. Underlying business in Orkla Foods is, however, more mixed, which Atle Vidar will revert to later in this presentation. Orkla International was down NOK 58 million compared to last year, and this is fully related to the challenging market situation and weak performance for Orkla Brands Russia. Orkla Confectionery & Snacks had weaker performance in the quarter compared to 2012, while Orkla Home & Personal and especially Orkla Food Ingredients had satisfactory performance in fourth quarter. We go back to the P&L and look at some of the other items. Other income expenses total minus NOK 13 million in the quarter. Gränges insurance claim related to the fire in Finspång factory in 2010 was finally settled in the quarter, resulting in the recognition of NOK 127 million in other income.
This was however offset by further restructuring and integration costs, mainly in Orkla Foods and Orkla Confectionery & Snacks. After the establishment of Sapa JV, the profit impact from this business has been moved in the P&L from discontinued operations to profit and loss from associates and joint ventures. Reported loss of NOK 300 million was due to further provisions and write-downs related to the ongoing restructuring in Sapa JV. Jotun, which is the other major part in the line for JV and joint ventures, had good results also in 2013. Taxes totaled NOK 232 million in the quarter. A normal tax rate for Orkla will be in the area of 25%-26% of operating profit. At year-end, net interest-bearing debt was NOK 8.5 billion. This represents an increase of NOK 3.7 billion during the year.
We have freed up close to NOK 5 billion from establishing Sapa JV and sales of non-core assets, while we have expanded the Branded Consumer Goods business through the acquisition of Rieber. Cash flow from operating activities amounted to NOK 3.2 billion, whereof NOK 2.6 billion stemming from Branded Consumer Goods. Working capital was in line with last year. Paid dividends and net sale of treasury shares totaled NOK 2.6 billion, while taxes and interest amounted to NOK 1.2 billion. At the end of fourth quarter, the group's net interest-bearing debt was, as I said, NOK 8.5 billion and had an average borrowing rate of 3.4%. Orkla's net debt is mainly allocated across the currencies where we operate, and this represents a hedge to the underlying equity exposure within the group. A weaker NOK will give a negative translation effect on the reported net debt in NOK.
Net debt has been significantly reduced over the last years. The increase in 2013, as mentioned, is related to the acquisition of Rieber. Orkla's equity ratio has been relatively stable, but increased to 59.1% at the end of 2013. This increase is, however, largely explained by the accounting effect from restating Sapa as associated company as of September 2013. Balance sheet still strong and ensure financial flexibility to support the strategy going forward. The financial flexibility is further supported by a well-balanced debt maturity profile and significant unutilized credit facilities. The latter here presented in red. The average maturity is 3.6 years. Some comments to some of the non-core business areas. Gränges, both volume and profit growth in the quarter. EBITDA ended at NOK 78 million, compared to NOK 74 million in 2012. The growth was driven by somewhat higher volumes and contribution from cost programs.
Volume growth was related to the operation in Shanghai, which continued to benefit from the strong demand in the Chinese automotive market. Improvement programs in the Swedish operation is progressing according to plan, and the workforce reduction initiated in Q3 has been completed. Reduced working capital combined with good profit contributed to a solid cash flow from operation in Q4, and cash conversion represent 128%. Hydropower's EBITDA increased from NOK 85 million to NOK 97 million in fourth quarter this year. The result was positively affected by a final cash settlement related to termination of a power contract in Q4. Spot prices somewhat higher compared to same period last year, but production was down 110 gigawatt hour in the quarter. At the end of the year, the reservoir levels are somewhat higher than normal.
Jotun has not released figures for the last four months, but have another good year in 2013 with both top line and profit growth. Been growth in all segments except Marine, where the global decline in shipbuilding activity led to a decreased demand and turnover. Margin has been improved, largely due to stable raw material prices and good product mix management. Geographically, Europe, Middle East were the primary contributors to the company's positive profit performance. In line with the company's growth strategy, Jotun has continued this comprehensive investment program during the year, and the most important investments are the construction of new factories in Russia, Brazil, and China. Jotun has also continued the geographical expansion and has entered into several new markets, such as Myanmar, Bangladesh, and Morocco. The joint venture with Hydro, Sapa.
