Orkla has reported a 10% increase in operating profit , totalling NOK 725m in the first quarter of 2015.
The Branded Consumer Goods business achieved EBIT (adj.) of NOK 769 million, an improvement of 11% from the first quarter of 2014.
Orkla's first-quarter operating revenues increased to NOK 7,541 million, up from NOK 7,013 million in the first quarter of 2014. Branded Consumer Goods achieved 4.3% organic growth. There was sales growth in all the business areas, even when adjusted for positive Easter effects.
The increase in sales in the quarter was largely volume-driven. There were several major launches of new products, including the AquaDerma skin care range from Lilleborg, Big Cut chips from Orkla Confectionery & Snacks and Pastella vegetable pasta from Orkla Foods Danmark. Orkla increased its advertising investments in the first quarter.
The weakening of the Norwegian and Swedish krone resulted in higher purchasing costs for the Norwegian and Swedish businesses.
"I am satisfied with the first quarter. We saw volume-driven growth in Branded Consumer Goods. All the business areas improved their performance in demanding markets where there is strong international competition. Orkla also achieved broad-based profit growth in the first quarter of this year. We have focused on operations, and our various cost reduction programmes made a positive contribution," says Orkla President and CEO Peter A. Ruzicka.
In the first quarter, Orkla entered into an agreement to purchase the Swedish branded consumer goods company Cederroth, which is one of the Nordic region's leading suppliers in the personal care, health, wound care and household cleaning segments. The agreement is conditional on the approval of the competition authorities. The competition authorities have approved the acquisition of Nordic Partner Foods in Latvia, an acquisition that will double Orkla's turnover in the Baltics. Orkla has also announced its agreement to purchase the German sales and distribution company Eisunion, which will strengthen Orkla Food Ingredients' position as a leading supplier of ice cream ingredients. On 27 April Orkla entered into an agreement with PepsiCo to be its primary go-to-market partner for the sale of PepsiCo's juices, cereals and snack products in the Nordic region.
First-quarter profit from associates and joint ventures (primarily Sapa, Jotun and Grnges) amounted to NOK 238 million, compared with NOK 55 million in the same quarter of 2014. Cost synergies and strong demand for extruded aluminium products in North America contributed to good profit growth for Sapa. Jotun delivered all-time high sales and operating profit in the first quarter of 2015. Sales of marine coatings increased, year over year. Similarly, sales of decorative paints rose in Scandinavia, the Middle East and Asia.
Hydro Power and Orkla Eiendom saw a small improvement, overall, in the first quarter. At the end of March, the market value of the Group's shares and financial assets totalled NOK 691 million.
