Good morning, everybody, and welcome to Orkla's third quarter results presentation. Overall, I am satisfied with the financial performance in Q3. We have a favorable profit development in the quarter. Group EBITDA improved by 5% to 860 million NOK compared to Q3 last year. The improvement was mainly driven by improved operations in Branded Consumer Goods. We had positive organic growth of 0.4% still challenging in Orkla Foods, and the result for this business area this quarter is somewhat disappointing. 0.3 percentage points improvement in EBITDA margin, primarily driven by Orkla Confectionery & Snacks. In addition to improving operations, Orkla continues to deliver on its strategy in the third quarter. We had a successful IPO of Gränges. Orkla Confectionery & Snacks acquired NP Foods, which will significantly strengthening its size in the Baltic markets. We are still waiting for the approval from the competition authorities.
The sale of Delecta in Poland was completed. Orkla sold 100% of the shares for 199 million NOK. The sales process of Orkla Brands Russia is ongoing, and we are in discussions with several interested parties. Orkla's earnings per share in Q3 was 0.51 NOK, an improvement from 0.43 NOK in Q3, 2013. Our main challenge ahead is still organic growth, as was announced in Q1 and Q2. A number of improvement projects are underway to improve operations and to increase profitability in the future. As communicated earlier, it takes time before the improvements from the transformation materialize, but we see some positive signs this quarter, both on top line and bottom line. EBITDA margin in Branded Consumer Goods improved by 0.3 percentage points. Orkla Confectionery & Snacks in Norway was the main driver for the improvement.
EBITDA margin improvement in Orkla Food Ingredients was broad-based in almost all parts of the company. The development in Orkla Foods continues to be challenging. As you know, we are still in a transition phase with Foods, merging the Rieber operation, Toro operation in Norway and Orkla Foods Norge. I will comment on the development in both Confectionery & Snacks and Foods in further details later. For the last two quarters, organic growth has been positive for Branded Consumer Goods. In Q3, organic growth was 0.4%, driven by three out of five business areas. Orkla Confectionery & Snacks delivered a strong quarter. Within Orkla Home & Personal, especially Pierre Robert Group had very strong sales growth. Growth was driven by new and relaunched textile products and successful promotions. Orkla Food Ingredients continues to deliver strong organic growth across its companies.
Orkla Foods with negative 3.4% top line organic growth for the quarter is disappointing, and we are, as you understand, doing a lot of actions to improve that. My focus going forward will be to continue activities to improve organic growth and to improve margins. As mentioned, we had a solid quarter for Confectionery & Snacks and somewhat challenges in Foods. In Confectionery & Snacks, we had a top line and EBITDA margin improvement from several factors. We had strong development in Norway after a very demanding integration between the companies, both in Norway and Sweden. Improved field sales force performance after a challenging restructuring process, and synergies gradually realized as planned and as announced earlier. Positive development also driven by volume growth from strong innovations.
For instance, we had Polly and Smørbukk Storplate chocolate tablets, and Polly Naturligvis, all three launched at the beginning of the year and with great success. Key activities to increase sales and improve margins going forward is continued strong innovation programs and delivering on the cost initiatives already started. As mentioned, Orkla Foods has had challenges in the quarter. Reduction in EBITDA margin was mainly driven by negative top line due to fewer innovations, promotions, some impact of currency, and fixed costs increases. To improve growth and operations going forward, several activities are being implemented. We are looking into stronger innovations and promotion programs, continued strong initiatives where several restructure projects currently being analyzed. Including a redesign project in Arna in the Rieber & Søn factory in Bergen. Estimated savings of approximately NOK 60 million per year.
The integration process and synergy realization related to Rieber & Søn is according to plan in all companies. In addition, in Q3, the field sales forces in Orkla Foods Norge have been merged together in one sales force, and that is also influencing the negative sales development in Q3. As previously communicated, we have started a process to optimize our production structure. Starting the year, we have 97 factories. So far in 2014, 5 plants are closed or in the process of closure. 4 plants are considered for closure, and this will continue. The effects from our production structure optimization will be the sum of many small things. Some big factories, some small factories, but sum of a lot of small things. We also do redesign projects within the factories and continuous efficiency programs within the factories that are not closed down.
In the following, I will highlight some examples of the innovations that we have done during the quarter, one from each business area. First, in Norway, Pierre Robert has launched a collection of soft, seamless base layer for active youngsters. Pierre Robert sport collection was first launched in 2010 and has been a great success. The sports underwear are colorful, functional, and comfortable, and available at prices all consumers can afford, and you can buy them both in the retail store and in our online store. With the new innovation in Q3, we aim to win the battle of the future sports stars by launching base layer for active children in the age 7-14 years. The second example is Abba Middagsklar from Orkla Foods Sweden. That has been a success. That is fish sauce, and that's not the one on the picture.
