Sales growth for Orkla

Orkla’s operating revenues increased by 15.4% in the first quarter to NOK 13,271 million. Operating profit EBIT (adj.) rose 18.1% to NOK 1,532 million. Group earnings before tax totalled NOK 1,544 million, an improvement of 7.7%.

In the first quarter, Orkla’s branded consumer goods business achieved 13.4% growth in operating revenues. Organic turnover growth was 7.7%.

The biggest improvement was posted by Orkla Food Ingredients and Orkla Foods, which had organic turnover growth of 21.1% and 7.2%, respectively. Both business areas were positively affected by the reopening of several markets after the strict infection control measures against the pandemic in the first quarter of 2021. Orkla Care had organic sales growth of 5.9%, while Orkla Confectionery & Snacks and Orkla Consumer Investments had an organic decline in turnover of -1.1% and -4.3%.

Branded Consumer Goods, including Headquarters, saw a -2.4% decline in operating profit EBIT (adj.) in the first quarter. A substantial part of the decline was due to the higher purchasing costs of raw materials and packaging, coupled with rising freight and energy prices.

“These are exceptional times, where the situation in Ukraine is affecting both the availability and prices of a number of raw materials and input factors. Furthermore, we are seeing a sharp surge in energy prices from an already high level. A protracted conflict is likely to generate even greater uncertainty and imbalance in the global flow of goods. It is crucial for Orkla to maintain its good delivery performance and deal with cost increases,” says Nils K. Selte, who was appointed new Orkla President and CEO on 11 April.

“The strategy communicated on Orkla’s Capital Markets Day on 23 November of last year remains unchanged. My role is to ensure that we accelerate our pace, growth and value creation. To achieve our goals, we will make adjustments in our current organisational model. Our ambition is for our companies to have sufficient autonomy and decision-making authority to ensure that they have the necessary flexibility and speed to act on the opportunities and changes that arise,” Mr Selte states.

“In the time to come, we will assess our portfolio of companies and products. We will be more open to divestments, partnerships or stock market listing of businesses if we find it expedient,” he adds.

Profit from Orkla’s associates and joint ventures totalled NOK 238 million in the first quarter, compared with NOK 331 million in the same period of 2021. The decline is due to Jotun’s lower contribution to profit as a result of substantially higher raw material prices. Jotun had year-over-year growth of 15% in first-quarter sales.

Hydro Power had operating profit EBIT (adj.) of NOK 345 million, compared with NOK 86 million in the same period of 2021. The increase is due to significantly higher power prices than in the first quarter of 2021.

The Group’s other income and expenses in the first quarter totalled NOK -162 million, compared with NOK -143 million year over year. Orkla has decided to end its ownership of its Russian business, Hamé Foods ZAO, which produces long shelf life food products in the Russian market. Write-downs and expenses related to this business amounted to NOK 116 million.

Adjusted earnings per share were NOK 1.24 for the quarter, a decline of 2% from the same period of 2021.

In January, through its subsidiary Orkla Health, Orkla Care completed an agreement to buy 95% of the shares in Vesterålen Marine Olje. The company has been an important supplier of raw materials for Möller’s Tran cod liver oil and is an acquisition of strategic importance for Orkla with respect to both the health area and sustainability.

In February, through its subsidiary Orkla Health, Orkla Care acquired 100% of the shares in Healthspan Group Limited, a leading supplier of dietary supplements in the UK market. Healthspan was established in 1996 and has since built up a strong brand and a broad range of dietary supplements and skin care products. With this transaction Orkla has strengthened its position in consumer health and online sales.

In April, Orkla Food Ingredients purchased 70% of the shares in the Belgian company Hadecoup. Orkla has thereby strengthened its position in the sale and distribution of ice cream ingredients and accessories in the Benelux region.