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Improved markets and profit growth for Orkla

Orkla’s operating profit (EBITA) increased by 14% from NOK 1,161 million in the fourth quarter of 2009 to NOK 1,322 million in the same period of 2010. Full-year operating profit (EBITA) increased by 30% from NOK 3,029 million to NOK 3,944 million. 2010 was a good year for the Share Portfolio, which achieved a return of 31.8 %.

“The broad-based improvement for Orkla’s industrial activities reflects both operational improvements and better markets. We are continuing to keep up the pressure with regard to operational improvements, while also pursuing our structural development efforts,” says Orkla President and CEO Bjørn M. Wiggen.

Growth in volume and product mix and stronger market shares contributed to the improved results from Orkla Brands. Particularly good progress was made by the larger businesses in the Nordic region. Raw material prices continue to rise, a trend that will have to be countered by cost cuts and price increases. Important expansion investments were made in 11 companies and one brand in 2010.

Sapa reported significant improvement in volumes and profit in 2010. However, further volume increases are required to bring the market back to more normalised levels. Particularly volumes in the North American and South European markets remain low. Renewed emphasis has been put on improvement programmes with a view to improving the company’s cost position, particularly in the profiles business. Sapa Heat Transfer has seen an increase in new orders. The start-up of the new factory in Shanghai is proceeding as planned, and Sapa is continuing its expansion in Asia.

Borregaard is experiencing good demand and higher prices, and reported good operating results in the fourth quarter. The hydro power business was impacted by the fact that 2010 was extraordinarily dry and cold. REC reported a good fourth quarter, with EBITDA of NOK 1836 million. The Share Portfolio delivered a very positive performance, achieving a return for the year of 31.8%, compared with 18.3% for the Oslo Stock Exchange.

In accordance with Orkla’s dividend strategy, the Board of Directors proposes to pay an ordinary dividend of NOK 2.50 per share for 2010. This increase in dividend is in line with Orkla’s goal of delivering a stable, growing dividend to shareholders over time.

“Orkla will continue to create long-term value by developing a portfolio of companies and investments. The interaction between the company’s solid financial and industrial expertise and experience will remain the core of Orkla’s business model. Orkla will actively develop and support the various units in the Group. This means that the portfolio cannot be too broad, which is why we are concentrating our activities and reallocating resources and capital to the businesses in which Orkla is best positioned for success. Continuous focus on operational efficiency in every part of the value chain will lay a solid foundation for the company’s growth,” says President and CEO Bjørn M. Wiggen.