Press release: Continued improvement for Orkla
Orkla's operating profit (EBITA) increased by 16% to NOK 1,079 million in the
second quarter of 2011. Sapa continued to achieve profit growth. Profit was also
boosted by strong markets and good results for Borregaard, as well as normalised
production in the hydropower business. Profit for Orkla Brands was affected by a
natural lag in the effect of price increases to compensate for higher raw
material prices. Price rises have been implemented for the second half of 2011.
"Operational excellence is the core of Orkla's value creation, and it is
therefore gratifying that operating profit shows improvement for the eighth
consecutive quarter. Sapa is experiencing a positive trend in North America, in
terms of both market growth and operations, while the trend in Europe is still
weak. The current situation with higher raw material prices has impacted
negatively on profit for Orkla Brands in the second quarter," says Orkla
President and CEO Bjørn M. Wiggen.
Sapa's extrusion business in North America is experiencing improved markets,
particularly for deliveries for the production of means of transport, and has
delivered satisfactory results in the second quarter. The restructuring of the
company's North American operations following the acquisition of Indalex has
laid the foundation for good operational performance.
Sapa is now further restructuring and optimising its European production system.
This will initially affect its operations in Denmark, Benelux and Portugal. The
restructuring entails proposals to close plants, entirely or partially, and
relocate production equipment. The restructuring process will affect 450
persons.
"The restructuring is an important step towards strengthening Sapa's long-term
competitive ability and achieving the business's operational goals," Bjørn M.
Wiggen points out.
Orkla Brands reported slightly lower second-quarter profit this year than in
2010. Stabburet and Procordia in particular delivered good results, while
results for Orkla Brands Russia and Bakers were weak. The Nordic branded
consumer goods business is impacted by a natural lag in the effect of price
increases to compensate for higher raw material prices, and has implemented
price rises that will have effect in the second half of 2011. The process of
selling Bakers is still ongoing.
Borregaard's chemicals business is experiencing very good market conditions for
several of its products, and is delivering good results. However, profit is
negatively impacted to a certain extent by the high exchange rate for the
Norwegian krone, and market performance is expected to weaken somewhat towards
the end of the year. After heavy precipitation in the second quarter, hydro
power production was back at the more or less normal level in the quarter, and
significantly higher than last year. At the same time, reservoir levels have
been built up from substantially below normal to above normal.
In accordance with Orkla's accounting principles, the Group's shareholding in
REC has been written down to the market price at 30 June. The return on the
investment portfolio was higher than the return for the Oslo Stock Exchange
Benchmark Index and the Morgan Stanley Nordic Index in the second quarter, while
portfolio holdings were reduced to under NOK 10 billion during the quarter, in
line with the Group's strategic objective.
Orkla ASA
Oslo, 20 July 2011
Ref.:
Senior VP Corporate Communication and Public Affairs
Johan Chr. Hovland
Telephone +47 22 54 44 86/+47 917 63 491
Senior VP Investor Relations
Rune Helland
Telephone +47 22 54 44 11
VP Investor Relations
Siv M. S. Brekke
Telephone +47 22 54 44 55/+47 930 56 093
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
Presentation of 2nd Quarter 2011:
http://hugin.info/111/R/1532123/466489.pdf
2nd Quarter 2011:
http://hugin.info/111/R/1532123/466493.pdf
Quarterly and accounting figures 2nd Quarter 2011:
http://hugin.info/111/R/1532123/466502.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
[HUG#1532123]
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