Q4 is a seasonally weak quarter for Sapa, but total volume was somewhat higher compared to fourth quarter last year. Positive trend continued in North America, supported by growth in the automotive and building segments. Europe, however, demand for extruded products was stable while the building and construction industry remained very weak, especially in Southern Europe. Underlying EBIT for the Sapa Group for the fourth quarter reflects the seasonality and charges related to impairment of inventories and accounts receivables. Sapa's restructuring agenda is progressing according to plan, and reported EBIT is affected by related restructuring charges. Orkla's shares of Sapa net profit after tax for Q4 was minus NOK 312 million. Net debt for Sapa at the end of the year was NOK 1.8 billion, and Sapa has a committed five-year credit facility of EUR 700 million. I hand it over to Atle Vidar.
Good morning. I will present the performance of the business areas in Orkla's Branded Consumer Goods in some more detail. 2013 was a year of transformation and integration in Orkla Foods. Both the mergers of Procordia and Abba Seafood in April and the integration of the three Rieber & Søn business units into the Orkla Foods units has been executed firmly and in accordance with plans. This is now completed from a legal and governance perspective. In the fourth quarter, Orkla Foods reported an EBITA of NOK 422 million, an increase of NOK 54 million from the corresponding quarter the year before. The increase comes primarily from the consolidation of the Rieber & Søn companies. The operating margin was 14.6% in the quarter. The drop from 2012 is mainly explained by the consolidation of Rieber & Søn entities, but it also reflects a weaker performance in Norway.
Orkla Foods posted fourth quarter sales over NOK 2.9 billion. The underlying sales growth continued to be weak in the fourth quarter and was down 6%. The decline is primarily related to Norway, where continued weak contribution from product launches and significant loading differences between the quarters, especially in the Rieber portfolio, explains the weak performance. I will comment more on Rieber & Søn on the next picture. The integration processes in Sweden have been executed with great success. In the fourth quarter, market share remained strong and both revenues and EBITA increased in the quarter. The synergies from the mergers in Sweden are on track. The businesses in both Finland and the Baltic states also have improved in performance in the quarter with top line and EBITA growth. For Orkla Foods, the market share overall are somewhat weaker in the quarter, this is especially related to Norway and Denmark.
As previously announced, the cost synergy potential from the Rieber & Søn acquisition is NOK 250 million to NOK 300 million when running at full speed in the end of 2015. Currently, as we enter 2014, the run rate on the cost synergies are somewhat ahead of the targeted NOK 150 million, the integration generated positive cost effects in the fourth quarter of NOK 30 million to NOK 35 million. The main challenge continues to be the sales development in the Rieber & Søn portfolio. In the fourth quarter, the Rieber & Søn brands reported a decline in revenues of 12.6% from Q4 2012. This number is significantly impacted by having loading to customers in Q4 2012. If we measure the sales to consumers from the grocery outlets, the decline in the fourth quarter was 3% compared to the 12.6% in the fourth quarter.
This 3% drop is a clear improvement from the trend in the previous quarters. These are some of the new product launches being introduced in the market now in 2014. We have the Grandiosa Helmax in two taste variants, which is a new experience to consumer as there's cheese baked into the crust of the pizza, which gives an extra juicy and crispy experience. We also take out the Abba Middagsklart concept, the fish sauce concept, into Denmark and Finland under the names NemFisk and AteriaValmis . We continue to build on the success of the chilled soups launched in Sweden under the Felix brand last year and now launches pasta dishes under the same concept. As you can see, Toro Jægergryte for the Norwegian is an old favorite, now launched in the bigger XL pack as a chilled ready meal and with the Nora lingonberry jam inside.
I also have to mention the Stabburet Kokkeklar cauliflower soup, which is a genuine taste expertise synergy where the expertise in Rieber & Søn and Stabburet has combined to make a delicious soup. We move on to confectionery and snacks. For confectionery and snacks, 2013 was a year of transformation and integration as the seven operating companies in Norway, Sweden, and Finland were merged into three companies. The area reported an EBITDA in the fourth quarter of NOK 234 million, compared with NOK 255 million in the corresponding quarter in 2012. The revenues were posted at NOK 1.4 billion. The organic growth rate continues to be the main challenge and was negative by 2.7% in the quarter, which is in line with the development for the previous quarters in 2013. The markets across the Nordics continue to be challenging, with lower volume growth than previously and strong competition.
