Pre-close update for Q4 2024
As a service to the capital markets, the Orkla IR team would like to draw your attention to the following items to remember in advance of Q4 2024 reporting.
General
The number of sales days in Q4 2024 was the same as for Q4 2023.
Orkla Foods Europe
In Q4 2023, Orkla Foods Europe reported the following other income and expenses:
- Other income of NOK 52 million, of which the largest items were:
- Net gain of NOK 25 million from the sale of a factory building in Orkla Foods Česko a Slovensko as part of a restructuring project.
- A settlement agreement of NOK 24 million related to the acquisition of Hamé in 2016.
- Other expenses:
- Write-downs: A restructuring project in Orkla Foods Česko a Slovensko entailed the closure of four factories. Two factories were sold (see net gain of NOK 25 million above). Based on the assessment of the last two factories, tangible assets were written down by NOK 188 million.
Orkla Confectionery and Snacks
- Latvian biscuit factory:
- In Q4, 2023, Orkla reported a negative EBIT impact of NOK 25 million related to production challenges in the new biscuit factory in Latvia.
- As communicated during the Q3 2024 presentation, we expect further improvement in Q4 2024 from the resolution of biscuit factory challenges. As communicated at Orkla’s Capital Markets Day in November 2023, we expect in 2024 to regain a significant part of the negative impact of NOK 150 million that was incurred in 2023.
- Cocoa market:
- We communicated in the Q3 2024 presentation that volumes for 2024 are secured, and that we had also started to secure volumes into Q1 2025. We stated that we would continue to take mitigating actions to dampen the effect of extraordinarily high cocoa prices.
Orkla Food Ingredients
- Plant-based:
- We communicated in Q3 2024 a slight decline in EBIT (adj.) year-over-year for Plant-based, fully related to the margarine segment, where results were temporarily very strong in the second half of 2023, and in particular, in the fourth quarter.
- Bakery:
- We announced via a press release on 18 November 2024 that Credin Polska sp. z o.o. (“Credin Poland”), through its subsidiary Credin Polska Development sp. z o.o., signed an agreement to acquire the Eurohansa brand name and all assets and operations relating to the Toruń site (together “Eurohansa Toruń”) from the current owner. As noted in the press release, the transaction is expected to be completed in early 2025.
Orkla India
- Government grant:
- In Q4 2023, we reported a NOK 22 million in positive EBIT effect from a government grant provided by the Government of India.
- We do not expect to receive additional grants in Q4 2024, as Orkla India has already received incentives for 2024 in Q2 and Q3.
The European Pizza Company
In the fourth quarter of 2023, goodwill related to the German pizza chains was written down by NOK 62 million due to the closure of unprofitable pizza restaurants.
Pierre Robert Group
In Q3, we reported weak sales ahead of a customer contract expiration at the end of 2024. As reported in the news media, the contract was with grocery retailer Rema 1000.
Hydro power:
- We reported in Q3 2024 that Orkla has initiated a sales process for our Hydro Power operations and that we will update the market as the process progresses.
- Volume: Total production in Q4 2024 was 681 GWh. Average production in Q4 last ten years was 624 GWh.
- Price NO1 (Eastern Norway): Average price in Q4 2024 was NOK 0.53/kWh (vs. NOK 0.80/kWh in Q4 2023).
- Price NO2 (Southern and south-western Norway): Average price in Q4 2024 was NOK 0.63/kWh (vs. NOK 0.82/kWh in Q4 2023).
Kindly note that prices are preliminary estimates.