Related News:
Orkla Names Wiggen Chief Executive, Plans to Trim Solar-Energy Investments
Orkla ASA, a Norwegian company whose holdings range from frozen pizzas and aluminum to renewable energy, named Bjoern Wiggen as chief executive officer and said it would cut solar investments to concentrate on fewer areas.
Wiggen, head of Orkla’s aluminum-profiles unit Sapa, succeeds Dag Opedal today, the Oslo-based company said. The 50- year-old Norwegian joined Orkla in 1983 and has been head of Orkla Media and Elkem ASA.
Wiggen “is going to win back the confidence of the stock market,” Chairman Stein Erik Hagen said in a phone interview. “It’s important to re-establish Orkla’s capacity to expand. We’ve spread ourselves out over too many areas and we don’t have the capital to pursue the investments required to be market- leading in all of them, so we need to focus on a few.”
Orkla fell 0.75 krone, or 1.4 percent, to 52.40 kroner as of 2:38 p.m. in Oslo. The share is down 7.8 percent this year, valuing the company at 54 billion kroner ($8.8 billion). The benchmark OBX index was up 0.2 percent.
“He can definitely be a good man for Orkla’s future, given that they’re clearly cutting down on the number of areas they operate in and Bjoern has previously shown that he’s skillful at that and has a lot of experience,” Preben Rasch-Olsen, an analyst at Carnegie AB, said by phone. “He’s worked in brands, as well as processing, so he had a broad knowledge of everything Orkla is involved with.”
REC Sale
Orkla holds a 50 percent stake in Elkem and about 40 percent in solar-components maker Renewable Energy Corp. ASA, whose stock has lost 53 percent this year amid competition from China, cuts in state support for solar energy and rising expansion costs. Posco, the world’s third-biggest steelmaker, is considering buying Elkem, Reuters reported on Aug. 30, citing Chief Executive Officer Chung Joon Yang.
Orkla had a second-quarter net loss of 2.06 billion kroner, compared with a profit of 255 million kroner a year earlier. Sales rose 17 percent to 16 billion kroner. The company booked a writedown from its REC investment and other associated holdings of 2.91 billion kroner.
Still Diversified
“We’ll still be a diversified company,” but “we’ll have more focus on our branded consumer goods business and aluminum solutions business,” Wiggen said in a phone interview. “We’ll over time reduce our investment within the solar area.”
Renewable Energy rose 1.4 percent to 18.25 kroner as of 2:24 p.m. in Oslo.
There’s “no rush” in reducing the stake in REC, Hagen said, adding that the company would wait for REC’s stock to improve. “We have a lot of time but the signs do seem to be pointing in the right direction” for the share, he said.
The new CEO declined to comment on the timing of possible sales or asset values. The company’s Borregaard unit may be up for sale in the future “but it’s nothing we are looking at, at the moment,” Wiggen said. Proceeds from possible sales would initially be used to reduce debt and to expand the branded consumer goods and aluminum solutions businesses.
“We’re going to invest in areas we’re good at, that is to say within Brands and Sapa,” Hagen said. “We have to look where there’s growth and that’s Asia, but we could look at other areas too. For Brands it could also be interesting to look at the area around us -- Denmark, the Baltics and Finland.”
Elkem Sale
Rasch-Olsen said he expects Elkem’s silicon unit to be sold by year’s end for about 6 billion kroner, while REC is unlikely to be sold until 2011.
“REC in 2010 has started up a lot of new plants, so Orkla is likely to wait for these to be up and running in order to let the market make a more reasonable assessment of future earnings potential and ensure that the share price reflects what REC can earn,” said Rasch-Olsen, who has an “outperform” rating on Orkla. “So I don’t think anything will happen this year. I think it will be in 2011.”
Timothy R. J. Stubbs, 43, will replace Wiggen as chief of Sapa, Orkla said.
Former Orkla CEO Opedal said in July he will step down this year after more than five years in charge. Opedal will keep his role as chairman of REC.
To contact the reporters on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net; Meera Bhatia in Oslo at mbhatia2@bloomberg.net.
Rate These Stories
Rate this Page