Growth drivers, financial targets and outlook
Orkla's growth drivers, financial targets and outlook.
- Organic growth
- Mergers and acquisitions (add-on acquisitions)
- Margin improvements
- Deliver on initiated and ongoing structural processes
Focus on activities that drive organic growth and improve margins
- Strong innovation programmes
- More cross-market initiatives
- Increase sales force effectiveness
- Strengthen relations with our customers
- Optimising production structure
Updated financial targets 2016-2018 announced at Orkla’s Investor Day 2015
- Deliver organic growth at least in line with market growth
- Target annual adj. EBIT growth of 6-9%1 in BCG
1Including add-ons, excluding currency effects and large acquisitions and divestments
Source: Orkla's 34th quarter 2016 report
In the markets in which Orkla has a presence, growth is expected to remain moderate in the years ahead, with some variation from one market to another.
Orkla continues to face strong competition from imported international brands and retailers’ private labels. Consequently, Orkla must continue to take steps to secure its competitiveness and its position in the future. Efforts to optimise and rationalise the supply chain so as to exploit economies of scale and reduce costs will continue.
Overall, the global commodity prices to which Orkla is exposed have risen somewhat in the recent past. However, prices vary substantially from one commodity group to another, and the uncertainty attached to future commodity price trends is generally high.
The different business areas are exposed to currency risk to varying degrees, and there is uncertainty as to exchange rate trends going forward. Many of Orkla’s Norwegian companies do a substantial share of their purchasing in Norwegian krone, thereby reducing the overall impact of fluctuations in the exchange rate of the Norwegian krone against other currencies.
The strategy of being a leading branded consumer goods company, with the Nordic and Baltic regions as main markets in addition to selected geographies, remains unchanged. Orkla aims to deliver organic2 growth in turnover that at least matches market growth and growth in annual adjusted EBIT (adj.)3 of 6–9% in Branded Consumer Goods in the period 2016–2018.
2 Adjusted for currency translation effects and structural changes
3 Operating profit before other income and expenses