Good morning, and welcome to the presentation of Orkla's third quarter results. My name is Annie Bersagel, and I'm the Head of Investor Relations and Communications.

We're going to begin with a presentation from our President and CEO, Nils Selte, who will give an overview of the quarter. After that, our CFO, Arve Regland, will present more detail on the financials and the individual portfolio companies.

Nils will conclude with some closing remarks. Just a reminder on the procedure for the Q&A, we are going to have a video Q&A first with analysts, we're going to take those questions first, but you're welcome to submit questions via the web at any time, and we will take those afterwards.

With that out of the way, let me turn it over to you, Nils.

Thank you, Annie. Good morning, everyone.

As Annie said, I will go through the highlights of the quarter, and then Arve will provide more details after that. I'm pleased to report a strong quarter for Orkla in a challenging geopolitical environment.

While performance has varied throughout the year, the overall picture is positive, with a year-to-date volume growth of 1.5%. Across the portfolio, we are seeing good progress in profitability, and the companies are navigating a challenging input cost environment well.

Let's look into some of the details for the third quarter. Organic growth was 3.1%, with a broad-based positive contribution from a majority of the portfolio companies.

Underlying EBIT adjusted increased by 8.1%-- 8.1%. This positive development also contributed to a 4.9% increase in adjusted earnings per share, which reached NOK 1.94.

A significant part of the organic growth came from volume/mix, which contributed 2.7% this quarter. Most of the portfolio companies had positive volume growth, and the growth was particularly strong in Orkla Snacks, with a volume/mix growth of 11.2%, primarily led by the confectionery category.

Orkla Home & Personal Care also had double-digit volume growth this quarter. Despite a challenging environment, Jotun continued to deliver underlying operating profit growth.

I'm pleased to see that 8 of 9 consolidated portfolio companies delivered underlying EBIT adjusted improvements in the quarter. In the overall picture, the volume/mix was a key driver of EBIT adjusted growth across the consolidated companies.

Among those, Orkla Snacks again stands out positively, with volume-driven underlying EBIT growth of 16%. The rolling 12-month EBIT margin improves slightly from the last quarter.

Input price developments varied across the portfolio. Costs for marine products, meat, and packaging increased versus last year.

At the same time, costs for other input factors such as cocoa and dairy decreased. The outlook for prices remains fragmented across the different input factors.

We expect prices to rise modestly in 2027. However, the outlook remains uncertain.

As always, we continuously monitor the situation closely. This is our last quarterly presentation before our Capital Markets Day on December the 1st.

We are on track to finish 2026 within mid to upper range of our targets of 8 to 10% annual growth in underlying EBIT adjusted. The EBIT margin is also tracking within the target range.

Return on capital employed has improved significantly over the strategy period, but we do not expect to reach 13%. With that, I hand it over to Arve.

Thank you, Nils. Good morning.

Turning first to the income statement, well, make some comments to some of the items. Operating revenues reported operating revenues declined by 2% this quarter, reflecting negative currency translation effects of 6.4%.

Reported EBIT adjusted increased 2%, but also reduced by currency effects. Other income and expenses amounted to a net cost of 490 million.

This relates mainly to write-downs of goodwill and trademarks in Healthspan within Orkla Health and loss on sale of Eisbær Union in Orkla Food Ingredients. Under discontinued operations, we recorded a gain from reversal of provisions related to the sale of Sapa back in 2017.

As Nils mentioned, earnings per share adjusted increased by 4.9% this quarter. Cash flow from operations was 4.4 billion year-to-date, approximately 400 million lower than last year.

About half of the decline is was due to working capital, and this reflects both higher receivables following sales growth and a temporary inventory build-up ahead of an ERP implementation in Orkla Foods Norway. Cash flow before capital allocation was 3.9 billion year-to-date.

Turning to capital allocation and leverage, during the quarter, share buybacks were approximately 1 billion, and this includes both the completion of the 4 billion share buy-- share buyback program announced in November last year, as well as the new 4 billion share buyback program that we announced in September. Expansion investments increased with 260 million this quarter, mainly within Orkla Snacks and Orkla Food Ingredients.

