Good morning, everybody. I hope you noticed this Grandiosa commercial we just played. It has won the Silver Film Prize and is thereby a candidate to win the Gold Film Prize 2015 in Norway. The jury emphasized that the film has a lot of feelings as well as a clear brand strategy. I think commercials like these are great, and I am convinced that they promote sales for us. With this, I would like to welcome you to the presentation of Orkla's first quarter results 2015. I must admit that I have been anxious to see whether the positive trend from Q4 would continue into 2015. We have initiated several actions to mitigate strong headwind from demanding market conditions and the weakening of the Norwegian currency. I am therefore happy to be able to say that overall, I am satisfied with the financial performance in the first quarter.
Adjusted EBIT for the group improved by 10% to NOK 725 million compared to Q1 2014. The improvement was driven by positive development in all business areas. In Branded Consumer Goods, the adjusted EBIT margin improvement was driven by both top-line development and cost savings achieved through recently implemented restructuring projects. Furthermore, I am pleased to report organic growth for all business areas. The top-line development was mainly volume driven, but positive Easter effects accounted for about half of the reported growth. We'll come back to that. Associated companies also had a very strong start to the year, driven both by volume increase in Jotun and synergies from Sapa ahead of time. Gränges benefits from strong Asian demand and favorable FX exposure, and both analysts following the company as well as the company itself report a positive outlook for Gränges.
In addition to improving operations, Orkla continues to deliver on its strategy. The acquisition of Cederroth in Sweden, which was announced in January, is currently being assessed by relevant competition authorities. We expect the transaction to be completed during Q3 2015. In the first quarter, we completed the sale of Orkla Brands Russia and the acquisition of NP Foods in Latvia. Additionally, we made some strategic add-on investments in Orkla Food Ingredients during the first quarter, and we signed an agreement with PepsiCo to become their primary go-to-market partner for juice, cereals, and snacks in the Nordics. Earnings per share for Q1 increased by 32% to NOK 0.62, compared with NOK 0.47 in Q1 2014. This graph illustrates our 12-month rolling adjusted EBIT margin. Compared to Q4 2014, the margin improved by 0.1 percentage point to 11.9.
Looking at the short-term trend, we have seen improvement in the last quarters, but in a longer-term perspective, we see that there is still a way to go, and so we will continue our operational focus to improve margins. But we are on the right way. Adjusted EBIT for Branded Consumer Goods in the first quarter was NOK 769 million, and this represents an increase of 11% from Q1 last year. All four business areas reported growth in adjusted EBIT. The margin improvement in Orkla Confectionery & Snacks was mainly driven by reduced fixed costs from cost improvement programs initiated last year, as well as sales growth in Norway and Denmark. In Orkla Food Ingredients, the adjusted EBIT margin increased by 26% to 3.5% in the first quarter. The improvement was broad-based.
A weaker adjusted EBIT margin in Orkla Home & Personal was caused by higher input costs due to weakened NOK. Orkla Home & Personal have a higher foreign currency exposure due to higher share of traded goods in the portfolio. Furthermore, Orkla Home & Personal have made higher marketing investments to support a strong launch program in Lilleborg during the first quarter. We continue to optimize our factory footprint. It will take time to realize the full potential in our P&L, but we continue to progress steadily. On this matter, it is important to emphasize that we are not only closing down factories, but rather optimizing our footprint, meaning that we also maintain and invest in our remaining production facilities. Additionally, we continuously work with improvement and redesign projects in our factories, which also contribute significantly to our cost base.
I have said repeatedly that top-line development is a main driver for profit growth. Therefore, I am pleased to report 4.3% organic growth in Q1. Approximately half of this growth is related to campaign and Easter effects, which will have the same, of course, but opposite effects in Q2. On the other hand, the main part of the remaining increase was driven by volume, which is a positive development compared to previous periods. In Orkla Foods and Orkla Food Ingredients, the improvement in organic growth was broad-based. In Orkla Confectionery & Snacks, the growth was mainly driven by Norway and Denmark. In Orkla Home & Personal, Lilleborg in particular contributed to broad-based sales growth, whereas Orkla Health had a weaker start to the year. Adjusted for Easter effects, all four business areas delivered positive organic growth in the quarter.
