Outlook

Source: Orkla’s 4th quarter 2018 report.

Orkla held its Capital Markets Day in London on 31 October 2018. The strategy of being a leading branded consumer goods company remains unchanged.

Orkla targets organic growth at least in line with market growth for the 2019-2021 strategy period. For the same period, Orkla targets growth in EBIT (adj.) margin of a minimum of 1.5 percentage points adjusted for acquisitions, disposals and currency effects.

Orkla continues to face strong competition from international brands and the retail trade’s private labels. However, we are also seeing a shift on the part of consumers, where local players are gaining ground at the expense of major global manufacturers. With over 300 local brands and a strong local focus on innovations, Orkla is well positioned to respond to this shift. Furthermore, a channel shift is taking place with consumers moving away from traditional grocery retailers in many product categories. Orkla is addressing this change in a variety of ways, including intensifying its organic focus on ensuring a presence in new channels outside the traditional grocery retail sector and on making strategic acquisitions that offer access to potential customers in other channels.

Strategically appropriate acquisitions will remain a key element of Orkla’s growth strategy and value creation model. At the same time, the Group will focus more on reducing its complexity through more active portfolio management.

The Norwegian confectionery tax was reduced on 1 January 2019. This resulted in temporary destocking by Norwegian grocery chains in the fourth quarter, which is expected to be reversed in the first quarter of 2019. This particularly affects Orkla Confectionery & Snacks Norge.

The UK has decided to withdraw from the EU on 29 March 2019. It is possible that it will make this exit without an agreement in place. Orkla has production operations in the UK, as well as substantial exports and imports from the UK to the EU and Norway, and consequently may be affected by the final outcome. Orkla is tracking the situation closely and is considering possible action on an ongoing basis.