Orkla Reports Growth In Profit And Volume In First Quarter

By Dayeeta Das
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Orkla Reports Growth In Profit And Volume In First Quarter

Norwegian conglomerate Orkla has posted an 8% year-on-year increase in profit before tax of NOK 1.9 billion (€160 million) and revenue growth of 6% to NOK 17.1 billion (€1.5 billion) in the first quarter of its financial year.

EBIT for Orkla’s consolidated portfolio companies, including headquarters, increased 19% to NOK 1.6 billion (€140 million) during the quarter, driven by price and volume growth, cost-cutting measures and positive currency translation effects.

Adjusted earnings per share grew 14% to NOK 1.50 compared to the first quarter of 2023.

Orkla president and CEO, Nils K Selte stated, “Orkla has made a strong start to the year. Most of the portfolio companies achieved organic growth, higher operating profits and increased cash flow from operations.

“I am particularly pleased about the companies’ volume growth, which was achieved in a quarter with fewer sale days due to the timing of Easter. It is also good to see high earnings growth combined with increased investments in advertising.”


Quarterly Highlights

The profit contribution from associated companies in the first quarter amounted to NOK 415 million (€35.4 million), down 2% compared to the same period last year, Orkla added.

The company attributed this decline to currency losses made by Jotun (42.7% ownership interest) following devaluation of the Egyptian pound, which affected both Jotun’s operating profit and its financial costs.

However, Jotun, the company's paint and powder coatings manufacturing business, saw a 12% operating profit growth during the quarter on the back of volume growth, increased gross margin and effective cost controls.

Elsewhere, adjusted EBIT at Hydro Power amounted to NOK 165 million (€14.1 million) for the first quarter, down from NOK 255 million (€21.8 million) in the first quarter of 2023.


Partnership With Rhône

In October 2023, Orkla Food Ingredients (OFI) entered into a partnership agreement with Rhône, a private equity firm that invests in companies with a transatlantic presence.

In April, Orkla completed its transaction with the private equity firm, which will see Orkla Food Ingredients (OFI) replacing Orkla's existing financing with a NOK 6.4 billion (€540 million) committed bank facility (which will not be fully drawn at closing) and will not involve Orkla ASA's recourse.

“This agreement is a milestone for Orkla and will enable OFI to maintain its organic and structural growth. The transaction exemplifies the flexibility and value-creation potential of Orkla’s new operating model,” Selte added.

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