Rieber & Søn ASA can report a 14 per cent increase in sales, compared with the second quarter of 2006. The growth was mainly due to the acquisition of the Swedish cake producer Frödinge and the Dutch onion producer Rijnhout. For the first time, Rieber & Søn's net sales passed one billion kroner in the second quarter. Net sales during the period totalled NOK 1 133 million, against NOK 997 million last year. The second quarter operating profit before depreciation was NOK 89 million, against NOK 105 million last year. - While Rieber & Søn's continued growth is gratifying, we would nonetheless like to be able to present even better operating profits, says President & CEO Asbjørn Reinkind. Raw material prices under pressure Greater pressure on raw material prices was a contributory reason for the operating being poorer than last year. Smaller crops due to climatic conditions, increased global demand and higher consumption of bioenergy have contributed to the higher cost of raw materials. - We will be compensated in the third quarter for the increase in raw material prices, since we have increased our retail prices in the Nordic region from around the half year. There is a risk that raw material prices may rise even more, and price increases will be kept under constant review, says Reinkind. The increased cost of raw materials is not the only reason for the weaker quarterly results compared with last year. The lower onion quality at the end of the season weakened the gross margin, but is expected to normalise in the second half of the year. The implementation of SAP in Norway has again led to a temporary increase in costs in the present quarter, especially related to the additional manpower needed to increase stocks of goods and improve the level of service. Higher payroll costs and developments in major currencies such as the US dollar and the Euro have impacted negatively on the operating profit, as have reorganisation costs and the specialisation of factories in Denmark and the Netherlands. At the same time, the cost improvement programme, Impro 07, is proceeding as planned and has made a positive contribution, adding NOK 25 million to profits in the second quarter. Focus on chilled ready-made dishes The investment in Velbekomme chilled ready-made dishes is picking up speed, and in September the product will already be launched in Denmark. At the same time a new production line is being installed at Elverum which will provide increased capacity, greater operational efficiency and more flexibility, making it possible to offer more mealtime solutions to Norwegian consumers. - In the short term this important initiative will have a negative effect on operating profits, but we strongly believe that investments in this rapidly growing category has considerable potential for sales growth and profit enhancement, says Reinkind. Contacts: President & CEO Asbjørn Reinkind Tel.: +47 90 19 40 48 Financial Director Tor Lund Tel.: +47 95 27 28 10 Director of Communications & IR Geir Mikalsen Tel.: +47 90 62 08 51 Facts about Rieber & Søn ASA Rieber & Søn is one of Norway's leading food conglomerates. The main markets are Western Europe and Central and Eastern Europe where the Group has considerable market shares in the retail grocery sector. Rieber & Søn's aim is to be the Local Taste Champion in its main markets. Attractive and sought-after food products based on consumer requirements are developed through Rieber & Søn's competence in established eating habits. Rieber & Søn also introduces ethnic dishes in national and local markets and makes them easier for the consumers to prepare. Through systematic product maintenance and product development, as well as aggressive launches, Rieber & Søn has helped to bring about continuous consumer growth in its main groups. Rieber & Søn had leading brands such as TORO, Denja, MrLee, King Oscar, Vossafår, Vestlandslefsa, Sopps, Black Boy, Geisha, Ming, Trondhjems canned dinner, Mrs Cheng's and Frödinge (Sweden), K-Salat and Bähncke (Denmark), Delecta (Poland), Vitana (Czech Republic and Slovakia) Chaka (Russia), Cronions and Rijnhout (the Netherlands). The Group has a workforce of 4 000 (of whom 1 050 are in Norway), production plant in 7 countries and is represented through sales and market offices in a further 6 countries. 2nd Quarter Report 2007, inclusive financial tables, as well as the presentation of 2nd Quarter 2007 can be downloaded from the following links: