Okay. Hi, welcome everyone to Orkla Investor Day. Fantastic to see so many people here today. I know there's a lot of people joining in on the web, so I'd like to take the opportunity to welcome you as well. My name is Mattias Orrenius. I'm head of investor relations. Today, I will also be your moderator. Our main focus today will be on how we deliver on our strategy and increasing performance. Now we have quite an intense agenda for you. First, you'll hear from our CEO presenting the group strategy and targets. Our head of operations will give you some more insight on how we work improving efficiency in the supply chain. We have the CEOs from all our business areas here to present today. They will give you some different examples on how they work creating value and their main focuses going forward.
I really hope that this will be a valuable day for you. Please take the opportunity to ask questions during the Q&A sessions, because we will have Q&A sessions after each presentation. There will also be a final Q&A session at the very end of the day. Management will also be available for you during our break. For about an hour or so after the event, please stay for some snacks and drinks. I think it's time to start today. I'd like to present our first speaker, our president and our CEO, Peter Ruzicka.
Thank you, Mattias. Well, it's a great pleasure to welcome you all to Orkla Capital Markets Day. I have now been one and a half year in the position as president and CEO. I am still a freshman in Orkla. We have participants from the management team who have been in Orkla for more than 30 years, actually. Prior to that, I was a board member for almost 10 years. In the '90s, I was a large customer of Orkla as I was in the food retail business in Norway. Of course, I am also a heavy user of all the great products that Orkla has.
Knowing the company from the board perspective or as a customer or in the consumer is completely different from knowing the company from inside and to really get to know the people inside the company. It is a great company with a lot of great people. During the last years, we have had a lot of internal reorganization. We have had a lot of divestments and acquisitions. That has led for a period that we lost focus a little bit on the market, on the customers, competitors, and on the consumers. That led to not the best performance, top line and bottom line. When I started, I said we have to regain focus on operations. That's the most important thing. We have to focus on growth, organic growth. We have to focus on cost initiatives to increase margin.
I really look forward today to present, together with my management team, our plans, our targets going forward. As you will see during today's presentations, there are several new faces in the management team from the last time we had Capital Markets Day here in London in 2013. My presentation is in two parts. I will tell a little bit about what we have done the last six, eight quarters, and what we will do going forward to reach the targets. Before I go on to tell you about that, I will visit this quite important slide that I think you are quite interested in looking at. We will still maintain Nordic leading brand consumer goods company with the Nordics and the Baltics as our main markets, but also in other selected geographies. Growth is important to create shareholder value.
We aim to grow at least in line with the markets where we operate. EBIT growth is also important, and we aim for high single-digit growth in EBIT in NOK going forward. We do not have a margin target on each business areas, but we have a target to grow EBIT because we pay our bills with cash and not with margins. Regarding dividend, in the foreseeable future, we see that we will pay out at least NOK 250 per share in the period going forward. To what we have done the last quarters. Well, we have sold more of non-core businesses. We have invested in more brand consumer goods companies, and we have strengthened our position in existing markets, but we have also strengthened our positions in new channels and in new categories. Cederroth is one such example of the acquisitions we have done.
With Cederroth, we strengthen our position in Sweden, but we also strengthen or enters into a new category in Sweden because we are not present in home personal in Sweden. We are a big position in Norway, but Cederroth gives us a platform for growth in those categories in Sweden. Cederroth also gives us access to the pharmacy channel, which is very interesting and profitable channel, not only for the Cederroth products, but also for the rest of Orkla Health products. Cederroth also gives us access to a new category, the wound care. During this period, we have also done some exits. We have listed and sold most of our shares in Gränges. We still have 16% left. We sold off most of our business in Russia, and we sold our Polish business, Delecta. As I said, focus on operations has been main priority.
We have shown top-line growth and bottom-line growth, and that is the most important way to increase shareholder value, of course. We have created top-line growth by having fewer but bigger innovations that really make a matter on the top line. We have also succeeded in cross-border innovations, meaning that we have taken successes from one market and introduced it in the other markets. We have had successful cross-category innovations also. We are acting more as One Orkla, as you will hear several times today, and I will revert to that. We have also developed our customer relationships. We sell our products through retailers, so the relationship with the retailers is very important. We focus to spend less time on negotiations on terms and conditions, and more time on how to create growth together.
We have a common goal with the customers, that is to create growth. We have also initiated several programs to reduce costs. One is the optimization of supply chain, but we have also had substantial cost savings through organizational changes. On that, we will tell you more about this later today on the organizational changes. We have introduced a new KPI. Actually, I stole it from our associated company, Jotun, and we call it black over red, where black represents the organic growth figures and red represents the growth in fixed costs. As you can see, this is just illustrative, but as you can see, we have had a period where the red have been above black, and of course, you don't have to be Einstein to understand that eventually that will not be the way for salvation. This is a simple KPI.
It is very easy to understand, and I tell you, it is highly effective. I don't want to see red over black. During this period, margin has improved by 0.5 percentage points. We have delivered on our strategy, on the communicated strategy. We have reallocated capital from non-core to core to brand and consumer goods companies. We have improved our operations, visible in both top and bottom-line development. We have realized shareholder value, as you can see from the right side of this slide. We have outperformed also stock exchange in the last periods. Actually, in this particular graph, I like to see red above black. That is a little bit about what we have done. What are we going to do forward? Well, pretty much the same. We have no change in our strategy.
We will develop and strengthen our position as the leading Nordic brand consumer goods company. We increased presence in Baltics and some other selected geographies. We will do more of the same because it obviously works. Our focus on operations has proven that we can deliver top line and bottom-line growth. We also have to extract synergies throughout Orkla. We have a lot of powerful brands. We have a lot of skilled people. We have a lot of fantastic innovations in the different parts of Orkla, and we have to utilize the synergies and extract synergies from operating as One Orkla. We will tell you more about that later. Orkla is a result of a lot of acquisitions over time, small and big. We have a lot of local value chains.
I think that was probably right some years ago, five, 10, 15 years ago, to be really local. This has led to a complicated supply chain structure. We have 103 factories. We have 30 different ERP systems, and it is quite obvious that this is not optimal. We also see that the competitive scene is changing. Our competitors are getting more professional. They are also seeking for synergies. Our customers have become more demanding. If you just look at our figures in rough numbers, we have NOK 30 billion in sales. We have NOK 3 billion in profit. That means we have NOK 27 billion in cost. Out of those NOK 27 billion, NOK 24 billion is related to supply chain. It is a huge potential in optimizing that supply chain to reduce the NOK 24 billion cost base. We have started the process. We have already decided to centralize production.
We have centralized procurement, logistics, and IT. Johan will tell you more about this in a few minutes. One of our competitive advantages is our unique consumer insights, and also our flexibility to adjust, to tailor-make our products to the local needs, local taste, local preferences in the local markets. That is really the strength of Orkla. In addition, we also have a very strong go-to-market organization in all the countries where we operate. This, as mentioned earlier, this has led to a complex structure. Going forward, we have to find a balance still being local, but at the same time take out synergies and utilize the size and the power that lies within One Orkla. We need really to have a step change in realizing synergies. We have, for instance, several factories producing the same. Take ketchup, tomato ketchup, as an example.
We have four or five different factories producing tomato ketchup. It is more or less the same product with some local adjustments under some local brand, but the product and the production technology is more or less the same. It is quite obvious that we should have only one factory to produce ketchup in the Nordics. We have to utilize the strength, realize synergies in supply chain, but at the same time, we have to still be able to be flexible and local so we can meet the local consumer and customer demand. Another strength of Orkla is our broad portfolio of number one and very strong number two brands in almost all categories and markets where we operate. Actually, we produce, we market, and we sell 8 million consumer units every day, 365 days a year.
That means that every minute, 24/7, 6,000 decisions are taken in favor of an Orkla product. Why is that? It is, of course, because the consumer, they know our brands, they know our products, and they trust our products. They trust that products coming from Orkla, it is safe and healthy and good for me, and I can trust this both product and brand. We need to further build on these strong positions, both cross-market and cross-categories. We have to act as One Orkla to utilize the potential that lies within all those strong positions. On the left side, you see a few examples of our really strong positions in the markets. Actually, in many cases, we have 40%, 60%, 80%, even 100% market share in our categories. We compete well with the multinationals. We compete very well with P&G.
We compete well with Unilever, with Nestlé, with Mondelez, and so on. We have been competing with them for many years, and still, we have these market shares. That shows that our model works, but we need to take out cost. On the right side here, you see an example of what I mean by One Orkla. We have responded to the consumer demand of having more healthy snacks, so we have developed and launched dry roasted nuts. This is developed and produced in a factory in Norway, and it will be launched in Sweden, Denmark, and Finland as well. It is the same product, same production facility, same packaging, but sold under different brands. Anyday in Sweden, Denmark, Finland, and Polly in Norway, because this is the leading brand in Norway. We have several such examples, and we will see some later today as well.
We are a big player in a quite small pond. We are the largest supplier to the food retail sector in the Nordics. Obviously, the trade, as I said, we sell our products through food retailers, so the retail trade is important to us. We are also important to them. We have strong brands, strong positions, and we have unique consumer insights. We also have good innovations. Winning with the customer is also important to create growth. We see a demand from our retail customers that they have a demand to differentiate from the other competitors. We can help doing that with our model. We can tailor-make products. We can offer unique brands that we own for one customer. We can offer an innovation for another customer, or we can offer a unique launch for a period for the third customer.
We will do that to a much greater extent. Atle Vidar will revert to this later today. We also see that a new shopping behavior. Products that people used to buy in traditional food retail stores 10 years ago, they expect to buy somewhere else today. They buy it online, of course, or they buy it in a specialty store, DIY, tax-free, a lot of different occasions. We need to be present in all the situations where the consumer expects to find our products. New channels is important Approximately 5% of our total turnover comes from export. 5% doesn't sound that much, it's NOK 1.5 billion, roughly. We have not done a lot on export on the Orkla level.
Some of our companies have done a lot, some companies have done very little, and some companies have only lifted up the phone when the customer has called. We have a big potential in doing much more cooperating together, we have merged our export sales force into one sales force for all Orkla companies. We think, especially for food products, everything you put in your mouth, it is a big potential in Asia. Nordics food is regarded to be healthy, safe, and clean. We have to utilize that. We also see a trend for CSR sustainability. Many companies see this as a hurdle for growth, but we see it as another growth driver. People are more and more concerned what they eat, how much salt, how much sugar, saturated fat, and so on.
They are also concerned about is the food safe, and how is the impact on the environment from the products I buy. Actually, as a player in the Nordics, with our local proximity to the local markets, we have an ability to create growth situation out of these trends. Palm oil is one such example. Palm oil is a huge environmental issue in Europe in general, and it's the same in Norway, but in Norway it's also an issue about health, because palm oil is saturated fat. We have replaced palm oil or saturated fat with unsaturated fats in almost all our food products in Norway. We can do that to meet the local need in Norway, and I can tell you that our big multinational competitors, Unilever, Dr. Oetker, and so on, they will not adjust their recipes to suit 5 million crazy Norwegians.
We can do it. Atle Vidar will elaborate on this later on. We have a very strong position in the Nordics. Of course, with our strong position, as I show you with some of the really, really high market shares we have, there is, of course, a limit to how much we can grow. Therefore, new geographies is important, and especially the Baltics, where we have strengthened our positions by the acquisition of NP Foods. There are still white spots within some categories. I mentioned Cederroth Home & Personal Care in Sweden. We are not present at all. It's a huge market. For us, it's a huge market. Cederroth gives us access to fill that white spot.
We also see that even though we are mainly in Nordics and the Baltics, we also have Orkla Food Ingredients, with a broad presence in Europe, and Pål will tell you more about this later. We also see growth opportunities from smaller M&A add-ons. When we look at smaller M&A add-ons, we look, of course, at companies that fit with our strategy, fit with our categories. Companies that either have a very strong brand market position or they have a position that we can develop. Companies that are attractively priced, when multiple at attractive levels, and companies where we can realize synergies. Usually, the small acquisitions, the small M&As we do, they are highly profitable. They're easy to integrate. While looking at this map, I would also like to say a few words about India, because quite often I get questions, "Why are you in India?
What are the synergies between India and the Nordics? The taste of food is somewhat different." We acquired MTR in India in 2007, and since then, the company has grown by close to 20% every year. Of course, there are not that many synergies, but we have a highly professional management team, local management team in India. They're driving the business fantastic. They claim, they say very openly that, "Without Orkla as owner, we would never have been in the position we are today." We have helped them, supply chain, innovation processes, marketing tools, and of course, food safety standards, not at least very important. They claim that we have been a very important owner for the Indian success, and MTR is really prospering. I think this slide is familiar to you, at least for those of you who were here two years ago.
