Operating parameters still challenging - comprehensive measures
implemented
(Thomson Reuters ONE) - Orkla's operating profit (EBITA)* for the second quarter ended at NOK334 million, compared with NOK 1,187 million for the same quarter of2008. Orkla Brands continued its positive profit performance. Thedevelopment for Jotun (42.5%) and Elkem Energy was also satisfactory,while Sapa and Elkem have been strongly impacted by the weak economicsituation. At the end of the first half-year, the return on the SharePortfolio was 13.7 per cent."Although market conditions still are challenging for several ofOrkla's business areas we are not satisfied with the Group's overallfinancial results. However, the wide-ranging measures that have beenimplemented are producing results. We must nevertheless assess theneed for further action on an ongoing basis. Orkla's financialposition is robust, and the Group is well positioned thanks to itsforward-looking portfolio of companies," affirms President and CEODag J. Opedal.Orkla's second-quarter operating revenues totalled NOK 13.7 billion,down from NOK 16.9 billion in 2008. One of the main reasons for thedrop is the significant decline in demand experienced by Sapa inseveral markets, particularly in the automotive and buildingindustries. Volume has fallen around 35 per cent, compared with lastyear. Nevertheless, Orkla Aluminium Solutions (Sapa) is delivering onits targets in terms of both costs and cash flow.A fire in Elkem Solar's new plant will delay the ramp-up ofproduction capacity by 2-3 months.Pre-tax profit for the second quarter amounted to NOK 282 million(NOK 2.5 billion in 2008). Net interest-bearing liabilities are atapproximately the same level as at the start of the year, and theequity ratio has increased to 50 per cent. Orkla's FinancialInvestments division reported a half-year return of 13.7 per cent,compared with 16.7 per cent for the Morgan Stanley Nordic Index and25.2 per cent for the Oslo Stock Exchange Benchmark Index.On 31 July it was announced that Sapa has taken over the aluminiumextrusion company Indalex, with 1,400 employees and total sales in2008 of USD 900 million. This acquisition significantly strengthensSapa's operations in North America, and with a market share of around30 per cent, Sapa is now clearly the largest aluminium extrusioncompany in the USA.Key figures Q2-09 (Q2-08) in NOK million:Operating revenues: 13 652 (16 851)EBITA: 334 (1 187)Profit before taxes: 282 (2 453)Earnings per share diluted (NOK): 0.3 (1.9)Cash flow from operations: 1 271 (267)As of 30 June 2009(as of 31 Dec 2008):Net interest-bearing debt: 27 903 (27 424)Equity (%):50.0 (47.7)Net gearing: 0.59 (0.55)The first half in brief- Due in part to the weak global economy, Orkla's operating profit(EBITA) for the first half-year ended at NOK 567 million (NOK 2,216million)**. EBITA for the second quarter alone was NOK 334 million(NOK 1,187 million)**.- Profit before tax in the first half-year totalled NOK -33 million(NOK 3,299 million)**, while for the second quarter alone it amountedto NOK 282 million (NOK 2,453 million)**.- Reductions in working capital helped to improve cash flow in thesecond quarter. Cash flow from operations at the end of the firsthalf-year was NOK 1,485 million (NOK 1,106 million)**.- Orkla Brands reported a good first half with continued profitimprovement. EBITA for the first half-year was NOK 1,160 million (NOK1,078 million)**.- Orkla Aluminium Solutions has been strongly impacted by the weakeconomic conditions in the USA and Europe, resulting in a 35 %decline in volume compared with the second quarter of 2008. However,volume performance was relatively stable through the first half of2009 and, partly due to the implementation of cost-cutting measures,the deficit in the second quarter alone was significantly lower thanin the first quarter.- For Orkla Materials, as expected, the market for thesilicon-related businesses in Elkem weakened through the secondquarter. A negative contribution to profit in the start-up phase ofElkem Solar was a further reason for Elkem's lacklustre first-halfresults.- In Orkla Associates, REC reported EBITDA of NOK 745 million (NOK1,631 million)** for the first half-year. Jotun's results wereaffected by somewhat slower activity in certain market segments, butprofit performance is still satisfactory.- In Orkla Financial Investments, realised portfolio gains wereoffset by accounting write-downs, and the net contribution to profitby portfolio investments in the first half-year was NOK -87 million.- At the end of the first half-year, the return on the SharePortfolio was 13.7 %, compared with 16.7 % for the Morgan StanleyNordic Index (25.2 % for the Oslo Stock Exchange Benchmark Index).- Orkla Aluminium Solutions' agreement to purchase the US companyIndalex was finally completed on 31 July.