Norwegian food conglomerate Orkla has posted a 7% increase in operating profit in the third quarter of its financial year, to NOK 1.44 million (€140 million), boosted by recent acquisitions.
The group has been active on the M&A front in the quarter, with its Orkla Confectionery & Snacks arm purchasing 20% of Icelandic confectionery business Nói Siríus; Orkla Food Ingredients purchasing Dutch ingredients company Vamo and Orkla House Care agreeing to take over the remaining 50% of the shares in joint venture Anza Verimex Holding.
Operating Revenues
Operating revenues at the business rose by 7%, to NOK 10.89 billion (€1.07 billion), while its branded consumer goods business saw turnover growth of 1.5% and a 6.2% increase in operating profits of 6.2%.
Commenting on the group's performance, Orkla President and CEO Jaan Ivar Semlitsch said, "Orkla’s Branded Consumer Goods business has had a satisfactory quarter, with both top-line and bottom-line growth. All four business areas delivered organic growth in the quarter.
"It is positive to see that after a relatively strong third quarter last year, we are still able to deliver profit growth, although performances varied from one company to another. Three out of four business areas reported improved profit."
Orkla Care was the only division to post a decline in operating profit, with the group citing 'challenges in the health segment' for the drop.
Improve Competitiveness
Semlitsch added that the business has initiated a project to strengthen Orkla's competitiveness, and "ensure that we have the optimal organisational structure for increasing organic growth and reducing complexity".
As part of this, a new corporate structure will be introduced in the business as of 1 November, whereby parts of Orkla Care will be incorporated into a new area of the business, along with Kotipizza and Gorm’s.
"The purpose of this change includes strengthening the entities’ operational focus, and grouping the companies that have a somewhat different profile than Orkla’s other business areas," said Semlitsch.
The group estimates that it will be able to reduce annual costs at its headquarters by NOK 150 million to NOK 200 million.
Adjusted earnings per share increased by 11% to NOK 1.18 in the period.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