I have promised I will revert to this, the figures and the targets that we communicated. The left column, or the figure columns, shows the targets that we communicated for each business area in 2013. Since then, quite a lot of things have happened. We have merged Orkla International into Orkla Foods after we sold the Russian business. We acquired NP Foods in the Baltics, and both these two actions had a dilutive effect on the margin of approximately one percentage point. We also entered into an agreement, distribution agreement with PepsiCo that also had a dilutive effect on the margin. The acquisition of Cederroth will have a dilutive effect on the Home & Personal margin of two and a half percentage points. That's also why we don't want to focus on a margin target for each business level, but rather an EBIT growth target.
The EBIT is what we pay our bills with, that's how we pay our dividend. That is also to avoid counterproductive decisions. If we only focus on the margin targets, a lot of these actions should not have been done. We should not have bought NP Foods, we should not have bought Cederroth, we should not have entered into agreement with Pepsi, they're all dilutive on the margin. They are value creating on bottom line, that's the most important thing. According to those targets we communicated, restated with the dilutive effects and so on, we are approximately one year delayed on Foods and Confectionery & Snacks, we are more or less on plan in Home & Personal. That was the status for the previous targets. Let's look at the new targets that I briefly commented on already.
As I said, we will not have a growth target stated as a percentage. We will have a growth target that we should grow at least in line with the markets where we operate, which is of course different from geography to geography. We have grown now. We have 5 quarters in a row with organic growth, that is a trend shift. Our growth is roughly 2% on average. We know that our main markets in the Nordics are growing 2%-3%, varying by category. We are on the right track, we are still not there. We are definitely on the right track. We are mainly in attractive and stable markets in the Nordics. Not very high growth, it's a growth above EU average. We face strong competition, we handle that well. We also have a consolidated market on the customer side.
We have 3 main customers in Norway, 3, 4 in Sweden, 4, 5 in Denmark, 3 in Finland and so on, that is a challenge. It is actually also an opportunity, as I said, winning with the customers, creating growth together with customers, it's more easy when you have 1 or a few big customers than they have, for instance, in India, where they have 170,000 customers. Can you imagine how to make a promotion, really powerful promotion in 170,000 small mom-and-pop stores? It's an opportunity. When it comes to EBIT growth, we announce a growth of 6%-9% every year from now. That includes smaller add-ons, it does not include any strategic, bigger acquisitions. If we do any bigger strategic acquisitions, we will adjust that EBIT target, of course. Actually, this represents a step change in the EBIT development of Orkla.
If you look back 10 years history, our EBIT has increased by 5%, including acquisitions, big acquisitions. This represents a step change from 5% to 6%-9%. I said that bottom line and dividend capacity is more important than focusing on the margin target. Just to make that clear, that does not mean that we are not focused on margins. We are focused on margins. We have solid plans to reach the targets. We will continue organic growth and all projects that will support that. We will realize synergies through One Orkla. Successful integration of the acquired companies is very important, that is really an important value driver, I think our history shows that we usually succeed in that. We see opportunity to do some smaller strategic add-on acquisitions.
Before I round off, I would also like to say some words about Orkla Investments, because according to some of the parts, it accounts for approximately 30% of the value of the Orkla share price. It is a big part of Orkla. It includes Sapa JV. It includes 42.5% of Jotun, the paint manufacturer. It includes some hydropower plants. It includes real estate portfolio with a book value of approximately NOK 1.7 billion, and a share portfolio with a market value of approximately NOK 1.3 billion. Since we communicated our new strategy some years ago, we have actually done a lot. We have sold Elkem, we have IPO'd and sold Borregaard. We established Sapa JV together with Norsk Hydro. We sold our shares in REC, unfortunately at the wrong time. We IPO'd and sold most of our shares in Gränges. We still hold 16%. We reduced the share portfolio substantially.
During this time, we also reallocated capital from non-core to brand consumer goods businesses by acquisition of Rieber & Søn, Jordan, NP Foods, and Cederroth, and a lot of smaller add-ons in all business areas. When it comes to Orkla Investments or non-core or whatever you call it, for us, it is much more important to realize the real value in those assets, or the fair value, than speed of execution. Our two main assets are Jotun, 42.5% of Jotun, and actually part of Jotun is a branded goods company with a very strong brand, not only in the Nordics but worldwide. They have had a steady growth over many years, and they actually report record high sales and profit so far this year.
When we established Sapa JV, we announced a NOK 1 billion cost saving in synergies in the new JV, and we are ahead of plan to realize that NOK 1 billion. In addition, we see a strong EBIT growth, as you can see on the right side. We still believe there is a huge value potential in Sapa. We are convinced and 100% sure that the plans and actions that we have going forward will make it possible to pay out at least NOK 250 in dividends every year. We want to sustain an investment-grade company. That means that our debt to EBITDA should be in the area 2.5 to 3 maximum over time.
We will continue to have a very high focus on capital efficiency, I can assure you that in senior management, the most important bonus target is EVA goal, where, of course, capital return is an important factor. We also have to improve our working capital. On the working capital, we are not best in class, but with the complicated supply chain we have and with the changes we do in the supply chain, we see a great potential in improving working capital. If we have excess capital from operations, which I hope we will have, or from the sale of non-core, our first priority is, of course, to find attractive assets to buy in the brand consumer goods businesses. Attractive assets means that fits into our strategy, fits into our current portfolio, at attractive prices, attractive multiples, and where you can realize synergies.
If we don't find that, I can assure you that cash is not burning in our pockets. We will suggest to the board to pay out the cash back to shareholders, either in the form of an extraordinary dividend or with a share buyback program. I think what you see also from our results the last quarters, we are on the right track. We have quite demanding but highly realistic goals going forward, and we have solid plans and actions. Probably the most important, we have the right team in place to meet those targets and to execute on those plans. Before I hand the floor to Johan, who will talk about supply chain, I am open for questions.
Just some quick words before we start the Q&A session. I'd just like to remind everyone on the web that we welcome your questions as well. Since we are broadcasting, please wait until you get the microphone before you state your question, and also please state your name and institution. Now, if we have any questions?
Chris Carson at TCG Senhouse. Just how many ERP systems are you going to go down to? You said you had 30. Likewise, how many factories do you think you can chop?
I think Johan will answer the factory question in his presentation. Regarding ERP systems, 30 systems is obviously not optimal. The dream would be to have only one, and sometime in the future we will probably have. We have not set a date for having one common system. We have said that when each business area or local company change their system and is in a need to change, this is the system you're going to have.
No further questions? Okay. Thank you, Peter.
Okay. Thank you.
Now it's time for me to present our next speaker. He started in Orkla quite recently, a couple of years ago, but he has extensive experience from operations. It's our new head of operations, Johan Clarin. Welcome.
Thank you very much, Mattias. Good afternoon. Our supply chain is a great opportunity with a lot of potentials. Why? Well, first of all, we have sufficient enough volumes running through our factories each and every day to make sure that we can secure economies of scale, of course, if we operate wisely. Secondly, we have a great team. We have dedicated people, excellent leaders, and skilled workers at our factories. Also looking into the potential side around the factory base here, we see when we look into our core performance metrics around utilization and productivity, that we are operating, let's say, in our high 50s. We also see that we have, over time, had a gradual decline on the return on our assets.
When we compare to our peers in terms of how often we turn our inventories, we are turning at a lower pace, and that was also indicated by the working capital issue that Peter mentioned. If we look into the revenues per factory and comparing with our peers, we see that we operate maybe down to one-third of the revenues per factory that some of our peers are doing. Of course, having 103 factories, there is the obvious risk that we are spreading our capital expenditure a bit too wide. Also, going back to the NOK 24 billion in our supply chain cost. Let's decompose that a bit. NOK 4 billion-plus goes into conversion cost manufacturing. NOK 1 billion-plus goes into logistics, and the rest is basically within procurement. Here, our biggest spend is raw material.
Our belief is that we are not leveraging this spend fully, and we are going to do that going forward. What are we then doing? Well, we have outlined five priorities. I promise you there will not be a test in the end, but there will be five priorities for us. First of all, we're working with our organizational setup. We are taking all these local value chains and integrating them into one value chain. Secondly, we are rationalizing our footprint, both in terms of our manufacturing and distribution setup. We are also targeting to improve, on a continuous basis, the cost base we have within manufacturing. That's item three on this list. As I said, we are certain we can leverage our spend better, and that goes into the accelerate purchasing savings.
Last but not least, we are building and strengthening our capabilities to set a new baseline for our performance. Of course, we do all this to strengthen our competitive position by taking our costs down and operating more efficiently. Five priorities. Talking a bit about our journey, and this corresponds to actually when Peter came on board in 2014. This was our point of departure. As you can see, in 2014, we had limited strategic direction for our supply chain. We were not sourcing across markets well enough and maybe not even collaborating well enough. In terms of reporting, it was quite fragmented. In 2015, this has been the year of gearing up. We have done the organizational changes. We have, for example, moved out the operative responsibility for our factories from the local companies into a supply chain organization per business area.
This is quite a big change in Orkla. We have also, of course, been keen on not only talking about the organizational setup, but also focusing on core improvements in terms of our footprint, but also in terms of our cost out or cost improvement work at our factories. Not only organization, but also delivering here and today. When we look forward during 2016-2018, we see that, of course, we need to step up in our performance throughout our supply chain. We also need to continue building these capabilities, and we will accelerate the value creation. Looking at this and looking at our challenges, there will not be one single silver bullet solving all our issues. There will instead be a lot of different activities that we need to run in a synchronized manner.
Having done this before, most recently at Sony Mobile, I have to say, I truly believe that we are in a good spot. We have a good foundation and platform for the continued journey. Peter showed this picture before, and I realize that the great surprise with animation is gone. You already know where this circle is moving, right? Thank you very much for destroying that, Peter. I bring it up here because it's critical for us. We are, to a great extent, becoming more similar with some of our peers. We are taking out synergies, and we're focused on working more as one company. The localness, keeping the proximity to our consumers and our customers, it's so critical for us. It's part of our heritage, it's part of our success, and it's part of our DNA.
Atle Vidar will later on show you some great example of this. It's important that we will not copy anyone else. We will make an Orkla journey. When we're doing this, talking a bit and going more into details around the factory base. 103 factories. This is including some of the purchases or the purchases, acquisitions that Peter mentioned before around NP Foods, Anamma Foods, et cetera, and [uncertain]. It's not including some of the plants we divested as part of exiting Russia, but it leads up to 103 factories. This has been, of course, the natural way of adding capacity and complexity through acquisitions. It's fair to say that we have not done any big structural changes for quite some time, which has really grown our footprint. Where are we today? We have many small factories, that's for sure.
Everything from four people up to 400. As Peter mentioned, we have several factories producing the same products like several ketchup factories, five potato chip factories, seven ready-meal factories. We have not managed well enough to source across different geographies and across different markets. Of course, this has led into a situation where we actually have a quite significant underutilization of our total base. Then also, as I mentioned earlier, having this wide footprint, also the investments that goes into this footprint has been a bit scattered and maybe not focusing enough on innovation, more focusing in the past of sort of maintaining our footprint. Last but not least, we also see great variation of cost. We, for example, have up to five times the difference between for labor costs in factories producing almost the same thing within our footprint.
There were question earlier, what are you doing around this? I'd like to draw your attention to the left-hand side. These are sites that we have communicated or already closed. We have closed 12 of these factories, and we have communicated that we will close another seven. If you average this out a bit, we are operating right now at two factories per quarter, eight per year. To put this into a more historic perspective, from 2005 to 2013, we actually closed eight factories. It took us eight years to close eight factories. That's basically what we are running now in one year. We feel very confident with the methodology and the business cases and the way we are operating this.
If I should make any prediction going forward, My view is that we will continue around this pace, one to three factories, throughout 2015, 2016, and well into 2017. By then, we have actually closed down or reduced number of factories with over 20%. It's really a game changer in terms of how we operate and how we work with our footprint. What's our basic idea when we do this? Our idea is to go to center of excellences per category or per product line, really focus on building strong, capable, and competent factories. This will, of course, require a greater internal sourcing, being able to share production capacity across geographies. By doing this, we think and believe that it will allow us to have a better capital allocation in our footprint due to the fact that we have reduced number of factories.
I'd like to give you some examples here. This talks about herring. We had a factory in Finland, and we saw a potential along the lines of creating center of excellences with moving this production into our factory in Kungshamn in Sweden, really consolidating the footprint. This is one of the 12 cases that we actually already closed. By doing this, we managed to take out 80% of the total fixed cost, and we did not only sort of move the jars from the Finnish markets into the Swedish production facility, we also took the opportunity to streamline and simplify the stock keeping units, the SKUs. We saw an EBIT effect here of NOK 15 million from one example. We also have a pretty wide footprint in terms of warehouses. We have 100+ warehouses, where 70 of them are in the Nordics or Scandinavia.
