Norwegian conglomerate Orkla has reported a 14% year-on-year increase in operating revenue to NOK 16.8 billion (€1.4 billion) in the third quarter of its financial year.
The profit contribution from associates amounted to NOK 509 million (€43 million), an improvement of 114%, primarily driven by Jotun, the company's paint and powder coatings manufacturing business.
Orkla president and CEO Nils K Selte said, "I am pleased to report profit growth for most of the portfolio companies. It is gratifying to see Jotun’s continued strong growth and that Orkla India is delivering solid growth on top of last year’s good profit.
"The start-up of a new biscuit factory in Latvia has been more difficult and complex than anticipated and has impacted negatively on our profit."
Profit before tax amounted to NOK 2.0 billion (€170 million), down 9% from the third quarter of 2022 due to lower power prices.
Hydro Power’s adjusted operating profit EBIT reduced from NOK 773 million (€65.3 million) last year to NOK 153 million (€12.9 million) during the quarter.
Adjusted earnings per share rose by 2% to NOK 1.61 in the third quarter, the company added.
Selte added, "Continued high inflation, lower buying power and reduced demand have had a negative effect on sales volumes in several portfolio companies. Major cost improvement measures are proceeding as planned and contributing to reduce cost growth."
New Business Model
On 1 March 2023, Orkla implemented a new business model comprising 12 autonomous portfolio companies.
Recently, the portfolio companies finalised their strategic plans for the coming years.
Selte stated, "Orkla’s new business model better facilitates structural measures, but in the short and medium term the most value-creating activities will be to improve the performance of our portfolio companies."
Elsewhere, Orkla Foods Europe has announced that its chief executive Paul Jordahl has decided to step down and Atle Vidar Nagel Johansen, EVP and investment executive at Orkla, will serve in the role temporarily, effective 1 November 2023.