Orkla has said it aims to drive continued improvements at its consumer foods unit as it booked a decline in operating profit during the first quarter.
In a regulatory announcement today (2 May), Orkla said first-quarter EBITA amounted to NOK596m (US$103.5m) in the period, down from NOK676m in the corresponding quarter of 2012. Much of the decline can be attributed to lower profits at the conglomerate’s financial services arm, where the first-quarter performance last year was boosted by gains from the sale of real estate.
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The Norway-based energy-to-snacks company is in the process of transforming itself into a pure-play branded consumer goods manufacturer, selling off its energy and hydro-power interests to focus on core operations. In its branded consumer goods units, Orkla said operating profit rose 8% to NOK579m, driven by “broad based sales and volume growth” in food.
Revenues from continuing operations increased to NOK7.2bn, up from NOK7bn in the comparable period of last year.
Commenting on the group’s performance, CEO Åge Korsvold said he was “satisfied with the profit performance” but added that the group must become more competitive. “We must create larger, more effective entities. We are now merging our chocolate, snacks and biscuits companies, and creating one leading company per country in the Nordic region.”
Speaking to just-food at the Consumer Analyst Group Europe conference in March, SVP of investor relations Rune Helland claimed Orkla will have a competitive advantage over multinational players from its “multi-local” strategy because it is more focused on the Nordic markets. However, some industry watchers have suggested that as Orkla sells off its non-food operations its strong regional brands will make it an attractive takeover target for international food manufacturers.
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By GlobalDataClick here for further coverage of Orkla’s “multi-local” approach.