By the way, this is today's geography lesson. This is actually Denmark. You have on the far left, you have Jylland, and on the right you have Copenhagen. We have five warehouses across Orkla Health, Orkla Foods, and Orkla Confectionery & Snacks Denmark. We reviewed this setup, and we found that it's better to consolidate it in two logistical points. Also in this process, we evaluated if we should do this ourselves or if we should outsource it. In the end, we outsourced this operation to a service provider, and we had 21 people then moving over and getting a new employment with this service provider. We see an effect of this activity up to a saving of up to NOK 70 million from doing this. Now we're continuing into Norway and Sweden. There is a program and a project ongoing right now.
It's not concluded yet, but we hope to have a final decision before Christmas on how we should move forward. That's what we're doing with our structure. Of course, we have also a lot of improvements to be done with the existing manufacturing base. We have established a central team of experts that are then working together with factory management along standardized tools and methodologies that we have developed with the clear aim of reducing cost and also setting a foundation for continuous improvements. We are running this. We have completed seven projects. These are dedicated factory improvement projects. We have completed seven, we have another five ongoing, and we are scoping more. We have then a portfolio of up to 19 projects. This is something that we have in focus and that we will continue to have in focus.
Maybe it's a bit hard to understand what we're doing, I will give you another example of that. This is a case from a factory we have in Norway, in Bergen. It's producing the Toro brand. These are dry products, like dry soups. In 2013, they had a really horrifying development of the conversion cost per kilo. As you can see on the graph, it was really going through the roof. With the central team teaming up with the local factory team, we set a new organizational structure. We also recalibrated the resource demand needed to produce. We also worked with the more flexible workforce, being able to share and utilize the workforce better. This team delivered great results. They really did a great job.
Not only breaking the curve, they actually are now operating at a lower level than when we started in 2013 in terms of conversion cost per kilo. All in all, we estimate that we will get roughly NOK 60 million out from this activity. Of course, this is tough and somewhat painful processes. We had 50 of our employees leaving the factory, we see us being more competitive now than before. We are also on a journey in terms of our procurement. This is the majority of the NOK 24 billion Peter and myself have talked about. We have over some years now moved into a more centralized setup. By doing this, we have seen that we could improve our improvement rate or reducing our cost by 2.
We are right now having roughly 70% of our spend managed within one team, we see this continuing going forward. The role then of Orkla Group Procurement, this is really to stay close to the categories. What we have done is really to put people working with same categories, working together. We think that this will strengthen our category dimension. Also, of course, it's much easier to develop and implement and deploy best practices. Maybe number three on this graph is the most important. Of course, they continuously need to work with cost out improvements to leverage our spend and also working with price management. Last but not least on this one, I am a strong believer in open innovation, I think there is a lot of activities happening out at our suppliers that we can benefit from by taking in.
Just as an example of this, the work we're doing, this is talking about our spend within 1 category. This is corrugated packaging material. Our spend in Orkla is around NOK 300 million. We have 30 companies buying this across Orkla. What we did was that we took sort of a pan-European approach, consolidating our business, setting up frame agreements, negotiating terms and conditions, cost improvements, also some bonus schemes. We found one supplier that could cover 80% of our needs. This has led into a situation where we can save up to NOK 30 million on EBIT level that will hit us positively, Peter, in 2015 and 2016. I mentioned capabilities, this is critical for us in terms of securing that we are building a stronger and better Orkla. One of the activities is around implementing a production system.
This has striking similarities to the Toyota Production System. Having worked for a Japanese company for many, many years, I know the great value this provides of setting baseline requirements, standardizing ways of working, and also enabling to create and share best practices. We don't have to invent everywhere in the 103 factory landscape. We can do this in a more standardized way. My aim is also to instill a more proactive management around how we operate this and how we push this through to set clear requirements and clear expectations. We're also looking into how we track and follow up performance. First of all, we're implementing a shared set of KPIs that will in turn enable benchmarking. I've been a factory manager myself. I know there are few things that drive you as hard as internal benchmarking.
You simply don't want to be on number 3 or 2 place. You want to be number 1. This has a great effect. We have also implemented one common tool to report and track improvements. I mentioned there is no silver bullet here. There are tons of activities we have done in this system, up to 1,500 different activities targeting improvements across procurement, planning, and logistics. It's really an excellent tool for us to monitor and follow up that we are delivering according to our expectations. Then, rather unique, we had a question around ERP earlier, and here we're actually moving forward to implement one shop floor system to control and monitor our shop floors out in the factory base. It's also happening on the IT side. Our priorities going forward, well, I guess most of you remember this slide. It's the same.
We will continue to work with our organization and evolve that over time. We will continuously work to rationalize our footprint and warehouse structure. We will work with continuous cost improvements throughout our factory base. We are putting more effort. We are centralizing procurement to leverage our spend better. We will strengthen our capabilities as we move forward, really to increase our value realization in terms of taking out cost and operating more efficiently. I'm very confident that we have all the activities that we need to be able to deliver in the years to come. Thank you very much.
Thank you, Johan. Now, Johan, we'll open up for some questions.
Stephen Kusmierczak at Wanger in Chicago. When you look at the factory consolidation, is this just a question really of moving equipment into existing facilities, or should we expect much of an increase in CapEx as you have to build larger facilities to handle consolidated production? The other question is as you move production into, say, one geography, giving the ketchup example, have you done any research? Does it matter to your customers whether their ketchup is coming from? If you're a Finn, do they want Finnish production, or are they okay if it comes out of Norway, for example?
Let me start with the first one. We don't see any significant capital expenditure. Of course, there will be, in certain cases, a need maybe to set up a new factory. Overall, having fairly low utilization installed in our manufacturing footprint, we believe that we can move a lot before we start spending a lot of money on capital expenditure or building new factories. Did I answer your question first?
Yeah.
In terms of the localness, yes, this is of course important for us. I've stressed it, Peter stressed it, and Atle Vidar will stress it further. We are doing these type of evaluations when we are considering our footprint.
We have one.
Preben Haagensen, Carnegie. A short question on your cross-country sourcing.
Yeah.
I know Norway has a lot of very strict rules on bringing foods back and forth.
Yeah
Norway. Do you think it's easier to do this cross-country sourcing outside Norway? Should we expect more impact on your margins in your operations outside Norway than inside Norway?
The simple answer to that question is yes, it's easier to do this within the EU. Of course, we adopt our footprint towards the game rules for duty regimes or whatever there is. We are optimizing along where we could optimize, but I wouldn't say that we will have a lower saving rate in Norway. I think there were savings that could be done there, and some of the recent changes we have done is to actually to consolidate smaller factories in Norway into bigger ones, for example, in Elverum in Norway.
Are there any more questions for Johan? Okay. Thank you, Johan.
Thank you, Mattias.
Now we're moving on to the business areas. I'm very happy to introduce our next speaker. She's the newest member of the management team, but she has almost 20 years of experience from Orkla, various positions within sales and marketing. Here to tell you about Orkla Confectionery & Snacks, Ann-Beth Freuchen.
Thank you, Mattias. At Capital Markets Day in 2013, we were talking about Orkla Confectionery & Snacks being a turnaround with a significant potential. Orkla Confectionery & Snacks was up until 2014 underperforming in Orkla, facing a drop in margins and also a decline in our market shares. It was urgent to turn around our performance within this business area. Now I can gladly tell you from second half 2014, the performance is increasingly performing better, and this particularly delivered by Norway. I'm therefore looking very much forward to sharing with you today the performance in this business area in particular, as the turnaround in Norway has been a piece of work I'm really proud of telling you about today. I'm going to elaborate in the end a bit on the business area going forward for the next years.
So what does Orkla Confectionery & Snacks look like today? Today, we are present in six different geographies, three different countries. We are still present in the three big categories presented here. The big change in this map is that we are now present to a much larger extent in the Baltics by our last acquisition in Latvia. We bought Laima, which is the number 1 iconic chocolate brand in Latvia, together with Selga, which is also giving us a strong foothold in the biscuit category in the Baltics, here Estonia and Latvia. Pretty much we are a strong market leader in all the categories and all the countries, and having very strong position in several of the areas makes this a very healthy business. When it comes to turnover, not so much change since the last two years, but now Norway is still our biggest market.
Therefore, the turnaround I am going to tell you a bit about afterwards has been so extremely important to the performance in this area the last year. We were also telling you a bit about the Baltics becoming a bigger growth driver for us going forward when we met two years ago. Now gladly to tell you that the Baltics is now represented here by 20% of the revenue of the total business area. Also, if you look at the revenue split per category, by far still snacks is our biggest category, but combined with confectionery, by far the biggest two categories that we are working in. Also gladly to tell that those categories at the moment showing the fastest-growing rates amongst the categories that we operate in.
Then someone asked me out here, "What have you been doing for the last two years?" We presented and told and shared with you for two years in 2013 that we were going to make a turnaround focusing on three primary areas. We wanted to get our growth rates going again and increase our market shares. We want to get our cost synergies out, and we wanted to make Baltics a bigger driver for the growth in this business area. What have we been doing? What's the status? The status I can gladly share with you that the organic growth rate running this year is around or just above 2% for the business, the organic growth rate. We have been taking our cost synergies for the last two years, accounting for about 4% of our total cost base.
We have black over red, as Peter were passionately telling you about earlier today in the business area. We made an acquisition of a number 1 iconic brand and a very attractive business in the Latvian market. So far, we are on plan with what we were sharing with you two years ago. So 2014, performance was in decline, and it was extremely urgent to turn things around. Growth and margins were not in line in what the expectations from Orkla was at that time. Then I am glad to show the results here from top line growth, making a big step change after summer last year, and now having growth rates, as I told you, just above 2% first half this year.
The performance has significantly been picked up by the Norwegian turnaround. I would also say very strong performance in Denmark and in Estonia, the Kalev business that we have there. Still, we have markets having big growth challenges, the one I am not mentioning when it comes to performance turnaround. I would like to elaborate a bit on the Norwegian turnaround, as that has been the most important driver for our performance. We had a sharp, and I use the word sharp turnaround, because if you look at the stables in the graph, not very many businesses I think can show growth rates going from minus four to plus six in only one quarter.
Only after one year of the merger, we were delivering growth in the Norwegian market, and that being, again, as I told you, the main driver of our performance improvement in the business area of Orkla Confectionery & Snacks. I'm even more glad to tell you and share with you that the first half sales growth figures is now showing us a growth just below 8% in this company. All this was delivered whilst we're actually integrating three businesses at a very high speed. I would like to share with you how we actually have been doing this. I told you it was urgent. It was very urgent to get the integration going and get the turnaround running at a fast rate. We had to focus on getting the business back on track, and we had three very important top priorities throughout the whole integration period.
We needed to do things rapid, at a high speed, not losing time and not losing more margins. We had to regain our top-line growth. We have to turn around our development in market shares. We have to get cost synergies. You can say quite optimistically so, wanting to do all these three things at the same time at a very high speed. I think I'll show you that we have been successful in doing this. I'll walk you through this one by one. I'm not going to pronounce the company names. Some of you probably know them. They're very Norwegian names. We brought these three companies together to one company, very different of nature, but at the same time sharing a lot in common. All being present in categories, categorized by very high impulse and indulgence.
I think we could say making then Orkla Confectionery & Snacks Norway the natural common home for these three companies. I was talking about speed, and speed was extremely important. I was appointed the CEO in April 2013 for this company, and within 30 days, I had a new management team in place for the new company. Within three months, we pretty much more or less had the whole organization in place. I think very few cases like this can beat us at speed when it comes to organization. We are also very focused on getting common processes aligned to get these three companies delivering growth quickly and not delaying us going forward. As you know, it's probably a soft thing, but moreover, very important, bringing together and building a common culture for these three companies. I was telling you, very different of nature.
Not the least, we had some very tough priorities, and we had to deliver on those immediate priorities at a quick pace. At the same time we're doing all this, never, ever compromising on the day-to-day business going forward. I was telling you, the second priority that we set for our integration was to actually regain our market shares and get our growth rates up at a higher and positive number. As the integration was moving on, this was our focus. We wanted to regain market shares, and that was a tough target as this was a highly competitive category. Increasing competition during the last 5 years in the Norwegian market, both by local players and global players. We just started then as the growth rate, as you could see in the earlier graph, we would start delivering growth mid-year 2014.
At the same time, we started then gaining market shares. The good news was that we were gaining market shares in categories growing at a faster rate than previously. We were contributing to also category growth. I would say three most important things, drivers behind the market share gain, that would be stronger customer relationships as one true bigger company in Norway, increased sales execution, and bigger innovations. On to customers. I think Peter was talking about that, also in his presentation. That has been a key to growth for the Norwegian business. In Norway, the retail market is highly concentrated with only three big retailers. Obviously, we needed to have strong customer relationships in an integration phase to create the growth.
