Challenging quarter for Orkla
Orkla CEO and president, Peter A. Ruzicka
Orkla achieved an operating profit of NOK 1.4 bn (€188.7m) in the fourth quarter of 2018, a decline of 2.4%.
Fourth-quarter operating revenues rose 1.2% to NOK 10.9bn (€1.46bn). The largest business area, Orkla Foods, posted organic sales growth, but this was offset by a decline in the other business areas.
Destocking by wholesalers in Poland contributed to weaker results for Orkla Care. The Norwegian sugar tax was reduced as of 1 January 2019, resulting in short-term destocking by the Norwegian grocery chains and lower fourth-quarter profit for Orkla Confectionery & Snacks.
“Towards the end of the year, some companies faced major challenges, but a majority of the companies achieved growth in revenues and profit. Ongoing cost reduction programmes are on track. The reversal of the sugar tax in Norway gave a positive start to the new year,” says Orkla president and CEO Peter A. Ruzicka.
As of 5 February 2019, Orkla now owns 99.29% of all shares and votes in the Finnish restaurant chain Kotipizza.
Orkla Foods Danmark entered into an agreement in the fourth quarter to purchase Easyfood, a Danish manufacturer of bake-off bakery goods. Orkla Foods Danmark also purchased the Pama brand, the Danish market leader in the porridge rice segment.
In the fourth quarter, Orkla Food Ingredients completed its acquisition of the British chocolate and caramel manufacturer, County Confectionery Ltd, which primarily serves industrial customers.
Hydro Power reported a 28% increase in EBIT (adj.), which amounted to NOK 132 million (€17.7m). The rise is due to higher power prices than in 2017.
Profit from associates totalled NOK -43 million (-€5.7m), compared with NOK -78 million (-€10.4m) in the fourth quarter of 2017.
The group’s other income and expenses totalled NOK -296 million (-€39.7m) in the fourth quarter, largely as a result of supply chain restructuring and acquisitions. In Norway, there were workforce reductions in connection with the phasing out of Orkla’s merchandising function, while an improvement programme has been initiated in the UK painting tool company, Harris. Comparative figures in 2017 were particularly low due to the gain on the sale of the Danish company K-Salat.
Orkla’s profit before tax amounted to NOK 1.01bn (€136.2m) in the fourth quarter, down 22%.
Earnings per share from continuing operations amounted to NOK 3.24 (€0.43), compared with NOK 3.46 (€0.43) in 2017.
For the full year, Orkla’s operating revenues increased by 3% to NOK 40.8 bn (€5.4bn). Operating profit rose by 3% in 2018, to NOK 4.7bn (€640m). At year end, the group had 18,510 employees.
Orkla’s Board of Directors intends to propose payment of a dividend of NOK 2.60 (€0.35) for the 2018 financial year.