Warm welcome to Orthex Interim Report for January to September. I have the pleasure to present, especially the third quarter, together with Saara Mäkelä, our CFO, and Hanna Kukkonen, our CSMO. Just a reminder, there's a chat where you can put questions that you have while I'm presenting, and we will try to answer as many as possible at the end of the presentation. Feel free to post your questions during the presentation or then afterwards. I'll start with a short introduction of our company. I think many of you know this already. We are a European company with the origin in the Nordics and production in Finland and Sweden, two factories in Sweden, one in Finland. We sell branded household goods under our own brands. That's one key here. 90% of what we sell is actually under our own brands.
And we sell to around 40 countries around the world, but with the main focus, as I said, on Europe. Then if we look at the categories, we operate in storage is the biggest one, where we see about 66% of our sales. Kitchen stands for about 22%, and then home and garden products are around 12%. The mission with our products is to make everyday life easier, so they have to be functional, good. Needs to be nice with a good design. People can actually have them for a longer time. Sustainability and functionality is the key of the strategy, and especially producing long-lasting products that you can use for years and years and then recycle at the end of the lifespan is at the heart of the strategy. Also using other raw materials, recycled and bio-based, is part of that important strategy.
Then we are focusing quite a lot on new product, and I'm actually happy to see a big amount of new products already launched lately and a nice pipeline ahead of us of new product. So the aim is that we should have about 10% of the turnover coming from that. Okay, going into the numbers and where we are. In terms of sales, we are on net sales up by 5.3%. And I would say the highlight of the quarter was actually very strong growth outside of the Nordic countries. And that's clearly key for us to grow on new markets for us and grow where we have set our structures for growth and enforce the structures. The EBITDA and profitability during this period is at EUR 7.2 million, remembering that last year we got one-off electricity support from the Swedish state of around EUR 800,000.
The margin decreased slightly to 10.9%, and there you have the comment on the support. Raw material during the period has been quite stable. No big gains, but no big losses either from raw material prices. So that hasn't affected this year too much. Then looking in particular on the third quarter, I think, as said, the highlight is actually our strategy to focus on growth outside the Nordics as one of the key elements is going well. The overall sales increased by 4.2% in the third quarter, with absolute constant currencies 2.8%. But I think the most sort of the thing that makes us enthusiastic is, of course, the 24.1% growth outside the Nordic countries. Then if we look at the Nordics, I think for some reason we can see in shopping behavior that consumers are not too keen on shopping at the moment for various reasons.
We have had to fight hard to actually be flat in the Nordics. Then, looking at EBITDA, clearly a slight disappointment for us at EUR 2.9 million. And we'll go deeper into that, but I think one of the main reasons is that we had actually planned for higher sales, especially in storage products and especially in the Nordics. And that means that we've had quite full activities in operations. And when the sales and the demand wasn't as high as we had hoped for, especially in the Nordics, the costs are influenced. Then, looking at percentage-wise, it's clearly not on the level where we want to be at 12.6%. So that's high on the list to focus on and to improve going forward. In terms of cash flows, one would say a good EUR 5.7 million compared to EUR 5.3 million the previous time.
Then, small comment on the full year as well, where now it's almost EUR 66 million of sales, whereas the year before we were at EUR 62.5 million. I think in terms of a consumer goods company in these days, we're actually quite okay with the growth. Of course, we have our ambitions higher, but still managing to grow both on the Nordics, but especially then on the markets outside of the Nordics lately. On the EBITDA, I commented on that a bit already at 7.2 and the margin at 10.9%. The leverage is now down at 1.3. And as said, raw material prices have been stable. Looking at then a little bit more detailed sales pictures here, you can see that in the third quarter to the left, we have Nordics at almost EUR 18 million. Not too much growth, as said, but then rest of Europe growing nicely.
And rest of the world a little bit back to business, one could say. On that particular line, we are depending on just a few customers. And fortunately, the customer who has been struggling a bit is now performing a bit better for us. So that are small numbers, but the percentages become big when small numbers change. Then if we look at the yearly situation, EUR 52.6 million in the Nordics and EUR 14.6 million in the rest of Europe. And then year to date now flat in the rest of the world. I think the interesting part here is as well following a bit the categories and especially a few highlights here. I would say storage keeps on growing now at EUR 16 million for the quarter and then at EUR 45 million year to date.
On the kitchen category, the rebranding of especially the storage products, the food storage products into SmartStore has been a good move, and we have launched quite a few new lines and series in the kitchen food storage category. And that's actually driving growth both internationally and in the Nordics, and then home and garden, rather stable category for us. Year to date at EUR eight million, and in the quarter we did EUR two million. Both comparisons are the same as last year. Looking at the strategy and also giving you a glimpse of what strategy in action means for us in the coming slides, so keep winning in the Nordics is one of the building blocks of growth, and in the Nordics, where our market position is fairly strong, it's not so easy to get additional distribution into new stores.