We had to identify who these three, NorgesGruppen, Coop, and REMA 1000, mutual growth drivers, and we had to create more win-win situations than we had been previously as three separate companies. We did this example through category management. This is going to be a quite specific one in the checkout zones. We're quite dominant in the checkout zones. By re-spacing our checkout zones with our biggest customers, increasing sales in a very high margin part of the shop. We also brought in customers in our strategic innovations at an earlier stage, trying to increase and optimize the market fit on the initiatives we're bringing to the market. For NorgesGruppen, which is the largest retailers in Norway, it made NorgesGruppen to increase their market shares in our categories, growing faster than the market in all our categories.
At the same time, we were gaining market shares in those categories in NorgesGruppen. I would say a clear win-win situation was created with the biggest customer in Norway. Moreover, a very big driver for growth in impulse categories like these is sales execution. This is a very powerful set of numbers, and I will elaborate a bit on those. Very early in the integration phase, we decided to set out to bring together two sales forces and creating one powerful sales force. We're combining roughly 300 employees into one sales force. What did that mean? We created a whole new structure in the sales organization. We changed a lot of our managers, replacing them with different and new people. We set some new rules of working, new sets of tools, and new ways of measuring performance.
You can just imagine 300 people going through this change was setting us back a bit. Moreover, we ended up realizing cost synergies accounted for 20% in our cost cut. At the same time, we're actually increasing our number of store visits, as I said, very important to impulse categories, by 25%. This particular action been extremely important to the growth on our core portfolio, which I'm going to show you a little bit later. In addition to the customer relationship side and the sales execution, innovation was key to bring growth forward for the company. You can say having a sales force going through a restructuring that we were actually going through, you should probably wait a bit bringing bigger innovations to the market.
We decided we need to bring innovations to the market at the same time. I forgot my tablets. At the same time, I have to show this, a very particular one. At the same time, the sales force not being fully operative, and that was quite riskful. Anyhow, we did so. I brought you an example from the chocolate segment, the chocolate category being the biggest of our categories in Norway in value. We decided to bring in bigger innovations in the high-value segment, and a highly competitive one as well as Mondelez, our global competitor in confectionery, is very dominant in this area. In Q1 2014, only half a year after we started integrating the businesses, we actually launched the tablet.
Several SKUs, a set of new products, I'm just showing you this, into the market by elaborating and taking brands across categories into the chocolate segment. Polly, which was the biggest brand in Norway, and we also brought some biscuits into the tablet segment. We leveraged on the strong brands that we had in our other categories in this new company. It ended up giving the segment, a growth of 7% on average for the last two years. Last year, us growing by 18%, obviously making us gaining market shares in a very important chocolate segment, standing for 1/3 of the value in chocolate. Secondly, biscuits. We have been the market leader in biscuits in Norway for ages, and the biscuit category being also an important part of our portfolio, has been declining in value for many years in a row.
I think as a market leader, it's your responsibility to actually reignite growth in categories declining. At the same time integrating these businesses, we set out to make new innovation plans to actually reignite the growth, bring back that in a category, both been declining in value, but also been set out for competition in a much more rapid way. Mondelez, our then global competitor, buying biscuit factories across Europe and bringing innovation into the Norwegian marketplace, but giving category no growth. We've reignited growth in the biscuit category. You can see it's amazing numbers that we're actually seeing at the moment. Double digits so far this year, single digit last year, by actually leveraging strong chocolate brands, Kispo, which is a big chocolate brand in Norway, into the biscuit category, increasing frequency and attracting more younger target groups.
Last, I think this has been mentioned several times already today. Our strength lies in our local strong brands and our closeness to our local markets. Saying that, it's also very important that we're actually open up a bit more and getting launches and innovation to travel faster across markets. This will drive synergies, and we will bring value at a higher speed. This is going to be required by us going forward to a much larger extent as we're meeting competitors like Mondelez, and then lastly, Intersnack, who acquired Estrella in the Nordics. I'm therefore showing you here a few examples from the snacks category, as we call it, the salty part of my business, where we brought new launches across Sweden and Norway during quarter one this year at the highest speed on the same platform.
I guess, Johan, that will also help you driving your supply chain structure-
Absolutely
to a more lean level. To add up, growth was definitely on our agenda, being number 2 priority. What happened? This is the strength of the mix of our growth from the last year. In Norway, we actually had a significant growth, I showed you, almost 8% so far this year. This mix in our growth is the strength as only 20% of the growth is driven by the innovations. I just showed you a few examples. 80% of the growth actually coming from what we're calling core portfolio. Here, actually then, revitalizing our old and beautiful brands, and several of them actually growing by double-digit numbers. My last focus area, my third and very important priority, was to get a reversal of our cost development over the last years.
Up until 2013, we were almost close to 26% in fixed cost and percentage points of our turnover. I would say very blunt, a very unacceptable level. We need to reverse the situation, and we've been actually realizing then cost synergies accounting for equivalent 4% of our fixed cost base in Norwegian business, making then fixed cost on a level now at 23.5%, so quite increasingly so, improving our margins by doing this. We've been working on fixed cost in several areas, not only supply chain, but also supply chain. You saw the example from the sales execution, what we did for one common sales force. At the same time, we're working actively on FTEs in all areas of the value chain, also headquarters. To sum up, what are my few reflections on the Norwegian case?
I think I have a couple of reflections since I've been running the turnaround. We definitely have the tools to make our businesses grow, I think also Atle Vidar will conclude on that afterwards. But we have to apply those more consistently across our markets. We have to learn from what we've been doing in Norway. It is fully possible to actually reduce your cost base at the same time you're driving your top line. I think we're going to see more of that also for the years to come in several of my markets. So the future, I see a bright future, I have a few learnings from the turnaround in Norway. We have the tools and the capabilities to reignite growth in categories we're already present in, and we have to apply those more consistently across all our markets.
We need to make big innovations travel faster across our markets, to some extent done very little of the last couple of years. We need to improve sales execution across all markets. These are highly impulse driven, and you can see the effect on the core growth, on the core portfolio growth. I just showed you from the Norwegian case. We have to work on our cost base. Definitely still in several other markets outside Norway, we have some organizational efficiency to take out. But I have also to then support Johan and say that the real step change in our cost base is going to come from supply structure going forward. Lastly, we need to succeed with our last acquisition, as Peter was talking about, NP Foods in Latvia.
We bought a very attractive business and we took it over this spring, so only a few months down the road. Well, we have a very new, strong management team in place. We're going forward with integration plans as set out a few months ago, and there's a big potential there. I think I'm comparing our acquisition in Latvia very much with the acquisition we did in Estonia five years ago, Kalev. You saw the brand in one of the first slides. Our business has been increasingly having a better performance year by year during the five last years, and I'm expecting the same for NP Foods going forward. So I said I see a bright future. Going forward, I'm quite certain that we still are able to increase our performance by mainly focusing on getting our operational plans rolling out across all our markets and get the job done.
Orkla Confectionery & Snacks will still deliver on our targets set ahead. Thank you.
Thank you, Ann-Beth. Are there any questions for Ann-Beth? Preben Rasch-Olsen?
Thank you. Actually, I have several, but I'll try to be as short as possible. It's hard not to suspect that there's some things going on between you and NorgesGruppen prior to 2013, since you mentioned it and since you did so poorly in 2013. I was just wondering what kind of agreements you sort of reached and then started growing again. Also, speaking of NorgesGruppen, because you said sales force have been extremely important for your turnaround, but I believe sales force is now kicked out of NorgesGruppen stores. Will that help you going forward, or will it make it more difficult?
Okay. I'll take one question at a time. Being three companies like we were previously before 2013, when we started integrating the businesses, we were smaller players, and we had a very high competition in several of our categories. Becoming one big company and then getting our competence on a much higher level, made our category management, for instance, or our innovation strategies at a much closer level and closer connected to the customers. In this way, we actually had a better dialogue with NorgesGruppen, with our category insights and all the insights that we were putting into this natural home of Orkla Confectionery & Snacks in Norge. Is that the answer to your first question? The big player. Yes. Secondly, you're asking about merchandisers. I think it's probably known for a lot of the audience is that we actually are not anymore in merchandising our goods in NorgesGruppen.
We still, though, have a great part of our sales force visiting NorgesGruppen. I think the consultancy that each of our sales consultants actually still applies to the shops in NorgesGruppen is still very much important. Learning the frequency of being sold, the goods sold from the shelves, getting the new products in the right place, and getting the right shelfing. We're still visiting NorgesGruppen, still doing a very important job there, but we're not merchandising the goods anymore. No.
Thank you. Just two very quick one. Do you see any changes in consumer behavior in the Nordics? Are people trying to get more healthy, or are they still buying potato chips? The last one is, should we expect your margin to go back up to 16.5%, or are you satisfied with where it is right now?
Okay. It's all in the health, your two questions. Healthy, yes, people are increasingly being focused on health. At the same time, when you're living a very healthy life, you also want a fully indulgent life during the weekend. If you can see the numbers in how the markets are developing, I see across all our markets in confectionery snacks, we're delivering extremely healthy market growth numbers, accounting for between 5% and 8% in all our categories in all our markets, with one exception, which is Finland. Yes, people are increasingly being aware of their health, but at the same time, they really want to indulge with our products. That was the one question. The margins, we set out a target, I think Peter shared with you, two years ago on 16.5%.
We're still working towards that target, maybe also diluted a bit by our last acquisition in Latvia. Yes.
Petter Nystrøm, ABG. Just a follow-up on the cost savings and how you prioritize those savings. Are you seeing those going through the bottom line, or are you more in the process of reinvesting in innovation or driving volumes by cutting prices or increasing marketing? Thanks.
You can see that the margin levels have now turned for Orkla Confectionery & Snacks. Obviously, we're putting some of our cost synergies down to the bottom line. We're also very much focused on reinvesting where we can see growth opportunities. I think there will be a combination of the two going forward. Definitely. The cost structure, yes, will give us growth power.
Hi. Ali Hilali from Ingalls & Snyder. I have a question about commodity prices. We've seen a marked reduction in the last six months in most commodities, sugar, cocoa, et cetera. Can you quantify the effect that's had on your business?
It's a very mixed picture, the commodity picture for us, as we have several big commodities driving our costs. I think, yes, we've been absolutely hit by higher commodity prices in several of our segments. The most important thing that we do is that we're quite close to those numbers and actually work with our price management side to actually, yeah, get our cost side in balance with the prices.
Okay, I have one question from the web. What is the strategy to grow for confectionery? With no presence in Denmark and Sweden and low in Finland and then very high in Estonia, Latvia, and Norway. What is the strategy to grow for confectionery in new markets?
Confectionery is by far one of our largest categories, accounting for 34% of our turnover, our second-largest category. If you look at the market numbers, confectionery as a category as such is by far the biggest market potential in my markets across the board. Therefore, it's extremely important to, of course, develop and make a category of confectionery growing in the existing big markets. At the same time, obviously, this is a big growth opportunity for us going forward to actually enter the confectionery markets in the other countries where we're not present at the moment.
Are there any more questions? Okay, then we thank Ann-Beth. I guess after listening to Ann-Beth, you are very eager to try our confectionery and snacks products. Luckily, there is now a break where we have some product samples outside. We're a bit ahead of schedule. We have a 30-minute break, so we'll be back and starting with the presentations at 2:00 sharp. Please be back in time. Thank you. Okay. Welcome back, everyone. I hope you had a chance to try our products during the break, and we will now start again with the presentations. The next speaker is the CEO of Orkla Home & Personal, Stig E. Nilssen.
Thank you. For the next 20 minutes, I will talk about our track record of growing through acquisitions. I will use some examples to give you insights into how we successfully have been integrated company in the past. As you all know, we have recently acquired the Swedish-based company Cederroth, and I would like to share with you the rationale for that acquisition. Let me first give you a short update on the Orkla Home & Personal business area.
Try this.
Okay. This is our portfolio of businesses. We have number one position in the main categories that we are operating in. Our markets are, in general, stable, with high margin, and we experience strong brand loyalty. I will come back with examples from both Lilleborg and Orkla Health. I will come back with example for both Lilleborg and Orkla Health later in this presentation, and I will also give you the background for the new unit, Orkla House Care. As you can see from this figure, we have a heavy exposure in the Nordic countries, Norway in particular, with 63% of the revenues. We have looked for a way to balance this exposure. That has been a part of the rationale for the acquisition that you will hear more about soon. On the right-hand side of the slide, you can see the revenue split per category.
I think we have some technical problems. Okay. Revenues in Orkla Home & Personal have increased from NOK 3.5 billion in 2009 to NOK 5 billion in 2014, representing an average growth on 7%. This has been achieved by combining organic growth with acquisitions and add-ons. Average organic growth in the same period has been approximately 2%. We have achieved this in a highly competitive market, with strong competition from global competitors. At the same time, we have been taking care of integration work, we have been focusing on own brands, and we have been slimming the portfolio. My main focus in the last strategy period has been to seek additional growth in the Nordic countries with key focus outside Norway. We have been looking for new categories, new channels, and growth opportunities in new markets.
