The Share Portfolio staff manages one of Norway’s largest share portfolios consisting primarily of investments in the Nordic region. Orkla Finans offers investment services to institutional and private investors, while Orkla Eiendom invests in and develops real estate properties. Elkem Energi Handel, which trades in and manages power contracts, was transferred within the organisation from Elkem to Orkla Financial Investments in 2009. The business area also includes Borregaard Skoger, which develops and manages Orkla’s forests.
The Share Portfolio
Market conditions: 2009, like 2008, was an unusual year in the equities markets, but this time in a positive sense. The year began as 2008 had ended, with concern about the recession facing the entire world.
After a weak start to the year, March ended the first quarter with clear positive undertones. Despite very low levels, there were improvements in several business expectation indicators, coupled with rising consumption in several countries. After the turning point in March, stock market returns all over the world were considerably better for the remainder of the year.
Investment strategy for the Share Portfolio: The main strategy is to identify and invest in value-creating independent companies. The Share Portfolio is expected to take substantial positions, and the weightings will therefore be skewed compared to a market portfolio. In addition, the Share Portfolio will focus on how it contributes to, and at the same time makes use of, the expertise present in Orkla’s other business areas.
Efforts are made to pursue an active investment strategy that emphasises large equity stakes in listed companies, combined with investments in unlisted companies. Establishing industrial options for the Group is an important rationale behind this strategy.
Orkla Finans (investment services)
Orkla Finans aims to be a market leader in offering investment products to institutional and private investors. In 2009, the company had to contend with a challenging investment market while also facing difficulties in obtaining financing for new projects. Through the launch of a new asset management product and the achievement of good returns on existing stock products, the company has succeeded in increasing the volume of asset management products that generate ongoing revenues. Cost-cutting measures were implemented, and the number of employees was reduced by around one-third, to just under 90. The company will maintain its strong focus on cost-effective operations.
In 2010, however, the company will continue to strengthen its analysis capacity, with a view to further accelerating the pace of innovation and underpinning the company’s own asset management activities.
Orkla Eiendom (real estate)
A main reason for operating Orkla Eiendom is that Orkla itself has a significant portfolio of property through its industrial activities. Orkla Eiendom has a strong track record of value creation within the property development sector.
Elkem Energi Handel (energy trading)
The business, which is one of the leading players in the Nordic power trading market, trades and manages power contracts. In 2009, Energi Handel was moved from the Orkla Materials business area to Orkla Financial Investments.
Borregaard Skoger (forestry)
Borregaard Skoger develops and manages Orkla’s forestry properties. These properties total around 1.1 million decares, of which around 800,000 decares are productive forest. Activities consist mainly of forestry, property management and nature conservation.
Results for 2009
Orkla Financial Investments reported a positive performance in 2009, as a result of a substantial increase in the market value of securities. The Share Portfolio showed a return of 39%, while the benchmark index MSCI Nordic increased by 36.1%. The Oslo Stock Exchange Benchmark Index rose by 64.8%. Pre-tax profit for Orkla Financial Investments amounted to NOK 761 million in 2009, compared to NOK -5,356 million in 2008. The positive results are largely ascribable to the realisation of portfolio gains and changes in the fair value of associates, which totalled NOK 584 million, compared to NOK -6,043 million in 2008.