Seven months ago, Orkla CEO Bjørn Wiggen announced the Norwegian conglomerate would focus on the FMCG sector, earning praise from analysts in the process. This week, Orkla stunned the market with news that Wiggen had decided to resign. Eyebrows were raised further yesterday when it emerged the boss of Orkla’s FMCG unit would also leave the business. Industry watchers believe the departures will not mean a change in direction but could suggest Orkla’s owners were frustrated with the slow progress of the company’s new strategy. Michelle Russell reports.
In the last two years, there were a series of signs that Orkla, the Norwegian conglomerate, had decided on a change in direction.
The company, which, alongside selling food, operated in a range of industrial sectors, sold metal and materials firm Elkem and forests company Borregaard Forests. In September, CEO Bjørn Wiggen met analysts and said branded goods would become Orkla’s “strategic focus”. The move was welcomed in the financial community. Asset disposals would return cash to shareholders. Moreover, a series of acquisitions in the last decade meant consumer goods accounted for a shrinking slice of revenues at the expense of assets in more cyclical sectors. A focus on FMCG would provide Orkla with more stable revenue streams, it was argued.
However, just seven months on, Orkla this week stunned the market with the news that Wiggen had resigned amid a clash with the company’s board.
Wiggen did not comment but majority shareholder and chairman Stein Erik Hagen shed some light on what was behind the resignation.
“Orkla is at a crucial stage of a demanding process of transforming the group into a pure branded goods company. The Board of Directors wishes to be more closely involved in this process. The main reason for the change of president and CEO is disagreement between the board and Bjørn Wiggen as regards ways of working,” Hagen said.
Arctic Securities analyst Kenneth Sivertsen believes majority owner and Orkla chairman Stein Erik Hagen may have wanted “a firmer grip” on the company’s strategy.
“It seems the disagreement was between the board of directors and Wiggen and the way he was working. The owners can choose whoever they want [as CEO], so if it’s not running the way the owners want it to, then it is their right to change the board.”
However, Wiggen’s exit is not the only high-profile departure at Orkla. Three days after the announcement of his resignation, eyebrows were again raised with the news that Torkild Nordberg, CEO of Orkla Brands, the company’s FMCG unit, would also leave the business.
There was no mention of any disagreement in the announcement of Nordberg’s departure, a date for which has yet to be set.
However, Carnegie analyst Preben Rasche-Olsen believes the announcement of the departure of both Wiggen and Nordberg was “absolutely a surprise”.
“In my opinion they’ve done things pretty much in the timeline they laid out a year ago so it seems a bit strange,” he told just-food.
Hagen has insisted the departure of Wiggen “entails no change in Orkla’s strategy”. Age Korsvold, Orkla’s deputy chair, has been named acting president and CEO. He said his primary task will be to “drive the transformation of Orkla into a pure branded goods company”.
Orkla pointed to Korsvold’s “many years of experience in top executive and board positions in Norwegian and international business”. Korsvold was CEO of Norwegian financial services company Storebrand from 1994 to 2000 and chief of investment firm Kistefos between 2001 and 2010.
Sievertsen says Korsvold’s appointment, even on an interim basis, suggests the Orkla board thought the company needed to implement its strategy faster.
“What is interesting is the new CEO is highly experienced in the capital markets, it could be that the board of directors thought progress was going too slow,” Sivertsen says.
Rasche-Olsen echoes Sievertsen’s comments. He believes the changes could mean Orkla soon adds to its consumer goods assets through M&A. When Wiggen announced Orkla’s new “strategic focus”, he said there were “increasing opportunities” to buy businesses. As yet, no major deal has been made. Rasche-Olsen says: “If anything, it might mean they will be a bit more aggressive on acquisitions going forward.”