Good morning, welcome to this second quarter 2019 presentation for Borregaard. My name is Per A. Sørlie, I'm the President and CEO, and I will take you through this morning's presentation together with Per Bjarne Lyngstad, our CFO. I will talk about the highlights for the second quarter, the market update for the business areas. Also, an update on some of the more recent projects that we are working on, and an outlook for the rest of the year. Then Per Bjarne will take over and talk about the financial performance more in detail. The highlights for the second quarter, EBITDA adjusted increased from NOK 164 million a year ago to NOK 179 million in the second quarter. This was driven partly by a favorable product mix in Performance Chemicals.
The Speciality Cellulose was burdened by higher wood costs. Finally, we also had a positive net currency impact that had an effect on the result for the second quarter. Going to Performance Chemicals and the market situation. If you look at the pricing, the price in sales currency is down approximately 1.5% versus a NOK development of +4.1%. In spite of this, we see that we have a favorable product mix in the portfolio, meaning that we produce more of products with, let's say, lower costs and better margins that had a positive impact on the result. The price development in sales currency was influenced by also the concrete admixtures market. That's the reason why we had a slightly lower price in currencies.
If you go to the sales volume, the sales volume was 2% higher versus the same quarter last year. This was lower than what we had expected, but it's due to some headwinds in some markets, particularly construction. Examples there would be Turkey and Mexico. Also, a slowdown in agrochemicals toward the end of the quarter, driven by the unusual weather situations, particularly in North America. We had volume growth in industrial products. We have seen strong growth there for a while. That continued into the second quarter. Also, specialties had a positive development, whereas construction had a slightly lower sales volume versus the same quarter last year. The Florida plant, which is in ramp-up situation, is following its linear curve when it comes to production and sales. Then on to the Speciality Cellulose markets.
The prices in the quarter was slightly lower in NOK compared to the same quarter last year. Pricing in certain segments are down in sales currency, but this is partly compensated by a more positive product mix. The quarter, we also saw a particularly high sales volume, 42,000 tons. Also, in this business area, we report the bioethanol business, which also had very high deliveries in this quarter. This unit also had a positive impact on foreign exchange. Then on to Ingredients and Fine Chemicals. Ingredients continue to show a very strong performance. If you look at the diagram on the left-hand side, you can see that for the last three consecutive quarters, we have established a new sales revenue level that continued also into the second quarter. It was helped partly also in the second quarter by a favorable product mix.
Very strong quarter for Ingredients again. Fine Chemicals, on the other hand, had lower deliveries in the second quarter compared to the first quarter and also, I think in a general trend. We also saw lower average prices in sales currency in this particular quarter. I'll have a few words on the projects that we have issued releases around in the quarter, and also what we have now going into completion during the quarter. First, we announced in the quarter a capacity increase for wood-based vanillin. The capacity increase is expected to be at least 250 tons, so that's in a 20% range. The construction will start more or less immediately, and completion will be in the first half of 2021. However, part of the volume will be realized earlier in the period.
Towards the end of 2019, we hope to have a part of this volume available for the market. This is primarily a debottlenecking expansion of an existing facility, so the CapEx is fairly modest at NOK 130 million. We also announced at the same time that we will increase utilization of side streams from the production in Sarpsborg as bioenergy. We use most of the side streams from the process in Sarpsborg to produce green energy, bioenergy. What we will do here is that we will remove water and salt before we burn these side streams, which will increase the efficiency and the capacity to make green energy. The investment cost is estimated to be NOK 131 million. However, Enova, a government body, supports the investment by NOK 46 million, so the net CapEx for Borregaard amounts to NOK 85 million.
This means that this project will meet our target internal rate of return of minimum 15% on investments. Completion of this project also in 2021. Energy savings of at least 20 gigawatt hours per year, maybe longer term potential up to 34 gigawatt hours. This will give us more green energy to replace other types of energy, and it will also reduce CO2 emissions by 1,200 tons and longer term, probably 1,400 tons. A large project that we have been working on in Sarpsborg for the last two years, the upgrade of the lignin business and also a streamlining of the logistics operations at the Sarpsborg site will now come to completion. The upgrade which primarily consists of a new large dryer for making powder products in lignin, in combination with packaging capacity and also an improved solution for logistics of liquid materials.