The net cash flow effect from acquisitions and divestments during the quarter amounted to about 2.9 billion, and the largest element was the acquisition of the European Candy Group. Leverage was 2.1 times EBITDA at the end of the quarter.

Let's move to the portfolio companies with some more details. As usual, I will start with Jotun, where the underlying revenue grew 13% in the third quarter across segments and markets, driven by both volume and price.

The gross margins declined because price increases did not fully offset the higher raw material costs. On an underlying basis, operating profit rose 1.3%.

Reported operating profit fell 5.1%, reflecting negative currency translation effects. Orkla's share of profit from Jotun was down 6.6% to 563 million.

Jotun's outlook remains uncertain due to the conflict in the Middle East. Demand in war-affected markets has been resilient, but the conflict creates uncertainty around supply, logistics, and business conditions.

Margin pressure is expected to continue in the coming quarters. In Orkla Foods, organic revenue grew 2.4%, of which 1.5% came from volume/mix.

Growth platforms delivered volume/mix growth of 5.3%, with growth in all markets. There was also a positive effect from the comparison to ERP challenges in the Czech Republic last year.

Input costs increased slightly, with higher increases for mackerel and packaging. Underlying EBIT adjusted increased 7.6%, driven by revenue growth and continued cost discipline.

Organic growth in Orkla Snacks was 5.6%, and volume/mix contributed a record-high 11%. Organic growth was partly offset by lower prices, mainly for chocolate products.

The confectionery, snacks, and biscuit categories all delivered volume/mix growth. Confectionery was the largest contributor, with four main drivers.

Bubs continued to grow in the US, across the Nordics, with further expansion in Finland and launches in Estonia and Latvia. Secondly, Smash!

also continued to grow, including from its launch in Latvia. Thirdly, chocolate volumes continued to recover, supported by lower prices.

Lastly, earlier Christmas sales than last year had an additional positive effect on volumes in the third quarter. Underlying EBIT adjusted increased by 16%, driven by higher volumes, but partly offset by higher advertising spend and SG&A costs.

Organic growth in Orkla Home and Personal Care was 10%, almost entirely from volume/mix. Volumes increased in Norway, Sweden, and contract manufacturing, supported by more campaign activity.

Part of the growth reflects positive phasing effects that shifted sales into the third quarter, partly from the second quarter and partly from the fourth quarter. Underlying EBIT adjusted increased by 8.7%.

Orkla Food Ingredients had a more muted development, with organic revenue growth of 0.7%. Prices were lower, reflecting lower input costs in several markets and categories.

Volume/mix grew in bakery and sweet, but within plant-based, lower volumes and unfavorable mix effects contributed negatively to both overall volume/mix and EBIT development. Underlying adjusted EBIT declined by 2%.

Volume growth was more than offset by higher operating costs. As we said last quarter, Orkla Food Ingredients is taking steps to reduce its cost base, however, with limited effect this year.

Organic growth in Orkla Health was flat in the quarter. Price increases in most categories were offset by lower volume/mix.

Most of the decline came from food supplements, where price increases negatively impacted volumes. Oral health and functional personal care contributed positively to both revenue and EBIT growth.

Underlying EBIT adjusted increased 6.1%. Pricing and mix lifted the contribution margin, which more than offset higher operating costs.

As communicated earlier, we'll present more details about its strategy going forward. In Orkla India, organic growth was 19%, driven primarily by pricing to offset significant inflation in key raw materials.

Volume growth also contributed 2.9%. Government grants had a net positive delta of about 8 million in the quarter, and adjusted for this, organic growth was 18%.

Underlying EBIT adjusted growth was 7%, but flat when excluding the effect of the grants. Consumer sales in the European Pizza Company increased by 9.7% with the growth in all businesses.

