Orkla continues on its path

Orkla’s (OSE: ORK) management works towards transforming the company to a more focused entity as a pure branded goods company. The acquisition of Jordan, reduced shareholding in Renewable Energy Corporation ASA (OSE: REC) and overall reduction in share portfolio and divestment of Borregaard are just a few ongoing measures towards that end. Meanwhile numerous challenges remain as we enter a seasonally weaker third quarter on the heels of a mixed second quarter where Nordic Branded Consumer Goods performed acceptably but contract manufacturing lessened.

Second quarter operating revenues fell by 5% to 15 145 million NOK. Earnings before tax came in a considerable better at 541 million since loss from associates fell clearly and operating cash flow of 679 million also improve vs. last year. Sequentially all of the numbers are condirable weaker. Raw material prices remain high. The measures taken have greatly reduced interest bearing liabilities in the last several years although so far this year that trend has not continued.

Another recent acquisition is that of Boyfood Oy in Finland, Finland’s leading herring product maker known for its BOY-silli brand. It was acquired by Orkla’s subsidiary Felix Abba from Icelandic company Fram Foods ehf. for 9.6 million Euros on debt-free basis. Boyfood’s 2011 sales reached around 18 million Euros and it employs 56 people in Rymättylä. This makes Felix Abba a clear market leader in Finnish herring market with strong ABBA, AHTI, VESTA and BOY brands.