This will add more flexibility and also improve the capacity when it comes to making high-end specialties in the lignin business. We mentioned last quarter that the CapEx is estimated to come in 10% below the original budget of NOK 500 million, and we still expect that to be the final ballpark number. This project will generate both cost savings and increased revenues value added. The cost savings are estimated to be above NOK 40 million, and they will gradually be realized from 2020. This project will now go into full operation in July, this month actually, of 2019. At the same time, we also have built a new lignin warehouse at the Port of Borg, south of Sarpsborg. This is a modern new warehouse for dried lignin products, and this is built, owned, and operated by the Port of Borg.
Under IFRS 16 leases, of course, this will come onto our balance sheet. This warehouse went into operation in June last month, and between the two projects, the increased depreciation will amount to roughly NOK 15 million in the second half of 2019. The projects have been completed on time and below cost. Finally, we are announcing today that we will do a restructuring of our German lignin operation. The German operation does not have its own raw material source. It's using a number of sources, both internal and external in Europe. With the increased drying capacity coming online in Norway, this reduces the need for drying capacity in Germany. Therefore, the operation will be aligned with future needs, and this will imply reduced logistics cost and reduced headcount in the operation.
Annual cost savings is estimated to be NOK 20 million from 2020, and this will be in addition to the NOK 40 million that I mentioned on the previous slide connected to the Norwegian investment. The restructuring cost of NOK 16 million has been recognized now in the second quarter under other costs, and fairly quick implementation of this restructuring, like I said, starting from 2020. I'll move on to the outlook for the remainder of the year. In Performance Chemicals, the 2019 sales volume is forecast to increase by 5%. This is a lower number than we have used in the past, realizing that the volume increased by 4% in the first half. The estimate now is that it will increase by 6% in the second half, giving a 5% total all year on year. We continue to see competition and price pressure in the concrete admixtures market segment.
We expect this to be compensated by diversification and specialization across the whole product portfolio in lignin. Fixed costs and depreciation for the Florida plant will be NOK 45 million above 2018. Like we touched upon on the previous two slides, the depreciation will increase by approximately NOK 15 million in the second half due to the new lignin operation in Norway and the new warehouse. Speciality Cellulose . For the full year, we expect the average cellulose price in sales currency to be in line with last year. It means that in some areas, we see weaker pricing for acetate and textile cellulose in particular, but a more specialized product mix will even this out on the average pricing side. A more specialized product mix usually means higher manufacturing costs. That has to be taken into consideration.
Wood prices for the second half of 2019 has now been concluded with most suppliers. We expect that the wood costs will come down in the second half compared to the first half, but it will be slightly above the level that we saw in the second half of 2018. When it comes to the third quarter, sales volume in total will be lower than in the second quarter, where we saw a very high volume. The highly specialized products are expected to be in line with the previous quarter. Under other businesses, Ingredients are expected to continue to deliver very strong results, going also into the second half of 2019. The positive market trend in wood-based vanillin seems to have stabilized, and we expect continued good results. Fine Chemicals, stable. No major changes expected there.
Cellulose fibrils is on an increasing trend when it comes to sales, the lead times and conversion into sales projects continue to be fairly long. We have to be patient, but it moves definitely in the right direction. Remaining grant from the Horizon 2020 will cover a smaller share of the costs than in the previous years. That concludes the outlook for the remainder of the year. Now I will hand over to Per Bjarne for the financial figures.
Thank you, Per, and good morning, everyone. In the second quarter, Borregaard's operating revenues increased by 12% compared with the second quarter last year. EBITA adjusted increased to NOK 179 million, compared with NOK 164 million last year. Performance Chemicals had an improvement in EBITA adjusted. The strong result improvement continued in Ingredients, while Speciality Cellulose, affected by high wood costs, had a decline in its result. Net currency effects were, in total, positive by NOK 30 million compared with the second quarter last year, and the positive impact was quite equally spread between our three segments. The EBITA adjusted margin for the group was 13.4%, close to the margin we had in the second quarter of 2018. Earnings per share ended at NOK 1.22, compared with NOK 1.32 last year.
