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Satisfactory quarter for the group
First quarter results 2007
3 May 2007
Roar Engeland
EVP Orkla Financial Investments and Corporate Development
Agenda
• Highlights Q1-07
• Financial performance
• Orkla Financial Investments
• Orkla Branded Consumer Goods
• Orkla Aluminium Extrusion
• Orkla Materials
2
Highlights Q1-07
• Strong improvement
• EBITA +26 %
• Profit before tax + 63 %
• Progress in Nordic region for Orkla Branded Consumer Goods
• Polish market particularly challenging for Orkla Foods
• Strong growth in earnings and improved operating margin for
Orkla Aluminium Extrusion
• Profit improvement for Silicon-related businesses and
Chemicals at Orkla Materials
• Large realised financial gains
• Portfolio gains, Mecom shares, REC transaction, real estate
3
Profit before tax + 63 %
Key figures in NOK million
1 Jan - 31 Mar 2007 2006 Change
Operating revenues 13 888 12 498 11 %
EBITA 1 467 1 168 26 %
Amortisation intangibles -58 -52
Other income and expenses 0 0
EBIT 1 409 1 116
Associates 352 44
Dividends 240 149
Portfolio gains 881 696
Net financial items 623 143
Profit before tax 3 505 2 148 63 %
Taxes -666 -433
Profit after tax 2 839 1 715
Discontinued operations 0 48
Profit for the year 2 839 1 763
Earnings per share diluted (NOK) 13.6 8.4
Earnings per share diluted (NOK)* 13.8 8.3
* Excluding amortisation, other income and expenses and discontinued operations
4
Satisfactory industrial growth in Q1
Change in EBITA
145 13 -20 1 467
118
43
1 168
Q1-06 Branded Orkla Orkla Materials Orkla Financial Other Q1-07
Consumer Aluminium Investments
Goods Extrusion
All figures in NOK million
5
Improved cash flow from operations
Key figures in NOK million
1 Jan - 31 Mar 2007 2006
Cash flow from operations 1 097 666
Financial items, net - 156 - 178
Cash flow from Industry division 941 488
Cash flow from Financial Investments 619 562
Taxes paid and miscellaneous - 559 - 596
Cash flow before capital transactions 1 001 454
Dividends paid and share buybacks -8 4
Net expansion -5 406 -1 011
Net purchases/sales portfolio investments - 460 478
Net cash flow -4 873 - 75
6
Strong balance sheet, net gearing 0.3 per Q1
NOK billion
Net gearing
56 1.4
52
48 1.2
44
40 1.0
36
32 0.8
28
0.6
24
20 0.4
16
12 0.2
8
4 0.0
0
-4 2000 2001 2002 2003 2004 2005 2006 Q1-07 -0.2
Equity Net interest-bearing debt Net gearing
7
Orkla Financial Investments
8
Return on share portfolio +6.9 % in Q1
Portfolio MSCI Nordic OSEBX S&P 500
Gains and dividends in NOK million
33,5 % 1 Jan -
29,1 % 2007 31 Mar
23,5 % Market value portfolio 19 414
Unrealised gains 113
Net gains and losses 745
10,1 % Change in fair value of associates 136
6,9 % 7,3 % Dividend received 240
4,8 % Others and internal gains 26
0,6 %
Change in net asset value 1 260
2007 2004-2007
Average annual return
Orkla Financial Investments 9
Orkla Finans and Orkla Real Estate
Orkla Finans
• Realised net gain from sale of Orkla Finans Insurance
broking NOK 40 million
Orkla Real Estate
• Realised net gain from sale of real estate at Fornebu in Oslo
NOK 261 million
Orkla Financial Investments 10
Orkla Branded Consumer Goods
Torkild Nordberg
EVP Orkla Branded Consumer Goods
11
Continued EBITA growth
EBITA 12-month rolling basis Orkla Branded Consumer Goods
in NOK million
NOK million
2 600 1 Jan - 31 Mar 2007 2006 Change
2 400
Revenues 5 285 4 878 8%
2 200
EBITA 468 425 10 %
EBITA margin 8.9 % 8.7 %
2 000
1 800
1 600
1 400
1 200
Q1-02 Q3-02 Q1-03 Q3-03 Q1-04 Q3-04 Q1-05 Q3-05 Q1-06 Q3-06 Q1-07
12
Orkla Branded Consumer Goods
Slow start to the year for Orkla Foods
Orkla Foods
• Stable performance in most Nordic categories in NOK million
