Norwegian conglomerate Orkla has reported an 18.1% year-on-year increase in operating profit, to NOK 1.5 billion (€150 million), in the first quarter of its financial year.
The company's operating revenue grew 15.4% year on year, to NOK 13.3 billion (€1.4 billion), in this period.
Group earnings before tax amounted to NOK 1.5 billion (€150 billion), reflecting an increase of 7.7% compared to the same period last year.
Orkla’s branded consumer goods business saw 13.4% growth in operating revenue during the quarter, with organic turnover growth of 7.7%.
However, the unit's adjusted operating profit, including headquarters, witnessed a 2.4% decline due to the higher purchasing costs of raw materials and packaging, coupled with rising freight and energy prices.
Orkla president and CEO, Nils K Selte, said, “These are exceptional times, where the situation in Ukraine is affecting both the availability and prices of a number of raw materials and input factors. Furthermore, we are seeing a sharp surge in energy prices from an already high level.
"A protracted conflict is likely to generate even greater uncertainty and imbalance in the global flow of goods. It is crucial for Orkla to maintain its good delivery performance and deal with cost increases.”
Orkla Food Ingredients and Orkla Foods saw the biggest improvements, with organic turnover growth of 21.1% and 7.2%, respectively.
Both business units benefitted from the reopening of several markets after COVID-19 control measures in the first quarter of 2021.
Orkla Care reported organic sales growth of 5.9%, while Orkla Confectionery & Snacks and Orkla Consumer Investments saw turnover decline by 1.1% and 4.3%, respectively.
Profit from Orkla’s associates and joint ventures amounted to NOK 238 million (€24.2 million) in the first quarter, down from NOK 331 million (€33.6 million) in the same period last year.
The company's Hydro Power unit reported an EBIT of NOK 345 million (€35 million), up from NOK 86 million (€8.7 million) in 2021 due to significantly higher power prices than in the first quarter of 2021.
Orkla also ended the ownership of its Russian business, Hamé Foods ZAO, which produces long shelf life food products in the Russian market.
Write-downs and expenses related to this business amounted to NOK 116 million (€11.8 million), the company added.