As many of you remember, that was one of the key messages in the Capital Market Day in September 2013. With the recent add-ons and with the acquisition of Cederroth, we will now deliver on this strategy. We will fill many of the white spots you see on this slide. The Nordics will still be our main markets, but as Petter also mentioned in his presentation, we will look for growth opportunities internationally with key brands and in selected markets. It is demanding to generate significant growth only with innovation and new product launches. I think it's very important to find the right balance between organic growth and structural growth. We have the necessary critical mass in the Nordics to integrate companies and to realize synergies.
It's important for you to remember that a successful acquisition always start with a strong local market position. You will now see three examples which have increased our presence in new categories and in new channels. Our experience shows that smaller add-ons are very attractive and often profitable already from day one. They can be taken in existing business almost with no additional fixed costs, which means that the contribution margin after advertising almost goes straight down to the bottom line. Orkla Health has a good track record with such add-ons. The latest three add-ons, Gevita, Pharma-Vinci, and HUSK, have strengthened our position outside the grocery channel, giving us a stronger foothold in the very interesting pharmacy channel. The aging population causes strong growth in categories like gut health and joint health, and these add-ons have given us a strong position in these growing categories.
In addition, Orkla Health has also bought a stake in Proteinfabrikken, 17%, which is a Norwegian e-commerce web-based company in the fast-growing sports nutrition market. This is a part of our strategy to give us more insights and expertise in the fast-moving digital universe. We have the option to buy more shares in that company, and we will evaluate that in the next few months. Let us now look at a bigger acquisition, Jordan. In 2012, we acquired Jordan, adding approximately NOK 1.9 billion to Home & Personal. We decided to split the company, taking the Home & Personal Care part in Jordan into Lilleborg, and then establish a new and dedicated unit only focusing on the painting tools, which is now called Orkla House Care. With Orkla House Care, we have a strong Nordic position in the do-it-yourself channels.
In addition, we attained new customer and channel insights, which can be very beneficial also for other Orkla categories, like cleaning for home care or Confectionery & Snacks. For Home & Personal Care, the integration into Lilleborg was a great success. Let us now look into this case. With the acquisition of Jordan, Lilleborg attained a new international platform and also a complementary portfolio in Norway. Especially was this important in oral care, combining the toothbrushes in Jordan with the toothpaste in Lilleborg. Jordan has some very interesting position in the international market, especially with the kids concept, which you can see also there on the right-hand side of the slide up in the left corner. This was a case with significant synergy potential. Let us now look at the result. The integration was very successful. The synergies were higher, and they were realized faster than expected.
I believe also that Lilleborg has gained useful experience from the integration, which will be helpful for us when we are starting the integration with Cederroth. The number of SKUs was reduced, giving us a more focused and effective portfolio. With this, we managed to take out more than NOK 60 million in total synergies, inclusive NOK 10 million in purchasing savings. The sales in the Nordics are growing, and we see a very strong development internationally with more than 13% in average growth the last two years. Let us now look at the Cederroth case. I am really happy that the competition authorities approved the transaction in the end of August. That was under the condition that the two brands, Asan and Allévo, are sold. These two brands represent approximately 8% of the turnover, with a slightly higher margin than average.
When these two brands are sold, the total purchase price will also be reduced. As Petter mentioned, I think that it's important, the acquisition of Cederroth will really strengthen Orkla's position as one as the leading Nordic player in health and Home & Personal Care products in the Nordics. We will also get access to a new category, wound care. As you can see from this slide, the revenues in Cederroth in Sweden are 43%, and it's 8% in Norway. That give a very good balance to the strong position we have with Lilleborg and Orkla Health in Norway. I think it's fair to say that Cederroth is a perfect match for Orkla Home & Personal. The integration work has already started. A new CEO and CFO was in place already on closing day, and we have ambitious plans in the months to come.
We have put together an experienced integration team, also with support from Johan and his central supply chain team. What is going to happen? The home and personal care part in Cederroth will go into Lilleborg, and the health part of Cederroth will go into Orkla Health. Wound care is today a separate category in Cederroth, and we will use the next few months to evaluate how to organize this best in the future. There are two things I would like to emphasize on this slide. Firstly, we have achieved the reduced exposure to the Norwegian market that we were looking for, going from 64% to 50%. Secondly, we have got a much stronger local setup in our other home markets. You can see the development on the left-hand side on the slide. For example, in Sweden, we more or less triple the turnover.
We will be a major player with NOK 1.1 billion in turnover, and that is a good starting point for further growth. As you have just seen, Cederroth, we will reduce our exposure to the Norwegian market. We will also reduce our reliance to the grocery channel in Norway. The share is going from 45% to 35%. Down at the right side, you will see how our presence in the pharmacy will be in all the markets. After integrating Cederroth, we will have a stronger portfolio and we will be a very interesting partner. In our baskets, we will have a great number of brands in wound care, in oral care, skin care, dietary supplements, sports nutrition, and so on. We will be a very interesting partner for the fast-growing pharmacy channel in the Nordic region.
In Sweden, Denmark, and Finland, we will establish common go-to-market organizations, working close with central marketing in Orkla Health and in Lilleborg. This setup will realize synergies both on the top line and also the cost side, in common sales force, key account management, category management, also in systems and support functions. We see a substantial value creation opportunity with Cederroth case. On the top line, we will, as mentioned before, attain critical mass on the go-to-market capability. Innovation is key driver to accelerate growth. Together, the joint organization will have better teams and we will improve their competence. With stronger local consumer insights and trade insights, we want to be an attractive alternative towards the big global players. Cederroth will give us access to new markets and channels. For example, we see a lot of cross-sales alternatives already from day one.
The cost synergies will come from joining the organization in a more efficient setup, as well as procurement and supply chain improvements. Total synergy potential will be minimum NOK 70 million to NOK 80 million, and the main part will come in 2017. To sum up, our track record demonstrate ability to grow through acquisition, while at the same time maintaining a positive development on the existing business. We see many growth opportunities also in the future with new categories, new channels in new markets, both organic and structural. The acquisition of Cederroth will give us a unique platform for future growth. Sweden will be a key value driver. I believe that we have a solid base for future growth within a broad range of categories and markets. Thank you.
Thank you, Stig. Now we open up for some Q&A. Here we have a question.
I would like to know what multiple you paid for the Jordan acquisition, and what would that multiple be today after you've had your synergies?
I-
On the EBIT basis.
Yeah. I don't have that exact figures today. We have to come back to that later. Sorry.
Only two questions this time, I promise. Do you see any chance of gaining any market share in home personal outside of Norway in the other Scandinavian markets for the coming years? How is Aquaderm doing right now?
Sorry, what was the first question?
If you can see any chance of getting higher market shares on home personal outside Norway in the coming years for you?
Yes, definitely. With Cederroth, we will increase our market share. I don't think I understand your question. What?
On Home & Personal? With Cederroth?
You said home care? Just to be clear. Cederroth, they are present in personal care, in home care, and in wound care. With that acquisition, we will have a strong position in these three categories.
In Sweden.
In Sweden. They are also present in Finland and in Denmark.
What will the market shares be in those markets after the acquisition of Cederroth?
I don't have the exact figures for each market.
Oh.
Aquaderm is, to answer that question, I think Aquaderm is moving in the right direction. We are taking step by step, and the market share is constantly moving. I think it's fair to say that this is not something you win on the short term. We are up there against playing with big global players, but we are moving in the right direction, and we are taking market shares for every month.
Kurt Jønskredager, Nordea Markets. Just a question, which is more short-term related. Can you say anything about the impact of the extraordinary weak Norwegian krone on your purchases and how that influenced your margins presently and going forward?
Yeah, it's a good question. It's a challenge. As you know, we have a lot of products that we also buy from outside the Nordic region. It's a challenge. We work hard with, as Ann-Beth also said, with price management. On short term, it's a challenge to compensate for the currency effects. On longer term, we will come back and be fine.
Thank you. Magnus Berg, ABG Securities. You described some quite large cost synergies you foresee due to the Cederroth acquisition. I saw you guiding for the 2017, the old target was 17.5% margin. Given that you expect some dilutive effects due to the Cederroth acquisition, do you think that it will be able to, or could you see even higher margin when you see these cost synergies? Also, how would you prioritize market shares compared to margins going forward?
To take the first question first, as mentioned, also Petter mentioned, we will have a dilution effect the first year. When we have been integrating Cederroth, we will be back on track on the same level as we are today. If we succeed, maybe we will be even higher at the level we are today. That was the answer on the first question. The second question, I don't think I really understand that.
Yeah. It was related to the first one, also how you view market share compared to margins in general going forward. If you're looking at pricing to drive sales, et cetera, compared to
I think that strategy can differ from category to category, to market to market. Of course, market share is very important for us to keep a strong market position. I think both are important. I think it's difficult to answer clear on that.
Yeah, it's Petter from ABG. How easy is it to adjust prices versus your customers when you have these FX movements? Thanks.
I think it's fair to say that it's never easy to increase prices with the customer. I think when things happen, they are in the same situation. They also buy products from Eastern, from China, from Asia. I think they understand the position we are in some categories. Some categories it will be easy, other it's more a challenge. For example, our textile business, where everybody knows that we are buying everything external from Asia, I think it's easy to get understanding for a price increase.
Ole Martin Westgaard from DNB Markets. A question on the performance. In the first half, more or less all segments in Orkla was on track on the organic growth targets, while Home & Personal was sort of lagging behind. Can you comment a bit more on what was the specific reasons for this, and what should we expect going forward?
Yes. I think it's the right observation. I think especially Orkla Health has a very tough start on this year. It's many reasons for that. One reason, they had a very strong December, piping a lot of products for campaigns in January, February. Also they closed one factory, business to business factory at Leknes on low-margin products. Also they were facing a challenging market in weight management, traditional weight management products for the Nutrilett business. That was something both in Norway and Sweden. I think that was the main reason. House Care had also some challenges due to a wet spring, the painting equipment. The other company was doing quite good. Two main reasons, two companies which was behind on both top and bottom line.
I don't think it's the right timing to guide for the next quarters. I think both units are doing what they can to be back on track.
Any further questions for Stig? Okay, thank you then, Stig.
Thank you.
Now it's time to move on to Orkla Food Ingredients.
Orkla Food Ingredients is presenting for the first time on Investor Day today, the presenter is no rookie. He has been in Orkla for over 30 years. Please welcome the CEO of Orkla Food Ingredients, Pål Eikeland.
Thank you, Mattias. Good afternoon, everybody. My responsibility in Orkla is Orkla Food Ingredients, which differs somewhat to the other business areas by the fact that we are primarily a business-to-business company. 80% of our business is business-to-business, and 20% is business to consumer. I will, during my presentation here today, give you an overview of our operation, business model, value creation thinking, and strategy. Orkla Food Ingredients as a business area was founded in 1999, although most of our companies have a much longer history. Today, we have 45 companies in 22 countries, consisting of both what we call category companies or production companies and sales and distribution companies. I will return to that later in my presentation because this is an important element in our business model and value creation thinking.
Within bakery ingredients, we are clear market leaders in the Nordic with more than 50% market share. We also have some very interesting startup positions outside the Nordic, primarily in sales and distribution in Central Eastern Europe, within one of our categories, improver and mixes, and within ice cream ingredients. Going back seven years, we had 75% of our turnover in Nordics, 25% outside. Today, we have 55% our turnover in the Nordics and 45% outside. Although we are still growing in the Nordics, we grow much faster in rest of Europe. Our main customer segment is the bakeries, where we sell bakery ingredients and solutions to artisan bakeries, to industrial bakeries, and to in-store bakeries, and this stands for 72% our total turnover. We sell ice cream ingredients primarily to ice cream shops. That accounts for 8% of our total turnover.
Within ice cream ingredients, we are growing very fast at the moment. We are clear market leaders in Scandinavia. We are actually also market leader here in U.K., and we entered the German market earlier this year through the acquisition of Eisunion. We have the retail side of our business. In our retail side, we are primarily in Scandinavia, but also for some historical reasons, in Romania. Our main brands are in yeast, margarine, butter blends, marzipan, and bakery products. In this part of our business, we are, of course, cooperating very closely with the three other business areas, both when it comes to taking our synergies, but also when it comes to best practice and knowledge. In the rest of my presentation, I will concentrate on the business-to-business part of Orkla Food Ingredients.