Now I want to show you some of the new launches in the quarter that have contributed to this improvement. Based on the insight that the average person worries that he/she does not eat enough vegetables, Orkla Foods have entered into a new segment and have launched chilled vegetable pasta in Denmark and Sweden during Q1. You can only eat this pasta, and you get all the vegetables you need. The product will also be launched in Finland during Q2, and it is actually exported to the Netherlands and Iceland. According to ACNielsen data, the chilled pasta category has grown by 8% in volume and 11% in value year to date. Pastella has increased its market share by eight percentage points from December '14. Another innovation is the Big Cut potato chips. That's a new kind of potato chips with extra deep ridges.
The deep ridges capture the spice and give maximum taste. Big Cut was launched in Norway and Sweden during Q1 and contributed positively to the sales growth in the quarter, and it has just recently been launched in Finland. A version of the product and concept is to be launched in Denmark later this year. This is another example of making an innovation bigger by launching the same product in several countries, several markets where we are present. We are doing more of this now, and we will continue to urge our business areas to focus on close cooperation going forward. Lilleborg has launched Omo and Blenda detergents in new packaging. The new series consists of six different SKUs, and the units are 60% smaller in size, but with a more efficient formula. That means the number of washes is the same.
In addition to consumer advantages, this is more environmentally friendly, and it is, of course, also tougher on the stains. Odense has added to its marzipan product portfolio, following the trend of convenient but homemade. A range of marzipan-based products for homemade ice cream, cakes, and desserts were launched in Q1. These are products for the consumer markets. In addition to our innovation program in Q1, we have also signed an agreement with PepsiCo that will contribute to organic growth going forward. Orkla has distributed Tropicana juice for PepsiCo in Sweden and Denmark since 1st of January and in Finland since 1st of April this year. On 27th of April, it was agreed to expand the distribution agreement with PepsiCo. The agreement now includes Tropicana in all the Nordic markets. It includes Quaker in all the Nordic markets and snacks in Norway, Sweden, and Finland.
The retail sales value to consumer of the PepsiCo portfolio in scope for this agreement is about NOK 1 billion, according to data from ACNielsen for 2014. All markets are to be implemented 1st of January 2016, and Orkla takes over negotiations toward retailers from the fall of 2015. Orkla will be responsible for sales and distribution, while PepsiCo is responsible for production and marketing. Before handing over to CFO Jens Bjørn Staff, who will take you through the financials, I would like to confirm that our main operational focus will continue to be on activities that drive organic growth and improve margins. For 2015, we have already implemented several new initiatives in order to reach our targets. I have shown you some of them here today. Furthermore, we want to continue to work with our cost base going forward.
CFO Jens Bjørn Staff will now present Orkla's financial performance for Q1 2015. Jens, the floor is yours.
Thank you, Peter. I'll continue with the details of Orkla's financial performance, and then starting with the group P&L. Orkla had operating revenues of NOK 7.5 billion in the first quarter, and that's an increase of 8%. As Peter mentioned, we saw organic growth in the branded consumer goods area this quarter. In addition, positive currency translation effects and company acquisitions helped top line growth. As from 2015, Orkla will focus on adjusted EBIT instead of EBITA. Adjusted EBIT is defined as operating profit before other income and expenses. This change will make it easier to compare Orkla with relevant peers as we are becoming a leading branded consumer goods company. For Orkla, the difference between EBITA and adjusted EBIT amounts to about NOK 20 million for 2014 in total. Adjusted EBIT ended at NOK 725 million, and that's up 10% from last year.
The growth was mainly due to a stronger result for the Branded Consumer Goods business. I'll come back and revert to the details related to Branded Consumer Goods and Orkla Investments later. Other income and expenses amounted to a negative NOK 117 million, largely as a result of costs from restructuring activities within Orkla Foods. Profit from associates totaled NOK 238 million, mostly driven by good performance, both from Jotun and Sapa. The group's net financial costs decreased in the quarter, mainly related to lower debt and lower interest rates. This resulted in a profit before tax of NOK 795 million in the first quarter, and that's up from NOK 579 million in the same quarter last year. Earnings per share increased by 32% to NOK 0.62. Let's look at the adjusted EBIT bridge from Q1 2014 to Q1 2015.
To keep it simple, I will from now on, use the term EBIT throughout my presentation when referring to adjusted EBIT. As I mentioned, the group's growth in EBIT was 10% or NOK 66 million in the quarter. Branded Consumer Goods had a growth of 11% or NOK 74 million, supported by growth from all segments. Orkla Confectionery & Snacks and Food Ingredients showed especially strong growth rates. Orkla HQ costs have increased for the quarter. This increase is mainly related to a former management option program and other share-based incentive programs. These costs are directly linked to Orkla's share performance and fluctuate in line with the company's share price. This quarter's positive share price development has therefore led to higher costs. And it's important to note that the underlying cost base for HQ costs has in fact reduced.
In Q1 2015, Branded Consumer Goods had an increase of 6.7% in revenues year-on-year. This increase was due to an organic growth of 4.3% and positive currency translation effects of 2.1%. The organic growth was supported by an early Easter this year, which will have an opposite negative effect in Q2. Timing effects from campaigns in Orkla Foods had a negative effect on operating revenues in the quarter. This was expected and was communicated in the fourth quarter. Combined effect from Easter and timing of campaigns account for approximately half of the organic growth in the quarter. Despite effects from Easter and timing of campaigns, all business areas in Branded Consumer Goods delivered organic growth. The contribution from currency translation effects is a result from a weaker Norwegian krone.
With the Norwegian currency slipping back against the euro and US dollar, we have experienced significant rise in the purchasing cost for Norwegian companies. Overall, strong top-line revenues and focused cost reduction measures have mitigated negative currency effects. As Petter mentioned earlier, this is the fourth consecutive quarter with organic growth. I'll now run you through the details for the business areas in Branded Consumer Goods. In Orkla Foods, we saw first quarter increase in revenues to NOK 3.045 billion, and that's an organic growth of 4.1%. And an increase in EBIT of 4% to NOK 322 million. The EBIT margin was on par with last year and ended at 10.6%. The main drivers for the development were broad-based sales growth and positive effects from cost improvements. The sales increase was affected by early timing of Easter in Scandinavia. In Food Sweden and Foods Denmark, new launches and Tropicana contributed positively.
There was continued growth amongst the Fenno-Baltic and international companies. The EBIT margin received an uplift from cost improvements. However, this was partly countered by negative currency effects. As predicted in our communication in the fourth quarter, the timing of campaigns had a negative effect on Foods in Q1. Orkla Confectionery & Snacks delivered strong organic growth of 4.2% in the quarter. The quarter was positively affected by the timing of Easter in all Nordic countries. The improvement was primarily driven by Norway and Denmark, with continued strong growth from the previous quarter last year. EBIT ended at NOK 159 million, and the EBIT growth was broad based. In addition to sales growth in Norway and Denmark, reduced fixed costs from improvement programs that was initiated last year contributed to profit growth and improved EBIT margin.
The acquisition of NP Foods was completed in Q1 and will be included in the figures as from Q2. Revenues in Orkla Home & Personal in the first quarter ended at NOK 1.3 billion, an organic growth of 1.4%. The growth was a result of good sales development in four out of five business units, especially Lilleborg. A strong launch program in Norway and continued growth in the international business drove the increase in Lilleborg. Orkla House Care saw broad-based sales growth, while growth in Pierre Robert Group was due to successful campaigns in Norway. Orkla Health had a weak start to the year, and that's partly due to the strategic choice to close down the production site at Denomega Leknes. EBIT in the first quarter ended at NOK 230 million at the same level as 2014.
A weaker EBIT margin was caused by significantly higher input costs due to a weakened Norwegian kroner, as well as marketing investments to support a strong launch program in Lilleborg. It is expected that the negative currency effects will be partly compensated by price increases during the rest of the year. Orkla Food Ingredients continued the positive development seen over the last quarters with strong top and bottom-line growth. The organic sales growth was 7.9% in the quarter. Easter effects contributed positively, and food ingredients had broad-based growth both from new and existing customers. The EBIT margin increased by approximately 30% to 3.5% in the quarter and supported by strong top-line growth and effects from improvement projects. EBIT ended at NOK 58 million, and that's an increase of almost 50% from Q1 2014. Let's look closer at Orkla Investments. I'll concentrate on Sapa, Jotun, and our hydropower business.
In addition, we have a 31% shareholding in Gränges and our remaining share portfolio, and that represent the combined market value of roughly NOK 2.2 billion. Orkla Investments also manages a real estate portfolio with a book value of approximately NOK 1.9 billion. Looking at Sapa experienced increased demands for extruded products in North America compared to the same quarter last year, driven by strong automotive demands and increased building and construction activity. In Europe, demand was stable year-on-year. Underlying EBIT for Sapa more than doubled from the first quarter last year. The improvement was mainly due to strong North American demand, the synergy program, and positive currency effects. Sapa's NOK 1 billion synergy program continues to be ahead of plan, with limited restructuring charges for this quarter.
Let me also remind you that Sapa has announced an investor call to be held on the 18th of May at three o'clock. Jotun only reports financial results on a four-monthly basis, and a result of that is that we cannot present official figures for Jotun for the first quarter. This slide illustrates the development in 2014. Jotun had strong performance at the end of 2014, and this positive trend has continued into 2015. Jotun reported all-time high sales and operating profits for the first quarter of 2015, with good performance in all four segments, in addition to positive currency translation effects. Sales of marine coatings have improved compared to the same period last year, following growth in the new building markets and higher maintenance activity. Decorative sales have increased in Scandinavia, the Middle East, and Asia.
EBIT in hydropower was slightly lower than last year, mainly explained by lower production volumes and lower power prices. As of the end of the first quarter, estimated snow reservoir levels at Sauda are significantly above normal levels. Now, let's move on to the capital structure of Orkla. Starting with the changes in net debt. Net debt as of the first quarter was NOK 5.7 billion. During Q1, Orkla followed through on net expansion investments of NOK 0.8 billion related to several acquisitions in the branded consumer goods area. Cash flow from operations ended at NOK 0.3 billion at the end of Q1, and net debt for Orkla was NOK 6.2 billion. This slide highlights Orkla's strong balance sheet and financial flexibility. Orkla's net interest-bearing debt had an average maturity of 3.9 years.
As I said earlier, the group's net interest-bearing debt was NOK 6.2 billion by the end of the quarter, with a net gearing of 0.19. Orkla's financial position is robust, with cash reserves and credit lines that will cover known capital expenditures for 2015. Finally, I would like to remind you that Orkla will arrange an investor day at the London Stock Exchange on Friday, September 11. You're welcome to this event, and a formal invitation will be sent out in due time. Let me hand the floor back to Peter.
Thank you, Jens. I think that the first quarter results show that we continue to deliver on our strategy and on our plans. I see results from an increased focus on operation throughout the organization. The adjusted EBIT for Branded Consumer Goods is improving, but I think more importantly, the improvement is due to a healthy development in the underlying operations. Q1 2015 is the fourth consecutive quarter with organic top-line growth, and in Q1, this is broad based, and it is volume driven. We have managed to take out synergies from structural changes and hence improved our margin. All four business areas achieved positive growth in demanding markets with strong international competition. I am also very pleased to see that good operations in both Jotun and Sapa have resulted in a solid start to the year. I still see a lot more potential for operational improvement.
Going forward, we will remain focused on activities that drive organic growth and that improve margins. Thank you very much, and then we will open up for Q&A.
