Comprehensive actions – improved financial performance
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.