Oslo, Aug 9 - Norwegian food-to-metals conglomerate Orkla posted a smaller-than-forecast 14 percent rise in core earnings for the second quarter, hit by weakness in foods and sending its shares down nearly 8 percent.
Earnings before interest, tax and amortisation (EBITA) rose to 1.19 billion Norwegian crowns ($205.3 million) in April-June from 1.04 billion in the same quarter a year earlier.
The result missed all forecasts that ranged from 1.25 billion to 1.51 billion crowns in a Reuters survey of seven analysts whose average EBITA expectation was 1.36 billion crowns.
Orkla shares fell 7.7 percent to a two-month low of 101.75 crowns, valuing the company at $18.3 billion. The stock underperformed a 0.8 percent drop in the Oslo bourse benchmark index.
Group profits were held back by a weaker-than-forecast performance in the Foods division which accounted for slightly more than a quarter of revenues.
"We are not satisfied with Orkla Foods' results this time," Chief Executive Dag Opedal said in a statement. "Wide-ranging programmes have therefore been implemented with the aim of returning the company during 2008 to the level of profitability it has achieved in the past."
Although the Nordic grocery market is expected to remain relatively stable in the coming quarters, input prices in areas such as raw materials and packaging are expected to come under further pressure, Orkla ASA said in the statement.
"Countermeasures taken and price rises will compensate for the cost increases in the next few quarters, contributing to further profit growth for Orkla Branded Consumer Goods," it said.
Orkla said the U.S. market for its Sweden-based Sapa aluminium parts unit was "significantly weaker" than last year with a 15-20 percent decline in volume, though Sapa's other markets were seen remaining relatively stable.
At the end of the quarter, Orkla closed a deal to merge Sapa's aluminium profile operations with those of U.S. heavyweight Alcoa.
Orkla said the establishment of that new company could bring increased investment and non-recurring costs in the second half of 2007 and that restructuring projects with related costs would also be considered.