On the move: FMCG takes front-seat as new CEO joins Orkla
Orkla chairman Stein Erik Hagen (l) and new CEO Peter Ruzicka (r) (photo credit: Vegard Grøtt / NTB scanpix)
Nordic group Orkla has replaced former CEO Åge Korsvold just two years after he took the helm. With reports of boardroom strife in the Norwegian press, at first glance one might question whether the news is a function of internal factionalism. On closer inspection, however, it would seem Orkla has moved to another phase in its drive to become a branded consumer goods powerhouse by bringing in FMCG veteran Peter Ruzicka. Katy Askew reports.
When Orkla revealed it planned to replace Åge Korsvold as chief executive, reports of boardroom divisions in the Norwegian press late last year seemed to be given added pertinence.
A division between Korsvold and the rest of the board - notably Orkla's chairman and largest shareholder Stein Erik Hagen - had purportedly emerged in December over the group's restructuring initiatives.
According to press speculation, morale at Orkla had plummeted as the group's head office was relocated and its IT functions were outsourced. Orkla had lost sight of the consumer - and its rank and file employees - in its drive to transform the business, a sceptical media bemoaned.
Korsvold had himself taken the helm of Orkla when his predecessor, Bjørn Wiggen, had resigned following a clash with the group's board. The echoes of his departure seemed only too clear.
However, on closer inspection, these conclusions are perhaps rash.
Wiggen had launched a strategy to focus the aluminium-to-chemicals conglomerate on its consumer goods business in September 2011. The move was warmly welcomed by the financial community. Asset disposals would return cash to shareholders and an FMCG focus would drive up the group's share price, which was trading at a conglomerate discount.
Just seven months on, Wiggen's exit from the company did not reflect a re-evaluation of this strategy. Wiggen left Orkla because the board were frustrated at the slow pace of disposals.
Korsvold's investment banking background lent itself more to Orkla's drive to slim down while also generating shareholder returns. Korsvold was CEO of Norwegian financial services company Storebrand from 1994 to 2000 and chief of investment firm Kistefos between 2001 and 2010.
Under him, Orkla has pushed ahead with the disposal of non-core assets. It has started the staggered exit of its aluminium business by establishing joint venture operation Sapa, completed a sale of the Renewable Energy Corporation and spun off biorefinery Borregaard through an IPO.
As Korsvold told just-food in an interview last year, by 2016 the group intends to have withdrawn from all remaining non-core activities. "The timetable for the exit of the Sapa JV is three years and inside that time frame we expect to exit everything else," Korsvold explained.
This is not to say that Orkla is where it wants to be. One of the difficulties slowing Orkla's progress is the nature of its non-core businesses: they are significant assets in industries that are largely dominated by a few big players. In hydro-power, for instance, finding a buyer for an asset of the magnitude of Orkla Hydro Power is not the easiest of tasks. The timing must be right to ensure an appropriate valuation. However, Orkla is on the right track in this area and, if all goes to plan, the company will be a pure-play FMCG group within two years.
As one analyst tells just-food, Korsvold did a "good job" in preparing Orkla for its final push to become a consumer goods group. However, Korsvold is not an FMCG specialist.
That, more than any deep division, seems to have prompted Korsvold's replacement with Peter Ruzicka.
Ruzicka benefits from a significant amount of time spent in the Nordic region's FMCG arena. He has sat on the Orkla board since 2008. During his career, Ruzicka has served as MD of deputy CEO of Sweden-based retailer ICA and regional chief of Ahold's operations in the Czech Republic and Slovakia. Since 2006 has been MD of Canica, Orkla chairman Hagen's family-owned company.
As Hagen commented in a press conference to announce the management change: "I know Peter quite well. I have no doubt that he is the right man in the right place... [He has] experience in food, retail and consumer goods. He has breadth and experience across all functions required for the CEO role and he holds a record of accomplishments in a relevant and increasingly challenging business environment."
That experience will serve Ruzicka well as he tackles the challenging task of getting sales of Orkla's stable of leading regional brands moving in the right direction.
Commenting on his plans, Ruzicka insisted he was not about to initiate a strategic overhaul or announce any significant changes.
There is little doubt Orkla's consumer business has underperformed for successive years. The company hopes to improve sales trends through a focus on innovation.
Ruzicka revealed he will continue to drive Orkla's efforts around convenience, health and wellness and reformulation, while also taking the threat posed by private-label and branded competitors "very seriously".
"Orkla aims to become the Nordic region's leading consumer goods company. We will make products that are healthy and enjoyable and make life simpler... We cannot rest on our laurels. We must ensure that tomorrow's favourites also will come from Orkla."
Orkla ASA (ORK) - Financial and Strategic SWOT Analysis Review provides you an in-depth strategic SWOT analysis of the company’s businesses and operations. The profile has been compiled by GlobalData ...
Nordic food group Orkla struck a deal to sell its Polish cake mixes and desserts business, Rieber Foods Polska ("Delecta"), to an investment fund managed by Innova Capital....
Orkla Foods Romania based its expansion in Romania on a strategy of acquiring leading domestic players. This strategy was followed in establishing a presence in Romania, as well as moving into other u...
Orkla Foods Romania based its expansion on the Romanian market on important acquisitions of main domestic players, which represented the source for entry on the Romanian market, divesting in other unr...
- On the move: What's in store from Tesco's new CEO?
- The just-food interview: Premier Foods CEO Darby
- On the money: Can Premier build H2 sales momentum?
- Focus: Lindt plays safe with Russell Stover buy
- Interview: Bell hits out at German cartel ruling
- UPDATE: Premier establishes international unit
- Campbell issues warning on 2014/15 fiscal year
- S&A Foods announces restructure, 55 jobs to go
- Premier launches Oxo pots range in UK
- Universal Robina to buy biscuit firm Griffin's