Orkla's Branded Consumer Goods business achieved wide-ranging growth in the first quarter and Group operating profit before goodwill amortisation showed underlying growth of 19 per cent. Higher gains from the Financial Investments division contributed to an increase in pre-tax profit from NOK 126 million in the first quarter of 2003 to NOK 782 million.
The sale of Orkla's 40 per cent stake in Carlsberg generated proceeds of NOK 17,471 million and a book gain of NOK 12,529 million. Dividends totalling NOK 6 billion will be paid out on 19 May.
At the end of the first quarter, the market value of the Financial Investments division's portfolio was NOK 15.6 billion, up NOK 906 million since the beginning of the year. The return on the portfolio was 6.4 per cent in the first quarter.
Orkla's first quarter operating revenues totalled NOK 7.9 billion, equivalent to underlying growth
of 3 per cent compared with the corresponding period of last year. This growth was partly ascribable to successful launches by Orkla Foods and somewhat improved advertising markets for Orkla Media. New business generated revenues of more than NOK 200 million in the first quarter.
"The first quarter results confirm the impression that Orkla's Branded Consumer Goods business is progressing at a good pace. Orkla Foods is leading the way, with satisfactory profit growth. Furthermore, the advertising market seems to have bottomed out and is rising again. In conjunction with the effects of cost improvements, this has led to improved results for Orkla Media. The other Branded Consumer Goods businesses have also made pleasing progress. Nevertheless, the efficiency improvement programmes that are under way are continuing with undiminished force," says Group President and CEO Finn Jebsen.
He also stresses that the ongoing strike in the Norwegian transport sector will affect the Group's second quarter results.
"So far four hundred of our employees have been laid off, and a continued strike will gradually have an increasing impact on Orkla companies."
BRANDED CONSUMER GOODS:
- Orkla Foods reported operating profit before goodwill amortisation of NOK 205 million, up 42 per cent from the corresponding period of last year. The improvement in profit was largely due to systematic cost reduction programmes and a marked rise in sales of several important branded products. Since the beginning of 2003, the workforce has been reduced by approximately 850 man-years. Operating revenues totalled NOK 3.1 billion, equivalent to underlying growth1 of 4 per cent compared with the first quarter of last year.
- Orkla Brands increased its operating profit before goodwill amortisation by NOK 10 million compared with the first quarter of last year, to NOK 223 million. Operating revenues amounted to NOK 1.2 billion, equivalent to an underlying decline1 of 2 per cent from the corresponding period of last year. The most important explanations for the decline are fewer major innovations and tougher competition from private label detergents.
- Orkla Media's operating revenues totalled just under NOK 2 billion, equivalent to 4 per cent underlying growth1. First quarter operating profit before goodwill amortisation was NOK 54 million, up NOK 38 million from last year. Berlingske reported substantial profit growth due to higher advertising revenues and cost improvements.
Borregaard's operating revenues totalled NOK 1.6 billion in the first quarter, equivalent to underlying1 growth of 4 per cent compared with the corresponding period of last year. Operating profit before goodwill amortisation dropped from NOK 103 million to NOK 97 million. Profit performance was mixed. The Lignin and Energy businesses achieved satisfactory results, while Denofa had a negative impact on profit due to continuing weak markets.
After rising 48.4 % in 2003, the Oslo Stock Exchange Benchmark Index (OSEBX) rose a further 13.3 % in the first quarter of 2004. The dividend-adjusted FT World Index was up 3.2 %, while Orkla's Financial Investments were up by 6.4 %. Book profit before tax for the Financial Investments division totalled NOK 401 million, compared with minus NOK 88 million in the first quarter of last year. Realised gains amounted to NOK 310 million, compared with NOK 28 million last year. The net asset value of the investment portfolio increased by NOK 951 million in the first quarter to NOK 14.6 billion. At the end of March, the market value of the portfolio was NOK 15.6 billion. Investments outside Norway accounted for 32 per cent of the portfolio.
Following the sale of Orkla's interest in Carlsberg Breweries, there have been changes in employees' representation in the governing bodies. On Orkla ASA's Board of Directors, Arvid F. Strand and Stein Stugu have been temporarily replaced by Marianne Torp and Kjell Kjønigsen, who were deputy member and observer respectively, until new elections are held in May/June this year.
Excluding acquisitions and divestments and currency translation effects.