Orkla (ORK) Q2 2024 earnings summary

Executive summary

• Adjusted earnings per share in Q2 were NOK 1.66, up 7% year-over-year, with EBIT Adjusted growth of 13% for the group and 22% for consolidated portfolio companies.

• Consolidated portfolio companies delivered 19.5% underlying adjusted EBIT growth in H1 2024, with a 3.2% increase in group operating revenues driven by volume, price, and currency effects.

• Strategic focus remains on organic value creation, portfolio simplification, and delivering on financial targets set for 2026.

• Two major transactions completed: partnership with Rhône for Orkla Food Ingredients and sale of Lilleborg to Solenis.

• Financial performance aligns with ambitions set at Capital Markets Day; progress on structural initiatives including Orkla Food Ingredients partnership and sale of Lilleborg.

Financial highlights

• Group operating revenues grew by 1% in Q2 to NOK 17,244m, and by 3.2% in H1 to NOK 34,351m.

• EBIT Adjusted for consolidated portfolio companies rose 17% in Q2 to NOK 1,864m; group adjusted EBIT up 13% to NOK 2,023m.

• Profit after tax to shareholders was NOK 2 billion in Q2, with a rolling 12-month EBIT Adjusted margin of 9.7%.

• Cash flow from operations (adj.) improved to NOK 3,162m YTD, up from NOK 1,781m YTD last year.

• Adjusted EPS: NOK 3.16 (+9.7%) in H1; reported EPS: NOK 3.52 (+32.8%), reflecting the Lilleborg gain.

Outlook and guidance

• Financial targets for 2024–2026: 8–10% CAGR in underlying adjusted EBIT, 1.5–2.0 pp EBIT margin improvement, ROCE increase from 10% (2023) to 13% (2026).

• Input costs are expected to see low to mid-single digit improvements for 2024, but cocoa prices remain a risk.

• Jotun expects continued sales growth in H2 2024, with positive momentum in Marine, Protective, and Powder segments.

• Ongoing evaluation of accessing capital markets in India, with updates expected in 2025.

• Macroeconomic conditions improving; lower inflation and interest rates expected to support demand.