Jaan Ivar Semlitsch joined an under-pressure Orkla as CEO this summer and initial signs are positive, Simon Harvey writes, although it is a little early to judge if gains will be sustained.

Orkla’s new chief executive Jaan Ivar Semlitsch is already hitting the right notes in terms of strategy to get the Nordic food group’s organic sales growth going at a decent and sustainable pace, along with a better uptick on margin improvement, but it’s still too early to judge progress based on today’s third-quarter results.

While M&A has, and will, continue to play an important role in Orkla’s strategy, Semlitsch will need to be selective as the recent deals instigated by the acquisition-hungry company under his predecessor have still to make a notable impression on margins, while organic growth remains subdued at best.

Orkla’s third-quarter numbers were welcomed by some analysts. Sanford Bernstein’s Andrew Wood talked of the “further encouraging momentum” in the company’s sales, EBIT and underlying earnings per share. After a poor set of annual results last year, Orkla is showing signs of progress.

However, there would likely have been disappointment in some quarters in the investment community this morning not to get any fresh, new and inspiring projections on Orkla’s organic sales growth and underlying margins beyond the oft-repeated 2021 targets of above or in-line with the market (organic growth), and a 1.5 percentage point improvement on margins.

To be fair, the CEO is already taking strides in the right areas – strengthening the top management team and bringing in a new guy to fill a new M&A strategy role, and, this morning, revealing Project Future, a directive to make cost savings and speed up organic growth. Work on costs will be key. In Orkla’s key Nordic markets, it is facing stiff competition from international brands and private label, so the company will need to be tough on costs to bolster margins.

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On organic growth, Semlitsch has also indicated plans to look internally at Orkla’s existing portfolio to get there rather than just peering through the M&A lens, with a recognition the company has some “hidden jewels” crying out to be scaled up.

Nevertheless, the question on market watchers’ lips will be how long before Semlitsch has enough yardage under his belt to give more positive and concrete guidance that takes the Orkla story up a notch – hopefully they won’t have to wait until 2021.