Oslo, May 3 - Norwegian foods-to-metals conglomerate Orkla reported a stronger than expected 26 percent rise in first-quarter core earnings on Thursday and said its key Nordic grocery foods business was likely to remain stable.
Earnings before interest, tax and amortisation (EBITA) rose to 1.47 billion crowns ($246.9 million) from 1.17 billion in the same period of 2006.
The result beat all forecasts given in a Reuters survey of nine analysts, which ranged between 1.18 billion and 1.32 billion crowns.
"It was better than I expected -- 250 million better on EBITA and much better on pretax -- so it was a really strong report," said Danske Equities analyst Henrik Schultz.
"Aluminium looks considerably better than I had forecast," Schultz said. "It looks better almost across the board except for foods, wich maybe was a bit disappointing."
Operating earnings beat expectations in the brands division, the Elkem metals group, the Sapa aluminium parts subsidiary and the Borregaard chemicals unit, but missed the average forecast for the foods division, according to the Reuters survey.
"Orkla Branded Consumer Goods continued to perform well on the Nordic market," Orkla ASA said in a statement.
"The Nordic grocery market is expected to remain relatively stable in the coming quarters and future profit growth will primarily be driven by Orkla's own efforts," it said.
The trend is also positive for the east European grocery markets but this was counteracted by the increased consolidation of customers and constantly increasing pressure on prices, the company said.
WEAK DOLLAR WORRIES
The company, which makes a wide range of products from frozen pizza to aluminium, said it expected good demand for its Orkla Aluminium Extrusion and Orkla Materials businesses in the second quarter.
But it added: "Over time, an anticipated weak U.S. dollar against the Norwegian crown will have a negative impact on Orkla Materials."
Gains from the sale of shares in UK media group Mecom, Norwegian solar energy components and materials supplier Renewable Energy Corporation and real estate contributed to the financial results, Orkla said.
Orkla, which has a large investment portfolio, posted net financial gains of 881 million crowns, up from 696 million in the same quarter a year ago and above the 850 million in non-recurring items that analysts included in their forecasts.
First-quarter operating revenues grew to 13.89 billion crowns from 12.50 billion a year earlier, beating the average of analysts' expectations of 13.34 billion crowns.
Orkla's shares closed at 96.50 crowns on Wednesday, valuing the company at around $16.9 billion. Trade is due to resume on the Oslo bourse at 0700 GMT. (Additional reporting by Richard Solem and Wojciech Moskwa)