The market shares overall for this area are somewhat lower compared to 2012. There is a comprehensive turnaround program going on in Orkla Confectionery & Snacks, addressing both sales, cost and capital efficiency, and organization. The program is and will be implemented step by step and must be expected to take some time. In the fourth quarter, we saw sales growth in Denmark and the Baltics, and also in Sweden there was a better development compared to Q4 2012. Here are some of the strong launches coming out in the first quarter 2014 from confectionery and snacks. We see launches under the biggest brands like the OLW Cheez Starz and the Laban line extension. We also see brands taking cross-categories as the Polly chocolate with delicious peanuts inside and the Sommerfugl chocolate with caramel inside.
We also have a healthy profile with nuts without salt and the rye-based snacks launched in Denmark first called Strø. We move to home and personal. Posted sales just below NOK 1.3 billion in the fourth quarter, along with an EBITDA of NOK 194 million. The EBITDA was up NOK 8 million in the quarter, driven primarily by the realization of synergies from the Jordan acquisition and a generally strong performance by Lilleborg. Organic sales growth was slightly on the positive side in the quarter, while as for the year in total, the organic growth was down 1.5%. Lilleborg delivered a satisfactory performance both in the quarter and for the year in total, to a large extent related to the fact that the integration of Jordan Personal & Home Care has been accomplished successfully. Pierre Robert saw weaker sales at the end than expected.
This was due to that in Norway, we had a mild winter in that season with lower sales of wool collection and less campaigns. On the other hand, we see sales in Sweden for Pierre Robert improving due to gradually improved distribution in that market. Also for Axellus, Q4 came in somewhat weaker than expected. Positive effects in 2013 in general from acquired businesses, while the underlying sales and result landed approximately on par with last year. We also saw that the sales to export markets were somewhat lower, while the home markets were somewhat higher than last year. The market shares overall were quite stable in the fourth quarter, with a slightly positive trend in the total compared to the same period last year. The EBITDA margin was on par with last year. The acquisition of Jordan initially lowered and diluted the operating margin for home and personal.
With the realized cost synergies, we can see that margins are now back to the satisfactory level of 15.3% in the quarter. Some innovations here as well. We see that Axellus launches a series of new products with the branding Nutrilett Protein Shapes, which is based on health trends with strongly increased focus on protein content across several food categories. We see that Pierre Robert has had great success with the sports collection and launches new and improved products within this category. Define comes with a new shampoo and conditioner called the Define Keratin Shampoo and Conditioner. We also see a colorful limited edition under the Sunsilk brand. We move on to Orkla International, posted sales of NOK 916 million in the quarter. The increase from Q4 2012 was due to the consolidation of the Rieber & Søn companies in Czech Republic, Slovakia, Poland and Russia.
The weaker performance both on the top line and on the EBITDA is caused by a negative development for Orkla Brands Russia. As Mr. Korsvold announced earlier, a structured process for divesting this business is now initiated. India posted a sales growth of 13% quarter. This is somewhat lower growth rate than in the previous quarters, and it is still relatively weak macroeconomic conditions in India. Still satisfactory growth. In the quarter, Felix Austria continued a positive development from previous quarters. The Czech operation, Vitana, that we acquired from Rieber, is facing a tough business climate in the retail market with increased promotional pressure, resulting in a weaker performance in the quarter. Orkla Food Ingredients continued the good progress from previous quarters. They posted sales of NOK 1.7 billion, and the organic growth was positive with 2.2%. Many companies contribute to this strong performance.
We can mention a stronger contract situation in Norway, a good increase for margarine and butter blends in Denmark, and a good performance for improvers and mixes in the Netherlands. Overall, the Orkla Food Ingredients companies have increased their market shares in the quarter. The EBITDA for Orkla Food Ingredients was up NOK 21 million in the quarter, driven by profitable volume growth and many improvement initiatives in several markets. The key priorities for 2014 for Branded Consumer Goods will be, first and foremost, to grow the top line. We are confident that we have stronger launch programs in 2014 than we had last year, and the product launches this quarter have received overall strong listings in retail. We see more cross-market initiatives than earlier, and we will improve execution in-store. We also see somewhat improved positions with the trade in 2014.
