Norwegian food producer Orkla has reported that operating revenues rose 4% in the second quarter of the year, increasing to NOK 9,771 million.
The company achieved organic growth of 0.7%, with an increase in operating profit of 3%, totalling NOK 1,025 million. Earnings per share for continuing operations rose 9% to NOK 0.75, while overall profit before tax increased 3% to NOK 967 million.
High Costs
Orkla posted marginally lower operating profit than in the same period last year, which the company says is due to increased raw material prices and higher advertising investments.
"We saw a rise in raw material prices for meat and dairy products in the EU this quarter, in addition to a weaker kroner in Norway and Sweden," said Peter A. Ruzicka, president and CEO of Orkla.
"Our goal is to compensate for this by raising the prices of our finished products, but the price increases will have a gradual effect. We will also continue to improve our own operational efficiency."
Growth Strategy
Acquisitions were made in this quarter for a total of NOK 531 million. A large percentage of this was for Danish company Riemann Holding, with which Orkla will expand its position in the personal care and pharmacy segment.
The company also strengthened its position in the ice cream and bakery ingredient market through several small acquisitions, while it has agreed to sell its interest in aluminium manufacturing company Sapa.
"The sale of Sapa will give Orkla a very solid financial platform that will provide a foundation for both continued growth and good dividend capacity," added Ruzicka. "In line with Orkla's capital allocation strategy, our first priority is to strengthen the branded consumer goods area by making acquisitions and investing in our present operations."
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