Just to give you a short overview of what our offering is from a product perspective. We sell a lot of ingredients, but our goal is to come up with added value solutions for our customers. Our business is not about single ingredients, it's about expertise in end products, in consumer products. The same goes for our confectionery products. Again, a lot of ingredients, but the name of the game is to come up with solutions that increase our customers' profit, that makes them more competitive. This is what we sell in ice cream products, a lot of lovely products here. Here we actually sell everything you need to run an ice cream shop except the ice cream. It's too much competition on the ice cream side.
As previously stated, Orkla Food Ingredients started up in 1999, which means that we are still quite young as a company, still a teenager, still learning, but also with a teenager curiosity for growth and willingness to grow. Over the last 16 years, we have managed an average annual growth rate of 10% over 16 years. The startup position in 1999, that was three companies, Dragsbæk in Denmark, Odense in Denmark, and Eden in Norway, with approximately NOK 1 billion in turnover. Since then, we have grown both organically and structurally to where we are today, a business unit with NOK 6.5 billion in turnover in 2014. The big question is, of course, how much of this growth has been structural and how much has been organic?
From this picture, you might get the impression that most of the growth has been structural, but in reality, it is 50/50. It's 50% structural growth and 50% organic growth. One of the main reasons for the rather high organic growth over the years is our business model, which gives us the opportunity to build organic growth platforms through acquisitions. I will try to explain that. In Orkla Food Ingredients, we have been consistent to our business model over the last 16 years. On the one side, we have category companies, production companies, with deep product knowhow, deep application knowhow, doing innovations, doing recipe optimization, and so on. On the other side, we have sales and distribution companies being very close to the local market, to the local customers, really understanding what is happening in the local marketplace, acting swiftly to changes in the market.
We believe that in the interaction between our category companies and sales and distribution companies, there we can create our biggest competitive advantage. Input from our sales and distribution companies to our category companies can help them making better products, and by making better products, they are strengthening both themselves and our sales and distribution companies. Therefore, we focus a lot on what we call flow of products and flow of knowledge in Orkla Food Ingredients. At the moment, we have close to NOK 1 billion in turnover going from our category companies to our sales and distribution companies. In addition, as previously mentioned, when we are doing acquisitions, when we are buying companies, it is a great opportunity for us to create organic growth platforms.
When we are buying a category company, of course, that is a great opportunity to strengthen the product offering in our sales and distribution companies. When we are buying a sales and distribution company, of course, that is a great opportunity for our category companies to enter new markets, to get new distribution. We are the only one on the European bakery ingredients market and on the European ice cream ingredients market which operate with this dual model, and we think it gives us a competitive advantage on several dimensions. Our sales and distribution companies are stronger than national wholesalers due to the fact that they have an open access to product expertise, to product development, and to application resources in our category companies. Our category companies are stronger, more profitable than national producers by scale in production in combination with a close cooperation with our sales and distribution companies.
We also differ from the big international product specialists by being closer to the local markets, to the local customers, and by hopefully being better on cooperating between companies and business units. To make this business model work, to make this synergy thinking work, we have to have leaders that really understand this setting. We are decentralized organized in a multi-local model, and we also build up resources close to where the decisions are taken, close to the customer and close to the market. In such a setting, we have to have leaders that can manage and balance two hats, both the company hat and the Orkla Food Ingredients hats.
Therefore, we focus a lot on what we call people and passion, having the right people, clarifying roles and responsibilities to leaders, so that we together can make it a competitive advantage how we both utilize taking out synergies and local nearness. To put this into perspective, we have defined three very clear value creation arenas in Orkla Food Ingredients, which we as leaders have to handle. The first one is profitable growth in the companies. That is the most important one and the fundament for profitable growth in OFI. We have agreed growth plans for all our companies where we focus on three elements. Where are we? Really understanding the basic of the company. Where do we want to go?
Profit ambition, growth ambition, growth direction, priorities, and how to get there, concrete action plans to be implemented in combination with an active leadership and organizational process, focusing on, do we have the right people, teams, cultures, and knowledge to accomplish the plan? The second value creation arena, we have been talking about that. That is realizing synergies, our two flows, flow of products and flow of knowledge, meaning sharing best practice and cross-selling, cross-buying between our category companies and sales and distribution companies to improve our organic growth rate. The third value creation arena is structural growth, strengthening the total business system by opening up new markets to our category companies when we are doing acquisitions in the sales and distribution area, and by strengthening our product portfolio in our sales and distribution companies when we are doing acquisition in the category area.
As already mentioned, we have for the last 16 years managed to have a top-line growth of 10%. During the two, three last year, our main focus has been on the contribution margin and profit development. Partly by gradually moving our product portfolio towards higher margin product, and partly by being better on coming up with added value solutions for our customers. Orkla Food Ingredients has a lower EBIT margin than the three other business areas in Orkla, but we are also less capital intensive. Therefore, an important KPI for Food Ingredients is return on capital employed. Our return on capital employed has increased from 10% in 2012 to 13% in 2015, and we have a clear ambition to increase it further in the coming years.
To try to sum up, I would say that Orkla Food Ingredients is a growth machine with a 10% growth every year since 1999, growing both structurally and organically. We think we have a proven business model and value creation thinking, which gives us a lot of opportunities for further growth, both in the Nordics but especially outside the Nordics. We will continue to focus on contribution margin and profit development with return on capital employed as an important KPI for improvement. Thank you very much.
Thank you, Pål. Now Pål will be happy to answer any questions.
Daniel Johansson with Fondsfinans in Oslo. Thanks for a very interesting presentation about this perhaps somewhat overlooked business that you're running. Just wanted to ask one question about impacts of raw materials. Right now, we have a raw material cycle that seems to be slightly more beneficial for you. I wanted to understand what are the raw materials impact here? When you're talking about improving the gross margins or gross contribution, how do you do that and what are the critical points there? Thank you.
Of course, raw material going up and down for us is extremely important, and we are following this very closely and also is very occupied with price management. I would say that a lot of our contract with customers is back to back. There we have most of our customers are very well into what the raw material prices are. There we have no effect at all. At the moment, for the two, three last years, we have been running with a positive effect price towards raw material prices between NOK 30 million and NOK 40 million a year. Our focus is more that we must have a positive effect from price management, and that is what we are focusing on.
On acquisitions in the bakery business, who are you competing against largely? Is this CSM? And are these run in auctions or?
No. I would say that our acquisition strategy is totally different from what you see from the three other business areas. We are normally doing smaller add-ons between NOK 50 million and up to NOK 300 million. Our strategy is more to get in contact with the companies, sit down, talk with the management, understand the business, get to know the management and so on, and often it's family businesses. We have the opportunity to really get to know the business we are buying before we are doing the acquisition. That's normally our acquisition strategy. Of course, there are sometimes we have to do in another way, but that's the way we like to do it. We know a lot of businesses around, businesses which we maybe have been a supplier, been a customer, and so on over the years, and we know them very well.
We have at the moment a list of five to 10 companies which we are looking into for the next two, three years. That process for us is often 18-24 months, really getting to know the companies, and we will continue with that kind of add-ons. We don't foresee any big acquisitions. There are a couple of big companies out there, which maybe can be an opportunity in the future, but they are also, at the moment, very difficult to obtain.
Can you talk a bit more about the whole artisanal bakery growth and maybe where you're seeing the fastest growth, which geographies, how much of that has played out already?
Yeah. This is a rather stable market. The artisan is going somewhat down. The industrial has gone somewhat up. We see also a different trend, that artisan is coming back in the Nordics companies. Industrial bakeries, because we are a supplier, then you have the industrial bakeries, then you have the retail side. We saw that at the moment, industrial bakeries is in the difficult situation. The retail side is going to the suppliers for solutions, and the industrial bakeries ends up as a producer. Of course, their margin is squeezed at the moment. Our market share is higher on the artisan side than on the industrial side, but it's growing on the industrial side at the moment. I don't know if that answered your question.
Raymond?
Yeah. One question on the acquisitions again. Is there a rule of thumb how much synergies you're getting out on your acquisitions as a percentage of revenue or as a percentage of cost base?
One more time, please.
The synergy you are getting out on average on your acquisitions, do you have a rule of thumb as a percentage of revenues or a percentage of cost base?
Most of our acquisition, as I said, is between NOK 100 million or NOK 50 million or NOK 250 million, with 2%-3% margin. We see several value creation opportunities. Let me take one example. We bought a company in Slovakia, Ekva, a sales and distribution company. There the biggest value creation for us was to get NOK 100 million of our products through that system over two, three years. That was the biggest value creation. When we are buying sales and distribution in Central and Eastern Europe, we see that they are on a very low level, typical wholesalers, just buying companies, buying products and selling products. In Scandinavia, we have our sales and distribution companies which sell solutions. We try over time to be more and more professional with these wholesalers in Central Eastern Europe. We are moving in the right direction, but that's a longer value creation history.
Any further questions? Okay. Thank you, Pål . Now it's time for me to introduce the last business area presenting here today. It's also the largest business area in Orkla. Here to give you some more insight in the world of pizzas and pickles and porridge, the CEO of Orkla Foods, Atle Vidar Nagel Johansen.
Thank you for a wonderful introduction, Mattias. Good afternoon, everybody. Orkla Foods holds a much position in all our core markets. Those markets are what you, in general, will call mature. This presentation is about how we work to create growth in those mature markets. I can promise you great stories on pizza, pickles, and porridge, and Paulúns and more, Mattias. First, let me give you an update on the current status and performance of Orkla Foods. On your left-hand side, you see the composition of our revenues by market. As you can see, Norway and Sweden are still our largest markets, and 85% of revenues comes from the Nordic area. Outside the Nordics, we have some very interesting positions that we should develop further. Especially India is a strong contributor to the growth in Orkla Foods.
On your right-hand side, you see the composition of revenues by product categories. We are working in many categories in our core markets. We are market leader and have very strong position in all those categories, and we prefer to work in categories with local consumer preferences. Meals and pizza combined is about one-third of the revenues and combined is the largest category we have. I was here two years back, I presented our business model now, so it's a brief recap for those who were here. Local taste preferences differ between markets. Food habits differ between markets and so does values and consideration in various aspects. Our business model build very strongly on developing the local brands with the local heritage in all our markets. We have brands like Abba going back to 1838 and Beauvais going back to 1850.
Our competitive edge is to have the local consumer insights and superior trade and customer insights compared to the multinationals. You probably heard the word local enough this afternoon, I will continue. We exploit the scale advantages, which we have both nationally and across all markets. The national synergies are often much more significant than most people believe. We see it in advertising, we see it in field sales forces, and we see it in back office and those kind of functions. Those synergies are mostly national in nature. With our new and more optimized model that Johan Clarin has given a lecture in, we also see that there are much more synergies to be realized across the markets we operate in. We consistently work with creating value from organic growth, we also consistently work with creating value from structural growth.
Within the framework of the local more optimized model, we always look for acquisitions where we can create excess returns on capital, and that can give us a stronger platform for growth in the future and deliver on the key trends. This rather small acquisitions of Anamma and Bioquelle gives us positions in vegetarian products and in organic products in a much better way. Post the acquisition of Rieber & Søn, Orkla Foods has created one operating company in each of the markets where we operate, resulting in more effective and more cost-efficient operations. After this successful divestments of Orkla Brands Russia and Delecta in Poland, we have incorporated the international food companies into Orkla Foods, creating a leaner overhead structure and making it easier and frictionless to cooperate and realize synergy across our markets in the food area. I mentioned the Rieber & Søn acquisition.
One of the key priorities we did in 2013 and 2014 was to realize synergies from this acquisition. This was a huge synergy case. This graph shows the rate of the synergies, the run rate of the synergies realized, which means the 12 months speed, in a way, from the actions we have carried through. We have announced a run rate target of NOK 250 million-NOK 300 million a year, and as you can see, we are currently performing at NOK 350 million. Maybe also very important to mention is that we still continue to see opportunities to realize synergies from this acquisition that we didn't see before. Like that you may sort of saw on Johan Clarin's slide, we are now closing down two factories in Norway and merging them with a rather big Elverum plant, which came in from Rieber.
We are closing down one Finnish plant and relocating production there to Örebro plant in Sweden and the Frödinge plant in Sweden and the last one came from Rieber & Søn. This kind of consideration was not there when we acquired Rieber & Søn. Still we can create value from this. It was the button. Sorry about that. To the current performance. After having heavily concentrating on taking out synergies in 2013 and 2014, I'm now happy to see that we are back on track when it comes to organic growth in 2015. As you can see, also the margins are increasing in 2015 as synergies are realized. I may remind you that just the consolidation of Rieber & Søn lowered the operating margin by 1.5-2 percentage points.
With the exception of 2013, Orkla Foods has produced underlying growth in profits in all the years on this chart. I've so far taken you through the current business model and the current status of Orkla Foods and our competitive advantages. In this section of the presentation, I will talk about how we execute on this business model to successfully create organic growth. As every FMCG company, we need to grow together with both consumers and customers to succeed. We need to deliver on key consumer trends and needs and at the same time deliver on our customer needs. These five words describes the key trends we see in today market. It's about healthy living, maybe the strongest trend we see around. It's about convenience, making it simpler for the consumers all the time. It's about indulgence, as Ann-Beth talked about, treating yourself.
