Slide 1: Robust operations – 1st quarter results 2008
Robust operations 1st quarter results 2008 6 May 2008
Slide 2: Agenda
Agenda • The Orkla Group Roar Engeland – Highlights and financial performance EVP Orkla Financial Investments • Business Area Review – Orkla Brands – Orkla Aluminium Solutions – Borregaard – Orkla Associates – Orkla Financial Investments • Elkem Helge Holen CEO Elkem • Q&A 2 First quarter 2008 - The
Slide 3: Robust operations – Profit affected by special items in Elkem
Robust operations – Profit affected by special items in Elkem • Profit growth for Orkla Brands – Positive impact from action plan • Satisfactory performance from Sapa in challenging markets • Elkem Solar’s silicon quality confirmed • Elkem negatively impacted by loss on energy trading and aluminium
Slide 4: Change in EBITA from Q1-07 to Q1-08
Change in EBITA from Q1-07 to Q1-08 + 24 1467 - 319 -183 Energy trading Primary Aluminium -86 - 95 Elkem Solar -50 -15 1062 Q1-07 Orkla Brands Elkem Elkem Orkla Financial Other Q1-08 items Investments All figures in NOK million 4 First quarter 2008 - The Orkla Group
Slide 5: Group income statement Q1-08
Group income statement Q1-08 Key figures in NOK million 1 Jan - 31 Mar 2008 2007 Change Operating revenues 16 944 13 888 22 % EBITA 1 062 1 467 -28 % Amortisation intangibles -57 -58 Restructuring and significant impairment 0 0 EBIT 1 005 1 409 Associates 179 352 Dividends 88 240 Gains and losses/wr
Slide 6: Financial items – special issues
Financial items – special issues in NOK million Change vs 1 Jan - 31 Mar Q1-07 Realised gains/Write-downs, Share Portfolio -1 176 One-off gains in Q1-07 - 842 Termination of put options in REC 61 • Write-downs brought a net loss of NOK 295 million on the Share Portfolio – Gain of NOK 881 million in
Slide 7: Q1 - Solid balance sheet
Q1 - Solid balance sheet • Equity ratio 55.4 % • Net gearing 0.3 • Market value Share Portfolio 17,141 MNOK • Net interest-bearing debt 18,628 MNOK 7 First quarter 2008 - The Orkla Group
Slide 8: Business Area Review
{Ei ORKLA Business Area Review
Slide 9: Orkla Brands
Orkla Brands 9 First quarter 2008 - Orkla Brands
Slide 10: Positive impact from action plan
Positive impact from action plan (EBITA 12 month rolling) NOK million 2 600 2 400 2 200 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 Q3-07 Q1-08 Q3-08 10 First quarter 2008 - Orkla Brands
Slide 11: Orkla Brands – Profit growth
Orkla Brands – Profit growth • Underlying top line growth +5 % Orkla Brands in NOK million 1 Jan - 31 Mar 2008 2007 Change • Profit growth mainly due to action Revenues plan Orkla Brands 5 361 5 285 1% – Structural changes Orkla Foods Nordic 2 293 2 207 4% – Price increases Orkla Brands Nordic 1 859
Slide 12: Action plan proceeding as planned
Action plan proceeding as planned 1) Price increases in line with Q1 raw material cost increases – Further price increases will be implemented due to continued hike in raw material prices and labour cost 2) International operations – Divestments/restructuring of unprofitable companies – Further stru
Slide 13: Orkla Aluminium Solutions
Orkla Aluminium Solutions 13 First quarter 2008 - Orkla Aluminium Solutions
Slide 14: Restructuring on track in difficult markets
Restructuring on track in difficult markets • Lower margins due to Orkla Aluminium Solutions in NOK million • Dilution effect from consolidation of Alcoa figures 1 Jan - 31 Mar • Weaker markets in North America Revenues 2008 2007 Change and Europe Orkla Aluminium Solutions 7 432 4 653 60 % • Sapa Pr
Slide 15: Q2 expected to be affected by:
Q2 expected to be affected by: • Weaker profile markets compared with Q1-08 and Q2-07 expected, both for U.S. and Europe • US market expected to drop 10 % in 2008 • Continued strong demand for Heat Transfer • Start-up/integration costs for Sapa Profiles • NOK 40-50 million per quarter in 2008 15 Fir
Slide 16: Borregaard
Borregaard 16 First quarter 2008 - Borregaard
Slide 17: Borregaard – Improved profitability
Borregaard – Improved profitability Borregaard • Specialty Cellulose benefits from in NOK million favourable market conditions for 1 Jan - 31 Mar textile cellulose Revenues 2008 2007 Change Borregaard 1 216 1 145 6% • Weaker USD and higher costs for Energy 62 47 32 % wood, chemicals and energy Chemi
Slide 18: Orkla Associates
Orkla Associates 18 First quarter 2008 - Orkla Associates
Slide 19: Orkla Associates
Orkla Associates REC Jotun in NOK million in NOK million 1 Jan - 31 Mar 2008 2007 Change 1 Jan - 31 Mar 2008 2007 Change Revenues 1 771 1 616 10 % Revenues 2 259 2 072 9% EBITDA 742 869 -15 % EBIT 579 737 -21 % Profit before tax* 327 634 -48 % • Revenue growth of 10 per cent. • Growth in both operat
Slide 20: Orkla Financial Investments
Orkla Financial Investments 20 First quarter 2008 - Orkla Financial Investments
Slide 21: Orkla Financial Investments
Orkla Financial Investments Portfolio OSEBX MSCI Nordic S&P 500 Gains and dividends in NOK million 20.6 % 1 Jan - 17.1 % 2008 31 Mar 15.6 % Unrealised gains -1 078 5.9 % Net gains and losses - 274 Change in fair value of associates - 21 Dividend received 87 2008 2004-2007 Tax and interest 83 Change
Slide 22: Elkem
Elkem Helge Holen CEO Elkem 22 First quarter 2008 - Elkem
Slide 23: Elkem – Weak result compared to last year, but positive development in main markets
Elkem – Weak result compared to last year, but positive development in main markets Elkem • Primary Aluminium result in NOK million hampered by weakened USD, higher costs and aluminium 1 Jan - 31 Mar hedges Revenues 2008 2007 Change Elkem 2 708 2 433 11 % • EBITA from Elkem Energy Energy 442 320 38
Slide 24: Primary Aluminium – Good foundation for future profitability
Primary Aluminium – Good foundation for future profitability EBITA per quarter - Primary Aluminium • Metal hedges hamper profit 160 temporarily 140 120 – Loss on metal hedges 100 NOK 61 million in Q1 80 – Unrealised hedge loss of 60 NOK 973 million, mainly 40 20 in 2008-2010 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 25: Elkem Energy – Lower result due to weak trading
Elkem Energy – Lower result due to weak trading EBITA per quarter - Energy • EBITA at NOK 104 million vs. NOK 244 million last year 350 300 250 • EBITA from Energy trading at 200 NOK -54 million versus NOK 129 150 million last year 100 50 • 600 GWh/year from Sauda hydro 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 26: Silicon-related – Good price growth in main markets
Silicon-related Good price growth in main markets • Most silicon metal contracts are long- Ferrosilicon price - CRU Europe term with market price adjustments [EUR/Mt] • Strong production base on Iceland gives very competitive cost position 1 500 in ferrosilicon and foundry products 1 000 – FSM produ
Slide 27: Elkem Solar – A break-through Solar Grade Silicon production process
Elkem Solar - A break-through Solar Grade Silicon production process... • Low power consumption enables total cost below USD 20/kg • Technology uncertainty reduced through systematic verification program 27 First quarter 2008 - Elkem
Slide 28: Cell efficiency on par with polysilicon
