Orkla ASA: announces profit improvement in Q1-2023

Oslo / NO. (ok) Norway’s Orkla ASA had a solid improvement in both profit and revenues in the first quarter. Profit before tax amounted to NOK 1.7 billion, a year-over-year increase of 12 percent. Operating profit Ebit (adjusted) rose by 5 percent to NOK 1.6 billion. The group’s first-quarter operating revenues totalled NOK 16.2 billion, equivalent to 22 percent growth.

Orkla’s Branded Consumer Goods business increased its operating revenues by 23 percent to NOK 15.8 billion in the first quarter. There was 13 percent organic turnover growth, driven by price increases to compensate for higher costs in the value chain.

Branded Consumer Goods, including Headquarters, increased its operating profit Ebit (adjusted) by 14 percent to NOK 1.35 billion in the first quarter. Five out of six business areas showed profit growth. High costs related to the start-up of a new biscuit factory weighed on profit for Orkla Confectionery and Snacks.

Orkla’s profit from associates and joint ventures rose by 77 percent to NOK 422 million in the first quarter. The entire increase can be linked to Jotun, in which Orkla has a 42.7 percent interest. Jotun increased its operating revenues by 24 percent to NOK 7.8 billion. Sales improvement was particularly strong in the Decorative, Marine and Protective segments. Operating profit EbitA rose by 81 percent to NOK 1.6 billion, driven by improved gross margin, volume growth and good cost control.

Hydro Power’s operating profit Ebit (adjusted) amounted to NOK 255 million in the first quarter, compared with NOK 345 million in the same quarter of 2022. The decline is chiefly due to lower power prices, year over year, and the effects of a new windfall tax (high-price contribution) on power production that was introduced in September 2022.

Adjusted earnings per share were NOK 1.32 for the first quarter, an increase of 6 percent.

«I am pleased with the first quarter results. Orkla can point to high organic growth and profit improvement. Jotun and Orkla Food Ingredients have delivered a particularly strong performance. Increased inflation and rising interest rates have reduced consumer purchasing power in most of our markets, in turn putting pressure on our sales volumes. Even though there is great uncertainty as regards future economic trends, we have strong brands and robust value chains. I therefore look forward with cautious optimism. Orkla will continue to increase its investments in brand-building, while continuously seeking opportunities to improve costs,» says Orkla President and CEO Nils K. Selte.

«On 01 March we implemented our new business model with 12 autonomous portfolio companies. Orkla has become an industrial investment company, with focus on strong brands and consumer-oriented companies. We are making good progress on a comprehensive strategy process to ensure that the potential in each company is fully exploited. The composition of most of the Boards of Directors of the various portfolio companies has now been determined. Today, I am happy to announce the new composition of Orkla Foods Europe’s Board of Directors, which now includes solid external expertise,» he adds.

Xavier Belison and Kjersti Hobøl have been appointed as chairman and member, respectively, of the Board of Directors of Orkla Foods Europe. Belison, who is a French citizen, has top leader experience from Continental Foods, Heineken and Mars. At present, he is Chairman of the Board of Directors of Groupe Panzani and Partner in Pet Food. Hobøl is CEO of Nille, and has previous top leader experience from Kid, DNB and Princess. She is currently member of the Board of Directors of Elektroimportøren, Aspelin Ramm, Byggmax and XXL Sport og Villmark.

In addition to Belison and Hobøl, Orkla Foods Europe’s Board of Directors will consist of Atle Vidar Nagel Johansen, Øyvind Torpp and Hege Holter Brekke, all of whom are EVPs and Investment Executives at Orkla ASA. There will also be two employee representatives, who have yet to be chosen. Orkla President and CEO Nils K. Selte and CFO Harald Ullevoldsæter will sit on the Board as observers.

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