annual report 2009 The Orkla GrOup Orkla operates in the branded consumer goods, aluminium solutions, renewable energy, materials and financial investment sectors. Group sales total approximately NOK 56 billion. Orkla has 30,000 employees and operates in approximately 40 countries. ORKLA ORKLA ALUMINIUM ORKLA ORKLA ORKLA FINANCIAL BRANDS SOLUTIONS MATERIALS ASSOCIATES INVESTMENTS (39.7 %) • Foods Nordic • Profiles • Share portfolio • Brands Nordic • Heat Transfer Mkt. value (NOK million): 11,037 • Brands International • Building System • Real Estate • Food Ingredients (42.5 %) • Elkem Energi Handel Operating revenues Operating revenues Operating revenues (NOK million): 23,046 (NOK million): 20,803 (NOK million) : 11,317 EBITA1 (NOK million): 2,793 EBITA1 (NOK million): -344 EBITA1 (NOK million): 436 EBITA1 (NOK million): -85 Number of man years: 12,866 Number of man years: 12,495 Number of man years: 3,720 Number of man years: 198 1 Operating profit before amortisation, gain on sale of power assets, restructuring and significant impairment charges. key fIgURes1 2009 2008 2007 2006 2005 Operating revenues (NOK million) 56,228 65,579 63,867 52,683 55,304 ¹ Operating profit before amortisation, restructuring, gaoin on sale of power assets and significant impairment charges EBITA² (NOK million) 2,448 4,240 5,112 5,084 4,805 EBITA-margin² (%) 4.4 6.5 8.0 9.7 8.7 Ordinary profit before tax (NOK million) 1,071 -2,015 10,059 8,525 7,206 Earnings per share, diluted (NOK) 2.5 -2.8 8.1 10.9 5.6 Return on capital employed, from industrial activities3 (%) 5.2 9.4 11.5 13.0 11.4 Return on Share Portfolio (%) 39.0 -45.3 16.2 27.4 38.4 Equity ratio (%) 51.7 47.7 58.3 60.4 50.8 ¹ Historical figures for 2005-2007 2 Operating profit before amortisation, gain on sale of power assets, write-down inventory Sapa Profiles in 2008, restructuring and significant impairment charges. 3 See definition on page 123. CONTeNTS INTRODUCTION orkla’s bUsiness aReas valUe creation in orkla Message from the CEO 4 Orkla Brands 24 EHS and sustainability reports 49 The Board of Directors of Orkla ASA 6 Orkla Aluminium Solutions 28 Orkla’s human resource thinking 50 The Report of the Board of Directors 8 Orkla Materials 32 Share information 52 The Group Executive Board 22 Orkla Associates 36 Underlying value creation 56 Orkla Financial Investments 40 Asset values 58 Focus article: Sapa 44 Risk factors 60 Corporate governance 63 3 Mission stateMent and core values Orkla’s primary goal is “developing people – creating value”. We base our operations on a common set of values and attitudes designed to enhance our competitiveness and make us a stronger organisation than those with which we compare ourselves. PErSIStENCE Passion - In long-term value creation - For customer needs - In competence development - For innovation - In serving our stakeholders - For cooperation and transparency Precision - In exploiting opportunities - In focusing on output - In executing decisions annual financial statements 2009 Income Statement and Statement of Notes for Orkla ASA 116 Comprehensive income 69 Statement from the Board of Directors 121 Balance Sheet 70 Auditor’s report 122 Cash Flow Statement 71 Statement from the Corporate Assembly 122 Statement of Changes in Equity 72 Historical key figures 123 Accounting Principles 73 Group directory 124 Notes 78 Organisation 128 Financial Statements for Orkla ASA 115 Governing bodies and elected representatives 129 ORKLA ANNUAL REPORT 2009 MEssAgE from ThE CEO 4 strengtHened pOsitiOn in a cHallenging Year 2009 was a challenging year. it began in results so far, while sapa and elkem heavy burden on employees and manage- the shadow of the financial crisis, with experienced particularly weak markets. ment alike. plummeting economic activity and a recession in the us and europe. Wide- comprehensive action plans were initiated increasing cash flow from operating ranging, coordinated actions on the part in autumn 2008 to ensure that the Group activities and other measures to free up of authorities the world over helped to is able to maintain its maneuverability capital have been high priorities in 2009. stabilise the financial system. in many in the long term. the measures imple- all the business areas helped to boost countries, moreover, increased public mented in 2009 have included effici­­ency cash flow from operating activities to budgets have been used to provide eco- improvement programmes and restruc- NOK 5.8 billion, an improvement of NOK nomic stimulus packages. turing, as well as the closure of several 3.3 billion on 2008. in addition, capital plants. cost positions have been improved, was freed up through net sales of portfo- orkla’s business areas have been affected but the measures have also resulted in lio shares and sales of hydropower assets to varying degrees by the historical low workforce reductions of around 4,500 that were subject to reversion. all in