Orkla Foods is a leading developer, marketer and supplier of food products in the Nordic region, Central and Eastern Europe and Russia. Operations are concentrated around the company’s own strong brands and concepts. Orkla Foods is divided into three main areas: Orkla Foods Nordic, Orkla Foods International and Orkla Food Ingredients.
Orkla Foods produces pizzas/pies, sauces, small hot meals, ready meals, fruit and berry-based products, preserved vegetables, seafood, processed potato products, baking ingredients, bakery products, margarine and chocolate.
Orkla Foods Nordic largely holds number 1 and number 2 positions in its domestic markets. Orkla Foods International has strong market positions in the Baltic States, the Czech Republic, Austria, Poland, Romania and Russia. Orkla Food Ingredients is a leading supplier of baking ingredients in the Nordic region. At the end of 2005, Orkla Foods had 67 production plants in 15 countries and employed a workforce equivalent to 10,324 man-years.
Operating revenues amounted to NOK 13,650 million, equivalent to 7 % growth compared with 2004. Operating profit before amortisation totalled NOK 1,213 million, an increase of NOK 49 million or 4 %. The improvement in profit was largely due to structural growth. Underlying1 profit performance was slightly weaker than in 2004.
Orkla Foods has initiated a number of improvement programmes. In the period 2005–2007, the cost base will be reduced by approximately NOK 500 million, equivalent to a workforce reduction of around 10 %. Compared with 2002 the workforce will then have been reduced by around 25 %.
2005 was the first full year of operation for the Orkla Food Safety Standard. To ensure that the standard is complied with, 65 audits were carried out at Orkla Foods factories. The audit reports are used actively in the factories’ improvement activities.
Employees at all levels of the organisation have taken part in a number of human resource development programmes. The most important of these are the courses on management and various specialised disciplines run by the Orkla Academies and the Orkla Foods Management Programme.
Orkla Foods Nordic consists of Stabburet and Bakers (Norway), Procordia Food and Abba Seafood (Sweden), Beauvais (Denmark) and Panda and Felix Abba (Finland).
Orkla Foods Nordic posted operating revenues of NOK 8,864 million, compared with NOK 9,114 million
in 2004. Operating profit before amortisation amounted to
NOK 997 million, compared with NOK 1,036 million in 2004. The decline was largely due to difficult market conditions, especially on the Swedish grocery market.
Many cost reduction programmes have been implemented in the Swedish companies. In the past three years, Procordia Food has reduced its workforce from 1,515 to 1,286 man-years, while Abba Seafood has reduced its workforce from 577 to 409 man-years.
In 2005, Orkla Foods launched a record number of new products on the Nordic grocery market. Nordic consumers are more concerned about nutrition and health than ever before. Sugar-free Felix ketchup in Sweden and Nora’s juices in Norway were among the new launches that were well received by the market.
Stabburet largely maintained its strong positions on the Norwegian grocery market. On the catering market, Stabburet has increased its focus on the Chef service concept that serves petrol stations, street stalls and large kiosks.
Beauvais introduced a large number of new products on the Danish grocery market. In just one year, Fresh Light has become the fourth largest branded product on the Danish cordials and soft drinks market.
In May, Orkla Foods took over the Finnish company Panda, which manufactures and supplies liquorice and other confectionery products. Panda has developed in accordance with the assumption.
In December, the company bought the Norwegian bakery company Martin Nordby, which is an important supplier of fresh bread and bakery products in the Oslo region. The company will be amalgamated with Bakers.
Orkla Foods International consists of SladCo (Russia), Kotlin and Superfish (Poland), Guseppe (Czech Republic), Felix Austria (Austria), Orkla Foods Romania, Põltsamaa Felix (Estonia), Spilva (Latvia) and Suslavicius-Felix (Lithuania).
Orkla Foods International reported operating revenues
of NOK 2,312 million, compared with NOK 1,182 million in 2004. Operating profit before amortisation was
NOK 73 million, NOK 62 million higher than in 2004.
The Russian Company SladCo achieved growth in its first full year of operation. Sales were gradually re-oriented towards chocolate products with a stronger brand image and the company achieved significant sales growth in Moscow, the South Volga region and North-West Russia. The company increased its operating profit. SladCo has strengthened its senior management, established new sales channels and initiated several cost reduction measures. In cooperation with Nidar, work has begun on improving production technology at SladCo’s two factories and increasing the rate of innovation.
Orkla Foods also achieved revenue growth in the Baltic States, where its performance in Latvia was especially positive. Sales were on a par with 2004 in Poland, while they declined in the Czech Republic.
Orkla Foods has signed an agreement to purchase Royal Brinkers (margarine), which will strengthen Orkla Foods Romania’s position as an important supplier to the country’s grocery retail sector. This acquisition is dependent on the approval of the competition authorities. Orkla Foods also took over the remaining 30 % of shares in Suslavicius-Felix in September, and increased its shareholding in Kotlin from 68 % to
89 % in November.
Orkla Food Ingredients reported operating revenues
of NOK 2,743 million, compared with NOK 2,640 million in 2004. Operating profit before amortisation totalled
NOK 143 million, compared with NOK 117 million in 2004.
Most of the companies in Ingredients achieved sales and profit growth. Improvement programmes have been initiated in the companies that did not perform as well. The strongest profit growth was achieved by KåKå (Sweden), Odense Marcipan (Denmark) and Credin (Denmark, Poland and Portugal).
Dragsbæk continued to grow in Denmark, where the total market for margarine is declining. The Dragsbæk company in Iceland also performed well. Credin Bageripartner did not achieve satisfactory profitability on the Danish bakery ingredients market, which is affected by over-capacity.
The companies in Ingredients outside the Nordic region achieved profit growth. Apart from Credin, the best performances were achieved by Sedba Baking (Czech Republic) and Rigas Raugs (Latvia). MiNordija (Lithuania) and LaNordija (Latvia) developed well. Both companies are in a start-up phase and have not yet achieved satisfactory profit.
Ingredients acquired several companies in 2005:
All the acquired companies have developed in accordance with the plans that were made at the time of acquisition.
1 Excluding acquisitions, divestments and currency translation effects
At Nordic breakfasts it’s easy to choose products from Orkla Foods’ companies
