Orkla shares up on relief after Q1 in line

By Aasa Christine Stoltz

OSLO (Reuters) - Norway's food-to-metals conglomerate Orkla (ORK.OL: Quote, Profile, Research) reported a drop in first quarter core earnings, largely in line with forecasts, and saw its shares rise on relief that rising costs weighed less heavily than feared.

Shares in Orkla were up 2.7 percent at 73.70 crowns by 0809 GMT, valuing the group at about $15 billion, after rising as much as 3.3 percent. Oslo's key index was up 0.8 percent.

"The underlying result, if you strip for one-off effects...looks better than feared, which is supporting the shares," said analyst Tore Oestby at Handelsbanken.

Earnings before interest, tax and amortisation (EBITA) fell to 1.06 billion crowns ($206.6 million) in the three months to end-March from 1.47 billion in the same quarter a year earlier.

The result was in line with an average expectation of a drop to 1.07 billion crowns in a Reuters poll of 11 analysts. Forecasts had ranged from 950 million to 1.23 billion crowns.

Orkla noted that realised portfolio gains and sale of other financial assets had been high in the first quarter of 2007, resulting in a sharp drop in pretax profit in the first quarter of 2008. Pretax profit fell to 881 million crowns from 3.51 million last year. Analysts had forecast a drop to 1.46 million.

The group said it expected demand in the U.S aluminium market to weaken by 10 percent in 2008.

It added however, its restructuring plan at its aluminium arm was on track, and that it had turned around a negative trend at its Brands unit.