Welcome to Kitron's first half and second quarter results 2016. I'm Peter Nilsson, President and CEO of Kitron, and joining me today is Cathrin Nylander, CFO. Starting with the second quarter, we see a solid improvement of all key figures. Both our growth in revenue and order backlog is strong. The underlying growth for revenue in the second quarter is 9.8%. The profitability continues to improve, 5.9% profit, compared to the 4.5% we had the previous year. Our capital efficiency has continued to improve using 6.7% less capital, and we have a very favorable cash flow in the quarter. Looking at the first half of the year, overall growth is about 10.5%.
The underlying growth is 5% when we take out some of the FX-related effects. Our profitability compared to last year continues to improve, NOK 53.6 million in profit for the first six months. That's 5.1% versus the 4.5% we had last year. If we adjust for the one-off one-offs we had in the first quarter, our year-to-date profit is 5.5%. Overall, in the first six months, capital efficiency continues to improve. In the quarter, we received some important orders also. Primarily, the one we want to bring up is it was announced in May this year for Kongsberg Defence & Aerospace Communications equipment for deliveries to Hungary.
Overall, Kongsberg, over the past 12 months, has placed orders for 156 million for these advanced tactical communications products. The latest contract was for 37 million NOK. The deliveries will take place starting towards the end of this year and into 2017. We've had very strong growth in primarily our Swedish and Lithuanian sites. Most sites, even in China, we've seen some growth, but particularly Sweden, about 20% growth, and Lithuania, about 35% growth so far this year. We see this continuing into the second half of the year. We also see that it continues into the first half of next year. We've decided to increase our production capacity by investing in two new SMT lines, one in Lithuania and one in Sweden.
In addition to this, we invested early in SMT equipment during the last quarter of last year in Lithuania, pulling in some of the investments from this year. We're also rebuilding a couple of lines, extending the capacity in existing lines. Capacity will be up in Lithuania. It's needed for the growth we're seeing into the second half of this year and into next year. At the same time, in Sweden, we have some tremendous growth. Both these sites are pretty much running at full capacity right now. Sweden also needs to become more competitive, and this investment will help them become more competitive.
The lines will be in place in the fourth quarter of this year and during the first quarter of 2017 in Sweden, connected to how and when we do the move to the new factory. You know, you both, sometimes you grow and you have your one foot on the gas and one foot on the brake at the same time. We've done some resource adjustments in Norway. We had the temporary drop in efficiency we had in the first quarter in the factory, which was basically due to the relocation, has now been remedied. We see the second quarter pushing out the numbers we're expecting. Looking into the third and fourth quarter, we're continuing to adjust capacity and resources in Norway.
16 full-time indirect resources will be phased out to compensate for the longer-term downturn we have in the offshore marine sector. In addition, in the short term, we're preparing for a reduction for up to 60 employees that can be furloughed during the third quarter. This is basically due to a change in product mix, looking at more or less labor-intensive products. We want to keep up our profitability and focus on what we need to focus on. Those are some of the resource adjustments we're doing. Cathrin.
Okay. Thanks, Peter.
Take us through the finances.
I'll go through the financials. Exceptional growth in the industry sector in Q2. As Peter said, we grew with 15.2% and a underlying growth of 10%, up to NOK 563 million, above our really good fourth quarter. What is driving it is the industry sector. We have a growth there of 37.5% for the quarter, which is up from 35.4% last quarter. We have good growth in energy telecoms of 14%. It's slightly down from last quarter, where they grew 22.7%. Defense aerospace is growing with 14.3%. Medical devices at 15%, same as last quarter, and offshore marine continue to go down.
As you can see now, industry is the largest sector and offshore marine is very, very small. If you look on the revenue, how we're standing at half year, the growth is 10.5% compared to last year, and we are now at slightly over NOK 1 billion. The industry sector has grown with 36.4% compared to last year. Energy and telecoms about 17.7%. The defense aerospace, due to the project related businesses it is in, has grown 0.8% for the first half. We have to consider also that last year we grew 50% compared to the year before in the defense aerospace, so we're at the high level.
Medical devices, again, then 15% growth so far this year, and offshore marine at the level it has been for quite some time now. A solid growth for the first half. Let's split it up and look at the revenue by country. Norway ended up at NOK 224 million, up from NOK 184 million in the first quarter, a good improvement, and has grown with 3.9% compared to last year. Sweden, up NOK 25 million from last year and at 20.5%. Lithuania, very, very strong growth of 45.3% in the quarter, up to NOK 173 million. The others containing U.S. and China show a decline of 10%.
