Hello, and warmly welcome to Orthex Half-year Financial Reporting. I have with me here CFO Saara Mäkelä and CMSO Hanna Kukkonen. We will take you through the update of the H1 of the year and with the focus, of course, on the Q2. Just a brief introduction first, and then we'll go into the details, the strategy, financials, and also make some comments on sustainability as it's extremely important for us. Regarding background, I think really important to point out that we are operating under our own strategic brands, SmartStore in storage, GastroMax in kitchen products, and then Orthex in the rest of the product groups. These are for us and for the consumers, brands that we can trust and that signify good quality and durable, practical products.
We are proud to produce about 90% of the products we sell in our own factories in Finland and Sweden. If we go into the sales situation regarding the categories, for us, storage is the biggest one, and it was during for the H1 of the year, around 65% of our sales. Kitchen, the second largest, 21%, mostly kitchen utensils, food storage, and this kind of product. And then we have the home and garden category, including flower pots, mailboxes, bins, buckets, et cetera. And all the products have one mission in common, and that's to make everyday life easier for the consumer. So functional, good, reliable, high-quality products that last long and can be recycled at the end of use.
Then going into January, June, we had a period where we have been growing almost 6% on a market which is, I would say, not that easy. Consumers are not too eager to shop consumer products, and in this quite difficult situation, I think we are quite happy to be able to produce a nice growth. Outside of the Nordics, in our key target growth markets, that's the rest of Europe, I could say that it's been a bit of a balanced growth. We've done some strengthening of the organization. We are doing some change to one of our regions, and we are progressing well. Then, I said the consumer is careful and also the retail buyer is a bit careful here. And of course, price can be an issue.
We represent high-quality products, and from time to time, the easier choice is to buy something cheaper, which might break. We are proud to provide products that are of a quality that you last. In terms of profitability, we are almost at par with last year. Of course, last year included a one-time, state, Swedish state, compensation for high electricity prices, so we'll go into that a bit more in the, in Q2 overview. EBITA, without, the electricity support actually improved by 16%. Regarding raw materials, the price development has been quite stable. Q2, net sales increased by, by 4.3% and quite a small effect, from currencies this time, so, constant currencies, 4.4. And then invoiced sales grew by 5%.
And I would say this is driven quite well by actually Nordic growth. We managed to grow in the Nordics despite the quite gloomy environment in retail. And that, of course, has required quite a lot of activities in store and quite a lot of launching of new products, et cetera, et cetera. Regarding Europe, I think one of the strategic things that we are currently working on and progressing well is our German operations, where we take a little bit of a wider look at the area. And the ambition is to be able to be an even better partners for customers that have stores or activities in not only Germany, but in many other countries around Germany. Widening a bit the responsibilities and also looking for additional resources at the moment.
That is progressing as planned. Then on the EBITA, if you make a straight one-for-one comparison, we were down from 2.1 million EUR to 1.6 million EUR. However, last year, we got an 800,000 EUR compensation, a one-off from the Swedish state, where they gave support to those that had paid quite high electricity prices. If we take out that from last year's numbers, we can actually realize that the EBITA increased by 16%. Cash flows, bit negative there. Saara will comment on it. Nothing dramatic. We have a strong cash position in the company, and this is mainly preparing for summer breaks in the factories and having inventories at good levels.
Happy to say that, actually, the supply throughout the summer has worked well, and our products have found their way, in almost all cases, all the way to the stores as ordered. Then if we look at H1, I already commented a bit on this one. Maybe some numbers here. EUR 43 million of sales, when we did EUR 40.6 million during the same period last year, which means that invoiced sales grew by 6.5%, up to EUR 44.6 million. And the EBITA almost at par with last year, and then percentage-wise, slightly below. And as you remember, the one-time compensation there, the comparison numbers from last year. Leverage was at 1.6, down from 2.0 last year, and still, as said, raw material stable.
Looking at geographies, to the left, you can see the Q2, and to the right, the full year. And as you can see, Nordics have been performing during the period. There's been a lot of activities from our side to drive sales in the Nordics, and that is much needed when retail in general is quite tough and people are not prepared to spend that much at the moment. Rest of Europe delivered 6.2% of growth, and we came up to 4.2 million EUR in the Q2. And overall, as well, we're now at 9.5 million EUR in rest of Europe when we did 8.8 million EUR year to date last year. So that's progressing.
We would, of course, like to see a bit more pace on the European markets, a bit more sales. There are, especially in Q2, some roll out some invoices that were just at the end of Q2 that didn't hit the Q2 numbers. So we are hopeful for, and quite confident actually, that the strategy is working well to grow the rest of Europe. So that's in very short on this one. Rest of the world are small numbers, and the main focus is clearly to make Europe our home market, and that includes the whole of Europe, also the Nordics, which we already consider as our home. The Nordics we already consider as our home.
