Orkla's profit affected by weak markets

The global economic decline intensified in the first quarter,
weakening markets for Aluminium Solutions and Materials. Orkla Brands
achieved satisfactory results with an improvement of six per cent.
First-quarter operating profit (EBITA)1 ended at NOK 233 million,
compared with NOK 1.0 billion in the same period in 2008. Net profit
was NOK 638 million, compared with NOK 687 million in the same period
the previous year. Orkla has already implemented and is planning
extensive measures to manage the cash flow and adapt production
capacity to the weak market situation.


Orkla's first-quarter operating revenues totalled NOK 13.4 billion,
down from NOK 16.3 billion in 2008. Much of this decline is
ascribable to weak markets and a 40 per cent decline in volume for
Orkla Aluminium Solutions. Volume and price trends for Orkla
Materials were also negative in the quarter. Orkla's equity ratio was
50 per cent, while net interest-bearing debt was on a par with the
end of 2008.

"Orkla has a diverse portfolio in which the less cyclical businesses
like Orkla Brands and the energy business reported satisfactory
results, while the more international, cyclical business areas in
Aluminium Solutions and Materials were hard hit by the powerful
global economic downturn. However, Orkla's financial position is
robust, and the main focus in the short term is to adapt capacity and
costs to the weak markets and, at the same time, be as well
positioned as possible when the economic situation again improves,"
says President and CEO Dag J. Opedal.

He points out a few important milestones that were reached in the
first quarter:
"The swap agreement whereby Orkla took over Alcoa's 45 per cent
interest in Sapa Profiles in exchange for Orkla's 50 per cent stake
in Elkem Aluminium was finally completed, generating an accounting
gain of NOK 993 million. The new Elkem Solar plant is an investment
of well over NOK 4 billion, and the ramp-up programme aimed at
full-scale operations in the course of 2009 is on track. We also
inaugurated one of the last major hydropower plants in Norway,
Saudefaldene. That was an investment of over NOK 2 billion, and the
plant's total production output is equivalent to 20 per cent of the
city of Oslo's energy consumption," sums up President and CEO Opedal.

1) Operating profit (EBITA): Before amortisation, restructuring and
significant impairment charges.
Key figures Q1-09 (Q1-08) in NOK million:
Operating revenues: 13 448 (16 332)
EBITA: 233 (1 029)
Profit before taxes: -315 (846)
Earnings per share diluted (NOK): 0.7 (0.6)
Cash flow from operations: 214 (839)

As of 31 Mar 2009(as of 31 Dec 2008):
Net interest-bearing debt: 26 588 (27 424)
Equity (%):49.9 (47.7)
Net gearing: 0.56 (0.55)

First Quarter in Brief
- The international recession grew worse in the first quarter and
contributed to weaker demand in important product markets in Orkla
Aluminium Solutions and Orkla Materials.

- Orkla has implemented and planned extensive measures in order to
adapt production capacity and costs to the challenging market
situation.

- Orkla's EBITA came to NOK 233 million (NOK 1,029 million)1 in the
first quarter.

- Orkla Brands had a satisfactory EBITA of NOK 522 million (NOK 492
million)1.

- The volume for Orkla Aluminium Solutions was 40 % lower than the
same quarter last year. This contributed to a weak result, with EBITA
of NOK -342 million (NOK 343 million)1.

- In Orkla Materials, there was profit growth for Elkem's energy
business, while the markets for the silicon-related units weakend
considerably during the quarter. Elkem Solar is following the
targeted start-up plan, and this has resulted in EBITA of NOK -159
million.

- REC reported EBITDA of NOK 527 million (NOK 742 million)1 in the
first quarter. Jotun has had a satisfactory start for the year with
continued growth in sales.

- The stock markets were somewhat weaker in the quarter than at
year-end, and this contributed to a negative return of -5.7 % in the
Share Portfolio in the first quarter compared with returns for the
Morgan Stanley Nordic Index and the Oslo Børs Benchmark Index of -7.3
% and +0.4 %, respectively. The impairment resulted in further
accounting write-downs, and the net result in the Share Portfolio
came to NOK -315 million.

- Profit/loss before taxes came to NOK -315 million (NOK 846
million)1 in the first quarter.