That has been a success, and it is now sold in 4 Nordic countries under local brands, but with the same product. In the 3rd quarter, Abba has also launched a new fish soup. Abba Fisksoppor is a healthy and convenient meal with only natural ingredients. As mentioned earlier, the positive top-line development in Orkla Confectionery & Snacks is to a large extent driven by strong innovations. Pålegg Storplate, big chocolate tablet, was launched in Q1, and that's an example of one of those successful innovations during this year. In Q3, a Pålegg bar filled with Pålegg peanuts and soft caramel was also launched. This is an example of how we continue to utilize our strong brands across categories by launching a chocolate bar under the brand Pålegg, which is more known for nuts. By the way, I recommend you all to buy this and try it. It's great.
Our fourth example is from Orkla International. Our food company in Czech Republic, Vitana, launched several new innovations and relaunches in Q3. This is one example. It's a new tasty chicken soup with noodles sold in the trade in Czech Republic. Last but not least, from Orkla Food Ingredients, launched in Q3 a new ready-to-use fillings from Idun Mors Hjemmebakte sold in retail stores. The fillings are ambient, spreadable, bake stable and comes in three flavors: cinnamon, chocolate and apple. I will, of course, also recommend you to try this for the baking. As mentioned, Orkla, we continue to deliver on the strategy that were announced. The IPO of Gränges and acquisition of NP Foods are two examples of this. Gränges was well-received by investors community and successfully listed on Stockholm October 10th, despite very challenging markets.
Gränges has experienced strong operational improvement from Q1 2013 to Q2 2014. The EBITDA margin increased by three percentage points to 11%. Improved operational performance led to strong cash generation during the year of approximately 700 million SEK during the period from Q1 2013 to Q2 2014. The offering price was set within the initial range at 42.50 SEK per share. Market capitalization on 100% basis was approximately 3.2 billion SEK. Orkla's ownership after completion of the offering- [Foreign language] [Foreign language] [Foreign language] Per share. Market capitalization was 3.2 billion NOK approximately on a 100% basis. Orkla's ownership after completion of the offering is depending on the green shoe utilization, but it will be somewhere between 31% and 40%.
The remaining Orkla stake is subject to a lock-up provision for 180 days post the offering date. As mentioned, we also announced acquisition of NP Foods in the Baltics. That will significantly strengthen our position in those markets. Total Orkla turnover in the Baltics will increase by almost 65% to close to NOK 1.4 billion after the acquisition. NP Foods is a leading Baltic confectionery and biscuits player based in Riga, Latvia. Annual turnover is approximately 600 million NOK. It will particularly strengthen our position within chocolate and confectionery in addition to our position in Kalev in Estonia. Laima is an iconic confectionery brand with 99% brand recognition in Latvia. Other key brands and product categories include Selga in biscuits, Staburadze cakes, Gutta juice and water, Pedro convenience food. As mentioned, the acquisition is presently under consideration by the local competition authorities in the Baltic countries.
Expected closing is Q1 2015. With the acquisition of NP Foods, Orkla continues to build on its successful strategy in the Baltic region. Today, Orkla Foods, Orkla Confectionery & Snacks, Orkla Home & Personal, and Orkla Food Ingredients are all companies present in the Baltic states. The figures presented show the strong development in top line and EBITDA margin historically for Orkla companies located in the Baltic region. I will now give the word to our CFO, Jens Staff, to give us some more details on the financial in the quarter. Thank you.
Thank you, Peter. Can you hear me? Good. I'll now walk you through the numbers, starting with BCG. I'll walk you through Orkla Investments. Finally, I'll comment on Orkla's capital structure as of Q3. First, let's have a look at the group level performance. The group's operating revenues was NOK 7.48 billion in the quarter compared to Q3 last year. The development in operating stable. Increased by 5% and ended at NOK 860 million. EBITA for Branded Consumer Goods was NOK 903 million in the quarter, while EBITA for Hydropower, Orkla Financial Investments, and HQ totaled a negative NOK 42 million. I'll revert to the EBITA bridge shortly. Other income and expenses amounted to a negative NOK 47 million, mainly related to restructuring costs within Branded Consumer Goods.
