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Solid quarter in challenging operating conditions

Orkla’s second-quarter operating profit (EBITA)1 ended at NOK 1,230 million, compared with NOK 1,194 million for the same quarter of 2007.

Orkla Brands continued its positive profit trend, and Sapa delivered satisfactory profit despite declining volumes. The Share Portfolio outperformed the Nordic index, but delivered a negative return in a weak financial market.

“We are satisfied with our profitability performance in the second quarter, and the Industry division reported good overall results. However, we expect future market conditions to remain challenging,” says President and CEO Dag J. Opedal.

Orkla’s second-quarter operating revenues totalled NOK 17.6 billion, up from NOK 14.0 billion in 2007. A substantial part of the increase in the operating revenues (but also a lower operating margin) is ascribable to the merged aluminium profile business (Sapa/Alcoa).

Orkla Brands, Sapa and Borregaard all posted satisfactory performances. Both Elkem Solar’s construction project and the integration of Sapa’s and Alcoa’s profile businesses are on schedule.

As expected, profit for the primary aluminium business was negatively impacted by the weak USD and hedge losses. Moreover, costs expensed for Elkem Solar’s new plant were NOK 53 million higher than in the same quarter of last year.

Second-quarter profit before tax amounted to NOK 2.5 billion (NOK 3.1 billion in 2007). Orkla signed an agreement with Egmont in the second quarter to sell the remainder of the Group’s media business, i.e. its 40 per cent stake in Hjemmet Mortensen. This generated a book gain of NOK 830 million for Orkla in the second quarter. All in all, therefore, the sale of Orkla’s media business has brought in approximately NOK 9 billion, and a gain of around NOK 5 billion.

In a weak stock market, Orkla’s Financial Investments division delivered a negative return of 8.3 per cent, compared with a negative return of 16.9 per cent for Morgan Stanley Nordic Index and a negative return of 5.6 per cent for the Oslo Stock Exchange Benchmark Index.

1 Operating profit (EBITA): Before amortisation, restructuring and significant impairments

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