1 Jan - 31 Mar 2007 2006 Change
• Weaker profit in Central and Eastern Europe Revenues
• Polish market particularly challenging Nordic 2 145 2 111 2%
Ingredients 701 651 8%
International 549 505 9%
• Strong underlying top-line and profit growth for Eliminations - 70 - 68
Ingredients Orkla Foods 3 325 3 199 4%
EBITA
Nordic 147 152 -3 %
Ingredients 29 19 53 %
International - 17 3
Orkla Foods 159 174 -9 %
EBITA margin 4.8 % 5.4 %
13
Orkla Branded Consumer Goods
Broad based top-line growth within Orkla Brands
• Underlying top-line growth +7 % in Q1 Orkla Brands
in NOK million
• Strong improvement for Snacks, Biscuits and
Home and Personal Care 1 Jan - 31 Mar 2007 2006 Change
Revenues 1 990 1 708 17 %
EBITA 309 251 23 %
• Significant profit improvement, +23 %
EBITA margin 15.5 % 14.7 %
• Increasing market shares for most of the
businesses
• Integration of Dansk Droge on track
14
Orkla Branded Consumer Goods
Orkla Aluminium Extrusion
Terje Andersen
CFO
15
Continued strong growth at Sapa
• All business areas improved their operating Orkla Aluminium Extrusion
margins in NOK million
1 Jan - 31 Mar 2007 2006 Change
• Strong markets in China and Europe Revenues 4 653 3 944 18 %
EBITA 350 232 51 %
EBITA margin 7.5 % 5.9 %
• Improvement programmes on track
• Orkla and Alcoa project to establish J/V in
aluminium extrusion proceeding according to
plan
• Agreement to be closed in Q2-07
16
Orkla Aluminium Extrusion
Orkla Materials
17
Improved results for Elkem
Elkem
• Positive markets for most businesses in NOK million
1 Jan - 31 Mar
• Satisfactory results for Aluminium and Revenues 2007 2006 Change
Energy
Energy 320 358 -11 %
Primary Aluminium 704 662 6%
Silicon-related 1 551 1 355 14 %
• One-off effect of + NOK 40 million for Eliminations - 142 - 182
Silicon-related businesses Elkem 2 433 2 193 11 %
EBITA
Energy 244 256 -5 %
• Elkem Solar project on track Primary Aluminium 123 141 -13 %
• Expensed project costs NOK 27 million Silicon-related 164 15
in Q1 Elkem 531 412 29 %
EBITA margin 21.8 % 18.8 %
18
Orkla Materials
Continued strong aluminium markets
EBITA per quarter - Aluminium
• High aluminium prices
• Average 3 month LME prices USD 2 747, up 160
from USD 2 443 in Q1-06 140
• 70 % of volume in the next three years is 120
hedged 100
80
60
• Lower EBITA compared with Q1-06 due to 40
rising raw material prices and lower gain from 20
USD hedging 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2003 2004 2005 2006 2007
19
Orkla Materials
Continued profitable results from energy trading
EBITA per quarter - Energy
• Lower energy prices, but trading operations 330
profited from favourable positions
280
230
• Lower hydropower production than Q1 last
year 180
130
• Water reservoir levels higher than seasonal 80
average 30
-20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
• Investments cost increased by approx. NOK 2003 2004 2005 2006 2007
400 million at the Sauda-project
20
Orkla Materials
Borregaard – Significant progress for Chemicals
• Progress for Chemicals driven by price Borregaard
in NOK million
increases, improved product mix and impact
from improvement programmes 1 Jan - 31 Mar
Revenues 2007 2006 Change
• Higher wood prices hamper speciality
cellulose profitability Energy 47 96 -51 %
Chemicals 1 142 1 044 9%
Eliminations - 44 - 39
• Drop in profit from energy operations as Borregaard 1 145 1 101 4%
expected EBITA
• Volume of power from DNN contract reduced Energy 29 51 -43 %
by approx. 75 % as from 2007 Chemicals 62 14 343 %
Borregaard 91 65 40 %
EBITA margin 7.9 % 5.9 %
21
Orkla Materials
Coming event – Capital Markets Day
Orkla Capital Markets Day at Felix Conference Centre in Oslo
on 31 May 2007 at 1 p.m.
