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Satisfactory for Orkla in 2011 in challenging markets

Terje Andersen, Torkild Nordberg, Bjørn M. Wiggen, Svein Tore Holsether.

Terje Andersen, Torkild Nordberg, Bjørn M. Wiggen, Svein Tore Holsether. Photo: Orkla

Orkla delivered satisfactory operating profit for 2011 taken into account that the markets for many of its businesses were challenging.

 

 
Sales rose by 6% to NOK 61 billion, while operating profit amounted to NOK 4,041 million, approximately NOK 100 million higher than in 2010. The process of turning Orkla into purely a branded consumer goods company is in full progress. Orkla’s financial leeway was significantly strengthened in 2011 through the sale of businesses, which means that the Group is well positioned to grow in the branded goods sector.

Fourth-quarter operating profit (EBITA) totalled NOK 1,052 million, compared with NOK 1,322 million in 2010. The negative difference is largely explained by the fact that Orkla realised a gain of around NOK 200 million in the last quarter of 2010 through the sale of Orkla’s headquarters in Oslo. Orkla Brands delivered operating profit which, underlying, was 3% lower than in the same period of 2010. The decline is ascribable to weak sales towards the end of the year for certain categories such as confectionery and biscuits, and the fall in Lilleborg’s export deliveries. Particularly Stabburet, Axellus, the Chips Group and Orkla Brands Russia reported good improvement in the fourth quarter of 2011.

“Despite demanding markets, it is gratifying to see that Orkla Brands is maintaining its strong market positions in the Nordic region, despite having raised prices to compensate for higher raw material costs. We are also pleased that the measures implemented in Russia are now producing results,” says President and CEO Bjørn M. Wiggen.

As expected, Sapa’s fourth-quarter results were weaker than for the same period of 2010. In North America, Sapa Profiles continues to deliver a positive performance with both volume and profit growth. The market trend in Europe is still weak, but the reduced cost base is making a positive contribution. The primary reason for the weaker results is the negative trend for Sapa Heat Transfer’s Swedish business. Volumes have been moved from the Swedish operations to China, and price rises and organisational and other operational improvements have been carried out to improve Heat Transfer’s results.

The sell-off of holdings in the share portfolio is an ongoing process in line with the strategy announced by the Group. The portfolio was reduced by a further NOK 2 billion in the fourth quarter, bringing the total reduction in 2011 to NOK 4.5 billion. At year-end, the value of the portfolio was NOK 5.5 billion. Sales of portfolio holdings will continue in 2012.

“In the course of 2011, we strengthened our financial leeway through the sale of Elkem and the sell-off of holdings in the share portfolio. At the same time, we have paid out substantial capital to our shareholders. We have identified several possible candidates for acquisition, and have the necessary expertise and patience to make good acquisitions,” says Orkla`s President and CEO Bjørn M. Wiggen.

The Board of Directors proposes a dividend for the fiscal year 2011 of NOK 2,50 per share.