Welcome to Orkla's 2nd Quarter Presentation. I'm very happy to also this quarter and for the first half year report continued growth in branded consumer goods area. And actually, this is the 13th consecutive quarter with organic growth. In my short presentation, I will focus on the first half year figures and happenings, and Jens Stav will go more in detail on the Q2. But first, let's look at some of the highlights during this quarter.
As I guess all of you have noticed, on Monday, we announced that we finally have sold or entered into an agreement to sell our shares, 50% shares, in Sapa to Norsk Hydro. This is exactly in line with the strategy we have communicated over time, and I will come back to the Sapa transaction in more details shortly. Ground and consumer goods area continued to grow, both organically and through several smaller M and As in the quarter. We have experienced substantial higher input costs on some important raw materials during the quarter, especially meat and some dairy products in Central Europe. And this has impacted profit, as we will show, especially in foods.
We have, of course, taken action to counteract these effects by partly by price increases, but also by more cost initiatives that will be visible in the figures as we move along towards the second half of twenty seventeen. But now let me show you some more details on the Sapa transaction. On 10th July, Monday this week, we announced that we finally have entered into agreement with Norsk Hydro to sell our 50% shares in Sapa. This is, as I said, exactly in line with the strategy we have communicated, first in Capital Markets Day 2011, then we repeated it 2013 and in 2015 and also 2017 at Gardemond here in Norway. We have also been very clear that we have not been in a hurry to exit Sapa.
We wanted to capture our fair share of the value creation that we saw coming from the joint venture. And the joint venture has been a huge success. Since we entered into the agreement with Nosk Hydro 3.5 years ago, the EBITDA has more than tripled. And that has been achieved partly through very successful integration where we realized synergies a little bit ahead of NOK 1,000,000,000 cost synergies. And in addition to that, we have also had a successful transformation from going from commodity profiles with low margin into more value add products with higher margins.
The transaction price, Sapa, at an enterprise value of NOK 27,000,000,000 on a debt free basis. And actually based on of course, based on the final purchase price at the closing of the transaction, we ORCA, we will have realized since we entered into the JV more than SEK 20,000,000,000 from Sapa. That includes IPO and the sale of Gringes. It includes the 2 dividend payments we received. We received SEK 1,800,000,000 when we entered into the JV and SEK 1,500,000,000 from Sapa just the Q2.
And of course, of the final proceeds we get when we receive or when we now sell the last 50% of the shares. The Board of Directors in Orkla will propose to pay out a special dividend of NOK5 per share, and that is approximately NOK5 1,000,000,000 when the transaction is finalized. And we expect the transaction to be finalized latest by the end of 2017. We are awaiting clearance from competition authorities in 7 different countries. But as I say, we expect this to be final and closed by the end latest by the end of 2017.
And as we also have stated several times, when we have excess capital or excess capacity in Orkla, our first priority is to find attractive assets to buy to strengthen our brand consumer goods business. We are not in a hurry. We will take the necessary time to find attractive assets. And if we don't find attractive assets, we have a history of paying out special dividend. But let me just show you some example from the Q2 regarding M and A.
In line with our strategy, we continue to allocate capital from Orkla Investments or the noncore assets into branded consumer goods. We just bought the company, Rimand. They have new categories for us, sunscreen category that strengthens the care portfolio. It's a new category, new geography and partly also new channels where we experience higher growth than we do in traditional categories we have in food, grocery, retail. Orkla Food Ingredients have also strengthened their position, both in the bakery sector and also in ice cream ingredients and accessories.
And we have now actually become market leader in ice cream ingredients accessories in the Nordics, in U. K, in Germany and in the Netherlands. And not at least, we have now a very good platform for further growth in this segment, where we also see higher margins than we do on average in Food Ingredients. Orkla Food Ingredients have also bought the company SR Food, a Danish company. They are very strong in fresh dough segment, which is becoming more and more important for the bakery industry.
But they also have strong position both in organic and vegetarian food, which is important to meet the very strong consumer trends we see in these two areas. But we are not only buying companies, we are also pruning our portfolio continuously. Earlier this year, we announced that we will exit Mionnes based salads in Norway. We don't believe we are the right owner of and be able to create growth in this category. So we have decided to exit Mariner's based salads.
We have also exited industrial marzipan production in Italy. And just recently, we announced that we have sold our professional laundry business in Norway, And that is in the brand consumer goods area. In addition, we have also sold an asset that I will not regard as core for us, that's the Oryge Airport. It's partly out of our portfolio. And when we do this portfolio pruning, that also helps us to be more focused on our core business, focus on growth companies, growth categories, both when it comes to management attention, but also when it comes to capital.
