Orkla ASA

Orkla reported revenues declined 5% year over year, with underlying revenues flat after currency effects. Reported EBIT adjusted declined 5%, while adjusted EBIT for the consolidated portfolio rose 2.5%; adjusted EPS increased 3% to NOK 1.60. The EBIT margin was 10.5%, and year-to-date underlying EBIT growth was 2.7%. Cash flow from operations in the first half was NOK 2.1 billion, cash flow before capital allocation was NOK 1.6 billion, and net interest-bearing debt was NOK 20.7 billion, equal to 2x net debt/EBITDA. For capital allocation, Orkla had paid NOK 6 billion in dividends and repurchased NOK 2.3 billion of shares year-to-date, and the NOK 4 billion buyback program announced last November was completed in July. Management did not provide a next-quarter or full-year financial outlook beyond saying it remains committed to its financial targets and that margins are within the target range, but it expects elevated input costs from energy, transportation and packaging to remain a headwind.

CEO Nils Selte did not join the call due to travel, so CFO Arve Regland led the discussion. His strategic message was that Orkla is continuing to execute on its three priorities: improving organic growth, making progress on costs, and strengthening the portfolio through capital deployment. He highlighted recent deals such as the European Candy Group acquisition and the 40% stake in Go-Tan as examples of category-focused portfolio building, and said Orkla will present its long-term ambitions at the Capital Markets Day on 1 December.

Arve Regland said the quarter was mixed and “not satisfied” was the right framing, even though consolidated EBIT rose 2.5% and the margin held at 10.5%. He pointed to flat underlying revenue, a 1.3% decline in volume/mix, and currency effects that pushed reported revenue and EBIT down 5% each. On cash and capital allocation, he cited NOK 2.1 billion of operating cash flow in the first half, NOK 1.6 billion of cash flow before capital allocation, NOK 6 billion returned via dividends and buybacks year-to-date, and NOK 20.7 billion of net debt. He also noted that Jotun’s raw material costs are rising and margins there do not yet fully reflect the increase, while OFI’s mitigating actions are mostly SG&A-related and likely to matter more from next year onward.

Analysts focused on how much Middle East-related cost inflation could hit margins and whether pricing can offset it. Regland said the impact was lower than expected in Q2, but significant price increases at Jotun and elevated energy, transportation and packaging costs elsewhere will continue to weigh on results; he stressed it is too early to quantify because conditions change day to day. On Food Ingredients, he said the mitigation actions are being launched now but are unlikely to have a significant effect in the very short term, with more impact expected from next year onward. When asked about the outlook for 2026 and organic sales growth, he declined to give a top-line forecast and said Orkla’s ambition is simply to improve performance from here.