Orkla will then continue to realize and extract more cost synergies from the restructuring conducted during 2013. The focus in 2013 was mainly on realizing the synergies in administrative functions and in purchasing. In 2014, this program will continue, and we will continue to drive purchasing efficiency but now start more heavy programs on manufacturing productivity and footprint, and also actions to increase competitiveness and cost efficiency in our strong field sales forces will be initiated. I guess Q&A is next. Thank you.
Well, Danske Bank, Marcus. First question to Mr. Korsvold. Could you please comment on the view of the stake in Jotun in light of the sales process we see initiated in Russia? Please also comment on your thoughts on the rest of the non-core assets.
As you know, we have defined a three-year transition period. Jotun is not considered to be part of the branded consumer goods business. For the time being, Jotun is what I would define as. We have a whole strategy on Jotun, and if and when we are going to do something with our ownership position, that is something that has to happen in cooperation with Jotun and the Jotun shareholders.
Could you please also put some comments on Gränges? Is there any change in your thoughts on holding Gränges?
Well, as you know, we had a structure process that we stopped. I think what you see is a significant improvement in performance and a significant cash generation. I think in the short-term perspective, we feel that justifies our decision to hold the process. There is no change in our position on Gränges. It's a non-core business.
Okay. Thank you. Another question relating to Sapa joint venture. I can see that the underlying EBIT is unfortunately sliding down still. I understand that there's been restructuring programs also, but in your view, is the restructuring efforts enough with the current market outlook? Do you see further restructuring efforts needed if we see the market continuing as of now?
I would say that it's still very early days at Sapa. I think the financial results and the earn results that you see today reflects very much the fact that we are merging two independent units. There is a lot of one-time accounting effects reflected in results. We only closed that transaction in September. As you know, we have committed to a three-year holding period simply because I think we all realize that that integration process, and in particular, the synergies that we expect to extract from the merger will take time. I would say that platform is in place, but we are still at a very early stage, in a very early phase of the implementation of the restructuring process in Sapa.
Okay, thanks. The last question for Atle Vidar regarding Orkla Foods. We see that the organic growth is down 6%, and a lot of it relates to the Rieber & Søn. Could you please comment a bit further on why the integration process has impacted sales that negatively, and actually what you're doing to get organic growth up?
As I said, the performance of the Rieber & Søn plan was from our side to the retailer's wholesale operation. That was down 12.6%, while the sales to consumers from the retail outlets was down 3% in the quarter, which is a positive development in the trend. Of course, the long waiting period before we got the approval from the competition authorities has put a toll on the organization, and creates some standstill in the organization. That is probably the main reason why we see this sales drop. What we are doing, I try to present it to you, we have a stronger program this year, and we also put a lot of resources behind the main Rieber brands as Toro, for instance, during the year, as you will see.
Preben Rasch-Olsen, Carnegie. Well, I guess you're done with all your discussions with retailers now, and you have presented all the new products. You feel confident that we should see organic growth in Norway for 2014?
I feel confident we will see a better trend, yes.
Just a last question regarding the sales process of the assets in Russia. Are you able to comment on the timing aspect of this? Do you expect it to maybe be completed in the next six months?
Wise from experience, I think that committing to timelines is not very wise. It's a process in place. Obviously, a process such as this is complicated, and I think that good execution is better than speed.
Okay. Thanks. Regarding other M&A activities, any comments on changes in your views on the targets that you're looking at?
The picture is the same. We will continue to do add-ons if they represent significant strengths in the portfolio, but no transformational acquisitions. The focus is on improving operations. As we see from the strategic priorities, that is the main priority.
Thanks.
We got a few questions from the net. Markus Iwar from Goldman Sachs. Who would be the natural buyer of the Russian asset?
Well, from what we can see, there are both Russian and international interest in that asset.
Markus also would like to know what the organic growth was for Orkla Foods, excluding Rieber.
I don't have that exact figure, but the overall organic growth was down 6% in the quarter as presented.
One more question from Petter Nystrøm, ABG. What should we expect on marketing spend in 2014 versus 2013?
In general, I would say we expect that to be on the same level, maybe slightly higher.
It's your last chance to ask some intricate questions. Okay. Thank you.