The Share Portfolio manages one of Norway's largest share portfolios, consisting of investments mainly in the Nordic region.
Orkla Finans offers investment services to institutional and private investors, while Orkla Eiendom invests in and develops property.
The business area also comprises Borregaard Skoger, which develops and manages Orkla's forest properties.
Market conditions
2008 was a historically poor year for the stock market. What started out as financial turbulence gradually deteriorated into a financial crisis. Towards the end of the year, an economy already in retreat slid into a real economic crisis and a steadily deepening recession.
Although the stock markets ended the year substantially down, it took some time before share prices began to reflect the macro-economic situation. The Nordic stock markets ended down 46.0 %, falling more than the global markets which were down by 38.4 % (FTSE World). Due to its high percentage of foreign investors and high raw materials exposure, the Norwegian stock market was severely affected, plunging 54.1 %.
Investment strategy
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 employed will therefore be skewed in relation to a market portfolio. It will further focus on how it contributes to, and makes use of the expertise in Orkla's other business areas.
Efforts are made to pursue an active investment strategy with emphasis on greater equity interests in listed companies coupled with increased activity relating to investments in unlisted companies. Establishing industrial options for the Group is an important rationale behind this strategy.
Orkla Finans
Orkla Finans aims to be the market leader in offering alternative investments to institutional and private investors. The company is contending with a difficult capital market while also facing challenges in obtaining financing for new projects. Cost-cutting measures, including downsizing, have been implemented, and the number of company employees has been reduced by about one-third to less than 90. There will still be strong focus on cost-effective operations.
The company plans to further strengthen its analysis capacity in 2009, with a view to further accelerating the pace of innovation and underpinning the company's own management activities. By focusing on product innovations Orkla Finans will broaden its product platform.
Orkla Eiendom (real estate)
The strategy behind Orkla Eiendom relies heavily on the fact that Orkla itself has a significant amount of property from industrial activities. Orkla Eiendom has historically demonstrated good value creation within property development.
Its business strategy is based on a partnership model in which Orkla Eiendom teams up with local and regional partners to reinforce its implementation model and scale up its investment opportunities.
During 2008, Orkla Eiendom strengthened this partnership model through its position in Finansgruppen Eiendom which, together with ownership interest in Utstillingsplassen Eiendom, represent a very good foundation for further property development.
Borregaard Skoger
Borregaard Skoger develops and manages Orkla's forest properties. These properties total around 1.1 million decares, of which some 800,000 decares are productive forest. The main activities are forestry, property management and nature conservation.
Results for 2008
Orkla Financial Investments faced very difficult operating parameters in 2008. Profit before tax amounted to a negative NOK -5,371 million, compared with NOK 5,480 million in 2007. This negative result can primarily be ascribed to write-downs of the Share Portfolio totalling NOK -5,656 million. At year-end, the market value of the Share Portfolio was NOK 11,426 million.