Innovation drives 7.2% profit growth in Orkla snacks and confectionery

By Vince Bamford

- Last updated on GMT

Orkla presented its fourth-quarter results this week
Orkla presented its fourth-quarter results this week

Related tags Latvia Estonia

Innovation including new nuts and chocolate products has contributed to a strong performance by the confectionery and snacks division of Norwegian-based business Orkla.

Orkla Confectionery & Snacks has reported 2015 fourth-quarter operating revenues of NOK 1,818m ($212m), with year on year organic growth of 7.2%. Performance was particularly strong in Norway, Sweden, Denmark and Estonia, said the manufacturer.

New products that had contributed to Q4 performance include Stratos Melky chocolate big bar and Smash! Kuler in Norway; the Big Cut snacks launched in Norway, Sweden and Finland; Polly Ovnsristet roasted nuts in Norway; and Ballerina Bites biscuits in Sweden.

Fourth-quarter operating profit for the Orkla Confectionery & Snacks division was NOK 314m ($37m) versus NOK 245m ($29m) the year before. The improvement in profit was driven by sales growth, but positive currency translation effects and the acquisition of NP Foods also contributed.

'Significant structural growth'

Latvian business NP Foods, owner of brands including of Laima confectionery, had contributed “significant structural growth​” in the fourth quarter after being consolidated into the financial statements from April 1, 2015, said Orkla.

The acquisition had also brought a restructure in which the Latfood snacks company and NP Foods in Latvia have been combined and, from last month, renamed Orkla Confectionery & Snacks Latvija. This is the leading confectionery, biscuits and snacks company in the Baltics, said Orkla, with brands including Laima, Selga, Staburadze, Ādažu and Taffel. The company exports to 26 countries and has around 1,350 employees.

Orkla president Peter A Ruzicka
Orkla president and CEO Peter A Ruzicka

The ongoing changes, combined with slow growth in export sales to countries such as Russia, contributed to slightly weaker results in Latvia, said the manufacturer.

Finnish operation being evaluated

Orkla this month announced it is to launch an evaluation of the snacks and frozen product operations of its Orkla Confectionery & Snacks Finland division to “strengthen long-term competitiveness​.” Staff and employee representatives of the division – which makes products including Taffel snacks - have been told the evaluation will include all personnel at its Haraldsby production site on the island of Åland, as well as sales and marketing personnel in Vantaa.

In the wider business, which includes food, ingredients and personal care divisions, operating profit rose 9% in Q4 to NOK 1,102m ($129m) on turnover of NOK 9,571m ($1,117m). Orkla Foods and Orkla Confectionery & Snacks had made particularly strong contributions to profit growth, said the business.

Highly competitive markets

For the seventh consecutive quarter, we have succeeded in achieving organic turnover growth in highly competitive markets​,” said Orkla president and CEO Peter A Ruzicka. “In addition, we made several important acquisitions in 2015 that will strengthen our operations going forward​.”

For the full year 2015, Orkla’s operating revenues increased 12% to NOK 33,198m ($3,872m) while operating profit rose 12% to NOK 3,609m ($421m).

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