Orkla results second quarter 2008
The second quarter in brief
THE GROUP
Orkla's first-half operating revenues totalled NOK 34,513 million (NOK 27,937 million)1, while second-quarter operating revenues amounted to NOK 17,569 million (NOK 14,049 million)1. A large part of the revenue increase is ascribable to the consolidation of Alcoa's extrusion operations into Orkla Aluminium Solutions, as the operations are included in the figures as from the third quarter of 2007. However, there was underlying2 improvement for all the business areas in the Group's industrial operations. In the first half of 2008, the Norwegian krone was considerably stronger than in 2007, particularly measured against the USD, but also against euro-related currencies. This has resulted in a negative currency translation effect that has reduced operating revenues by NOK 1,347 million so far in 2008 and NOK 637 million in the second quarter.
The Group's EBITA rose 3 % in the second quarter to NOK 1,230 million (NOK 1,194 million)1, while first-half EBITA was NOK 2,292 million (NOK 2,661 million)1. Orkla Brands and Borregaard achieved profit growth in the second quarter. This was counteracted by Elkem Aluminium's continued poor profit performance, higher costs recognised in Elkem Solar and lower activity and contribution to Group profit on the part of Orkla Finans. For the Group as a whole, EBITA was negatively affected by currency translation effects totalling NOK 65 million so far this year and NOK 32 million in the second quarter.
In the second quarter, Orkla signed an agreement with Egmont regarding the sale of Orkla's shares in Hjemmet Mortensen AS. Egmont has taken over Orkla's 40 % minority holding for NOK 950 million. In the second quarter, Orkla also received dividends totalling NOK 72 million from Hjemmet Mortensen, relating to the 2007 accounting year. The share sale gave rise to a book gain of NOK 830 million for Orkla in the second quarter. This is presented in the financial statements on the line for profit from associates. The cash flow effect of the transaction will be seen in the second half of 2008.
Orkla's stakes in REC (39.73 %) and Jotun (42.5 %) are presented according to the equity method on the line for associates. The contribution from associates to Group profit so far this year totals NOK 1,332 million (NOK 646 million)1 , while the contribution in the second quarter amounted to NOK 1,153 million (NOK 294 million)1. Of the total amount, REC's contribution to Orkla's profit so far in 2008 accounts for NOK 280 million (NOK 487 million)1 of which NOK 196 million (NOK 198 million)1 is the second-quarter contribution.
At the end of the first half-year, the return on the Share Portfolio was a negative 8.3 %, compared with a negative 16.9 % for the Morgan Stanley Nordic Index (a negative 5.6 % for the Oslo Stock Exchange Benchmark Index). Gross portfolio gains of NOK 663 million were realised in the second quarter, but due to impairment charges of NOK 527 million under IFRS, net realised portfolio gains and changes in the fair value of associates amounted to NOK 112 million (NOK 1,011 million)1. Dividends received in the second quarter amounted to NOK 310 million (NOK 413 million)1.
Orkla's earnings per share, diluted, were NOK 2.5 in the first half of 2008, while first-half earnings per share in 2007 were NOK 5.3, due to the realisation of high portfolio gains and other financial gains. As of the end of the first half-year, a tax charge of approximately 21 % was estimated for 2008.
1 The figures in brackets refer to the corresponding period of the previous year.
2 Excluding acquisitions, divestments and currency translation effects.
Orkla ASA,
Oslo, 13 August 2008
Contacts:
Terje Andersen, CFO, Tel.: +47 22 54 44 19
Rune Helland, SVP Investor Relations, Tel: +47 22 54 44 11
Rune Helland, SVP Investor Relations, Tel: +47 22 54 44 11
Lars Røsæg, Investor Relations, Tel.: +47 22 54 44 26