Cell efficiency on par with polysilicon Cell efficiency (%) of cells made of Elkem Solar Silicon (ESS) vs polysilicon at UKON* • Efficiency from Elkem Solar 18 Silicon at Q-Cells is on par with 16 polysilicon 14 12 • Promising results from high efficiency cells – aiming for above 10 18% efficiency 8
Slide 29: Construction project on schedule
Construction project on schedule 29 First quarter 2008 - Elkem
Slide 30: Coming events
Coming events 7 May 2008 Dividend payment 13 August 2008 Second quarter 2008 results 31 October 2008 Third quarter 2008 results 30 First quarter 2008
Slide 31: First quarter 2008
31 First quarter 2008
Slide 32: Appendix
Appendix 32 First quarter 2008 - Appendix
Slide 33: Balance sheet 31 Mar 2008
Balance sheet 31 Mar 2008 Key figures in NOK million 31.03.2008 31.12.2007 Intangible assets 16 468 16 626 Property, plant and equipment 22 656 21 481 Financial non-current assets 15 198 14 999 Non-Current assets 54 322 53 106 Inventories 8 686 8 533 Receivables 12 489 12 628 Share Portfolio etc. 17
Slide 34: Cash flow 31 Mar 2008
Cash flow 31 Mar 2008 Key figures in NOK million 1 Jan - 31 Mar 2008 2007 Industry division: Operating profit 1 021 1 330 Amortisations, depreciations and write-downs 576 521 Changes in net working capital - 387 - 445 Net replacement expenditure - 384 - 309 Cash flow from operations 826 1 097 Financ
Slide 35: Largest holdings in the Share Portfolio
Largest holdings in the Share Portfolio Market value in NOK million per 31 Mar 2008 Share of Share of Principal holdings Industry Market value portfolio (%) equity (%) Fast Search Systems Software 969 5.7 15.2 % Tomra Industry 921 5.4 14.5 % Hennes & Mauritz Retailing 704 4.1 0.3 % DnB NOR Bank 560
Slide 36: Share Portfolio key figures
Share Portfolio key figures Key figures in NOK million 31 Mar 08 31 Dec 07 Change 08 Market value portfolio 17 141 17 513 - 372 Unrealised gains before tax 2 732 3 810 -1 078 Share of portfolio invested - outside Norway 53 % 55 % -2 % pts - in listed companies 84 % 85 % -1 % pts 36 First quarter 200
Slide 37: Currency translation effects
Currency translation effects in NOK million Revenues Q1-08 Orkla Brands -117 Orkla Aluminium Solutions -504 Elkem -54 Borregaard -35 Total -710 EBITA Q4-07 Orkla Brands -3 Orkla Aluminium Solutions -17 Elkem -8 Borregaard -5 Total -33 37 First quarter 2008 - Appendix
Slide 38: Financial items
Financial items 38 First quarter 2008 - Appendix
Slide 39: Net financial items
Net financial items in NOK million Full year 1 Jan - 31 Mar 2008 2007 2007 Net interest expenses -177 -146 -704 Currency gain/loss 14 16 32 Other financial items, net* 67 753 1 112 Net financial items -96 623 440 * Reference is made to slide 6 for further details 39 First quarter 2008 - Appendix
Slide 40: Net gearing 0.3 per 31 Mar 2008
Net gearing 0.3 per 31 Mar 2008 NOK billion Net gearing 60 1.4 54 1.2 48 42 1.0 36 0.8 30 0.6 24 18 0.4 12 0.2 6 0.0 0 -6 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1Q 08 -0.2 Equity Net interest-bearing liabilities Net gearing 40 First quarter 2008 - Appendix
Slide 41: Debt maturity profile 31 Mar 2008
Debt maturity profile 31 Mar 2008 Average maturity NOK million 5.1 years 6 000 5 000 4 000 3 000 2 000 1 000 0 2008 2009 2010 2011 2012 2013 2014 2015 2017- Drawn amounts Unutilised credit facilities 41 First quarter 2008 - Appendix
Slide 42: Funding Sources 31 Mar 2008
Funding Sources 31 Mar 2008 Unutilised credit Bonds and CPs 30 % facilities 31 % 9.3 9.2 11.7 Banks 39 % Figures in NOK billion 42 First quarter 2008 - Appendix