So we actually have to focus very much on doing better in the existing stores. And that means new products, especially campaigning, making sure that we can deliver products so the shelves are full all the time. And then helping with the right pace of activation of the products in the store, combined of course with media and so on. Then the second building block, which for us has been accelerating, and I think especially in Q3 we are happy with the development, is to accelerate the growth in the international market. And that's through strong customer collaboration and actually finding new good partners. And then also expanding the existing partners that we have all through the main markets in Europe. The third one, the online retail channel, it's all about looking good online and having a good offering to the online shopper.
If it's bundles or if it's activation at the right time of the year, the right period, when you have a specific holiday or such, I mean, use those and activate the online shopper. It's a fast-moving world and quite interesting, and also the traditional retailers are going into competing in that environment together with many other ones, then market consolidation. Usually I don't comment too much on that box, but clearly when the opportunity is right, we are prepared to move. When it comes to the ambition in terms of this growth strategy, it's clearly to become the number one storage brand in Europe and strengthen and maintain a leading houseware company position in the Nordics, and there are actually three pillars behind all of this, and that's of course having a very focused and clear category strategy, including the brands, the branded products.
It's showing the way in sustainability and it's maintaining a high innovation. So I'm just going to take you to a few slides here, and Hanna will also talk a bit about what this actually means. So if we look at the clear category strategy together with the accelerating growth in the international markets through strong customer collaboration, to the left is an interesting picture. It's all the points of sales where you today can buy SmartStore products in France. This is just an example of how a local organization can do a good impact on the ground with the feet on the ground, building the stores, building the shelves. And that's of course our ambition to do throughout Europe. And then to the right, you can see pictures of how we would like the stores to look on channel, etc.
When the store looks nice, then it's easy to shop. The products are attractive, and you can actually do good business with products that have a little bit higher quality and are long-lasting. Also you're able to communicate the sustainability behind the product. For us, it's quite important to not only produce products, but also do the full offering of an efficient assortment of qualitative goods that lifts the value of the category. Hanna, please, would you like to take?
Thanks. Thanks, Alexander. Yes, sustainability strategy is proceeding extremely well. We have launched a lot of novelties during this year, and all of them made of completely recycled plastics. Some of the biggest launches this year is the SmartStore Essence basket range, which you see behind my back here. And actually the number of listings and the sellout of Essence has started extremely well. So we're very happy with that launch. And then the latest newest launched is called the SmartStore Stack . And it's a new range for sorting, for example, waste. And you see it in the picture. And it's also made of completely recycled plastic. And that's a new range we introduced in September.
We have it already listed with a few customers, but we are pleased to introduce it to new customers. And the feedback there is excellent as well. And then we continue with the three research projects we are working with. And they are also proceeding well. And they are enabling us to find these more sustainable materials that we can use, for example, in the new products. And in this slide then about the innovations. So, here is, in pictures, some of the latest innovations. So, from left to right, is the new SmartStore Stack It. Then we have the SmartStore Essence basket range, the SmartStore Collect biowaste container that we launched earlier this year, and then the SmartStore Vision dry food containers that are made of 20% bio-based plastic. So, in good phase with all the novelties, and then we move on to the financials and Saara.
Thanks, Hanna. Our net sales increased by 4.2%, and quarter 3 net sales were 22.8 million EUR. And this time currencies had a bit of a positive effect to the net sales, and in constant currencies, the sales growth was slightly lower. It was 2.8% compared to last year.
The weak consumer sentiment in Nordics continued, but with high campaign pressure and the sales activity, we were able to keep the sales on last year level in Nordics. Outside Nordics, invoice sales growth was very positive, 24.1%. The growth was driven both by new and existing customers. Cumulatively, the net sales growth was 5.3%, so in line with our long-term targets. Then to Adjusted EBITDA, it decreased by EUR 600,000 roughly to EUR 2.9 million compared to last year, quarter 3. The lower profitability was affected by many factors. Our gross margin decreased by 3 percentage points. Main reason for the decrease was higher production costs as we were prepared for higher volumes or higher sales volumes. We also had other negative effects affecting the profitability. Polymer prices had some effect. Also electricity costs were affecting. Then some other smaller items.
High commercial activity and structural changes in the sales organization, as well as general salary inflation, were affecting the fixed costs and increasing them, and in addition, the depreciations related to right of use assets increased and also affected the EBITDA, so these depreciations are related to our rented premises, and next, the raw material price indexes. Prices have been quite stable and fluctuation has been on a normal level. General demand in Europe has balanced, but tension in the Middle East and logistics challenges are limiting the import, and that might affect the pricing in the future, and sort of uncertainty regarding prices is going on. Inflation is giving a price pressure to the manufacturers, and that might be affecting the prices in the future as well, then next, our investments.
