Oslo / NO. (ok) Norway’s Orkla ASA achieved operating profit (Ebit adjusted) of NOK 1,408 million in the fourth quarter of 2018, a decline of 2.4 percent.
Fourth-quarter operating revenues rose 1.2 percent to NOK 10,983 million. The largest business area, Orkla Foods, posted organic sales growth, but this was offset by a decline in the other business areas.
Destocking by wholesalers in Poland contributed to weaker results for Orkla Care. The Norwegian sugar tax was reduced as of 1 January 2019, resulting in short-term destocking by the Norwegian grocery chains and lower fourth-quarter profit for Orkla Confectionery + Snacks.
«Towards the end of the year, some companies faced major challenges, but a majority of the companies achieved growth in revenues and profit. Ongoing cost reduction programmes are on track. The reversal of the sugar tax in Norway gave a positive start to the new year,» says Orkla President and CEO Peter A. Ruzicka.
Through the acquisition of the Finnish restaurant chain Kotipizza, Orkla has attained a leading position in the Finnish pizza market. As of 5 February 2019, Orkla now owns 99.29 percent of all shares and votes in the Finnish company.
Orkla Foods Danmark entered into an agreement in the fourth quarter to purchase Easyfood, a Danish manufacturer of bake-off bakery goods. Orkla Foods Danmark also purchased the Pama brand, the Danish market leader in the porridge rice segment.
In the fourth quarter, Orkla Food Ingredients completed its acquisition of the British chocolate and caramel manufacturer, County Confectionery Ltd, which primarily serves industrial customers.
Hydro Power reported a 28 percent increase in Ebit (adjusted), which amounted to NOK 132 million. The rise is due to higher power prices than in 2017.
Profit from associates totalled NOK -43 million, compared with NOK -78 million in the fourth quarter of 2017. Jotun saw improvement in the fourth quarter, driven by higher sales in Decorative Paints and Protective Coatings. Sales in Marine Coatings are still affected by the cyclical downturn in the shipping industry.
The Group’s other income and expenses totalled NOK -296 million in the fourth quarter, largely as a result of supply chain restructuring and acquisitions. In Norway, there were workforce reductions in connection with the phasing out of Orkla’s merchandising function, while an improvement programme has been initiated in the UK painting tool company, Harris. Comparative figures in 2017 were particularly low due to the gain on the sale of the Danish company K-Salat.
Orkla’s profit before tax amounted to NOK 1,017 million in the fourth quarter, down 22 percent.
Earnings per share from continuing operations amounted to NOK 3.24, compared with NOK 3.46 in 2017.
For the full year, Orkla’s operating revenues increased by 3 percent to NOK 40,837 million. Operating profit (Ebit adjusted) rose by 3 percent in 2018, to NOK 4,777 million. At year end, the Group had 18,510 employees.
Orkla’s Board of Directors intends to propose payment of a dividend of NOK 2,60 for the 2018 financial year.