Orkla’s operating profit (EBITA) totalled NOK 857 million in the third quarter, compared with NOK 817 million in the corresponding period of last year. The Nordic branded consumer goods business achieved profit growth; the food operations in Norway, Sweden and the Baltic States, in particular, delivered a positive performance.
For continuing operations, Orkla’s operating revenues totalled NOK 7,223 million in the third quarter, compared with NOK 7,233 million in the corresponding period of 2011. The branded consumer goods business had underlying sales growth of 1%.
“In the past quarter, we have taken major, decisive steps on our path to becoming a pure-play branded consumer goods company. In parallel with implementing comprehensive structural changes, we have delivered satisfactory results,” says President and CEO Åge Korsvold.
A number of change processes have been carried out:
The acquisition of Jordan has been completed
An agreement has been entered into to purchase Rieber & Søn
The ownership interest in REC has been reduced to 15.6%¨
The Share Portfolio has been reduced
An agreement has been entered into with Norsk Hydro regarding the continuation of Sapa in a joint venture
Borregaard has been listed on the stock exchange
Orkla Foods Nordic achieved sales and profit growth in the third quarter, boosted by several new launches. Stabburet strengthened its position as a leading supplier to the Norwegian grocery trade and out-of-home sector. Procordia and Abba Seafood in Sweden and the Baltic businesses also reported improvement. Results in Finland and Denmark were on a par with the same period of 2011.
Adjusted for a loss of contract production, Orkla Brands Nordic posted operating profit on a par with the third quarter of 2011. Lilleborg in Norway achieved improvement in both sales and profit. The biscuit markets in Norway and Sweden were demanding. The Pierre Robert Group saw a decline in sales in Norway due to a reduction in the sales of one of its customers.
Orkla Brands Russia reported weaker operating profit. This is primarily ascribable to the discounting of discontinued varieties and products with a short remaining shelf life. MTR Foods in India continued to achieve good sales growth, particularly for spice and powder mixes and beverages.
The companies in Orkla Food Ingredients largely maintained their sales volume in markets that can be described as challenging. Dragsbæk saw a marked fall in sales and operating profit as a result of extensive stockpiling in the third quarter of 2011 prior to the introduction of a Danish tax on fat.
Sapa Heat Transfer had EBITA of NOK 64 million, compared with NOK 28 million in the third quarter of 2011. Sales volumes were at the same level as last year, and the substantial increase in profit is ascribable to improvement measures. Orkla plans to divest Sapa Heat Transfer, which is not a part of the joint venture agreement with Norsk Hydro, in the course of the first quarter of 2013.
Sapa experienced softer markets in Europe in the third quarter, but the extrusion business in North America continued to deliver a positive performance. On 15 October, Orkla and Hydro announced that the companies have agreed to combine their respective extrusion, building system and tubing operations to create the world’s leading aluminium solutions provider. The combined company, which will be named Sapa, will be a joint venture owned 50/50 by Orkla and Hydro. To compensate for the difference in size and to harmonise certain balance sheet items, Orkla, in addition to a 50% ownership interest, will receive NOK 1.8 billion from the new company.
A gain on property sales contributed NOK 51 million to Orkla’s operating profit. Hydro Power reported a weak performance, due to substantially lower power prices, as a result of which operating profit was NOK 48 million lower, year on year.
The sell-off of the Share Portfolio is on track. In the third quarter, net share sales totalled NOK 899 million. As at 1 October, the market value of the portfolio was NOK 2,860 million. The portfolio is expected to be sold in the first half of 2014.
Orkla’s profit before tax amounted to NOK 1,181 million in the third quarter, compared with NOK 660 million in the same period of 2011.