In relation to the restructuring of the lignin operation in Germany, a non-recurring cost of NOK 16 million was recognized in other income and expenses. Operating revenues in Performance Chemicals increased by 8% compared with the second quarter of 2018, mainly from a positive currency impact and higher sales volume. EBITA adjusted increased to NOK 107 million, compared with NOK 102 million last year. The improved EBITA adjusted was mainly due to a favorable product mix, positive currency effects, and higher sales volume. However, prices in sales currency to concrete admixtures were lower than in the second quarter last year, and fixed costs and depreciation for the Florida plant were higher. The Florida plant started up in mid-2018, with depreciation starting from the beginning of the third quarter.
Most of the cost and depreciation increase for the Florida plant have now already occurred in the first half of 2019, the increase year-over-year in the second half will be limited. EBITA adjusted margin in the second quarter was close to last year's margin and back in the high teens. A high sales volume and positive currency effects were the main reasons for the 13% increase in Speciality Cellulose's revenues in the second quarter. EBITA adjusted ended at NOK 48 million, compared with NOK 67 million in the second quarter of 2018. In the second quarter, wood costs increased by approximately NOK 25 million compared with last year. Wood cost was the main contributor to the decline in the result for Speciality Cellulose. The cellulose product mix improved due to higher shipments of highly specialized grades. However, these grades also have a higher cost per ton.
Bioethanol's result improved due to high deliveries, and the net currency impact was positive for Speciality Cellulose. EBITA-adjusted margin was 10%, close to six percentage points lower than in the second quarter last year. In other businesses, operating revenues increased by as much as 21%, mainly from increased prices and improved product mix in Ingredients. EBITDA adjusted improved to NOK 24 million, compared with minus NOK 5 million in the second quarter 2018. Again, the improvement came mainly from Ingredients, where higher prices for wood-based vanillin and a favorable product mix resulted in a strong performance. Fine Chemicals had a slightly weaker result from lower deliveries and lower average price in sales currency. Cellulose fibrils had a slightly improved result as higher sales and improved productivity more than compensated for reduced cost coverage from EU's Horizon 2020 grant.
Corporate costs were in line with the second quarter 2018, and also in other businesses, there was a positive net currency effect compared with last year. The net currency impact on EBITDA adjusted was positive by approximately NOK 30 million, as I said, compared with the same quarter last year. The positive impact came from a weaker Norwegian kroner, which weakened by approximately 6% compared with last year using Borregaard's currency basket. Hedging losses were NOK 13 million, compared with a loss of NOK 6 million in the second quarter last year, and partly offsetting the positive impact from a weaker Norwegian kroner. Year-to-date, the net currency impact on EBITDA adjusted was positive by approximately NOK 60 million, and hedging losses were NOK 21 million, compared with a loss of NOK 3 million last year.
Using currency rates as of yesterday, the net currency impact in the third quarter is estimated to be around NOK 15 million if we compare with the third quarter of 2018. The corresponding impact for the full year of 2019 is estimated to be approximately NOK 75 million compared with 2018. The cash flow from operations was lower than in the second quarter last year, mainly as a result of unfavorable development in net working capital compared with the same quarter last year. Increased sales, including currency effects, higher valuation of inventories from higher raw material prices, reduced investments, and reduced accounts payable, and utilization of prepaid EU grant have all contributed to the increase in net working capital. In the first half of 2019, net working capital as a percent of operating revenues has been close to 22%, which is above our 20% target.
We are watching the development closely, and our goal is to bring the percentage down to target level again. Investments in the second quarter were NOK 146 million. Expansion investments were mainly related to the lignin operation upgrade in Norway and completion of the lignin plant in Florida. Net interest-bearing debt, excluding IFRS 16 leases impact, increased by NOK 248 million in the second quarter, mainly from dividend payment of NOK 224 million. At the end of the second quarter, Borregaard is still well capitalized, with an equity ratio of 51% and a leverage ratio excluding IFRS 16 impact of 1.77. That concludes today's presentation. Now, Per Sørlie and I will be ready to answer any questions. Okay. It was crystal clear. Thank you very much.