MAIN TRENDS
The sale of the Media business was recognised in the financial statements in the third quarter. The net contribution to profit from discontinued operations is shown after tax and minority interests on a single line in the income statement. Comparable historical figures have been adjusted accordingly. Final completion took place on 11 October 2006, so the effect of the transaction on cash flow will not be evident until the fourth quarter.

After adjustments for discontinued operations, Group operating revenues totalled NOK 12,651 million (NOK 11,325 million)¹ in the third quarter.  Strong volume growth and high aluminium prices once again boosted revenues for Sapa, and underlying² revenues were 33 % higher in the third quarter than in the same quarter last year. Both Orkla Foods and Orkla Brands achieved growth in the Nordic region, and underlying² operating revenues for the Branded Consumer Goods area as a whole were up 2 %. New business in Branded Consumer Goods increased revenues by approximately NOK 260 million. In the third quarter, the NOK weakened against both the USD and EUR-related currencies. Currency translation effects increased revenues by more than NOK 200 million in the third quarter, while accumulated currency translation effects are slightly negative so far this year. At the end of September, operating revenues amounted to NOK 38,103 million
(NOK 34,661 million)¹. 

Group operating profit before amortisation totalled NOK 1,220 million in the third quarter (NOK 1,064 million)¹. At the end of the third quarter, operating profit before amortisation was NOK 3,432 million (NOK 3,236 million)¹. Improvements in the Nordic region contributed to underlying² profit growth for both Orkla Foods (+3 %) and Orkla Brands (+7 %) in the third quarter. In Russia there are still challenges in connection with the sales and distribution situation, but the chocolate and biscuits company SladCo reported slightly higher profit than last year. Sapa’s good profit growth was driven by a continuing strong growth in demand in Europe and Asia and the positive effects from improvement projects. For Elkem, restructuring contributed to profit improvement for Silicon Metal, while the operating situation at Icelandic Alloys also improved significantly compared to the same period last year. For Primary Aluminium, the reduced effect of favourable currency hedging contracts offset the effect of higher aluminium prices and profit was on a par with the third quarter of last year. Somewhat improved market conditions and the effects of improvement programmes boosted sales and profit for Borregaard, while the operations in Switzerland are still affected by a weak operating situation and high costs. Orkla’s interests in Hjemmet Mortensen (40 % financial stake) and Netzeitung GmbH
(100 % owned) are reported under “Other business”. At the end of the third quarter, Orkla’s interest in Hjemmet Mortensen generated operating profit before amortisation of NOK 86 million (NOK 92 million)¹. The German operations is still in the development phase and has had a minor deficit so far this year.

On 27 October the Board of Directors of Orkla ASA decided to invest NOK 2.7 billion in a plant that will produce 5,000 tonnes of solar grade silicon for solar cells per year.

Associates primarily consist of Jotun (42.5 % interest) and the Renewable Energy Corporation (REC) in which Orkla has a 27.5 % interest. So far this year, underlying² sales and profit growth have been positive for both Jotun and REC. REC is a listed company and reported an increase in operating revenues of 89 % and EBITA of
215 % so far this year compared to the same period last year. At the end of the third quarter, REC’s operating revenues and EBITA amounted to NOK 3,014 million (NOK 1,597 million)¹ and NOK 1,050 million (NOK 333 million)¹ respectively. At the end of the first eight months, Jotun had increased its operating revenues by 13 % to NOK 5,159 million (NOK 4,571 million)¹ and EBITA was NOK 550 million
(NOK 497 million)¹. 

The value of Orkla’s investment portfolio grew relatively well in the third quarter and at the end of September the return on the portfolio was 14.0 %, compared to a rise of 11.0 % for the Morgan Stanley Nordic Index and 11.8 % for the Oslo Stock Exchange Benchmark Index.  The dividend-adjusted FTSE World Index was up
9.0 %. Due to low realisation of gains, book portfolio gains amounted to
NOK 199 million (NOK 672 million)¹ in the third quarter. At quarter-end, unrealised gains totalled just over NOK 5.3 billion.

At the end of the third quarter, the Group’s tax charge is estimated to be 18 % and Group earnings per share diluted were NOK 41.9 (NOK 20.2)¹, of which the gain and contribution to profit from discontinued operations amounted to NOK 20.0 per share. Excluding amortisation, other revenues and expenses and discontinued operations, earnings per share were NOK 22.3 (NOK 21.6)¹. The increase in profit for the Industry division was partially offset by somewhat lower realised gains from the investment portfolio.

1 The figures in brackets are for the same period last year
2 Excluding acquisitions, divestments and currency translation effects