Then if we look at this by category, quite happy to see the two main categories, storage and kitchen, growing quite nicely. Storage keeps growing year on year, and SmartStore is proving to be a good spearhead when entering new customers, entering new shops, and entering new markets. On the kitchen side, we can see growth. We did rebranding of our kitchen food storage products into SmartStore, and this has proven quite successful when actually selling SmartStore as one brand of storage products, both kitchen storage products and home storage products. On home and garden, we could see a let's say quite stable development during the period in general. Strategy-wise, I think not that much new here.
Strategy is working. We have a clear focus on categories. We work on winning in the Nordics. We'll keep working on that. It includes launching new products. It includes showing the way in sustainability. It includes being the best possible partner to our retail customers, and then if we look at the international side of the strategy, so that's to accelerate, especially in Europe, and the ambition is to become the number one brand in storage in Europe, and that's going well. We are winning store by store. We are widening our footprint, and of course, we would like to speed up that and accelerate that further.
And the plans and the changes and the development in the organization that we are making, the investment in resources, are quite a lot focused to speed up this, a nice area of opportunity. And then we have the online retail channel that includes a lot of online platforms, both only e-com, but also multi-channels, where traditional trade is also involved in e-com, and we strive to be as good a partner there as in physical stores. It's also a good window to the consumer, where you can show your brands, you can show your quality, you can show what you have to offer, to those interested in digging a bit deeper into the assortment and the background of our products. So this is working well. Not much more to comment.
Then I'll give the word to Hanna Kukkonen.
Thank you, Alexander. And then, moving on to the sustainability news during the Q2. And, we've been having quite many audits during Q2 to ensure good quality and way of working at our operations. And the Orthex Gnosjö factory was re-audited and granted the ISCC PLUS certificate again, and this, of course, helps us to increase the use of renewable raw materials and to work towards our carbon neutrality target. We also audited our operations in Lohja and Tingsryd according to the principles of the SMETA sustainability audit. SMETA is the world's most widely used audit for ethical trade, and we were assessed in terms of occupational health and safety, working conditions, environmental performance, and business practices.
And then m oving on to the research projects, we have previously informed about two projects where we are involved in, and these two projects aim to increase the use of renewable and recycled raw materials in our production, and now we've started a third project called Reusify, and there, the aim is to reduce the use of single-use packaging in the HoReCa and takeaway business, so the aim is to find new reusable solutions to replace the single-use packaging in those business areas, so a very interesting project going on, then regarding the recognitions, we reported for the second time for this EcoVadis ESG assessment, and we were scored approximately same amount of points than last year.
But due to the very much hardened criteria in the assessment, we dropped from the silver level to the bronze level this year, even we had the same amount of points, so here's some homework for us for next year. And then moving on to the novelties. So during the Q2, we have been rolling out our latest launch or novelty, which is in the picture here in the left. It's called SmartStore Essence. Maybe you saw the nice videos in the beginning of the presentation, and it's a new modern, nice-looking basket range for all kinds of storage purpose, and four sizes, four colors, and the rollout has started extremely well. And more news to come during the fall as well. So that's my part, and then I'll give the word to Saara on financials.
Thanks a lot, Hanna. So next, a bit more regarding the financials. Our net sales increased by 4.3%, and it was 21 million EUR during that quarter. Market situation was quite difficult, and the consumer goods sector has been in a challenging situation for some time already. But we've been keeping high level in campaigning and high commercial activity during the H1 of the year, and we were able to generate the balanced net sales growth during this quarter as well. Cumulative net sales growth was 5.9%. Currencies had some negative effect still during the quarter, but very small. Cumulative, the negative currency effect is almost 0.5%, and sales would have been 6.3% with the constant currencies.
Our adjusted EBITA decreased by EUR 0.5 million to EUR 1.6 million compared to comparison period, and last year, we received electricity support, which was booked and paid in quarter two during last year. Without this support, our EBITA increased by 16%. Year-to-date level, EBITA was EUR 4.3 million, which is almost the same level as last year, even without the electricity support. Our gross margin improved by 1.4 percentage points. Raw material prices have been quite stable lately, but on the other hand, our operations costs were on higher level as we've been preparing for the maintenance breaks, and in general, activity before the summer holidays is on high level.
We have a lot of commercial meetings and finalizing IT projects and other projects as well. Salary inflation is also visible in the fixed cost during the H1 year, and if we take the raw material graph, it's been quite stable. Prices have balanced as well as the demand in Europe, so fluctuation is on a normal level. On the other hand, there's been tension, and tension has continued in the Middle East, and there are logistics challenges, and that's limiting the import then, and it might affect the price indexes in the future. Then next, our investments. So investment level was close to last year's level during quarter two, but on a cumulative level, it's on a higher level due to our investments to new molds and novelties.
