New companies, growth and higher earnings per share

10.08.2005: Orkla has been through an expansive phase in the past six months and second quarter operating revenues were almost twice as high as in the same period last year. This growth has also been profitable and earnings per share were NOK 2.6 higher than last year. The Financial Investments division also posted substantially higher profit than last year.

In the first six months, Group operating revenues totalled NOK 27.3 billion. Compared with the first half of last year, Orkla's pre-tax profit increased from NOK 2.2 billion to NOK 3.7 billion. Group pre-tax profit in the second quarter was almost NOK 2 billion, up NOK 740 million or approximately 60% compared with the second quarter of 2004. Earnings per share for the first six months increased from NOK 8.6[1] to NOK 12.9.
 
"The Orkla Group has re-invested much of the revenue from the Carlsberg sale and has expanded strongly in the last six months or so. However, our financial position is very good and we still have substantial capacity for expansion," says Group President and CEO Dag J. Opedal.
 
In the first six months, operating revenues in the Branded Consumer Goods division increased by 10 per cent compared with last year, mainly due to new acquisitions such as SladCo, Chips and several smaller companies. Operating profit for Branded Consumer Goods before goodwill amortisation and other revenues and expenses was up seven per cent in the same period. There was progress in most markets, with the exception of Sweden, where the grocery market is affected by pressure on prices and the retail trade's focus on private labels.  
 
Elkem's operating revenues (including Sapa) amounted to NOK 11.1 billion for the first six months, on a par with last year. Operating profit before goodwill amortisation and other revenues and expenses totalled NOK 908 million for the same period (NOK 1,067 million)[2]. The main reason for the decline was the reduction in margins and volumes for Sapa's aluminium profiles in Europe. Six-month operating profit for Elkem's other business was on a par with last year. Borregaard's performance in the second quarter was affected by the decline in operating revenues resulting from the demerging and sale of non-core businesses, which nevertheless contributed to a rise in profit compared with the same period last year.
 
The Financial Investments division reported an increase in net asset value of approximately NOK 2.6 billion so far this year. At quarter end the market value of the portfolio was almost NOK 14 billion. Realised gains were also high, and total profit before tax for the first six months was NOK 1.9 billion (NOK 1.4 billion). At the end of June, the return on the portfolio was 18.1 per cent, compared with 19.7 for the Oslo Stock Exchange, 18.5 for MSCI Nordic and 2.6 per cent for the FTSE World Index.

[1] Adjusted for the gain on the sale of Orkla's stake in Carlsberg Breweries.
[2] Figures in brackets refer to the corresponding period last year.