Norwegian conglomerate Orkla has identified its Orkla Food Ingredients, Orkla Health, Orkla India and The European Pizza Company businesses as areas in which it will look to grow organically, or through M&A activity.
The announcement was made by the group in conjunction with its Capital Markets Day, during which it detailed its intentions to achieve a minimum annual total shareholder return ranging from 12% to 14% for the period 2024–2026.
Elsewhere, the Jotun business (of which it owns 42%), along with Orkla Foods Europe and Orkla Confectionery & Snacks, have been identified as 'anchor' businesses, which are likely to be 'significant cash generators' in the years to come.
Other segments, including Orkla Home & Personal Care, Orkla House Care, Health and Sports Nutrition Group, Pierre Robert Group and Lilleborg have been classed as 'transform or exit', indicating that the group will either implement a transformation plan within these businesses in the near future, or look to divest them.
'The Best Of Two Worlds'
“We are developing a company combining the very best elements from two worlds: building on our DNA of developing brands and combining this with an investment company mindset," commented Nils K. Selte, Orkla’s president and CEO. "It is this combination that will make us truly unique. As an industrial investment company our ultimate goal and KPI is to deliver a minimum annual total shareholder return in the range of 12–14% in the period 2024–2026."
For the group's 12 core portfolio companies, the group is seeking to achieve (in the period 2023 to 2026) an underlying EBIT (adj.) CAGR of 8% to 10%, a margin expansion in the range of 1.5 to 2.0 percentage points, and a ROCE improvement from 10% to 13%, it noted.
Sustainability Commitments
Elsewhere, Orkla is also seeking to accelerate its ESG commitments. It aims to decrease greenhouse gas emissions from its own operations by 70% (Scope 1 & 2) by 2030.
In addition, all food companies within the organisation are expected to generate positive health impacts by 2030, while it has also set a target to achieve gender balance in its management teams by 2026.
