Comprehensive actions - improved financial perf...
Orkla's operating profit (EBITA*) in the third quarter ended at NOK
811 million, compared with NOK 334 million in the second quarter and
NOK 1,026 million in the same quarter of last year. Cash flow from
operations for the first nine months amounted to NOK 3.1 billion,
compared with NOK 1.5 billion for the same period in 2008. Weak
international economic conditions continued to impact demand and
sales in several of the Group companies, but the underlying trend has
been stable through the second and third quarters. The acquisition
and integration of Indalex into Sapa's North American extrusion
operations have now been completed.
"In the past year, Orkla companies have implemented comprehensive
restructuring and cost-cutting programmes. It is therefore gratifying
to see that these measures are helping to improve their cost position
and not least, ensure a good cash flow. We see clear signs of
stabilisation in important markets, but there are still few strong
growth signals," says President and CEO Dag J. Opedal.
Orka's third-quarter operating revenues totalled NOK 14.1 billion,
down from NOK 15.9 billion in 2008. This is largely due to weak
markets for Elkem and Sapa. Nevertheless, vigorous restructuring and
cost-cutting measures contributed to a positive result in the quarter
for these companies. Orkla Brands continues to report positive profit
performance, and Borregaard posted satisfactory results despite weak
markets. The return on the Share Portfolio at the end of the first
nine months was 26.2 per cent, compared with 30.7 per cent for the
benchmark Morgan Stanley Nordic Index.
The equipment damaged in the fire at Elkem Solar's new plant in
Kristiansand has now been repaired and test operations began in
October. The ramp-up towards normal production levels will start at
the end of November.
Sapa's acquisition of Indalex, its biggest competitor on the US
market, has been completed with effect from 1 August. This
acquisition will be followed by further restructuring of Sapa
Profiles North America, and two or three factories will be closed.
Following the Norwegian parliament's decision in 2008 to change the
reversion regime, Elkem sold two of its hydropower assets that
operate under licence for NOK 6 billion in the third quarter.
*Operating profit (EBITA): Before amortisation, restructuring and
significant impairment charges
Key figures Q3-09 (Q3-08) in NOK million:
Operating revenues: 14 088 (15 904)
EBITA: 811 (1 026)
Profit before taxes: 494 (-939)
Earnings per share diluted: (NOK) 0,5 (-1,2)
Cash flow from operations: 1 663 (365)
As of 30 September 2009 (as of 31 december 2008):
Net interest-bearing debt: 28 226 (27 424)
Equity (%): 50,3 (47,7)
Net gearing: 0,59 (0,55)
The third quarter in brief
- Orkla's operating profit (EBITA) for the third quarter amounted to
NOK 811 million, compared with NOK 1,026 million in the same quarter
last year and NOK 334 million in the second quarter of 2009.
- Cash flow from operations improved, totalling NOK 3,115 million at
the end of the first nine months, compared with NOK 1,473 million at
the same time last year.
- Weak international economic conditions continued to affect demand
and sales in several of the Group's industrial businesses.
Third-quarter operating revenues totalled NOK 14,088 million (NOK
15,904 million)1.
- Orkla Brands reported another good quarter with EBITA of NOK 759
million (NOK 708 million)1. Orkla Brands International and Orkla Food
Ingredients posted improved results, while the Nordic units performed
on a par with last year.
- Due to comprehensive restructuring and cost-cutting measures, Orkla
Aluminium Solutions achieved a positive result of NOK 29 million (NOK
92 million)1 in the third quarter. The acquisition and integration of
Indalex in the US have proceeded as planned.
- In Orkla Materials, Borregaard reported satisfactory third-quarter
results, while Elkem's results reflected continued weak markets and
low capacity utilisation, in addition to the ramp-up plan for Elkem
Solar being delayed by the fire in July.
- In Orkla Associates, REC reported EBITDA of NOK 429 million (NOK
711 million)1 in the third quarter. Jotun's EBIT for the first eight
months was NOK 858 million (NOK 807 million)1.
- At the end of the first nine months, the return on the Share
Portfolio was 26.2%, compared with 30.7% for the Morgan Stanley
Nordic Index (43.5% for the Oslo Børs Benchmark Index).