In those figures, China has a growth of 10%, and U.S. has a considerable decline in the quarter, but better than first quarter. Looking at the first half, on the countries, Norway had a rather weak first quarter, and that does, even though a good second quarter, show a decline for the first half of 8.7%. Sweden, a growth of 25.6%, up to NOK 276 million. Lithuania, a first half growth of 50% compared to last year, and now at NOK 348 million, or NOK 46 million for the half year, a very strong growth. The others, as I said, 10% down. China shows growth, U.S. shows a decline. Profitability level improved.
We are now at NOK 33.1 million for the quarter, up from twenty and a half in the first quarter. The first quarter we had a one-off of NOK 5 million. We're now approximately at the same level as Q4 last year, which was NOK 33.6, which was a very, very strong quarter. The EBITDA margin is at 5.9%. In the fourth quarter we're at 6.4%, we have a slightly lower margin than in the fourth quarter, we had a very, very favorable product mix in that quarter.
We see now, in part of this also we had volume increase in the second quarter, and US volumes picked up, which is driving profitability there, and temporary effects in Norway is remedied, as Peter mentioned as well, for the second quarter. We're starting to be where we wanna be for this year. Looking at the EBITDA by country, Lithuania drives profitability. Norway improves for the second quarter at NOK 10.2 million on an EBITDA margin of 4.6%. The temporary efficiency effects are remedied, and the EBITDA is good, and driven by the volume increase that we have seen.
Sweden is slightly down compared to last year, at the EBITDA margin of 3.5% for the quarter, and it's affected by temporary currency effects that we are seeing. Lithuania, EBITDA level at NOK 15 million and a EBITDA level at 8.7%, driven by the strong growth they're having. It's really excellent results that we can see. As mentioned, the revenue growth and improved profitability in China is driving profitability. U.S. volumes are picking up in Q2 and also affecting profitability in the others for Q2. They're now at 8% for the quarter. EBITDA by country for the first half year. Again, Lithuania drives profitability, and you can see now they're the largest contributor for the half year.
In Norway, at 10.8% and the decline from last year are a result of the first quarter this year. Second quarter was improving from second quarter last year. Sweden, the profitability drives EBITDA here, or the volume drives the profitability in Sweden. As I mentioned, Lithuania at over NOK 30 million, and the others are affected by the lower volumes in Q1 for US, but it's then picking up in the second quarter. Really excellent from Lithuania. Cash flow, we start on that. On the balance sheet, the Q2 cash flow is at NOK 68 million , an improvement from last year of NOK 48.6 million . The improvement in the quarter compared to Q1 this year is increased factoring debt that was actually decreasing in the first quarter and improved profitability.
Working capital levels are the same as from Q1 this year. Looking at the improvement from Q2 last year, the cash flow was basically improved by the improved profitability. As for the working capital, we have a reduction from last year. It was at NOK 560 million, now at NOK 520 million approximately. The reduction is primarily attributable to improved supplier terms. We have worked hard on the renegotiating supplier terms for longer payment terms and drives trade payables and reducing working capital. Another good figure is the cash conversion cycle is at 86 now, compared to 106 in the same period last year. We are well away on our target of 80 for the end of the year. The ROC is at 17.6 and improved from 11.8 last year.
Good progress to our target of 20% this year. Peter, back to you.
Taking a look at the markets, we spoke about increases in our order backlog. We finished the second quarter at NOK 989 million for our order backlog. This can be compared to the NOK 976 we finished Q4 with, which we were very happy with. NOK 989 solidifies the demand into the second half of the year. It compares to the NOK 830 we had last year, almost a 20% growth in our order backlog. Defense is strong, over 20% growth. Medical sort of flat, around -5%. Industry continues on the high levels of 32% growth, the same thing for energy telecom at 31%. Again, we see the trends on offshore marine, reduction of 57% in the order backlog.
Overall, 989, very strong number. We saw some high numbers earlier this year also, very happy with this order backlog. The outlook we repeat what we've said as our outlook earlier this year for 2016. We expect our revenue to be between NOK 2,050 million and NOK 2,250 million , with an EBITDA margin between 5.3% and 6.3%. The growth is primarily driven by increased demand in industry and defense aerospace. The profitability increase is driven by cost reduction activities and improved efficiency, especially when we look at the result now out of Lithuania, where we're really driving a factory that's taking advantage of the scalability of the resources. Very happy with that. That's the summary and conclusions of the Kitron management. Thank you very much.