Orkla ASA: Growth for branded consumer goods in Q3-2021

Oslo / NO. (ok) Operating revenues of Norway’s Orkla ASA increased by 10.3 percent to NOK 13,139 million in the third quarter of 2021. Operating profit Ebit (adjusted) increased by 9.0 percent to NOK 1,712 million.

The Branded Consumer Goods business achieved organic sales growth of 4.1 percent in the quarter. The easing of coronavirus restrictions and higher demand contributed to improvement in the Out of Home channel, and sales to the grocery sector remained good.

Orkla Food Ingredients saw organic growth of 7.3 percent in turnover, while Orkla Foods and Orkla Care achieved an improvement of 4.7 percent and 3.8 percent, respectively. Orkla Confectionery + Snacks saw organic growth up by 2.2 percent, while Orkla Consumer Investments experienced a decline of 1.7 percent, due to extraordinarily high sales of painting tools and equipment in the third quarter of 2020.

«We are pleased to have delivered good organic growth in the third quarter against strong comparables from 2020. Four out of five business areas saw improvement, and we had volume growth in several sales channels. I am particularly satisfied that we are achieving good growth in our strategic growth areas: Plant-based, Out of Home and Health,» says Orkla President and CEO Jaan Ivar Semlitsch.

«Despite good top-line growth, profit growth was limited in the quarter. The coronavirus pandemic has contributed to bottlenecks and global value chain disruptions. This situation, combined with increased demand, is resulting in considerable increases in raw material, packaging, transport and energy costs for us,» he adds.

Operating profit Ebit (adjusted) for Branded Consumer Goods, including Headquarters, increased by 3.1 percent to NOK 1,619 million in the third quarter. Structural growth is the primary driver of this growth compared with the same period of 2020. So far this year, Orkla has acquired companies for NOK 6.9 billion. The biggest acquisitions are the health and wellness company NutraQ, the Indian spice company Eastern Condiments (67.8 percent interest) and the Netherlands pizza chain New York Pizza (75 percent interest).

In October, New York Pizza purchased the two chains Flying Pizza and Pizza Planet, which have a total of 73 franchised outlets in Germany. These acquisitions were made one month after the purchase of the German pizza chain Stückwerk. As a result of these purchases, New York Pizza has 342 franchised outlets, 234 in the Netherlands, 107 in Germany and one in Belgium. Orkla also owns Kotipizza, a leading pizza chain with a total of 293 outlets in Finland, which means that 635 franchised outlets are now part of Orkla.

Operating profit Ebit (adjusted) for Hydro Power was NOK 89 million in the third quarter of 2021, compared with NOK -3 million year over year. The improvement in profit is a result of substantially higher market prices for power due to factors such as little precipitation, low reservoir levels and intermittent wind power. Power prices were also affected by the high levels of coal and gas prices on the continent, and the high price of carbon dioxide.

Profit from associates was NOK 164 million in the third quarter, compared with NOK 314 million in the same quarter of 2020. The decline was related to Jotun’s lower contribution to profit due to the considerably higher prices of raw materials and inputs and increased freight rates.

Group profit before tax amounted to NOK 1,747 million, a year-over-year improvement of 2.4 percent. Adjusted earnings per share in the third quarter were NOK 1.37, a decline of 6 percent from the previous year. Adjusted year-to-date earnings per share were NOK 3.77, an improvement of 4 percent from last year.

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