- On 4 October 2009, following the Storting's adoption of a new
reversion regime in autumn 2008, Elkem entered into an agreement to
sell its hydropower plants in Salten and Bremanger, operating under
licence, for NOK 6 billion.
The Group
Orkla's third-quarter operating revenues totalled NOK 14,088 million
(NOK 15,904 million)*. The decline was largely driven by low demand
in Orkla Aluminium Solutions, and slow markets for Elkem's
silicon-related businesses.
The Norwegian krone strengthened in the third quarter, against both
the USD and euro-related currencies, but was nevertheless weaker than
in the corresponding quarter of 2008. Currency translation effects
therefore had a positive impact on operating revenues, amounting to
around NOK 400 million in the third quarter and around NOK 1.65
billion in the first nine months.
The Group's EBITA for the third quarter was NOK 811 million (NOK
1,026 million)*. Orkla Brands reported a satisfactory third-quarter
profit performance with underlying** profit growth of 6%. Markets for
Orkla Aluminium Solutions remained very slow in Europe and the US,
although the latter saw slight growth compared with the previous
quarter. Wide-ranging restructuring and cost-cutting measures
contributed to positive EBITA of NOK 29 million in the quarter (NOK
92 million)*. In Orkla Materials, Elkem's results reflect continued
weak markets and low capacity utilisation in the silicon-related
business. Average capacity utilisation in the third quarter was 57%,
excluding Solar. Due to the fire in July, Elkem Solar had no
production of any significance in the third quarter and thus made a
substantial negative contribution to profit. The damage has been
repaired and test run begun mid-October. The ordinary ramp-up of the
factory will commence as soon as the repairs have been tested and
approved. Borregaard reported satisfactory third-quarter profit, and
EBITA ended at NOK 128 million (NOK 110 million)*. For the Group as a
whole, EBITA was affected by currency translation effects totalling
NOK -18 million in the quarter, and NOK -38 million in the first nine
months.
Orkla's equity interests in REC (39.7%) and Jotun (42.5%) are
presented according to the equity method on the line for associates.
The contribution from associates to Group third-quarter profit
totalled NOK -328 million (NOK 573 million)*. Of the total amount,
REC's contribution to Orkla's profit for the quarter accounts for NOK
-401 million (NOK 496 million)*.
At the end of the first nine months, the return on the Share
Portfolio was 26.2%, compared with 30.7% for the Morgan Stanley
Nordic Index (43.5% for the Oslo Børs Benchmark Index). Gains, losses
and write-downs on the Share Portfolio ended at NOK 334 million in
the third quarter, of which realised portfolio gains amounted to NOK
297 million and write-downs of portfolio investments totalled NOK 97
million. Dividends received in the third quarter totalled NOK 14
million, and NOK 238 million for the first nine months.
Group profit before tax for the third quarter was NOK 494 million
(NOK -939 million)*, while earnings per share, diluted, were NOK 1.4
(NOK 1.3)* at the end of the first nine months. The tax charge is
estimated to be NOK 92 million so far this year.
Strong focus on increasing capital efficiency helped to boost cash
flow from operations in the third quarter to NOK 1,663 million (NOK
365 million)*, and cash flow from operations for the first nine
months of 2009 totalled NOK 3,115 million, compared with NOK 1,473
million in the same period of last year. After the Group's
participation in the REC and SPDE share issues, and the acquisition
of Indalex, all in the third quarter, net interest-bearing
liabilities amounted to NOK 28.2 billion at quarter-end.
In connection with the acquisition and integration of Indalex in the
US, Orkla Aluminium Solutions will carry out further restructuring of
its extrusion operations in North America. The factories in Morris
and Calgary will be closed in the course of the fourth quarter, and
minor changes will also be made at other factories. In this
connection, a restructuring provision of NOK 94 million was made in
the third quarter. The agreement to divest the business in Catawba in
compliance with the requirements of the US Department of Justice has
been signed.
* The figures in brackets refer to the corresponding period of the
previous year.
** Excluding acquisition, divestments and currency translation
effects.
Ref.:
SVP Investor Relations
Rune Helland
Tel.: +47-2254 4411
SVP Corporate Communications
Ole Kristian Lunde
Tel.: +47-2254 4431
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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