Orkla reports strong profit growth

Orkla’s operating profit (EBIT adj.) increased by 13.5% to NOK 1,297 million in the first quarter. Operating profit for Branded Consumer Goods, including Headquarters, rose by 9.5%.

Group operating revenues amounted to NOK 11,503 million, on a par with the first quarter of 2020. Organic growth for Branded Consumer Goods was 0.5%, compared with a very good first quarter last year.

“The start of 2021 for Orkla’s Branded Consumer Goods business has been very positive. We achieved strong profit improvement and organic growth, despite facing strong comparables as a result of consumer stockpiling of food and cleaning products in the corresponding period of 2020. The first quarter was also impacted by the COVID-19 pandemic. There was good market growth in the grocery sector, but activity was still lower in the Out of Home sector. The outlook in most of our home markets is now brighter. Now that vaccination is underway, we can look forward to further easing of infection control restrictions,” says Orkla President and CEO Jaan Ivar Semlitsch.

“Acquisitions will continue to be an important part of Orkla’s growth strategy, and in the first quarter we made several purchases to strengthen Orkla’s position in selected categories, channels and geographies. I am particularly pleased that the acquisition of the Indian company Eastern Condiments has now been completed. Furthermore, by acquiring NutraQ we will take a new and important step into a growing health and wellness market. The acquisition will bring us a new sales channel and exciting growth opportunities,” Mr Semlitsch says.

Orkla Consumer Investments saw particularly good profit improvement in the first quarter, largely related to strong top-line growth in the painting equipment market. Orkla Confectionery & Snacks made progress, primarily due to high market growth in the grocery sector. Orkla Food Ingredients also had positive profit growth, driven by acquisitions and lower fixed costs. Profit growth for Orkla Care was virtually flat. Orkla Foods experienced a decline in profit, mainly due to the substantial consumer stockpiling that took place in March 2020.

Profit from associates increased by 55% to NOK 331 million, chiefly due to good sales growth and cost control at Jotun. Sales increased in Decorative Paints, especially in the Middle East, South East Asia and Scandinavia. Sales growth in Powder Coatings and Protective Coatings was also encouraging. In Marine Coatings, however, sales continued to decline as a result of lower activity in the newbuilding and ship maintenance markets.

Hydro Power posted operating profit of NOK 86 million in the first quarter, compared with NOK 39 million, year over year. The increase is due to substantially higher power prices than in the same quarter of 2020 as a result of normalisation of power transfer capacity and the resource situation.

The Group’s other income and expenses amounted to NOK -143 million in the first quarter. A total of NOK 72 million was expensed in the period in connection with the ongoing ERP project.

Orkla’s pre-tax profit increased by 24% to NOK 1,434 million. Earnings per share increased by 25% to NOK 1.15. Adjusted earnings per share rose 21% to NOK 1.27.

In January, Orkla Care, through its wholly-owned Swedish subsidiary Health and Sports Nutrition Group AB (“HSNG”), completed its purchase of 100% of the shares in Proteinfabrikken AS. Besides its own products, Proteinfabrikken sells and distributes a number of other sports nutrition, food and fitness equipment brands, with most of the sales going to Norway.

Orkla Health entered into an agreement in February to purchase 100% of the shares in NutraQ 2 AS (“NutraQ”), a leading supplier of subscription-based health and beauty products in the Nordic region. The purchase price for NutraQ is NOK 3.1 billion at enterprise value. This acquisition offers Orkla the possibility of strengthening its position in a growing health and wellness market and will bring Orkla Health new competence and a new sales channel, and will expand its international scope of opportunity. The agreement is subject to the approval of relevant competition authorities.

In March, Orkla completed the purchase of 67.82% of the shares in the Indian company Eastern Condiments Private Limited (“Eastern”). The purchase price valued Eastern at a total of approximately NOK 2.4 billion at enterprise value. Eastern will be merged into MTR Foods, and Orkla will have an ownership stake of 90.01 per cent. With this acquisition, Orkla has become a significant employer in India and now has more than 4,000 employees in the country. The new entity will consist of nine factories in six states.

In March, Orkla also announced its acquisition of 80% of the shares in the Finnish company Seagood Oy Fort Deli (“Fort Deli”). Fort Deli holds a strong position in the Finnish HoReCa market and is an established supplier of frozen products, sauces and condiments in Finland. This purchase strengthens Orkla’s position in one of its home markets and increases its exposure to the food service and Out of Home market. In the same month, Orkla acquired the business of the Polish sales and distribution company Ambasador92, a leading player in the sale and distribution of bakery and confectionery products.

Orkla ASA
Oslo, 29 April 2021
 

Ref.:

Group Director Corporate Communications and Corporate Affairs
Håkon Mageli, mob.: +47 928 45 828

 

SVP Investor Relations
Kari Lindtvedt, mob.:+47 950 75 114
 

An Excel spreadsheet showing key figures may be found at https://investors.orkla.com/.

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act