And the plan is to continue those investments in the future as well. So investment level has been and is estimated to be roughly on a 5% level compared to our net sales. Our net debt increased from last quarter, but it was below last year's level at 23.4 million EUR. This year we started to increase our inventory levels a bit earlier than last year. So inventories went on a higher level, and as we started to increase already earlier, we had to pay the raw material purchase invoices earlier than last year, and that's visible in the cash flow. But despite the increase in net working capital, our cash position is still on a good level, and leverage was in line with our long-term financial targets.
which have actually stayed the same as earlier. Currently, we are in line on a total net sales growth target, so that's above 5%, but we have to accelerate the growth in international markets, so outside Nordics, as well as work with the profitability to reach the 18% level on long term. Payout ratio regarding dividends, so compared to last year's result, we are paying out 54.1%. Half of that was paid already in April, and last part will be paid in October, so during quarter four. Maybe one comment before I hand over to Alexander.
So next report will be in November, fifteenth of November, and we will be also publishing the reporting timetable for next year on that day. But I'll hand over to Alexander to summarize the presentation.
Thank you, Saara and Hanna. So I would say Q2, more or less keeping the momentum, quite a business-as-usual quarter, I would say. Having to fight quite hard for growth and happy to see that we can deliver growth where many consumer companies are struggling to do it. And that comes from strong commercial activities. So that's basically been the headline for us for the summer. At this stage, we are happy to take possible questions that have come in through the chat. So Hanna, if you can help to moderate those, we will be happy to share the answering.
Yes, I will. There are some good questions in the chat. So, let's start with the European sales. So, maybe combining a couple of questions here. So, how does the progress in Europe look like? And, then could you also elaborate on the order timing issue impacting the European sales?
Happy to do it, and the European sales are progressing as planned. I would say when it comes to activities, we've had plenty of customer meetings. The year started with a very successful fair in Frankfurt at Ambiente, and from that, we have both deepened existing partnerships and also found some really interesting new ones. I would probably highlight here that the progress in France looks very good. We have a rollout, which actually has to do with some of the orders that were moved from Q2 to Q3. And adding to that, I think we see some positiveness in the U.K.
Meanwhile, we are focusing on rebuilding a bit of the German business into a larger region, so we can be even a better partner for those customers who are present in not only Germany but in Austria, Switzerland, and why not Czechia, Slovakia, and Hungary as well? So putting quite a lot of focus, learning all the time what works and what doesn't work, and quite happy to see also new products rolling out to existing customers in Europe. So keeping the flag high there and actually hoping and expecting for acceleration of the growth.
Thanks. Then, going to the margin level, so, about the margin level of the Q2, so what were the key factors behind the lower EBITA margin versus Q1 this year?
I can take that question. In general, usually the Q2 of the year, we have the lowest quarter sales-wise, but on the other hand, we are preparing to the maintenance breaks and finalizing a lot of activities and actions before summer vacation period. So costs compared to the sales are on a higher level, and that is affecting the margin.
Yes. And there's another question that regarding the seasonality, Q2 has been traditionally the weakest of the year, as you said. And then there's the question: Is this the case also in 2024? And I guess you answered the question as well here. Then, regarding the Essence baskets, I guess this is a question for me. So regarding the Essence baskets, I have noticed that it is almost impossible to find those from stores. How long it usually takes to roll out novelties for wide distribution? And it actually takes some time. So from the point where we have the product in our warehouse, then it takes some time, and it depends on our customers and the trades, launch windows, and campaigns.
So not everything goes out day one, but it's really depending when each customer has their launch window and when they can take in new products. So it can take up to six months to have a good rollout of the novelty. Then there's a question about the recycled product. If I buy a recycled product from you, which old product can I think the product's raw material come from? So what are the sources of origin of the recycled raw material? I can also take that question. So we use many, many different kind of recycled raw materials. So we use both post-industrial recycled raw materials, so these are then the leftovers from industrial streams that can be reused in our production.
And then we use post-consumer recycled plastic, which most often is then recycled packaging. So all the food packagings, the ketchup bottles and shampoo bottles that the consumers recycle, they are turned into new recycled raw material that we use. Then there is also recycled raw material from our kind of long-lasting plastic products, but that is a minority source at the moment. So mainly post-industrial and then recycled consumer packages. Then there is a question about the new entity that we are building in the DACH region. So does this new entity mean that we need to recruit new people, or is it just reorganizing the functions that we have today, and does this have an effect on the costs?
Thank you. That's a good question. I think as we are used to growing quite prudently, we take on new resources according to needs and also as we see opportunity for growth. This means that, yes, there will be new recruitment, yes, there will be reorganizational existing functions as well, but nothing that would disturb the whole picture. I think we are prudently building a strong organization for the future. Personally, I hope that the business in Germany and the DACH region will grow so big so we have need for further strengthening the organization in the years to come.
Thanks. And then still one question about the recycled raw materials. So how much of the raw materials is currently recycled, for example, H1? So we publish once a year in our sustainability report, the share of recycled and renewable materials, and last year it was around 14%. And it may not sound much, but the majority of the products we sell are food-approved, and today there is not a recycled raw material that is food-approved. So that's why we have this research project, so we are actively working to find new solutions that we could also use recycled raw materials in the products that are food-approved. I think that was all of the questions. If I now check carefully. Yes! So these were all of the questions this time. Thanks for the really good questions.