Industrial conglomerate Orkla Group’s (OSE: ORK) quarterly numbers were weighed down by the recent share price decline in Renewable Energy Corporation (OSE: REC) and thus diluted earnings per share were minus 2.6 NOK. For such a wide reaching company like Orkla, obviously there are sectors performing better and worse. It just so happens that REC’s share was up more than 20% today on the heels of a 10% advance yesterday.
As far as group companies are concerned, Swedish extruded aluminium profiles manufacturer Sapa AB continued to show profit growth and Norwegian biorefinery firm Borregaard experienced strong markets. Orkla’s hydropower business returned to normalcy. The sale of Elkem to China National Bluestar Group Co this January still affects comparisons. Orkla got the 12.8 billion NOK receivable from Bluestar during Q2.
Development In branded consumer goods division Orkla Brands was affected by higher raw material prices. There is typically lag before the company is able to pass on those costs to end-user (supply contract lenght issue). Profit was therefore lower for the division than in corresponding quarter of 2010. Orkla says that price rises will be implemented in second half of 2011. Results for Orkla Brands Russia and Bakers were weak. Orkla said last March, that it is planning to sell Bakers, which is Norway’s leading bakery company. The process is still ongoing.
Orkla is guiding for continued high volatility in raw material prices. The company says restructuring of Russian operations will contribute positively. Sapa expects slower growth than in the first half of the year going forward and Borregaard still has favourable market conditions. Second half normally has seasonally lower activity for Orkla companies as a whole. Orkla was up 2% today. Orkla’s full interim report is available here.
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