Orkla Sees Consumer Goods Profits Surge, Food Ingredients Slump
Norwegian food conglomerate Orkla has reported a 'marked improvement' in operating profits across four of its five businesses in the second quarter of its financial year, however the group's Food Ingredients arm saw profits decline 48%.
Overall, the group's branded consumer goods operations saw a 16% in operating profit.
The group's Orkla Consumer Investments (+46%), Orkla Care (+27%), Orkla Confectionery & Snacks (+26%) and Orkla Foods (+22%) businesses were all up, with the business noting that the improvement was driven by cost-cutting measures related to the coronavirus pandemic, productivity improvements and positive currency translation effects.
Turnover in its branded consumer foods operation was up 6.2% in the quarter, largely driven by currency fluctuations and acquisitions, however organic growth was down 3.8%.
It said that while it saw 'good sales growth' in the grocery market, it also posted a 'considerable decline' in sales in the out-of-home market.
At a group level, operating revenues rose by 5.3% in the quarter to NOK 11.1 billion (€1.03 billion), while operating profit was up 8.7% to NOK 1.2 billion.
“We can look back on a half-year marked by the biggest ever peacetime crisis," commented Orkla [resident and CEO Jaan Ivar Semlitsch.
"In March, there was extensive stockpiling in grocery stores. After a slow start to the second quarter, volumes have picked up again. It looks as though consumers turn to well-known, familiar brands in times of crisis like the one we are currently experiencing."
Outside of the grocery sector, however, Semlitsch added that the group's businesses have seen a "significant reduction" in demand, although this is being alleviated somewhat by the gradual re-opening of society.
In the quarter, Orkla Foods Sverige signed a deal with PepsiCo to acquire the Havrefras brand, including Rug Fras and Mini Fras, while in Norway, its foods business agreed the sale of SaritaS, Vestlandslefsa and Li-Klenning.
Elsewhere, Orkla Wound Care signed and completed an agreement to buy the shares in Norgesplaster, while the group also announced the winding up of the Swedish business in the Pierre Robert Group.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine