Good morning, everyone. Welcome to Orkla's second quarter presentation. I am very happy to also this quarter, and for the first half year, report continued growth in Branded Consumer Goods area. 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 Staff will go more in detail on the second quarter. First, let us 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 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.
Branded Consumer Goods area continued to grow both organically and through several smaller M&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. This has impacted profit, as we will show, especially in Orkla Foods. We have, of course, taken action to counteract these effects 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 2017. Now, let me show you some more details on the Sapa transaction. On 10th of 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 Gardermoen 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. The joint venture has been a huge success. Since we entered into the agreement with Norsk Hydro three and a half years ago, the EBITDA has more than tripled. That has been achieved partly through very successful integration, where we realized synergies a little bit ahead of NOK 1 billion cost synergies.
In addition to that, we have also had a successful transformation going from commodity profiles with low margin into more value-add products with higher margins. The transaction priced Sapa at an enterprise value of NOK 27 billion on a debt-free basis. Actually, of course based on the final purchase price at the closing of the transaction, we, Orkla, we will have realized since we entered into the JV, more than NOK 20 billion from Sapa. That includes the IPO and the sale of Gränges. It includes the two dividend payments we received. We received NOK 1.8 billion when we entered into the JV and NOK 1.5 billion from Sapa just the second quarter. 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 NOK 5 per share. That is approximately NOK 5 billion when the transaction is finalized. We expect the transaction to be finalized latest by the end of 2017. We are awaiting clearance from competition authorities in seven different countries. As I said, we expect this to be final and closed latest by the end of 2017. 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 Branded Consumer Goods business. We are not in a hurry. We will take the necessary time to find attractive assets. If we don't find attractive assets, we have a history of paying out special dividend.
Let me just show you some example from the second quarter regarding M&A. In line with our strategy, we continue to allocate capital from Orkla Investments or the non-core assets into Branded Consumer Goods. We just bought the company Riemann. They have new categories for us, sunscreen category that strengthens the Care portfolio. It's 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. We have now actually become market leader in ice cream ingredients accessories in the Nordics, in U.K., in Germany, and in the Netherlands.
Not 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. 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. We are not only buying companies, we are also pruning our portfolio continuously. Earlier this year, we announced that we will exit mayonnaise-based salads in Norway. We don't believe we are the right owner and be able to create growth in this category, so we have decided to exit mayonnaise-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. That is in the Branded Consumer Goods area. In addition, we have also sold an asset that I will not regard as a core for us, that's the Rygge Airport. It's finally out of our portfolio. When we do this portfolio pruning, that also helps us to be more focused on our core business, focused on growth companies, growth categories, both when it comes to management attention, but also when it comes to capital. Let's now have a look at the Branded 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. Q2 was negatively affected by Easter. Year to date, 1.1% organic growth. We have also seen that the growth in the markets where we operate is slowing down. I think 1.5, 2 years ago, we anticipated growth of 2%-3%, closer to 3% than 2%. By the end of last year, we saw that the growth came down to in the area of 2%. So far this year, we see a growth approximately on 1% in the market. What really I am happy to see is that we are growing in line with the market. 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. I was not happy about that.
As you see on the right side, Confectionery & Snacks, they continue with the very strong growth figures. Orkla Care is also in very good progress with 2% organic growth. I think it is also very nice to see that HPC in Norway is gaining substantial market shares during the first half year. Orkla Foods experienced lower growth. 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%. We are continuously looking into areas with higher growth, higher growth categories, higher growth channels like pharmacy, online channel, DIY, international sales, so on.
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 one Orkla, utilizing our scale and taking out cost in the whole value chain. That is working. I think this figure is quite familiar to you. It is my famous black over red, where the black illustrates development in organic growth and the red is development in fixed cost. We have, first half year, managed to keep the fixed cost at level or slightly negative while we have a top-line growth. We have a healthy gap, black over red, due to cost initiatives throughout the value chain.
Unfortunately, especially during the second quarter, 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 Hamé in Czech Republic. On top of that, we also experienced a stronger EUR versus especially NOK and SEK, which also makes our purchase in foreign currency more expensive. This has been compensated by price increases and also more cost initiatives. We also know that these initiatives take time, but we expect to see results of this throughout 2017. Needless to say, I am not happy with an underlying margin improvement of only 12 basis points. We expect to see much stronger second half of 2017 due to the actions that we have initiated, as I said, price increases and more cost initiatives.
Jens will take you through more of the details in the second quarter figures.
Thank you, Peter. As Peter mentioned, we saw continued progress in the Branded Consumer Goods area in the second quarter. Let's start by looking at some of the details in the P&L. Group EBIT improved by 3% in the second quarter and 6% year-to-date. The improvement is driven by the Branded Consumer Goods area. We have continued restructuring M&A activity and M&A activity within Branded Consumer Goods, and you can see the impact of this on the line item, other income and expenses. The size of this line item will fluctuate from quarter to quarter. For the first half of 2017, other income and expenses has been impacted by costs related to the decision to exit certain 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 this line item in the second half of 2017. 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 new builds. 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 Rygge Airport of approximately NOK 70 million, just to remind you of that.
Further on, the impairment of Rygge also impacted the net financial costs last year of approximately NOK 100 million, 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 NOK 967 million. 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. 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 second quarter performance in the Branded Consumer Goods area, then starting with the revenue bridge. Revenues grew 4% in the quarter, and as you can see, M&A was the main contributor, mainly related to the acquisition of Harris.
As well as the positive impact of M&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 Petter mentioned, as there were fewer selling days, mostly in Norway. As Petter 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. Then we always start with the largest one, namely Orkla Foods. In Orkla 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, profit 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. Second, the 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. As a result, we experience 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 Orkla Confectionery & 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. Orkla Confectionery & Snacks had a strong innovation and campaign activity in the first half year, boosting the sales growth. Profit 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 Orkla Care was driven by last 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 two companies that we have in the U.K. Synergy realizations from the merger is according to plan.
Organically, we continued 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. We had good progress this quarter with considerably increased market shares in Norwegian retail. We also improved performance in Orkla Health. Margins in Orkla Care were lifted from operational improvements and synergies, which more than offset the dilutive effect from the Harris acquisition. To sum up, we are pleased with the progress that we see in the Orkla Care area. Let's now turn to Orkla Food Ingredients. Several smaller add-ons that we've done in Orkla Food Ingredients increased revenues and profit 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 sum. 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 packaging fees was raised also sharply. In addition, raw material costs have risen this quarter, especially for dairy products, including butter. 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. The main message, of course, from the investment area is the sale of Sapa. 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, which is hydropower and financial investments. For hydropower, higher power prices and increased volumes resulted in improved EBIT. There has not been any larger transaction in the real estate area in the second quarter, and the book value is approximately NOK 1.5 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 second quarter of 2017 compared to the last year's quarter. The quarter is in fact the best quarter in Sapa'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 NOK 3.1 billion at the end of the quarter, mainly reflecting the dividend payments of NOK 3 billion to the owners. 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 2017. Let's look at the development of the net debt.
At the end of June, our net interest-bearing debt was NOK 9.3 billion, 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 2017, we plan to reduce our debt by approximately NOK 4 billion. This will roughly half our interest cost going forward. We do believe it's smart to keep some leverage headroom to execute on our strategy and grow our cash flow. We will, of course