Norwegian consumer goods business Orkla has posted a 18% increase in operating profit in its branded consumer goods business in the first quarter of its financial year, with turnover rising 14.7%.
Not all parts of the business had a strong quarter however, with its Orkla Food Ingredients and Orkla Consumer Investments arms seeing reduced demand, while Orkla Foods and Orkla Care reported a sales surge.
Changing Consumption
Orkla said that its sales performance for the quarter was largely due to consumer stockpiling and changes in consumption patterns, brought on by the coronavirus crisis.
It said in that in the last three weeks of March, Orkla Food and Orkla Care saw a 'substantial increase' in demand for food, cleaning and personal care products.
At the same time, the parts of the business that have been negatively affected account for around one quarter of the turnover of its branded consumer goods business, it said.
"The coronavirus crisis now unfolding is creating extraordinary uncertainty in extraordinary times,” commented Jaan Ivar Semlitsch, Orkla president and chief executive.
Acquisition Activity
Orkla carried out a number of acquisitions and disposals during the quarter, it said, with an agreement to purchase 70% of the shares in Win Equipment, a leading supplier of soft serve ice cream machines in the Netherlands, as well as the purchase of 100% of the shares in wound care business Norgesplaster.
Elsewhere, Orkla Foods Norge sold the SaritaS brand to Indian Gourmet AS.
In addition, the business invested approximately NOK 165 million (€14.7 million) in reorganising its headquarters, reformatting its cost structure at Orkla Foods and Orkla Consumer Investments, and writing down its IT systems.
Commenting on the group's performance, as well as the current COVID-19 situation, Semlitsch added, "As a supplier of food, cleaning and hygiene products, Orkla has a responsibility to society for ensuring that our products are available during this period.
"It is therefore gratifying to see that we have succeeded in maintaining close to normal supply chain operations, while safeguarding the health and safety of our employees as our main priority."
© 2020 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.
