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Rating action

Scope Ratings GmbH (Scope) has today affirmed the issuer rating of A-/Stable to Orkla ASA. Scope has also affirmed the senior unsecured debt rating at A- and the short-term debt rating at S-1.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: BBB+ (unchanged). The business risk profile is underpinned by Orkla’s good market position in the Nordic and selected European markets, with a strong diversification through reputable and established consumer product brands that continue to support cash flow growth and conservative credit metrics. Profitability continues to lag large international peers while remaining stable, and associated company Jotun remains a high‑quality and cash‑generative asset.

Orkla has a portfolio of growing brands that are positioned across everyday food, snacks, health, home & personal care and B2B ingredients, complemented by annual cash dividends upstreamed from partially-owned global paint and coatings company Jotun. The group today manages around 10 portfolio companies spanning Orkla Foods, Orkla Snacks, Orkla Food Ingredients (OFI), Orkla Health, Orkla Home & Personal Care, Orkla House Care, Health & Sports Nutrition Group, Orkla India, The European Pizza Company (TEPC), and associate Jotun. Management continues to simplify the structure to a target of 7–9 portfolio companies by 2026, prioritising core franchises and capital returns.

Most revenues come from a portfolio of over 300 brands that rank among the top in their categories underscoring the company’s strong competitive position. The company’s strength lies in its dominant local market shares, particularly in food, snacks, and household care, where it consistently outperforms larger international competitors on both positioning and price. Orkla’s strategy emphasizes leveraging these advantages while pursuing growth in areas aligned with long-term trends such as consumer health, and out-of-home pizza chains. These segments offer attractive opportunities but also come with heightened competition and potential margin pressure, which Orkla seeks to mitigate through targeted acquisitions of companies with established market leadership and divestments of non-core businesses. Importantly, Scope’s current ratings incorporate the expectation that Orkla will continue to build on its strong regional brand strength and barriers to entry versus international competitors, notably around its historical ability to protect regional brand resonance, and effective innovation to match changes in consumer preferences.

Diversification across consumer goods product categories and brands, and ongoing strategic expansion into growth areas, underpin Orkla’s long-term outlook. Although geographic concentration in the Nordics remains a constraint, Orkla’s wide product mix and proactive approach to acquisitions position them well to maintain strong market leadership and deliver incremental growth across the portfolio.

Scope-adjusted EBITDA* increased to NOK 11bn in 2024 (2023: NOK 9.2bn) with price/mix, cost discipline and higher dividend contributions from Jotun and as sources for growth. Forecasted profitability for the group is expected to remain lower than international peer average, at around 14.5% EBITDA margin in 2026/27 (Nestlé: 20%, Unilever: 20%, Mondelez: 18%) but remains stable, and is supported by gradually easing raw material costs (e.g., cocoa).

Financial risk profile: A (+1 notch). The financial risk profile is supported by the improved credit metrics despite its generous shareholder remuneration. Orkla’s modest leverage, double-digit interest cover and significant cash generation continue to substantiate the strong investment-grade rating.

Current net debt levels reflect Orkla’s M&A-driven strategy, with large disposals in 2025. Orkla’s divestments in Pierre Robert and its Hydro power production facilities, together with net proceeds from the IPO of Orkla India, result in a strong cash position going into 2026 (with proceeds earmarked for share buybacks). This reinforces a strategic shift to limit acquisitions amid reorganisation and market challenges, with moderate M&A expected by Scope from 2026 onwards, and over the next few years (around NOK 1bn annually). Scope-Adjusted Debt/EBITDA is expected to remain around 1.5x in 2025-2027, compared to 1.6x in 2024, reflecting both continued operational improvements and ongoing shareholder distributions.

Interest cover as measured by EBITDA/interest cover is expected to improve to 12.0x–13.5x (2024: 9.9x) in 2025-2027, reflecting higher operating earnings and base-rate projections moving lower, normalising funding costs on predominantly floating‑rate debt.

Orkla’s recent divestments result in an expected strong free operating cash flow (FOCF) of NOK 12bn for 2025. The anticipated FOCF/debt in the period 2026-2027 is around 30%–35% supported by strong cash generation, operating cash discipline and moderate capex investments. Scope’s base case further assumes dividend distributions at the upper end of the company's 50–70% earnings-per-share payout policy, following the NOK 10bn (NOK 4bn ordinary plus NOK 6bn extraordinary) dividend in 2025, and completion of the newly initiated NOK 4bn share buyback by mid 2026.

Liquidity: adequate (unchanged). Orkla’s liquidity is adequate, underpinned by solid access to bank and bond markets. As of Q3 2025, the company had NOK 10.5bn in combined cash and undrawn facilities, comfortably exceeding reported short‑term debt of around NOK 3.0bn. Liquidity ratios remain healthy at well above 200%.

Supplementary rating drivers: credit-neutral (unchanged). The rating has no adjustments related to financial policy, governance and structure, parent/government support, or peer group considerations.

Outlook and rating sensitivities

The Stable Outlook reflects the expectation of a continuation of improving profitability thanks to easing input cost inflation, with EBITDA margin of 15% over time and leverage remaining below 2.0x, amid the absence of transformational deals. The Outlook also incorporates Scope’s expectation that Orkla will likely not use its leverage potential to the maximum leverage ratio as defined by the company (net debt/EBITDA) of 2.5x over the foreseeable future.

The upside scenarios for the ratings and Outlook are (individually):

1. Scope-adjusted debt/EBITDA below 1.0x on a sustained basis
    
2. Improvement of the business risk profile, driven by increased international market presence and global brands and/or improving profitability (remote)

The downside scenario for the ratings and Outlook is:

1. Scope-adjusted leverage to above 2.0x on a sustained basis

Debt ratings

The senior unsecured debt rating is A-, aligned with the issuer rating. The S-1 short-term rating is based on the A-/Stable issuer profile and supported by adequate liquidity, strong banking relationships, and a well-established capital markets presence.

Environmental, social and governance (ESG) factors

Overall, ESG factors have no impact on this credit rating action.

All rating actions and rated entities

Orkla ASA

Issuer rating: A-/Stable, affirmation

Short-term debt rating: S-1, affirmation

Senior unsecured debt rating: A-, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and Outlook, (General Corporate Rating Methodology, 14 February 2025; Consumer Products Rating Methodology, 31 October 2025), are available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlook and the principal grounds on which the Credit Ratings and Outlook are based. Following that review, the Credit Ratings and Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlook are UK-endorsed.
Lead analyst: Thomas Faeh, Executive Director
Person responsible for approval of the Credit Ratings: Karl Yuan Pettersen, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 11 January 2022. The Credit Ratings/Outlook were last updated on 9 January 2025.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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