It's about localness, more and more preferring locally produced products, and it's about social responsibility, being a conscious and responsible producer and a social and responsible consumer. These trends are something that all players in the market need to address and need to exploit. These trends also to some extent differ between markets in strength and in consciousness. With our business model, we are better positioned to exploit those different from market to market. I will show you a few examples on that. Let's start with the issue of palm oil that also Peter mentioned. In Sweden, this case is from Norway, but in Sweden, we see that consumers are more and more concerned about vegetarian products and more and more concerned about organic products. In Norway, we see a very strong consciousness on the palm oil issue, both with consumers and with customers.
The reason for this is partly due to health issues with saturated fat and partly due to sustainability issues. Over several years, the Norwegian media has heavily focused on the issues with palm oil in the ingredients of many products. Our brand, Nugatti, which is a bread topping brand, and very tasty, really got a rough treatment in the media from this because it contained palm oil. We were able to quickly respond to this. In fact, we had already started work when this exploded in media some years ago. Believe me, it is not a simple product development task to remove palm oil and replace it with something else, because palm oil adds important attributes to the product. But within just one year, we were able to tell the Norwegian consumers that we had managed to remove all palm oil from our products.
Our products today are clearly marked with, "Do not contain palm oil," in Norway, and the same is, of course, utilized in our communication with consumers and society and customers. We see that our multinational competitors is not acting like this on this issue. Real men eat salad. Well, that is maybe not me. I mentioned in Sweden that the vegetarian trend is really strong. 4% in Sweden of the total population say they are vegetarian, and in the younger target groups, 17% claim they are vegetarian. There is a new word coming out called a flexitarian. That means that you have a rather normal meal pattern, but you deliberately choose to replace at least one meal a week with a vegetarian alternative. In order to meet this trend in Sweden better, Orkla Foods bought Anamma.
Anamma is a, today, rather small company producing and marketing soy-based dinner solutions. With the acquisition of Anamma, Orkla Foods has entered into a new segment, gain new competence that will enable Orkla to develop concepts and products to deliver on the vegetarian trend. Somebody needs to lubricate this button. Then another trend, which is the localness, which is very much playing out. You may say, ironically, the local trend is a global trend. We see it in all markets. Our consumers feel more confident eating products that are produced locally. The customers are also focusing quite heavily on local production. Even politicians are more and more encouraging inhabitants to buy the local products.
This illustration shows various signs and symbols used in the different markets to underline that these products are locally produced. As you may have guessed, we are perfectly positioned to take out this in the marketplace. In the Norwegian market, you see the famous brand, Grandiosa there. We put on a stamp saying, "This is only Norwegian meat and cheese." By the way, it contains no palm oil, as opposed to many competitors. In Sweden, we highlight that the Swedish classical hush, that is pyttipanna for those who understand that word, contains 100% Swedish meat and potatoes. Furthermore, in the Finnish market, we highlight that our pickled vegetables are locally sourced and produced. In Estonia, we see increase in sales when we have chosen to more and more promote the local brand, Põltsamaa. Good.
We have now seen a few examples of how Orkla Foods is well positioned to adapt to local trends and to winning competition. Now a few words on cooperation with consumers. In our highly concentrated markets, Peter mentioned three main customers in Norway, four main customers in Sweden, and so on. We see a demand from retailers to make unique products for them, and the purpose is, of course, to enable them to differentiate in their competition. On this picture we show, which is from Denmark, by the way, how we have executed this. We have a dedicated brand for Coop Danmark, called Go Like. Our brand. They have an exclusive right to use it. In the middle, you see some of the products we have in other markets, dry sauces and soups and things like that, exclusively for one year, delivered to Coop Danmark.
On the right-hand side for you, we have the Asian brand, Mrs. Cheng, exclusively delivered in Dansk Supermarked, a big Danish customer. This is how we can use our flexibility to deliver better on customer demands. Johan is not always fan of that, but that's a different discussion. Now we have seen some examples on how our local approach gives us opportunities to win in competition. In the next section, I will talk about how we need to create growth, both within the core portfolio of what we have and launch new products into new categories. Experience shows us, and some of us have some experience, that we need to do both those things to be able to create growth. This graph shows in a conceptualized way how we work with this. We develop the existing offers, developing new offers.
We take the existing offers from existing markets into new markets. I will now show you a few examples of how we do this in practice. That always is better. Pizza is an extremely important category for Orkla Foods, and in Norway, we have the biggest per capita consumption of pizzas in the world. An average Norwegian eats eight frozen pizzas a year, double this amount over Sweden, for instance. However, from 1998 to 2015, we have managed to double the value in this category, even though it was the highest per capita consumption in the world. Last year and year to date 2015, as you see on your left-hand side, the market is still growing, now by 4%. You see also how the new launch in this market comes on top of the existing categories and helps creating growth.
This is a highly innovation-intensive and launch-intensive category. If this works now, I will show the categories coming up, the news this year. Orkla Foods still aims to grow this category a lot by executing our strong innovation programs. On your left-hand side, you see the products we have launched already this year. In the main brands, Grandiosa and Big One, last with the Californian-style pizza under the Big One brand. These days, we are rolling out three more variants on our homemade range, very successfully so. Pizza Boccheria aiming to take a share of the growing Italian style market. The Pizza Boccheria is a new brand to us and is done in cooperation with the biggest Norwegian customer. Great-tasting products.
Now over to pickles, which I suspect that some of you may think is a boring category, maybe you think it's yesterday's, and so on. Well, I can tell you it's not. It's an exciting category. What we did with pickles in Finland, as we have done in some other markets, is that we put on a lid that makes the jar much, much more easier to open. Many people have trouble with really opening this, you all know that you have your tricks with forks and knives and so on. This makes it much, much easier to open. This category has in Finland grown by 6.3% the last 12 months. Our main product, the Felix Maku, has grown 20% in a boring category like pickles. We have never seen a consumer response like this in Finland.
Maybe that doesn't tell you much, we have a very, very many consumer praises coming to us unprompted. This show you how pretty clever innovation can make those categories growth, even in the categories that we consider dull or whatever you like to call it. That was about growing the core and how we work with that. Now we go into new categories. In 2010, we launched a new health concept under the Paulúns brand in Sweden, together with the nutritionist Fredrik Paulún. Since this launch, the annual growth from this brand has been 50%, five zero. Our new target now is to quadruple this brand by 2018. We will of course continue to develop the current categories within breakfast cereals, mueslis, juices, smoothies, and things like that. On top of that, we are entering new categories all the time with this brand.
We have launched very successfully a range of Paulúns' chilled ready-to-eat meals. Now we enter the porridge market with this super porridge containing only ingredients that is good for you. One and a half minute in microwave, you have a delicious meal that is really healthy. It also delivers on the convenience trend. Now to Denmark, where we have the brand Pastella, that's the market-leading brand within fresh pasta in Denmark. After a period of strong growth up until 2011, we saw a few years of a strong decline taken by the carb focus. Through consumer research, we have received many times that mothers, especially mothers and fathers, want their children to eat more vegetables. Then we thought, can we embed some vegetables into the pasta and make it a much more healthy meal and deliver on this need?
In January this year, after two year of really challenging product development work, Orkla launched what we now call Grøntsagsbånd or a vegetable pasta in Denmark. It's a fresh pasta with 40% vegetables embedded inside. We have not seen pasta like that in any other market where we operate. This launch has reversed the negative trend in this category. Year to date, the category itself, I mean, the pasta category itself, fresh pasta has grown by 14% after years of decline. Our brand Pastella has grown by 36%. Part of the trick is, of course, that it contains vegetable without tasting much vegetables, because kids don't want things to taste like vegetables. At least not my kids. I forgot to mention, it's only one minute in boiling water, it also delivers on convenience.
This insight that parents want their kids to eat more vegetables is, of course, valid across markets. What we now do is launching these pasta products in all our core markets. Sweden, Norway, Finland, coming on stream now, and we have also experienced strong interest for customers outside the Nordics, Holland, U.K., and other European markets. Another way of creating growth in our so-called mature markets is to utilize the professional capabilities in our go-to market organization. We have huge sales forces. We have very professional sales forces in all the core markets. As you know, we entered into this agreement with PepsiCo regarding distribution of Tropicana juices, Quaker Oats, and Lay's snacks. The first two are being handled by Orkla Foods.
These kind of agreements, and this agreement especially, will be a source of growth in the coming years when we take over distribution of those products. To sum up, after a period of strong focus on integration in 2013 and 2014, we again see stronger performance from Orkla Foods with growth on both EBITDA and on top line. Our proximity to the market, to the customers and consumers, gives us a competitive advantage as we can meet the local trends and needs better than most competitors. Our key priorities going forward to great growth are strong programs on the core portfolio, as you have seen. Strong programs to launch new products and concepts, as you have seen, and to drive launches cross borders wherever that is relevant, as you have seen. Thank you for listening.
Thank you, Atle. Now Atle will be happy to answer any questions.
Yes, thank you for your presentation. Can you say something about the also borderline balancing between innovation and the strong cost focus that you have been highlighting earlier in this session? Thank you.
It's a very relevant question and a huge question, it's hard to answer specifically, but we need to eliminate everything that I would call non-value-creating complexity and keep what we think is value-creating complexity. As we drive out cost, or as Johan and his teams are driving out cost, at the same time, we need to keep the flexibility because the flexibility and the localness is very much a part of our value creation. This is an everyday balance that we need to strike right over time. It is hard to answer more precise than that.
Atle, we heard from Johan about his plans for factory closures and maybe another 20% there. You and Beth stressed, though, the localness, local production, local contents. What do those discussions look like internally when he says, you need to rationalize, and you say, "No, actually Finnish consumers want a Finnish pickle.
Yeah.
Are his plans realistic?
To put that. You're striking the right issues that we need to strike right. It's like this. We are more risk willingness if the potential in the cost savings are big. It's always a trade-off with how much cost can we save compared to what risk do we perceive by making a brand or a product less local. If there is a huge potential, we are willing to take the risk. If the potential in the business case is not that huge, we are more conservative. That's the way we work on it.
Based on your analyses, which categories is localness most important?
I think the closer to the Earth that people perceive that product come from, the more important is the localness. These days, I know lots of economies are in trouble, I know there is a big consumer wish for locally produced products, also from a responsibility issue. I guess that's the general answer to your question. The more close to the people perceive that the product come from, that is pickles, jams, maybe, and those kind of things, the more important it is to be local.
You have mentioned palm oil is out of the basket.
What are you using instead?
Various vegetable oils. In the Nugatti case, it's sunflower oil.
Daniel Johansson with Fondsfinans. Just a question, perhaps somewhat similar to one of the previous ones here. Obviously, you are one of the market leaders in crisps within the confection and snacks unit. The PepsiCo deal, and I think that somebody has perhaps asked you this question before, but the logic here and how big is the Lay's business and what's the rationale behind this?
As I told you, Orkla Foods is handling the juice and the other parts, I don't really have that insight into the Lay's business. Anybody else?
I think to be exact, we have to come back to that question, but in Norway, the Lay's business is very, very small. That is because of import duty on potatoes. Doritos business, however, is somewhat bigger and Lay's and Doritos is also a bigger part in Sweden and Denmark and Finland. In general, the main part of the PepsiCo distribution agreement is related to Tropicana and Quaker.
John Innes from Goldman Sachs. I've got a couple of questions, actually. The first one's in relation to the capacity utilization rate of the Food Division. Can you say how that compares to the wider group, and what you're really aiming to achieve in that ratio going forward, given some of the plans from Johan? The second question is in relation to innovation, which appears to be the largest contributor to growth, I would imagine. What sort of focus do you put on return on capital when you think about investing behind these? Can you talk about how that's trended over the last couple of years? Thanks.
Are you ready for the capacity utilization in Foods question, Mr. Clarin?
For the first question around capacity utilization, I wouldn't say that Foods is sticking out negatively in any way. We have amongst the different categories where we have different levels of capacity utilization, this is also, of course, a bit counting on the installed capacity and how much we run the lines. As I mentioned before, a part of the structural grips we're taking is to reallocate products into available capacities. I think over time, we will see overall Foods utilization levels increasing to, well, maybe more healthy levels.
On the second question regarding return on capital or return on investment on innovation, it's really not for us, you may not like this answer, it's really not for us a question of return on investment. It's when we see we hit it right, you hit big needs, you find the right needs, you make it big, the return on investment is huge. If you don't do that, it's very small or even negative. That's basically it. It's not like we have a zillion projects and separate them by return on investments. It's really about do we have a feel that it hits a big need in the marketplace, we know it's a success. I hope that answered your question.
