Orkla's first half 2010: Solid improvement in o...
Orkla's first-half operating profit (EBITA)* ended at NOK 1,641 million,
compared with NOK 567 million in the same period of 2009. All of the business
areas have contributed to the profit growth. Group sales had risen 14
percent**Â to NOK 30.9 billion after the first six months of the year, driven
especially by improved markets for Sapa and Elkem Silicon-related.
Operating profit (EBITA) reached NOK 937 million in the second quarter, compared
with NOK 334 million in the same period of 2009. Sales grew 17 percent in the
quarter.
"It is gratifying to see that the measures implemented in the last years are
taking effect. Orkla Brands and Jotun (42.5 percent ownership) continue to
deliver strong results and margin growth. Sapa has had a profit upturn driven by
internal improvements and recovering markets. Elkem Silicon-related is
experiencing good demand and higher prices. The Group's two solar investments
(REC (39.7 percent) and Elkem Solar) are in a ramp-up phase which is expected to
show results in 2010/2011," says President and CEO Dag J. Opedal.
Orkla Share Portfolio achieved a half-year return of 9.3 percent, compared with
a return of 5.9 percent on the Morgan Stanley Nordic Index and -11.7 percent on
the Oslo Stock Exchange Benchmark Index.
As long as the market price of the REC shares is lower than the capitalised
value, the carrying value will be written up and down as the market price
fluctuates. The market price as at 30 June was NOK 15.61. For the second
quarter, this entailed an accounting write-down of NOK 3.0 billion. Orkla's
pre-tax result for the second quarter was thus NOK -1.8 billion (NOK 282 million
in 2009).
Dag J. Opedal has notified the Board of Directors of Orkla ASA that he wishes to
step down as President and CEO in the course of the current year. The Board has
commenced the process of finding his successor, and Mr Opedal will continue in
his position until the successor is in place. Mr Opedal will continue to chair
the Board of Directors of REC, and will remain Orka's representative on Jotun's
Board of Directors. The Board of Directors of Orkla ASA thanks Dag J. Opedal for
his wide-ranging efforts over the past 20 years to promote the development and
growth of the Group, not least as President and CEO since 2005.
* Operating profit (EBITA): Before amortisation, and other income and expenses
** Percentage change compared with the corresponding period of the previous year
Key figures Q2-10 (Q2-09) in NOK million:
Operating revenues: 16 002 (13 652)
EBITA: 937 (334)
Profit before taxes: -1 789 (282)
Earnings per share diluted (NOK): -2.0(0.3)
Cash flow from operations: 55 (1 197)
As of 30 June 2010(as of 30 June 2009):
Net interest-bearing debt: 24 786(27 903)
Equity (%):47.3 (50.0)
Net gearing: 0.60 (0.59)
The first half-year in brief
* Improved market conditions for Orkla Aluminium Solutions and Elkem's
silicon-related operations boosted sales by 14% in the first half-year and
17% in the second quarter.
* Orkla's operating profit (EBITA*) for the first half-year increased to NOK
1,641 million (NOK 567 million)**. Second-quarter EBITA* was NOK 937 million
(NOK 334 million)**.
* Orkla Brands continued its positive profit trend, achieving 10% profit
growth in the first half-year, when EBITA* totalled NOK 1,281 million (NOK
1,160 million)**. The corresponding figure for the second quarter was NOK
657 million (NOK 638 million)**.
* Orkla Aluminium Solutions experienced higher demand and sales volumes
through the first half-year and achieved EBITA* of NOK 427 million (NOK -490
million)**. In the second quarter, which is seasonally the strongest
quarter, EBITA* amounted to NOK 298 million (NOK -148 million)**.
* Orkla Materials saw good demand for silicon-related products and attained
close to full capacity utilisation (excl. Elkem Solar) at the end of the
first half-year. Low inflow and reservoir levels for the Saudefaldene power
plants led to substantially lower production than normal and weaker results
for Orkla Materials Energy. First-half EBITA* for Orkla Materials was NOK
121 million (NOK 84 million)**, while second-quarter EBITA* was NOK 61
million (NOK -54 million)**.
* The first-half return on the Share Portfolio was 9.3%, compared with 5.9%
for the Morgan Stanley Nordic Index (Oslo Stock Exchange Benchmark Index
-11.7%).
* REC reported first-half EBITDA of NOK 869 million (NOK 760 million)**. Jotun
continued to show positive growth at the end of the first four months, with
an operating profit of NOK 446 million (NOK 339 million)**.
* The Group's investment in REC is accounted for according to the equity
method. Orkla bases the value of its equity interest on the market price as
long as the market price is lower than the carrying value, according to the
principles applied for associates. The market price as of 30 June 2010 was
NOK 15.61. This generated an accounting charge of NOK -7.6 billion for the
first half-year and NOK -3.0 billion for the second quarter.
* Group pre-tax profit/loss for the first half-year thus totalled NOK -5,211
million (NOK -33 million)**, and NOK -1,789 million (NOK 282 million)** for
the second quarter alone.
