Good progress for Orkla in the first half of 2004

Orkla achieved growth in both operating revenues and profit in the first half of this year. Cost reduction programmes, new product launches and a rise in advertising revenues for Orkla Media had a positive effect, while two strikes had a negative impact. Compared with the first six months of 2003, Group earnings per share, excluding the gain on the sale of Orkla's interest in Carlsberg Breweries, were up 19 per cent, amounting to NOK 6.8.

In comparison with the first half of 2003, Group operating profit before goodwill amortisation increased by NOK 105 million to NOK 1,226 million.
 
The Branded Consumer Goods business continued to grow. Second quarter's underlying growth[1] in operating profit before goodwill amortisation was 18 per cent. Denofa's weak quarterly results had a negative impact on profit for the Chemicals business. Furthermore, Denofa has written down inventories and raw material contracts by NOK 250 million. The write-down has been posted under "Other expenses".
 
The Financial Investments division received significantly higher dividends in the second quarter than in the corresponding period of last year, and also realised a substantial gain on the sale of property at Skøyen in Oslo. At the end of the quarter, the market value of the investment portfolio was NOK 15.9 billion, up almost NOK 1.2 billion since the beginning of the year[2].
 
"Most of our businesses are now on the right track. The steady focus on new products and cost control is bringing results. In addition we see an improvement of certain markets, particularly for Orkla Media," says Group President and CEO Finn Jebsen.
 
In the first half of 2004, Group operating revenues totalled NOK 15.7 billion, up from NOK 14.6 billion in the first half of last year. In the second quarter, Orkla's earnings per share amounted to NOK 4.0, compared with NOK 5.8 in the second quarter of 2003.  
 
BRANDED CONSUMER GOODS
  •         Orkla Foods posted operating profit before goodwill amortisation of NOK 446 million for the first six months of the year, up from NOK 385 million in the first half of 2003. In the second quarter, Stabburet in Norway, Abba Seafood in Sweden and Felix Abba in Finland and the Baltic States made a particularly strong contribution to the positive performance, while Procordia Food in Sweden and Beauvais in Denmark reported slightly weaker operating profit.
  •  
  •         Orkla Brands increased its operating profit before goodwill amortisation for the first half year from NOK 444 million to 464 million. For the second quarter, Orkla Brands reported positive margin and cost trends, plus positive effects from new launches and an improved product mix. Orkla Brands launched several new products in the first quarter. Market shares have changed only slightly compared with the first quarter.
  •  
  •         Orkla Media's operating profit before goodwill amortisation totalled NOK 172 million for the first six months, up from NOK 74 million last year. The rise in profit is largely ascribable to the newspaper businesses in Denmark and Norway. Berlingske continued to achieve significant profit growth in the second quarter compared with the corresponding period of last year, due to positive advertising and cost trends. 
  •  
    CHEMICALS
    Borregaard's operating profit before goodwill amortisation for the first six months totalled NOK 212 million, compared with NOK 263 million last year. Borregaard reported good, stable results for its lignin business and improved prices and profit for speciality cellulose, but Denofa continued to be affected by the weak market situation and made a substantial loss. Operating revenues in the first half of 2004 totalled NOK 3.2 billion, equivalent to 1 per cent underlying growth[3] compared with last year.
     
    FINANCIAL INVESTMENTS
    At the end of the first six months, pre-tax profit for the Financial Investments division amounted to NOK 1.2 billion, compared with NOK 849 at the end of June last year. In the first half of 2004, the return on Orkla's investment portfolio was 11.5 per cent. This is lower than the Oslo Stock Exchange (19.6 per cent) but higher than most other stock exchanges. (FT World Index: 4.8 per cent.) At the end of June, the net asset value of the portfolio was NOK 15.3 billion, and unrealised gains totalled NOK 3.6 billion, compared with 2.9 at the beginning of the year.
     
    [1] Excluding acquisitions, divestments and currency translation effects.
    [2] Due to the weak financial markets, a book loss on the portfolio of NOK 668 million was posted in 1Q2003. It was reversed in its entirety in 2Q2003. Excluding this technical adjustment in the second quarter of last year, profit for the Financial Investments division was higher in 2Q2004. In order to neutralise the effect of the write-down and write-up and various Easter effects, this press release has largely been written from a six-monthly rather than quarterly perspective.
    [3] Excluding acquisitions, divestments and currency translation effects.