all, levels of economic activity. in 2009 orkla people over the past two years. these this has strengthened the Group’s financial Brands and Jotun achieved their best processes have been difficult, placing a position, while also enabling orkla to tHe Orkla waY • ambitiOus targets • structural measures • DevelOpment Of leadersHip capacitY and functiOnal expertise Developing people – creating value • Lean supplY cHain based • imprOvement OrientatiOn On Hse perfOrmance • custOmer fOcus and innOvative abilitY ORKLA ANNUAL REPORT 2009 MEssAgE from ThE CEO 5 under take strategic acquisitions in the orkla’s cost of capital, and on seeking aluminium profiles sector in theUS and profitable growth ina sia. to participate in the rights issue in rec. orkla Materials comprises elkem and there is uncertainty as regards future Borregaard. the business area invests economic trends. at orkla, however, we substantial resources in the development focus our attention on adapting to and of new technologies and processes. elkem exploiting the market conditions that we solar is a prime example of this strategy. actually face, rather than drawing up a variety of conflicting scenarios. orkla associates consists of orkla’s in- vestments in the solar energy company, orkla has a long-term industrial develop- renewable energy corporation (39.7%) ment agenda. operational efficiency lies and the paint and coating manufacturer, at the core of all orkla’s work. strategies Jotun (42.5%). Based on the conviction «Experience has taught us that are considerably easier to implement that renewable energy, which includes challenging economic conditions when our operational performance, from solar energy, is a long-term macro-trend, can also present opportunities for customer insight through innovation to orkla supports REC’s efforts to remain a material flow, remains at a high level. global front-runner in an industry with value-creating industrial initiatives When operations are unsatisfactory, our huge growth potential. a crucial focus in and improvement measures» strategic options are more limited and 2010 will be to ensure the success of create less value. orkla’s two investments in solar energy through rec and elkem solar, which orkla’s five business areas are undergo- entails completion of the companies’ ing dynamic development. We aim to expansion projects and increased capacity the orkla share ended the year at NOK continue to pursue the growth strategy utilisation, as well as on their responses 56.85, up from NOK 45.45 at the start of that we have followed in the past few to a demanding market situation. 2009. one of orkla’s objectives is to be years. our plans include further invest- able to maintain its dividends to share- ment in the nordic region and in global Jotun has a more established business holders and to increase them over time. markets, although there is also a need for model that is being rolled out in existing in line with this policy, a dividend of ongoing productivity improvement and and new geographical markets, with noK 2.25 per share was paid in 2009. restructuring. emphasis on asia and the Middle east. the return on shareholders’ investment for the year was thus 31%. orkla Brands holds strong positions in the orkla Financial investments continues to nordic region. We also aim to develop the generate good returns, while contributing experience has taught us that challenging Group’s companies in russia, the Baltics to the Group’s business development by economic conditions can also present and india. orkla Brands pursues a classic drawing attention to industrial opportu- opportunities for value-creating industrial brand strategy that emphasises innova- nities. initiatives and improvement measures. tion and market-leading brands based orkla’s financial position is strong, and on insight into consumer needs. orkla aims to gradually increase its pres- the Group intends to fully exploit its ence in asia. this applies to all of the frontier of opportunity in the future. through sapa, orkla aluminium Group’s business areas. elkem, Borregaard, solutions has established a leading plat- sapa and Jotun already have a history in form in europe and north america the region. through the acquisition of through the acquisition of alcoa’s and Mtr Foods in india, orkla Brands has es- indalex’ extruded aluminium profiles tablished its first foothold. rec has in- businesses. our focus in the next few vested in an integrated plant in dag J. opedal years will be on improving profitability singapore. President and ceo to our targeted level, which is well above ORKLA ANNUAL REPORT 2009 ThE BOARD Of DIRECTORs Of ORKLA AsA 2009 6 tHe bOard Of DIRECTOrs Of Orkla ASA 11. 7. 8. 12. 10. 2. 6. 9. 8. 5. 4. 1. 3. ThE BOARD Of DIRECTORs Of ORKLA AsA 2009 7 shareholder-elected members of the 4. bJØRG ven 7. LENNART JEANSSOn board of directors Degree in Law (Cand. jur.) from the University MBA (siv.