* Operating profit before amortisation and other income and expenses
**Â Figures in parentheses are for the corresponding period in the previous year
The Group
Orkla's operating revenues for the first half-year totalled NOK 30,895 million
(NOK 27,100 million)**, while second-quarter operating revenues amounted to NOK
16,002 million (NOK 13,652 million)**. The improvement on last year's results
was primarily driven by the increased demand experienced by Orkla Aluminium
Solutions and Elkem's silicon business.
Compared with the first half of 2009, the euro has weakened against the
Norwegian krone. In the first half of 2010, the Group had negative currency
translation effects that reduced operating revenues by around NOK 1.5 billion
and, for the second quarter alone, by around NOK 630 million.
Group EBITA* for the first half-year was NOK 1,641 million (NOK 567 million)**,
while second-quarter EBITA* came to NOK 937 million (NOK 334 million)**. Orkla
Brands reported a satisfactory profit performance and underlying*** profit
improvement in both the first half-year and the second quarter alone. Better
markets and the positive effects of internal improvement projects resulted in a
profit upturn for Orkla Aluminium Solutions of NOK 917 million, compared with
the very weak first half of 2009. Orkla Materials posted first-half profit of
NOK 121 million (NOK 84 million)**. Increased demand for silicon-related
products resulted in nearly full capacity utilisation and EBITA* of NOK 435
million for the silicon-related units (excl. Elkem Solar). Elkem Solar is in a
ramp-up phase entailing scheduled stoppages to carry out adjustments and
optimisations. Elkem Solar reduced EBITA* by NOK 381 million in the first
half-year. Orkla Materials Energy's contribution to profit was lower than normal
due to the extremely low reservoir levels at Saudefaldene. Comparative figures
for the first half of 2009 also include results from divested power assets. For
the Group as a whole, EBITA* was negatively affected by currency translation
effects totalling NOK 58 million in the first half-year, and NOK 34 million in
the second quarter alone.
Other income and expenses came to NOK -161 million in the first half-year (NOK
-188 million in the second quarter). The largest items can be ascribed to the
second quarter and consisted of the write-down of goodwill in Orkla Finans by
NOK 105 million and a provision of NOK 63 million for the closure of
Borregaard's factory in Italy, which also produced raw material for Borregaard's
vanillin production in Sarpsborg. Meanwhile, Borregaard has entered into a
long-term agreement for raw material deliveries from an external supplier. On a
full-year basis, these changes are expected to have a positive impact on profit
on the order of NOK 25 million.
The Group's equity interests in REC (39.7%) and Jotun (42.5%) are presented
according to the equity method on the line for associates. Orkla bases the value
of its interest in REC on the market price as long as the market price is lower
than the carrying value, according to the principles applied for associates. The
market price as at 30 June 2010 was NOK 15.61. A total of NOK -7,576 million was
thus recognised in the income statement for the first half-year and NOK -3,024
million for the second quarter in connection with REC. Associates' contribution
to profit at 30 June (year to date) totalled NOK -7,392 million (NOK -75
million)**, and NOK -2,908 million (NOK -210 million)** for the second quarter.
The first-half return on the Share Portfolio was 9.3%, compared with a return of
5.9% for the Morgan Stanley Nordic Index (-11.7% for the Oslo Stock Exchange
Benchmark Index). Gains, losses and write-downs on the Share Portfolio totalled
NOK 587 million (NOK -87 million)** in the first half-year. The second-quarter
contribution to profit was NOK 248 million (NOK 228 million)**. Dividends
received by the Group came to NOK 389 million (NOK 225 million)** in the first
half-year and NOK 251 million (NOK 180 million)** in the second quarter.
Orkla's first-half diluted earnings per share were NOK -5.6 (NOK 0.9)**. The
change in the value of REC represented NOK -3.0 per share in the second quarter
and NOK -7.4 per share in the first half-year. First-half tax is calculated to
be NOK 428 million.
On 6 May 2010, Orkla subscribed for a total of 132,078,878 shares at a
subscription price of NOK 12.10 per share in the rights issue in REC. The
subscription entailed that Orkla ASA subscribed for all of the subscription
rights allocated to Orkla ASA and Elkem AS. After the completed rights issue,
Orkla ASA owns 396,236,635 shares, thereby maintaining its equity interest in
REC of approximately 39.7%.
*Operating profit before amortisation and other income and expenses
**Figures in parentheses are for the corresponding period in the previous year
***Excluding acquired and sold operations and currency translation effects
Orkla ASA
Oslo, 21 July 2010
Ref.:
SVP Corporate Communications
Ole Kristian Lunde
Tel.: +47-2254 4431
SVP Investor Relations
Rune Helland
Tel.: +47-2254 4411
VP Investor Relations
Siv M. S. Brekke
Tel.: +47-2254 4455
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
[HUG#1433025]
2nd Quarter 2010:
http://hugin.info/111/R/1433025/378955.pdf
Presentation of 2nd Quarter 2010:
http://hugin.info/111/R/1433025/378956.pdf
Quarterly and accounting figures 2nd Quarter 2010:
http://hugin.info/111/R/1433025/378957.xls
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Orkla ASA via Thomson Reuters ONE
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