Thank you. Can you hear me? Yeah. Thank you. Martin Stenshall, Danske. Great to see such a solid performance this quarter, so congratulations. First question from me is regarding Sapa joint venture. We can see that the underlying EBIT has a strong jump year-over-year to 392, but Orkla's share of the net profit is only 45 million. Could you please bring us through the bridge where you end at 45 million? Because it seems like there could be substantial amounts going from the underlying EBIT to Orkla's net share of only 45.
Yeah, I can briefly explain. It was limited restructuring activities in connection to this synergy program this quarter. However, below this adjusted EBIT, Sapa books mark-to-market changes in commodity and FX derivatives, which is booked that way under IFRS. That fluctuates from month to month. Most of that was unrealized mark-to-market changes. That's the main explanation. Synergy restructuring charges was very limited this quarter. It was around NOK 44 million.
Okay. Thank you. Back to Branded Consumer Goods. You noted in the report that you have seen a slight pushback on market shares in Q1. Could you please comment on which segments or categories we are talking about there?
I think, in general, we see a slight decline. However, we see an improvement compared to the previous quarters. We cannot go reveal any details on the category segments, but I think the most important thing is actually that we see an improvement from earlier, but we are still not happy with the overall performance.
Then back to a bit overall question on M&A. There's been a lot of activity over the past 12 months. Sell Russia and NP Foods, you got Cederroth and so on. Could you please share a bit more comments on your view forward? I know it's difficult, but in terms of maybe new segments, consisting segments. Of course, my main question relates to India. Are you still focusing on staying in India?
We cannot comment, of course, on any specific M&A plans that we have. Of course, we are looking for healthy, well-positioned companies that fit well into our current portfolio in the markets where we operate and where we can realize synergies and of course, where we can buy or acquire companies at reasonable prices. When it comes to India, the development there is really very strong, and it continues. We have no plans to exit India. We have plans to continue there and continue the strong development.
Okay, thanks. The last question from me regarding PepsiCo. You're extending the deal with PepsiCo. You mentioned a number from Espen also about the value in the market. Would you be able to comment on the value for you in terms of revenue and EBIT on this total PepsiCo?
I think this deal will be gradually phased into our operations and parts of the growth in foods for this quarter was due to this Tropicana sales. When it comes to specifics on the margins, we don't comment on that, but it's slightly lower than the average of the foods portfolio.
Per Brand-Olsen, Carnegie. Two questions and the first one follow up on the PepsiCo question. A bit curious to understand how you're thinking about bringing Lay's potato chips into KiMs markets, both from your side and also from PepsiCo side. What is sort of the benefit and why are you doing such a stunt?
First of all, I think both parties are, of course, aware that we are in a way competitors, but we also fill different segments in that category. We also have to admit that Lay's, especially in Norway, is challenging due to high import duty on potatoes. Both parties are aware, and we are competing side by side also today before the agreement. We don't see any problem with that, actually.
Lastly, there's been a lot of changes in the customer structure in Norway, especially. Have you had any impact so far? Anything you expect going forward going from four to three retailers?
On the customer side, it will be probably more challenging going forward. On the other hand, I think also as a supplier, I think we like to have, of course, as many customers as possible, but also strong customers that are profitable. I think this makes it possible to have three strong, profitable customers in Norwegian markets, and that is probably better than having two strong and two quite weak.
We have a question from Haakon Aschehoug from DNB.
You mentioned that AquaDerma drove growth at the Home & Personal , but can you please be a little bit more specific in terms of how this new product range has been received by the market?
Well, the listing for AquaDerma has been very good. The sales so far has been very good. we hesitate a little bit to reveal any figures because we know that really the proof comes when customers come back to repurchase the products again. we will reveal more details on AquaDerma in Q2 or Q3. we are very happy with the start. No more questions? Okay, thank you all for coming, and I hope that you will find this in the grocery store for the weekend. It tastes, it's really great. Thank you very much for coming.