Organic revenue declined by 1.9%, and as in the previous quarter, this is mainly due to lower third-party sales in Kotipizza's wholesale business. Underlying EBIT adjusted increased by 5.4%, supported by higher consumer sales and positive mix effects.

Both Orkla House Care and Health and Sports Nutrition Group continued to develop well in the quarter and contributed to Orkla's organic revenue growth and underlying EBIT growth. With that, I'll hand it back to Nils for the closing remarks.

Thank you, Arve. In 2023, I set out three strategic priorities: drive organic value, reduce complexity, and carry out value-adding structural changes or transactions.

This quarter, our progress came from driving organic value, and I'm pleased to see the progress made. At the Capital Markets Day in a few weeks, I will review the full strategy period and present priorities and financial targets for the next four years.

With that, we are now ready to begin the Q&A.

Welcome back. We're now ready to begin our Q&A.

Please raise your hand if you have a question, and remember to unmute yourself and turn your camera on. It looks like our first question is from Ole-Martin Westgaard in DNB Carnegie.

Hi, and thanks for taking my questions. When it comes to the volume growth in this quarter, it was a clear improvement from the second quarter.

At the same time, you highlight that you benefited from some promotion phasing and spill forward from Q4, and Snacks also had some Christmas phasing. Can you quantify this effect on organic volume growth on the group level?

What should we expect on Q4 for that?

As Ole-Martin, we don't guide you for Q4, but what I said in the presentation was that if you look at the year-to-date numbers and the volume growth year-to-date, 1.5%, we think that that's a kind of a correct underlying our view on the underlying performance of the business at the moment.

Okay. Just on Snacks then to follow up on that, can you say anything about how much Bubs contributed to the organic growth in Snacks in Q3?

Sorry, we will not give you precise numbers of that. What we see in Bubs is that Bubs is growing across its markets.

It is growing healthily in the Nordics, in the Baltics, and also in the US. Good performance across the board in Bubs.

Okay. Then a question on the cost side.

Both in Food, Snacks, and Food Ingredients, you point to higher energy, packaging, freight, and raw material costs. Is this reflected in Q3 or is this something that would accelerate going into Q4?

It is reflected in the Q3 results as well. Given the picture we see today, we expect it also continue in Q4 in the coming quarters.

Obviously, it depends highly on the Middle East situation. As of now, it's a picture that we have seen and continue to see going forward.

Just a last one on the cost side. On the marketing spend in this quarter, how was that compared to Q3 last year?

Was it stable? What has the marketing spend been so far this year?

Slight increase this quarter, Ole-Martin, compared to last year.

Okay. Thank you.

I'll jump back in the queue. Thanks.

It looks like our next question is from Andrei Condrea in UBS.

Good morning, everyone, and thank you for taking my questions. If we could go back into the volume growth, particularly in Foods, obviously, we saw a nice step up there.

Can you speak to what's changed in your underlying markets and whether the performance was a bit flattered by any small one-offs beyond the Czech ERP implementation?

I think the volume in Foods was, as you said, affected by the ERP implementation in the Czechs, so that has been kind of addressed in the presentation. Otherwise, we see good growth in Sweden, as communicated.

We see weaker performance in Finland. What we see across the board and in all the markets that Orkla Foods are operating in, that we see that prioritized categories have a fantastic growth this quarter.

Otherwise, we are not precise on other items. We will not like to be more precise than that, actually, at the moment.

Understood. If we were to go to India, obviously pricing strong acceleration Q3 versus Q2, you mentioned that it's driven by input cost inflation.

If we look ahead, is there a potential for it to accelerate further? Conversely, is there a risk that price elasticities are going to increase?

This question applies really for the rest of the group as well, just seeing where we have inflation right now. Thank you.

Also,

if we look at India, through the third quarter, has experienced extreme high inflation on input prices, and that's also reflected in the numbers as well. I think as always, we don't guide precisely on different input factors.

It will give a lot of sense for you to watch the call that they have last or yesterday morning, probably you can enlighten you from that perspective. We are monitoring the situation closely together with the team in India.