This is Petter from ABG. What's your strategy on producing private label? You mentioned that you now gone into a cooperation with NorgesGruppen on pizzas. Is that something we should expect to increase going forward? The second question is on the Rieber deal. Obviously, a quite successful story when it comes to cost synergies. Can you say something about how sales has developed versus your expectations? Has been on par below or above? Thanks.
I will. I forgot your first question. That was about private label. We have a rather opportunistic approach on private label, where we see that that can contribute to our profit and to strengthen customer relationship, we are positive on that. These initiatives was not about private label, that was about developing brands and the products in close cooperation with customers. The last one you definitely will see more of in the coming years. That's a growing demand in our markets that we can deliver into. That was the answer to that one. The Rieber, yes, it's a successful case in synergy realization. Sales have developed weaker than we anticipated, obviously, in 2015, even a lot weaker, actually.
We now luckily see that it stabilizes, I must say that we have been able to turn around the trend of all what we call dry products, which again makes my story that if we really focus on something, we can turn it around. Indeed I see that the negative development over years in Rieber's dry products has stabilized and now is even increasing in our core markets. Was there something else that you wanted to have an answer to? No, that's okay. Thank you. Yes, any more questions?
Doesn't appear that.
No.
Thank you, Atle.
Thank you.
Thank you.
Now before Peter sums up and give his final remarks for the day, he and the management team will take some final Q&A. I'd just like first to thank you all for attending today. It's been great to see all of you, and I hope to see as many of you as possible staying for some drinks afterwards. Are there any final questions for Peter?
Ole Morten Westgaard from DNB Markets. A question on your EBIT growth targets. Can you sort of quantify or elaborate a bit on where you see the margin improvement potential and what the cost-cutting potential is of that organic growth or target? It seems to me at least that you have fairly ambitious program going on regards to cutting costs, but I can't really find any figures on how much that's going to contribute.
Well, our EBIT growth target of 6%-9% includes both organic top line and cost-out in the whole organization, but especially in supply chain. Some of those cost-outs is very difficult to estimate how much ends up on bottom line and how much is cost avoidance, especially in procurement. Included in the business case or in the targets going forward, that includes the 6%-9%, includes cost reductions in supply chain, and it includes organic growth on top line. I cannot give you a figure how much comes from growth, how much comes from cost.
Just to follow up on the organic growth. Can you quantify your sort of view on volume and price?
Yes. We have seen now lately, especially in 2015, that most of the organic growth comes from volume-mix and not from price. That is a big change from what we've seen the last years, where most of the growth has come from price. I think what we see now is a much more healthy growth than we have had previously. I will also stress that it's combined volume and mix, and that also means that we are selling more high-value products. It's also part of the growth.
Yes, we have a question here.
Can you just walk me through how you think about acquisitions? For example, what are you willing to pay? What are the metrics you use? How you decide whether or not you're going to do an acquisition? Is it going to be different, the standard that you have different depending on the business segment? Are you looking for larger acquisitions or are you now just focusing on bolt-ons? Where is your thinking in terms of pricing, returns, how much you're willing to pay as a different by segment or the big business categories?
There was a lot of questions. Well, I will try to answer, then you have to just tell me if I didn't answer your question. Well, first of all, we see that the most profitable acquisitions we're doing are the small bolt-ons. It's quite easy to integrate, and it's easy to take out synergies. Usually, you can reduce fixed cost dramatically in acquired company because we can just put it in our existing structure. When we look for companies to buy, we want to find companies that fits with our current presence in the market or in a geography. We want, as we have mentioned several times today, we want to buy companies that have a strong brand position in the market or that has a potential to build a number one position or at least strong number two.
We also look for companies where we can realize synergies fast and easy, of course. When it comes to what we are willing to pay, that varies, of course, from business area to business area and also from geography to geography. In general, we have a weighted average cost of capital after tax of 7.7%, that's absolutely minimum. That's where it starts. Then we add on top of that, we add premiums for geography, we add premiums for inflation, and so on. That's absolutely minimum.
Thank you.
Okay. Did it answer your question?
Yes.
Okay.
I have some questions on the web. I think the first one maybe for the CFO. You mentioned the need to improve working capital management. What specific targets do you have for working capital ratios? Put in a different way, how much cash do you think a company can extract out of working capital?
Yeah, as Peter mentioned, there's a potential here. Looking at 12-month rolling working capital level, we in fact have reduced the level slightly. It's now around 17%. We have the biggest potential for savings is on the inventory side. I think that's the biggest one. The improvements there will move along together with the progress on the supply chain program that Johan mentioned, looking at the factory footprint, the warehousing, et cetera. We also see potential, especially around the trade payables, the second-biggest opportunity. Not that much on the trade receivable side. We don't disclose a specific target or ambition here, but the ambition is it's going to be less than it is today. Today is around 17% improving.
This also including add-on acquisitions that we've done, and the headwind on the currency side, it's moving in the right direction. I hope that answered the question from the web.
Thank you.
One final question regarding Food Ingredients, more from a strategical point of view. The business unit differs quite a lot from the consumer units, where there has been a lot of focus over the past few years. Could you just give us an idea here, you back in 2013, you didn't include that into your guidance, the performance of that segment. Has this become more core for you or sort of the long-term strategy? Would you think that this could potentially be better suited for another kind of business, and that you would focus entirely on the consumer segments? Could you give us some sort of an idea of the plans for that segment?
Yeah, that is right. On our last capital markets day, we didn't include Food Ingredients. We didn't have any presentation, and we didn't have any targets or communicate any targets. The simple reason for that was that the previous CEO believed that that did not fit into the strategy and the structure of the future Orkla. I am of a different opinion. As Pål has shown today, and also what they have proved, is that Food Ingredients is an attractive business with very good and competitive return on capital employed, even though the margins are lower, but the capital requirements are also much, much lower. It really competes well with the rest of our business areas. We also see that there are quite a lot of synergies between the other business areas, especially Food and Food Ingredients.
Carving out food ingredients for sale, for instance, would lead to some negative synergies. As Pål has shown, we see still a great growth potential in food ingredients. The company has grown both organically and through acquisitions by an average of 10% since 1999. As you also see today, that the growth now is even higher than that, at, I think, 14%. The margins are improving, and bottom line is developing very well. I see that as a part of our core business, partly because of synergies, partly because of the growth potential, and partly also because 20% of the business in food ingredients is actually business to consumer.
Okay, I have another question from the web. It's quite long, but I have it written down here, so.
Okay.
I may have missed this in your earlier remarks, but can you briefly review the non-food assets of Orkla? The timeline for liquidity in assets you have target to dispose, such as financial assets and real estate, and the value of real estate's asset as they complete development. Your thoughts on non-food assets like Hydro Jotun, et cetera. Can you comment on your philosophy for returning capital to shareholders with buybacks versus dividends? Lastly, in your opinion, does it make sense to split off your non-food portfolio into a separate investment vehicle?
So-
That's a lot of questions.
That's a lot of questions, but mainly it's regarding the non-
Yeah
brand and consumer goods assets and your view on that.
Yeah. Well, first of all, we can take the smaller assets first. We have a real estate portfolio with a book value of approximately NOK 1.7 billion. That is mainly assets that has come from the operating part of the brand consumer goods companies. Where we have closed down a factory, or we have closed down a head office from a company, and where we have a vacant building that we can develop. Most of those real estate projects are development projects that will be developed, most of them for real estate, for housing. They will be sold, and we will get a gain from that development. We will not actively go out and buy real estate for development, but we will have a portfolio of real estate coming from our core business also going forward.
There will be development gains in that real estate portfolio, but the size of that, I cannot comment. When it comes to hydropower, we have two main hydropower plants. We have one set of plants in the southeast part of Norway called Sarpsfossen. Those plants are owned 100% by us. We can own them as long as we want. We have some plants on the west coast of Norway called Saudefaldene. We rent the waterfall rights from the state For a 30-year period. We own the infrastructure, the assets, the turbines, and so on. After 30 years, the state-owned company, Statkraft, they have the right to buy back those assets for book value. Hydropower assets is not a big problem within Orkla. It doesn't require any management attention. It's very little maintenance investments.
The great thing is that every time it rains, it rains cash, and it rains a lot in Norway. I don't see that as a priority to sell off. We are also in a situation now with quite low energy prices in Norway, and that is partly due to overproduction in Norway and partly due to lack of transfer capacity from Norway to the continent. There are two power cables that are under maintenance. That means that we are not able to export as much as we want, and there are a couple of new power cables that are under construction that will be finished in, I think, in 2018 and 2019. We expect power prices or grid prices to increase when those transfer cables are up and running again. I don't think that the time is right now to sell.
The share portfolio, as I showed, it has a market value of NOK 1.3 billion, and it has been reduced dramatically over some years. A big part of that is Gränges, our 16% in Gränges. I think that's approximately NOK 600 million. Is that right? Approximately 50%. When the time is right, we will exit most of the share portfolio as well. We have the more difficult parts. Jotun shares and Sapa JV. We have been shareholder in Jotun for many years. I think from since the beginning of the 1970s. As I said, as I showed you earlier, Jotun is a great company. They have developed fantastic, actually from a Norwegian base in the very start, to a Nordic base, and now as a really global player. They are a market leader and number one in the world in marine coatings.
They are also very big in decorative coatings. They deliver high growth, high profitability growth. We don't see an urgency to exit Jotun. It's hard to see any other companies where you can invest your money for a better return than in Jotun. We are also very concerned that we will develop Jotun and do anything with Jotun, either it is IPO, trade sale, or whatever, in close cooperation with the other owners. We have a long history of cooperation with the owner family. To Sapa JV. The agreement with Norsk Hydro is that after three years, that means next fall, both parties can require an IPO if we want. As I said, we still see a huge value potential in Sapa. The North American business is doing very well, and it's operating close to 100% capacity utilization.
Europe has been through a very difficult period, in general, the European economy. We now start to see signs of improvement in Europe, and demand side is increasing. At the same time, we have been through a very tough period reducing costs, closing down a lot of plants, and restructuring the whole business. I think we should really get our share of that profit going forward. Whether we will require an IPO next year or three years down the road, it's still too early to see, but we still see a value creation potential there.
Thank you.
If there's no further questions, I leave over to you, Peter, for your final remarks.
Okay. Yes, I hope today's presentations have given you a good insight into Orkla, into our plans, our actions, and our new targets. I think also we have shown you, at least we want you to have the impression that there is a lot of potential going forward, especially in cost and in supply chain. I think also we have shown you the last quarters, actually five quarters in a row with organic growth. We have grown both top line and bottom line at the same time, and we have reallocated capital from non-core to our core businesses. Today, you have seen examples of how we work to improve supply chain, and you have seen the great potential, and I mentioned, and also Johan mentioned, the NOK 24 billion cost base is tremendous.
We have shown you example how we take out synergies or realize synergies through organizational changes. There are more such examples to come. We have seen several examples, especially a good example with Cederroth and also the Jordan case, how we create shareholder value through acquisition with successful integration of the businesses and realizing synergies. Pål has shown you a fantastic story of Food Ingredients, how they have grown from being a small, local Nordic player to be actually a European player with a high growth. We have also shown you, I think, several examples what we mean about One Orkla, acting as One Orkla, utilizing the strengths, capabilities that lies within the whole group. We have seen that with cross-border innovations and other initiatives. Excuse me.
We have shown you also what we mean by winning with the customers, developing solutions together with the customers, focusing on growth rather than focusing on discussion on terms and conditions. Last but not at least, I think we have mentioned localness and flexibility at least 50 times today, and that is really one of the core strengths of Orkla. It is our ability to adapt to the local needs, local taste, local preferences, and we have to keep that also going forward. It's been a long day, it's late Friday afternoon, so I guess you are all keen on drinks or at least some refreshments. I just show this again, our financial targets. Those targets are much more in line with One Orkla. I have already gotten several questions about the margin targets. Why don't you have margin targets anymore? Are you not concerned about margins?
Of course, we are concerned about margins, but as I have said, it's much more important to grow in an absolute value, EBIT value. We will create shareholder value through long-term bottom-line growth combined with an attractive dividend, focusing only on margin would lead to some not optimal decisions going forward. For instance, acquisition of Cederroth, of NP Foods, distribution agreement with PepsiCo would not have been done if we only focused to have a high margin, but still we know it will help us grow bottom line. We have had some quite good achievements the last quarters, five, six quarters, and I must say I'm proud of my team and the achievements we have shown. I really look forward to work on mostly the opportunities that we have ahead of us and some challenges, but mostly opportunities.
I would like to thank you all for coming and joining us here today, and I hope that you have gained some more insight into Orkla. I also hope that you will have time to join us for drinks and refreshments in the room next door, and for some informal talks, and also the possibility to have some additional questions. Thank you very much for coming, everyone.