Norwegian food conglomerate Orkla has reported a 15% increase in operating revenue, to NOK 16,077 million (€1.48 billion), in the fourth quarter of 2022.
Operating profit adjusted EBIT increased by 2% to NOK 1,903 million (€174 million), due to a marked improvement in its Hydro Power, division, but profit was weaker for its Branded Consumer Goods business.
The group’s profit before tax amounted to NOK 1,702 million (€156 million), which was a decline of 8%.
Organic Turnover Growth
For the full year, Orkla’s operating revenues increased by 16% to NOK 58,391 million (€5.3 billion).
Operating profit adjusted EBIT showed growth of 21%, and amounted to NOK 7,411 million (€680 million).
Orkla’s Branded Consumer Goods business achieved 13% growth in fourth-quarter operating revenues. Organic turnover grew by 10%. The Norwegian firm said the growth was driven by price increases to compensate for steep increases in energy, raw material, packaging and freight costs.
All business areas saw organic growth in the quarter.
Branded Consumer Goods, including headquarters, saw a 14% decline in operating profit adjusted EBIT. Orkla claims part of the decline was due to accruals and non-recurring costs.
'Increased Costs And Lower Volumes'
Orkla Food Ingredients and Orkla India achieved improved profit, while the other business areas had a profit decline due to what Orkla describes as 'increased costs and lower volumes.'
“In 2022, Orkla faced a challenging market situation characterised by substantial increases in input costs, extensive value chain disruptions and uncertainty regarding the global food situation," said Orkla president and CEO Nils K. Selte. "In the fourth quarter, we experienced increased costs throughout the value chain. Higher inflation and rising interest rates reduced consumer buying power in most of our markets, which in turn put pressure on our sales volumes."
"Nevertheless, we have largely succeeded in maintaining our market shares and good delivery levels. Going forward, Orkla will increase its investments in brand-building, while also reinforcing our cost improvement initiatives."