Programme:
Orkla – Strategic direction by CEO Dag J. Opedal
Orkla Branded Consumer Goods – The value creation model by EVP Torkild Nordberg
Solar Energy by EVP Roar Engeland and MD John G. Thuestad
Orkla Aluminium Extrusion – Status and strategy by EVP Ole Enger
To register: info@orkla.no
22
23
Appendix
24
Balance sheet
Key figures in NOK million
31 Mar 2007 2006
Intangible assets 17 227 17 875
Property, plant and equipment 16 908 17 199
Financial non-current assets 13 535 4 469
Non-Current assets 47 670 39 543
Inventories 6 775 6 374
Receivables 10 946 10 980
Portfolio investments 19 448 17 333
Cash and cash equivalents 2 322 2 417
Current assets 39 491 37 104
Total assets 87 161 76 647
Paid-in equity 2 009 2 011
Earned equity 47 951 37 705
Minority interest 329 758
Equity 50 289 40 474
Provisions 5 614 5 635
Non-current interest-bearing liabilities 14 866 13 737
Current interest-bearing liabilities 4 446 4 180
Other current liabilities 11 946 12 621
Equity and liabilities 87 161 76 647
Equity to total assets ratio 57.7 % 52.8 %
Net gearing 0.3 0.4
25
Currency translation effects
in NOK million
Revenues Q1-07
Orkla Foods 47
Orkla Brands 16
Orkla Aluminium Extrusion 0
Elkem 17
Borregaard -10
Total 70
EBITA Q1-07
Orkla Foods 1
Orkla Brands 0
Orkla Aluminium Extrusion 0
Elkem 2
Borregaard 1
Total 4
26
Largest holdings in the portfolio
Market value in NOK million
per 31 Mar 2007
Share of Share of
Principal holdings Industry Market value
portfolio (%) equity (%)
Tomra Industry 1 018 5,2 13,4
Steen & Strøm Real Estate 1 002 5,2 10,3
Hennes & Mauritz Retailing 820 4,2 0,3
Vimpelcom Telecommunication 751 3,9 0,6
DnB NOR Bank 728 3,7 0,6
Norsk Hydro Energy 703 3,6 0,3
Fast Search Systems Software 673 3,5 12,6
Rieber & Søn Food 661 3,4 15,5
Schibsted Media 496 2,6 2,7
Amer Group Consumer Goods 438 2,3 4,6
Total principal holdings 7 290 37,6
Market value of entire portfolio 19 414
27
Orkla Financial Investments
Aluminium hedge in Elkem
Primary Aluminium - LME 3 month USD/MT
3 000
2 800
2 600
USD/MT
2 400
2 200
2 000
1 800
1 600
jan apr jul okt jan apr jul okt jan apr jul okt jan
2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007
- Elkem Aluminium recorded a loss of NOK 108 million on its metal hedging in Q1-07 (50 %
basis)
- At the end of first quarter 414 000 MT of aluminium were sold forward at an average price of
USD 1.842 per MT (100% basis). Put options for 19 000 MT have been purchased at an
average strike price of USD 1.730 per MT.
This corresponds to approximately 2.3 years of exposure
- Unrealised metal hedging losses total NOK 871 million (50 % basis), distributed over 2007-2010
28
Orkla Materials
Financial items
29
Financial items
Key figures in NOK million
Full year
1 Jan - 31 Mar 2007 2006 2006
Net interest expenses -146 -133 -579
Currency gain/loss 16 5 -38
Other financial items, net 753 271 333
Net financial items 623 143 -284
30
Financial items
Equity and liabilities
Net gearing
NOK billion
56 1.4
52
48 1.2
44
40 1.0
36
32 0.8
28
0.6
24
20 0.4
16
12 0.2
8
4 0.0
0
-4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Q1-07 -0.2
Equity Net interest-bearing debt Net gearing
Figures as reported
IFRS accounting from 2004
31
Financial items
Debt maturity profile 31 Mar 2007
NOK million
Average maturity 4.5 years
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
2007 2008 2009 2010 2011 2012 2013 2014 2017
Drawn amounts Unutilised credit facilities
32
Financial items
Funding Sources 31 Mar 2007
Figures in NOK billion
Unutilised credit
facilities 33 % Bonds and CPs 27 %
8.7 7.4
10.8
Banks 40 %
33
Financial items
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