- The swap between Orkla and Alcoa has been completed. The
transaction gives a positive contribution to profit for Orkla of NOK
993 million, which is shown on the line for discontinued operations.

The group
Orkla's operating revenues came to NOK 13,448 million (NOK 16,332
million)1 in the first quarter. The decline was mainly a result of
continued weak markets for Orkla Aluminium Solutions and weaker
markets for Elkem's silicon-related products and Borregaard's
chemicals business. The Norwegian krone is stronger now than it was
at year-end, but still weaker than in the same quarter last year,
relative to both USD and EUR. This resulted in a positive currency
conversion effect on operating revenues of NOK 696 million.

EBITA came to NOK 233 million (NOK 1,029 million)1 in the first
quarter. The negative deviation in profits can be mainly explained by
the weak sales volume in Orkla Aluminium Solutions. The total volume
was 40 % lower than last year. Demand in the North American market
has been in decline now for 10 consecutive quarters and is down 60 %
since its peak in the first quarter of 2006. Orkla Brands had a
growth in profits relative to last year. Implemented price increases
and cost-reducing measures compensated for a weaker volume trend and
raw material price increases. The timing of this year's Easter
vacation had a positive effect on the results. For Orkla Materials,
the picture was more complicated. The energy business in Elkem had
better results than in the same quarter last year, primarily as a
result of positive contributions from trading activities compared
with losses during the same quarter last year. Weaker markets
contributed to a decline in profits for the silicon-related
businesses in Elkem and for Borregaard's chemicals business. The
start-up programme for Elkem Solar is following its ramp-up plan with
an EBITA of NOK -159 million in the first quarter. The uncertain
financial markets resulted in continued poor results for Orkla Finans
in the first quarter. For the Group as a whole, EBITA was negatively
affected by currency conversion effects of NOK -38 million during the
quarter.

The swap between Orkla and Alcoa, where Orkla acquires Alcoa's 45.45
% share in Sapa Profiles in exchange for its 50 % share in Elkem
Aluminium was completed on 31 March 2009. Low book values in Elkem
Aluminium meant that the transaction made a positive contribution of
NOK 993 million to Orkla's earnings for the first quarter, which is
presented on the line for discontinued operations.

Orkla's share in REC (39.73 %) and Jotun (42.5 %) are presented
according to the equity method on the line for associates. REC had an
EBITDA of NOK 527 million in the quarter compared with NOK 742
million last year. Profit after tax for REC, however, was higher than
last year. Following this, Orkla's earnings contribution from REC
came to NOK 157 million in the first quarter, whereas it amounted to
NOK 84 million in the first quarter of 2008.
In the first quarter, the Share Portfolio had a return of -5.7 %
compared with -7.3 % for the Morgan Stanley Nordic Index and 0.4 %
for the Oslo Børs Benchmark Index. Gains, losses and write-downs in
the Share Portfolio came to NOK -315 million for the quarter, of
which accounting write-downs amounted to NOK 816 million. As
described in Orkla's Annual Report for 2008, the Share Portfolio
concluded hedge accounting in 2008. Currency hedging effects will
thus be regularly reported in the income statement. A strengthened
Norwegian krone from year-end entailed that there were positive hedge
effects of NOK 513 million during the quarter. Dividends received for
the Share Portfolio amounted to NOK 45 million (NOK 87 million)1.

Orkla's profit per share diluted in the quarter amounted to NOK 0.7
compared with NOK 0.6 in the first quarter of 2008. Also adjusted for
discontinued operations, however, the profit per share amounted to
NOK -0.3 compared with NOK 0.6 in the first quarter of 2008. The tax
for the first quarter is estimated at NOK -40 million.

1) Figures in parentheses are for the corresponding period in the
previous year.

Orkla ASA
Oslo, 6 May 2009

Ref.:

CFO
Terje Andersen
Tel.: [phone]

SVP Investor Relations
Rune Helland
Tel.: [phone]

SVP Corporate Communications
Ole Kristian Lunde
Tel.: [phone]

Investor Relations
Siv Merethe Skorpen Brekke
Telefon [phone]


This announcement was originally distributed by Hugin. The issuer is 
solely responsible for the content of this announcement.