- In July a small fire broke out at one of Elkem Solar's processingplants. It caused no personal injuries or serious damage to criticalprocessing equipment, but repairs will delay Elkem Solar's ramp-upplans by 2-3 months.The GroupOrkla's first-half operating revenues totalled NOK 27,100 million(NOK 33,183 million)**, while operating revenues for the secondquarter alone were NOK 13,652 million (NOK 16,851 million)**. Thedecline was largely driven by low demand in Orkla Aluminium Solutionsand slower markets for Orkla Materials.The Norwegian krone was significantly weaker in the first half of2009 than in the same period of last year, against both the USD andeuro-related currencies. This has resulted in positive currencytranslation effects on operating revenues, amounting to around NOK1.2 billion in the first half-year and around NOK 550 million in thesecond quarter.The Group's EBITA for the second quarter was NOK 334 million (NOK1,187 million)**, while first-half EBITA was NOK 567 million (NOK2,216 million)**. Orkla Brands reported a satisfactory profitperformance and underlying*** profit growth in both the secondquarter and the first half-year. Orkla Aluminium Solutions saw salesvolumes level off at low levels in the first half-year. Theimplementation of cost-cutting measures had a positive effect, butfirst-half profit was negative at NOK -490 million (NOK 707million)**. Orkla Materials posted profit of NOK 132 million (NOK 589million)** for the first half-year. The decline in profit isprimarily ascribable to weak markets for the silicon-relatedbusinesses resulting in around 55 % capacity utilisation in thesecond quarter, and to the start-up of Elkem Solar. For the Group asa whole, EBITA was affected by currency translation effects totallingNOK -20 million in the first half-year, and NOK +18 million in thesecond quarter alone.Orkla's share in REC (39.73 %) and Jotun (42.5 %) are presentedaccording to the equity method on the line for associates. Thecontribution from associates to Group profit in the first half-yeartotaled NOK -75 million (NOK 1,332 million)**, while the contributionin the second quarter amounted to NOK -210 million (NOK 1,153million)**. Of the total amount, REC's contribution to Orkla's profitin the first half of 2009 accounted for NOK -115 million (NOK 280million)** of which NOK -272 million (NOK 196 million)** is thesecond-quarter contribution. Associates' contribution to profit in2008 was positively affected by the NOK 830 million gain on the saleof Orkla's interest in Hjemmet Mortensen.At the end of the first half-year, the return on the Share Portfoliowas 13.7 %, compared with 16.7 % for the Morgan Stanley Nordic Index(25.2 % for the Oslo Stock Exchange Benchmark Index). In accordancewith IFRS, portfolio investments were written down by NOK 1,070million in the first half-year, whereof write-downs of NOK 254million in the second quarter. First-half gains realised on theportfolio total NOK 470 million, whereof NOK 460 million in thesecond quarter. Gains, losses and write-downs on the Share Portfoliothus ended at NOK -87 million (NOK -183 million) for the firsthalf-year. For the second quarter alone, the contribution to profitwas NOK 228 million (NOK 112 million)**. Dividends received in thesecond quarter totalled NOK 179 million (NOK 310 million)**, and forthe first half-year NOK 224 million (NOK 397 million)**.Orkla's first-half earnings per share, diluted, were NOK 0.9 (NOK2.5)**. The tax charge for the first half-year is estimated to be NOK79 million.Strong focus on increasing capital efficiency helped to improve cashflow from operations through the second quarter, and cash flow fromoperations for the first half of 2009 totalled NOK 1,485 million,compared with NOK 1,106 million in the same period last year. Netinterest-bearing liabilities were at the same level as at the end of2008.Orkla Aluminium Solutions' agreement to purchase the US companyIndalex was finally completed on 31 July. Under the agreement Sapawill take over Indalex' 11 active production plants in the USA andCanada, with 29 presses and a total capacity of about 315,000 tonnesper year. Indalex' sales in 2008 totalled abouyt 200,000 tonnes,which represents operating revenues of over USD 900 million. Indalexhas around 1,400 employees.*) Excl. amortisation, write-down of inventory in Sapa Profiles in2008, restructuring, significant impairments and discontinuedoperations. **) The figures in brackets refer to the corresponding period of theprevious year.***) Excluding acquisitions, divestments and currency translationeffects.Orkla ASAOslo, 12 August 2009Ref.:SVP Investor RelationsRune HellandTel.: +47-2254 4411SVP Corporate CommunicationsOle Kristian LundeTel.: +47-2254 4431http://hugin.info/111/R/1334090/316537.pdfhttp://hugin.info/111/R/1334090/316538.pdfhttp://hugin.info/111/R/1334090/316541.pdfhttp://hugin.info/111/R/1334090/316542.xlsThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 12.08.2009 - 06:55 Uhr
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