Investments during quarter 3 were EUR 1.1 million, and they were mainly related to product novelties, but we also made some capacity increases to Tingsryd and to Lohja factories. Cumulatively, investments are EUR 1.2 million higher than last year, but in general, last year's investment level was lower than for us. And we were postponing some of the investments which were started already last year were finalized in 2024. So that is affecting the low last year and higher investment level this year. The net debt decreased slightly, and it's on a very healthy 1.3 level compared to adjusted EBITDA. Then our long-term financial targets, they remain unchanged. Currently, we are in line with the sales targets in Nordics and outside Nordics, but profitability definitely needs improvement, and that is expected on long term. The equity ratio is 54.1, and we paid the second part of the dividends in October.
We have just also published our reporting dates for year 2025, and the next reporting, full year 2024, financials will be on 12th of March. And we are planning to publish our annual and sustainability report during week 13, and the annual general meeting is planned to be on 29th of April. I will then hand over back to Alexander.
Thank you, Saara. So I have the short summary to make here before the questions part. And that's if we look at the highlights of the third quarter or the facts of the third quarter, we had strong sales growth outside the Nordics. We maintained the pace still on positive in Nordics under a climate which was quite tough for consumer goods companies. And then regarding the cost level, as explained, there were several things. I think the most important there was that we had actually planned for a bit higher still sales growth, and the operating cost was accordingly on that level. We'll be highly focused to get more out of the existing structure going forward. So I think that opens up for questions. If you, Hanna, want to moderate that, it would be great.
Yes, thanks, Alexander. The chat box is full of excellent questions here, so I try to combine some of them. And let's start with the consumer demand or consumer behavior. So have you seen improvement in retailer or consumer behavior in Q3 and Q4 versus in Q2? And is there a difference between Nordics and Central Europe? And how do you see that in the future, the consumer behavior and demand?
Thank you. That's an excellent question. I think reading the news in different countries proves that inflation is still hitting the households. People are carefully monitoring their spending, and that clearly affects shoppers in many ways. It differs from market to market, and in some markets, we can already see a slight upturn in the belief in private finances. In other markets, we are still quite negative. It's a balancing game, and I would say the market is still tough when it comes to consumer purchasing. However, I sincerely hope that we've seen the worst. Let's hope for that.
Thanks. There are questions about the increased sales both in the rest of Europe and then outside Europe. Let's start with the rest of Europe. Your rest of Europe invoice sales picked up clearly versus Q2. What was the main reason? Was it timing of orders or something else?
I think it's a result of persistently following our strategy, building the structures, having a good international organization focusing locally on key customers and being very diligent. And the more you work, the more you contact, the more you do, the more you have opportunities to either get new customers or then deal with existing ones. And I would say this is a mix between broadened assortment, efficient campaigning, and then also a few new interesting customers with more distribution. So these three, at least.
Yes. Thank you. And then the outside of Europe. So could you please provide a bit of color on the growth outside of Europe? Have you found new distribution partners there, or is the growth driven by that one large customer you have there?
Well, we are focusing on Europe primarily at the moment because the market is so big and the opportunity is so big just under our noses. So in terms of rest of the world, we have a few customers, and especially one has been struggling to sell our type of products. And now I think the cooperation is going better, and we haven't actually gained distribution there, but we have managed to activate again. So to be very frank, no major changes in customer base in international. However, hopeful that we can have an impact going forward, perhaps in the e-com part of the business.
Yes. Thank you. And then moving on to profitability, quite many questions there. And especially then gross margin. So there's a few questions about the gross margin. So for example, what weighed most on gross margin? Just lower volumes than you expected or any other factors there?
I can take that question. Basically, I mean, I could put it so that half of the gross margin decrease comes from sort of external factors in that sense that raw material prices were changing, electricity prices were higher for us as we had fixed prices last year, up to quite high volumes, and then half of the gross margin decrease comes from the high operation costs, which were related to the fact that we were expecting to sell a bit more and had a manning based on the estimates and forecast.
Good answer. Thank you, Saara, then a couple more questions still, so thank you for the excellent presentation and lots of high-quality products from Orthex. I really love them. Thank you. I have one question about materials. Does Orthex have products made from sustainable polymers such as lignin-based or cellulose-based plastics, or any plan on this topic? So we currently don't have exactly those materials, but we use, for example, wood fibers in some of our kitchen utensils and cutting boards. So we have wood-based raw material in our products. And then we have bio-based plastics from, for example, sugarcane and tall oil at the moment that we use in our materials. And then one of the management team changes. So could you give some on recent management team changes, Alexander?
Yes. Commenting on that, we have seen good progress in our outside Nordic business, and we have, during the years, developed our structures and strengthened them. Together with the sales director, who now is leaving us, we came to the conclusion that it's a good time for a change, both in terms of continuing the efforts from a company and from a personal point of view. The timing was good to make this change.
Yes. That was all from this time. Sorry, we couldn't manage to respond to exactly all of the questions. There were so many this time, but please be in contact with us if you want more information.
Thank you very much to all the listeners and wishing you a nice run towards the end of the year.