Financial results

Increased chocolate and sugar taxes weakened Orkla’s Q2 sales growth in Norway

By Douglas Yu

- Last updated on GMT

Orkla is a supplier of branded consumer goods to sectors, including grocery and bakery. Pic: Orkla
Orkla is a supplier of branded consumer goods to sectors, including grocery and bakery. Pic: Orkla
Norwegian conglomerate Orkla has posted a 9% operating profit increase in Q2 this year, reaching NOK 1.12bn ($137m), while its operating revenues rose 3% to NOK 10bn ($1.22bn).

The company’s profit before tax increased by 13% to NOK 1.09bn ($133m) during the period, and its earnings per share for continuing operations rose 9% to NOK 0.82 ($0.10).

Additionally, Orkla’s branded consumer goods sector posted 2% turnover growth, while its organic turnover growth was 0.5%, adjusted for the loss of a distribution agreement within the company’s confectionery and snacks unit.

“Orkla continued to achieve good growth in Finland and Central Europe, and our food ingredients [division] made fine progress in the second quarter due to higher sales of ice cream ingredients,”​ said the company.

Turn sales around in Norway

Orkla said its sales growth in Norway was weaker than last year partly as a result of the 83% increase in tax on chocolate and sugar.

Some of the Orkla’s categories in the country have also seen lower campaign activity and higher retail prices, which have impacted volume growth negatively, added the company.

Peter Ruzicka, president and CEO at Orkla, said: “Our priority is to turn performance around in Norway, and to continue our efforts to shift our portfolio towards higher growing categories, sales channels and geographies.

“We maintain steady focus on improving our supply chain efficiency, and in the second quarter decided to close two factories in Sweden and Finland,”​ he added.

“We will make continuous improvements in production and procurement,” ​said Ruzicka.

“Effective October 1, Orkla will be making changes in its group executive board. The aim is to strengthen the group's strategic priorities and utilize our executive management team in the best possible way.”

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