So let's now have a look at the brand consumer goods performance. As I said, I will focus on the half year figures, and Jens will come back to the second quarter. For the first half year, we report an organic growth of 1.1%. Q1 was positively affected by the timing of Easter and Q2 was negatively affected by Easter, but year to date, 1.1 organic growth. We also see that the growth in the markets where we operate is slowing down.
I think 1.5, 2 years ago, we anticipated growth of 2% to 3%, closer to 3% than 2%. By the end of last year, we saw that the growth came down to the area of 2%. And so far this year, we see a growth approximately on 1% in the in line with the market. So we are maintaining or capturing market shares in a slow growth market. That was not the case in 2016, where we said that we are growing somewhat slower than the market, and I was not happy about that.
As you see on the right side, confectionery snacks, they continue with very strong growth figures. Keyer is also in very good progress with 2% organic growth, and I think it's also very nice to see that HPC in Norway is gaining substantial market shares during the first half year. Food experienced lower growth, and Orkla Food Ingredients is the only business area with negative organic growth, and that is mainly due to that we have exited some contracts with low profitability, some private label contracts on butter blends. All in all, I, of course, would like to see much higher market growth than we see in the area of 1%. So we are continuously looking into areas with higher growth, higher growth categories, higher growth channels like pharmacy, online channel, DIY, international sales, so on.
And of course, also very important to meet the strong consumer trends we see for organic, healthy, convenient food, vegetarian, good for you products and of course, also indulgence, which is important. Also during the first half year, we have been working much more as 1 Orkla, utilizing our scale and taking out cost in the whole value chain. And that is working. I think this figure is quite familiar to you. It's my famous black over red, where the black illustrates development in organic growth and the red is development in fixed cost.
And we have, first half year managed to keep the fixed cost at level or slightly negative while we have a top line growth. So we have a healthy GAAP, black over red due to cost initiatives throughout the value chain. But unfortunately, during especially during the Q2, we have experienced that variable costs are moving in the wrong direction. As I said, we have experienced substantial price increases on meat and dairy products, especially in Chame in Czech Republic. On top of that, we also experienced a stronger euro versus especially NUK and SEK, which also makes our purchase in foreign currency more expensive.
This has been compensated by price increases and also more cost initiatives. But we also know that these initiatives takes time, but we expect to see results of this throughout 2017. And needless to say, I'm not happy with an underlying margin improvement of only 12 basis points. But we expect to see much stronger second half of twenty seventeen due to the actions that we have initiated, as I said, price increases and more cost initiatives. So now Jens will take you through more of the details in the second quarter figures.
Thank you, Peter. And as Peter mentioned, we saw continued progress in the branded consumer goods area in the Q2. Let's start by looking at some of the details in the P and L. Group EBIT improved by 3% in the 2nd quarter and 6% year to date. The improvement is driven by the branded consumer goods area.
We have continued restructuring M and A activity and M and A activity within Branded Consumer Goods,
and
you can see the impact of this on the line item other income and expenses. And the size of this line item will fluctuate from quarter to quarter. For the first half of twenty seventeen, other income and expenses has been impacted by costs related to the decision to exit certain products product groups. These exits will allow us to focus more on the core, And we expect some positive impact from restructuring items like property sales and so on on this line item in the second half of twenty seventeen. As Sapa is now booked as discontinued operations, the majority of the profit from associates is related to Jotun.
As expected, profits from Jotun were lower in the second quarter and first half year compared to last year because of weaker markets for offshore and shipping newbuilds. I'll revert to more of the details in the associates later on. Last year's Q2 profit from associates included an impairment of shareholding in RIGE Airport of approximately NOK 70,000,000 just to remind you of that. Further on, the impairment of Rygje also impacted the net financial costs last year of approximately NOK 100,000,000, which explains the reduction in the net financial costs year on year. Overall, profit before tax increased by almost 3% in the quarter, ending at SEK 967,000,000.
The contribution from Sapa is booked as discontinued operations and was down in the quarter, mainly due to unrealized negative derivative effects. Earnings per share for continuing operations were up 9% in the quarter, but slightly down for the first half year. And the reduction year to date relates to timing of other income and expenses and lower results for Jotun. Let's take a closer look at the 2nd quarter performance in the branded consumer goods area and then starting with the revenue bridge. Revenues grew 4% in the quarter.
And as you can see, M and A was the main contributor, mainly related to the acquisition of Harris. As well as the positive impact of M and A, we grew revenues organically by 0.7%, largely because of growth in price. The organic growth rate was negatively impacted by the timing of Easter in the second quarter, as Peter mentioned, as there were fewer selling days, mostly in Norway. As Peter mentioned, the organic growth for year to date is in line with the market growth. Negative foreign exchange rates resulting from a stronger Norwegian kroner since Q2 last year reduced the reported revenues slightly.
