Norwegian conglomerate Orkla has reported a 6.1% year-on-year growth in operating revenues, to NOK 11.8 billion (€1.14 billion), in the second quarter of its financial year.
Operating profit rose 5.0% to NOK 1.3 billion (€130 million), the company added.
Earnings per share rose 9.5% to NOK 1.04 in the quarter, while adjusted earnings per share rose 3.6% to NOK 1.14.
Divisional Performance
The company’s Hydro Power unit saw operating profit increase to NOK 112 million in the quarter, registering a year-over-year improvement of NOK 131 million, driven by substantially higher power prices.
Jotun, a manufacturer of paint and powder coatings in which Orkla has an ownership interest of 42.6%, saw profits rise 2.8% to NOK 255 million.
Consumer Goods Division
The company’s Branded Consumer Goods business reported organic growth of 6.9% in the quarter.
The easing of coronavirus restrictions and higher demand in the out-of-home sector contributed to 20.5% organic growth for Orkla Food Ingredients, compared with a weak second quarter of 2020.
Orkla Consumer Investments reported an organic growth of 13.2%, driven by increased sales for Orkla House Care and Kotipizza.
Elsewhere, Orkla Foods and Orkla Care saw organic growth of 3.0% and 2.5%, respectively, while Orkla Confectionery and Snacks posted a 1.2% decline.
The company’s Branded Consumer Goods business saw a 5.4% drop in operating profit due to a higher level of activity and increased costs.
The decline was partly coronavirus-related, as the cost base was extraordinarily low in the second quarter of 2020, the company noted.
The company reported a 9.5% increase in operating profit at its Branded Consumer Goods business helped boost overall profits during the first quarter.
A 'Challenging' Situation
Commenting on the performance, Orkla president and CEO, Jaan Ivar Semlitsch, said, “The coronavirus pandemic has continued to impact on Orkla in the past quarter. We have seen high infection rates and lockdowns of society, especially in India, but the situation has also been challenging in several other countries.
“I am pleased that our top-line results were strengthened by volume-based organic growth, and that parts of the out-of-home sector approached a normal situation.”
However, Semlitsch is concerned about rising raw material prices and added that the company is monitoring its cost and profit performance and will “consider taking necessary action.”
“Orkla is exposed to a broad range of raw materials. The coronavirus pandemic has contributed to bottlenecks and disruptions in global value chains. This situation, combined with increased demand, will result in higher raw material prices going forward,” he added.
