Norwegian conglomerate Orkla has booked a 19% jump in first-quarter operating profit, despite a lacklustre performance from its FMCG unit Orkla Brands.
Operating profit rose to NKK786m (US$148.5) in the quarter, the company said today (5 May). Total sales during the three months to 31 March rose 15% to NOK1.5bn.
However, Orkla, which also has interests in aluminium, materials and financial sectors, said that profits at its Orkla Brands FMCG division were hit by one-time costs at its international segment associated with the establishment of Orkla Brands Russia.
First-quarter EBITA at Orkla Brands amounted to NOK520, down from NOK624m last year. Profit was “significantly affected” by the decline of NOK63m in operating profit for Orkla Brands International, the company said.
Although the unit, which includes businesses from Lilleborg detergents to snack maker Chips Group, has taken steps to compensate for higher raw materials costs, profitability has been impacted by a “natural lag” in through flow. The group revealed that further price increases are planned.
Orkla Brands reported revenues of NOK5.71bn, compared to NOK5.4bn in the comparable period of last year. Underlying sales were “on a par” with the same quarter in 2010. However, taking into account the timing of Easter, the underlying growth in sales was approximately 2%, the company revealed.
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Orkla added that it has taken steps in the first quarter towards focusing its operations, including the acquisition of Rasoi Magic Foods, an Indian manufacturer of spices and spice mixes, through its Orkla Brands unit.
Moving forward, Orkla president and CEO Bjørn Wiggen said that the company would continue to invest in developing Orkla Brands “both operationally and structurally”.