Let's now look in more details at each business area within the branded consumer goods, and then we always start with the largest one, namely Foods. In Foods, we grew organic sales by 0.4% in the quarter despite the negative Easter effects and the negative impact on sales related to the introduction of a goods and services tax in India. In addition to these negative effects, profits were down in Q2 due to the following two factors. First, we saw increase in key raw materials, primarily animal products like meat and dairy. For example, the prices of pork and beef have risen by 19% year to date in the Czech Republic, and the majority of this increase came in Q2.
2nd, the timing effects resulted timing effects resulted in higher advertising investments in the second quarter. We have implemented price increases, but we have not yet been fully offset by the increased input costs. And as a result, we experienced a negative lag effect on both EBIT and margins. Further price increases are being implemented, which will have a positive effect as from the second half year. Let's move on to Confectionery and Snacks.
Organic sales rose by 4% in the second quarter. This was primarily due to volume growth with especially good progress in chocolate and confectionery. Confectionery and snacks are the strong innovation and campaign activity in the first half year, boosting the sales growth. Profits were lifted through sales growth and improvements primarily related to carryover effects from the turnaround that we did in Latvia in 2016. The adjusted EBIT margin improved by 1.4 percentage points and ended at 12.2% for the quarter.
Let's look at the performance for Orkla Care. Revenue growth in Care was driven by year's acquisition of Harris. The performance in Harris was negatively affected by lower sales activity. This is mainly a result of internal focus as we are currently merging the 2 companies that we have in the U. K.
However, synergy realizations from the merger is according to plan. Organically, we continue to grow despite the negative Easter effects that we saw in Q2. The competitive environment in Norway within Home and Personal Care is still tough, as we've said many quarters, but we had good progress this quarter with considerably increased market shares in Norwegian retail. We also improved performance in Orkla Health. Margins in Care were lifted from operational improvements and synergies, which more than offset the dilutive effect from the Harris acquisition.
So to sum up, we are pleased with the progress that we see in the care area. Let's now turn to Orkla Food Ingredients. Several smaller add ons that we've done in Food Ingredients increased revenues and profits in this quarter. Organic sales declined by 0.9%, mainly because we have exited contracts with low profitability. This will limit organic growth throughout most of the year.
Most of the remaining portfolio had a good sales development in some. EBIT was negatively impacted by weaker profit development in Romania as for what was the case in Q1. The minimum wages in Romania has been raised and packages fees packaging fees was raised also sharply. In addition, raw material costs have risen this quarter, especially for dairy products, including butter. And as I mentioned, in Q1, we have taken action on this, and we are starting to see results, but the majority of the positive effects will come in the second half of 2017.
Let's look at the investments area. And the main message, of course, from the investment area is the sale of Sapa. And this transaction, as you know, will free up significant capital that we, over time, want to reallocate to the branded consumer goods area. Until closing, SAPA will be reported as discontinued operations. Let's turn to the fully consolidated businesses where Hydro Power which is Hydro Power and Financial Investments.
And for Hydro Power, higher power prices and increased volumes resulted in improved EBIT. There has not been any larger transaction in the real estate area in the Q2. And the book value is approximately SEK1.5 billion at the end of the quarter. This book value will, of course, increase as we go along with the progress of constructing our new headquarters. As I mentioned, Sapa will be booked as discontinued operations until closing.
Let's have a quick look at the performance in the second quarter. Sapa improved its underlying EBIT in the Q2 of 2017 compared to the last year's quarter. The quarter is in fact the best quarter in Zapa's history. The increase was driven by a higher share of value added business and internal improvements in all areas. The reduction that you see in net profit after tax is due to the negative unrealized derivative effects for the quarter.
Net interest bearing debt increased to SEK 3.1 1,000,000,000 at the end of the quarter, mainly reflecting the dividend payments of SEK 3,000,000,000 to the owners. And now moving on to Jotun. Jotun continues to deliver growth, but as expected, revenues were below last year, mainly because of weaker markets in shipping and offshore. Weaker markets in combination with increasing raw material costs hampered profit for Performance Coatings. Underlying growth continues in decorative paints with profits in line with last year.
Price increases and tight cost control will partly offset the effect of rising raw material costs with positive effects going into the second half of twenty seventeen. Let's look at the development of the net debt. At the end of June, our net interest bearing debt was SEK 9,300,000,000, representing roughly 1.7x 12 months rolling EBITDA. The increase from Q1 was related to dividend payments and the acquisition of companies. After closing of Sapa transaction in the second half of twenty seventeen, we plan to reduce our debt by approximately SEK 4,000,000,000.
This will roughly half our interest costs going forward. We do believe it's smart to keep some leverage headroom to execute on our strategy and grow our cash flow. But we will, of