I think what's encouraging is that they are able to take out price to the market on the increased input prices that we are experiencing at the moment. Anything to add to that, Arve?

No, but I think in general, the Indian business is affected by special categories of input costs, raw materials, that's more particular for that market, which is highly volatile. For the rest of the group, it's more in general, as we said for the last couple of quarters, freight, packaging, energy, that kind of costs that runs through all the portfolio companies and affects the general business in addition.

Understood. Thank you very much.

I'll jump back in the queue.

Looks like our next question is from Petter Nystrøm in ABG.

Thanks, Annie. Two questions for me, I take one at a time.

Starting with Jotun, you talk about margin pressure. You now say, raw material costs are starting to impact the margin, with more to come.

Does that mean that we should expect more margin pressure here into Q4 and '27? Thanks.

This is in line with what we have said the last couple of quarters, Petter, that input prices in the market started to increase highly after the Middle East conflict started earlier this year. We have expected this to gradually impact margins throughout the year.

We have seen this now in Q3, and we expect this picture to continue going forward. The magnitude of it, it's very hard to give a precise answer on, but it's according to what we have said, that the impact on the numbers has some lag effects.

We see it in Q3, expected to continue in the coming quarters as well.

Thanks. Perfect.

Then one final question on OFI and the turnaround there. Are you seeing any, let's say, call it early benefit from the cost measures?

When should we expect to see any meaningful impact? Is this a first half '27 effect, or is it more like in the second half of '27?

Thanks.

We have currently Marianne Kirkegaard as acting CEO in the company. She has initiated a lot of different kind of projects within Orkla Food Ingredients that is ongoing.

We don't expect to see anything this current year because this is longer processes. You should see gradually effects throughout 2027 from these initiatives.

Thanks, Nils. I'll jump back in the queue.

Next

from Håkon Fuglu in SEB.

Yes, morning, all. Thank you for taking my question.

Could you explain a bit around the stronger Norwegian krone, how does that sort of impact your EBIT margin and your input costs, and what should we think about the lag effects there? Thank you.

It has obviously positive effect in particular for the Norwegian business.

Compared to the negative currency translation effects, it is a much smaller impact. It has some positive effects on in particular the Norwegian business on the margin side.

We are not precise on how much that will be. Going forward, it's very hard to quantify the effects also going forward related to input cost.

Okay. Thank you.

That's all from me.

It looks like we have another question from Ole-Martin Westgaard.

Yes. I just wondered if you could provide some color on what you aim to guide for at your Capital Markets Day.

Are we still going to get an underlying EBIT growth? Will you do adjusted margin?

Is return on capital even with that kind of framework we should expect at this Capital Markets Day, or any color would be interesting.

I think you need to be patient there, Ole-Martin. It's just a few weeks until the Capital Markets Day, we will let you be curious and show up at the Capital Markets Day and get the answers there.

Okay. Thanks.

That seems to be the last question on the video. If I turn to the questions from the web, it looks like the first question is from Robin Scott: "Have quarterly payouts been discussed in Orkla to improve interest in the stock?"

It has been discussed, but this is up to the board to decide. I think this will be continuously discussed, and if we have something to announce in that regard, we will come back to you.

As of now, we will stick to yearly dividend.

The second question is from Birgitte Sverdrup-Oskår in Nordea: "How do you view the current count of portfolio companies? It is above the stated target range of 7 to 9.

Can we expect any divestments anytime soon?"

We are currently 10 portfolio companies in Orkla. I think we guided on the Capital Markets Day 7 to 9, that was an ambition.

Having said that, we will not guide the market on any M&A activities, and so we will just announce something when it has happened. From that perspective, we will not give any more comments on that.

That seems to be the last question here. Before we conclude, let me just remind you that we are holding our Capital Markets Day on the 1st of December, and we will report fourth quarter results on February 10th.

Thank you again for joining us, and please enjoy the rest of your day.