UBS analysts downgraded Orkla to 'Sell' from 'Neutral,' citing rising cost inflation and pressure from associate Jotun.
The 12-month price target was cut to NOK 89 from NOK 130, implying 14% downside. Higher freight, packaging, and energy costs combine with weak European demand.
The bank expects consolidated margins to shrink about 90 basis points from 2025 to 2027, though less severe than the 2021-2022 inflation shock.
Jotun contributes roughly 30% of Orkla's net income. UBS forecasts Jotun's profit contribution to fall 14% in 2026 and 6% in 2027 due to supply-chain disruptions, energy costs, and the Middle East conflict.
Analysts cut 2026 and 2027 EPS estimates by 7% and 15%, respectively, citing weaker organic sales, higher inflation, and a stronger Norwegian krone.
Orkla's organic sales growth is expected at 2.9% in 2026 and 2.7% in 2027, below peers like Nestlé and Danone. Lower pricing power leaves it more exposed to inflation.
