Improved profit for all business areas
Orkla’s third-quarter operating profit (EBITA) ended at NOK 1,166 million, compared with NOK 811 million in the same quarter of 2009.
Profit improved in all business areas. The return on the Share Portfolio was 21.3 percent as of 30 September.
“It is gratifying to note the clear improvement in results in the third quarter. Underlying operations were strengthened in all business areas, while Elkem’s silicon-related business in particular has also benefited from better markets and higher prices,” says Orkla President and CEO Bjørn M. Wiggen.
Orkla’s third-quarter operating revenues totalled NOK 16.3 billion, up from NOK 14.1 billion in 2009. The growth in sales is primarily ascribable to increased capacity utilisation and higher prices for Elkem’s silicon-related operations, as well as to market growth and increased market shares for Sapa. Orkla Brands had another good quarter with underlying profit growth of 5 percent.
Several of the Nordic Orkla Brands companies reported improved results, while the business in Russia faced special challenges as regards production and sales due to the heat wave in Russia this summer. The year-to-date return on the Share Portfolio was 21.3 percent, compared with 16.0 percent for the Nordic reference index and 2.7 percent for the Oslo Stock Exchange Benchmark Index.
As long as the market price of Orkla’s REC shares is lower than their capitalised value, the accounting value will be written up or down in step with the fluctuations in market price. Through the third quarter, the REC share price rose from NOK 15.61 to NOK 19.92. The positive accounting effect on Orkla’s profit was NOK 2 billion in the quarter.
Pre-tax profit in the third quarter totalled NOK 3,434 million, compared with NOK 494 million last year.
Orkla’s Board of Directors appointed in September Bjørn M. Wiggen as Orkla’s new CEO. Wiggen came from the position as CEO of Sapa. At the same time, Timothy R. J. Stubbs was appointed new head of Sapa. Svein Tore Holsether, former Business Area President for Sapa Asia & Middle East, has now been appointed Executive Vice President with overall responsibility for Orkla’s M&A activities. Holsether will take up the position in January 2011. Stubbs and Holsether will be part of Orkla’s new Group Executive Board.
“Orkla will continue to be a portfolio company in the future,” says Bjørn M. Wiggen. “However, we want to focus the portfolio on a smaller number of businesses, and thereby ensure, not least, that we have sufficient capital to develop the areas in which we are best qualified and positioned to create long-term value for our shareholders. However, we are under no pressure, and we will take the time we need to find good solutions.
Since the end of the third quarter, Orkla has entered into an agreement to sell Borregaard Skoger to Statskog for NOK 1.7 billion.