Orkla ASA: Improvement for Orkla's branded consumer goods business
In the second quarter of 2019, Orkla's branded consumer goods business achieved operating profit (EBIT adj.) of NOK 1,124 million, an improvement of 7%. Operating revenues rose 4% to NOK 10,051 million. Organic growth was 1.1%.
Three out of four business areas reported good growth in operating profit: Orkla Foods 13%, Orkla Confectionery & Snacks 12% and Orkla Food Ingredients 11%. Orkla Care saw a decline of 8%.
"Overall, we are satisfied with our second quarter performance. It is particularly gratifying to see the progress made by Orkla Foods and Orkla Confectionery & Snacks, which delivered broad-based growth at both top-line and bottom-line level. A shift towards more profitable sales gave Orkla Food Ingredients good growth in operating profit. These improvements were offset by Orkla Care's profit performance. Improvement initiatives in this business area will be a priority going forward," says Acting President and CEO Terje Andersen, who is also pleased that Jotun, in which Orkla has a 42.6% equity interest, continues to achieve strong profit growth.
During the quarter, Orkla Food Ingredients strengthened its position through the acquisition of a majority shareholding in the Greek company Stelios Kanakis, the UK caramel manufacturer Confection by Design, and the Swedish sales and distribution company Bo Risberg Import.
Orkla Foods Danmark completed its purchase of Easyfood, a Danish manufacturer of bake-off bakery goods. In addition, Orkla Foods Danmark sold the Glyngøre brand to Amanda Seafoods. The purpose of the sale was to reduce portfolio complexity and concentrate operations in priority growth areas.
Hydro Power's operating profit amounted to NOK 69 million, compared with NOK 97 million in the second quarter of 2018. The decline in profit is chiefly due to lower production volume.
Orkla Financial Investments achieved operating profit of NOK 10 million, compared with NOK 14 million year over year. Kotipizza Group reported good sales growth and profit improvement. Orkla has entered into an agreement with the City of Oslo on the sale of the property at Treschowsgate 16. The sale is conditional on the approval of the Oslo City Council, and is expected to be completed in the second half of 2019.
Profit from associates increased by 72% to NOK 181 million. Jotun's operating profit rose 45% in the first half. Last year's price increases combined with stable raw material prices had a positive effect. There was good growth in Protective and Marine Coatings. Following a period of difficult market conditions in the shipping and offshore industry, sales have started to pick up in these markets.
Orkla's overall operating revenues rose 5% to NOK 10,542 million in the second quarter. Operating profit (EBIT adj.) reached NOK 1,109 million, on a par with the second quarter of 2018.
Orkla's profit before tax increased by 8% to NOK 1,178 million in the second quarter of 2019. Year to date, earnings per share (adjusted) have increased by 12% to NOK 1.78.
Oslo, 12 July 2019
Group Director Corporate Communications and Corporate Affairs
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