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Our course remains firm

In 2003 all Orkla’s branded consumer goods businesses achieved growth, the results for the chemicals business declined due to weak markets, while the financial investments division recouped most of the losses it had made on weak stock markets in the preceding years. All in all, it was a good year for Orkla. Our position is strong and we are well prepared for new challenges.

By Finn Jebsen, Group President and CEO

This year, Orkla is celebrating the fact that 350 years have passed since mining began at Løkken in Central Norway and the foundations for the Orkla Group we know today were laid. At a milestone such as this, it is natural for us to look back on our own background and experiences. We have therefore included an account of the Group’s historical development elsewhere in this report.

In the past twenty years, Orkla has achieved particularly strong, profitable growth. While all three core business areas have grown, our development in the branded consumer goods sector has been the most impressive. We have become the leading supplier to the grocery trade in the Nordic region and hold interesting positions in Central and Eastern Europe. As a result of this development, Orkla has become a significantly larger, more solid company than before and has created substantial value for its shareholders. Our corporate culture is healthy and strong and we are entitled to be proud of what Orkla has achieved thus far.

During this period of growth, Orkla has sometimes sold companies in its core business areas. In the mid-1990s, for example, we sold all our interests in clothing, which was a main area of focus within the branded consumer goods business. In the 1980s, Orkla sold its interests in the contracting business, which was one of the Group’s core activities at the time. Nevertheless, the sale of our 40 % interest in Carlsberg Breweries in this anniversary year is different from previous divestments. Beverages were part of a core business that we were strongly motivated to further develop and had a central place in our strategic plan. Over a period of seven to eight months, we struggled to find solutions to a growing conflict with the majority shareholder in the company, Carlsberg A/S (CAS). When problems first arose in our partnership with CAS, the most natural thing for us to do would have been to buy the brewery business, Carlsberg Breweries, from CAS. However, this proved impossible to achieve in practice. In the end we were faced with a choice between a destructive battle and selling at a good price. Although our hearts told us to continue, a cool assessment of the entire situation told us that the most correct thing for Orkla to do was to sell. Consequently that was the choice we made.

The sale is not a result of any change of strategy or a signal of a short-term rather than a long-term approach. Our strategic orientation is unchanged and our main direction will continue to be profitable industrial growth with the main emphasis on branded consumer goods, preferably at the international level. At the same time, we will continue to strengthen Borregaard’s core industrial business, which has now been clearly defined as wood chemicals, and our Financial Investments business will continue to operate with focus on a concentrated, long-term portfolio.

With our expertise, our solid market positions and our extremely strong financial situation, we have a good foundation for further expansion. We will be patient enough to ensure that our future growth will be profitable and create value. And maybe we will expand our horizons a little further, perhaps geographically, perhaps in terms of products, but always on the basis of what we do best.

Orkla has achieved underlying profit growth throughout 2003, particularly in our Branded Consumer Goods business. The value of our financial investments also increased significantly, while the Chemicals business experienced a setback. However, the overall picture is one of progress, and we have continued to implement improvement programmes with drive and determination in all of the Group. This provides a good foundation for further growth in 2004.

Orkla´s history - 350 years: 1654-2004

From mining to Grandiosa

Historians Knut Sogner, Harald Espeli and Trond Bergh, who all work at the Norwegian School of Management BI, are writing a book about Orkla's history from its early beginnings until the present day. The book will be published later on in this centenary year. Trond Bergh, who is editor of the book, has written the following summary of some of the main trends in Orkla's history.