Profits from associates was mainly related to Jotun and Sapa joint venture. The net profit from Sapa joint venture was NOK 54 million in the third quarter. The market value of financial assets was approximately NOK 826 million at the end of the quarter. Profit before tax improved by NOK 240 million to NOK 871 million, while earnings per share improved from NOK 0.43 in Q3 2013 to NOK 0.51 in Q3 this year. In Orkla's Q3 report, Gränges is classified as discontinued operations. A write-down of the book value in Gränges resulted in a negative profit from discontinued operations in Q3. I'll comment on this further in detail later on in the presentation. Let's look at the EBITA bridge quarter-over-quarter. Branded Consumer Goods had a 1% underlying EBITA growth in the quarter. All business areas had improved EBITA in Q3 except for Orkla Foods.
In line with Peter's comments, I'll revert back to this in more detail later. Orkla Investments had a total EBITA on par with last year. In total, a positive change of NOK 41 million. This slide shows the Branded Consumer Goods had a 1.2% increase in revenues quarter-over-quarter. This growth was mainly down to a positive currency translation effect. The organic growth was 0.4%, largely driven by satisfactory top-line development in Orkla Food Ingredients, Orkla Home & Personal, and Orkla Confectionery & Snacks. Let's look closer at each business area. First, Orkla Foods. Overall, Orkla Foods posted third quarter sales of NOK 2.6 billion, which represented an underlying decline of 3.4%. The top line is still challenging in Norway and Denmark. Domestic performance in Norway is still influenced by the integration of Rieber & Søn and the focus on synergy realization. This has adversely affected the top-line revenue performance.
Sweden, Finland, and the Baltics have delivered satisfactory growth through the quarter. Q3 EBITA declined by 6% and the EBITA margin weakened by 0.4 percentage points. The main contributor to the weakened EBITA was decline in top line. This, combined with a weakening of the Norwegian and Swedish kroner, led to increased raw material costs. In addition, production costs increased in Sweden. The realized cost synergies from integration of Rieber and from the merger of Abba and Procordia last year still contributes positively and will continue to do so both in Q4 and in 2015. In Q3, realized synergies was NOK 60 million-NOK 70 million, and compared to Q3 2013, this was an increase of NOK 40 million-NOK 50 million. Orkla Confectionery & Snacks has achieved growth this quarter.
Following a challenging restructuring process of this business unit over the last year and a half, we are now able to show top-line revenue growth and improved EBITA margin in Q3. This positive development was primarily driven by the Norwegian markets, with strong sales growth in all main categories. In addition, the Baltics, Kalev in Estonia and Latfood in Latvia delivered strong sales growth. KiMs in Denmark also improved its EBITA in the quarter. The Swedish company still experiences top-line and EBITA decline, mainly due to a highly competitive market environment and internal organizational changes. As you know, we have merged OLW and Göteborgs Kex into one new strong Swedish entity. In parallel, we have merged Nidar, KiMs, and Sætre in Norway to create a strong and unified single unit. The process in Sweden has proven to be more challenging and is taking longer than anticipated.
Organizational changes was implemented in Sweden during the quarter. A new CEO, Henrik Julin, was appointed and started with us the 1st of July. Further, a new factory director at the biscuit factory. The walkthrough of Confectionery and Snacks. I think it's then worth mentioning that it's important to note that parts of the reported revenue and EBITDA figures in Q3 and year-to-date were positively affected by timing of selling days, and that this effect will have the opposite effect in Q4, with revenue effect of approximately NOK 40 million. Now let's look at Orkla Home & Personal. The business area has delivered top-line growth in four out of the five units in the third quarter.
Axellus, which was renamed Orkla Health in October to more accurately reflect the profile and identity of this business unit, had a quarter somewhat behind Q3 last year, mainly due to weak development in Finland and Poland. Lilleborg experienced sales growth both internationally and in Norway. It's important to note that for several of the business units, the year-to-date figures are positively affected by extra selling days in Q1, and also have a phasing of campaign pressure, which has given an additional boost to the Q3 sales. Also, those effects will have an opposite effect on revenues in Q4 of approximately NOK 50 million. Reported EBITDA was NOK 257 million, and all business units, except Axellus, showed growth in the third quarter. The EBITDA margin was somewhat reduced, partly due to negative currency effects. Moving on to Orkla International.
In Q3, the business area reported revenues of NOK 661 million, a decrease of 10% compared to Q3 last year, and that is mainly as a result of the performance in Orkla Brands Russia. Organic revenue growth ended at negative 3.4%. MTR had strong revenue growth driven by growth in the core categories, instant mixes and spice mixes, and the organic growth in MTR totaled 19%. EBITDA for Orkla International was flat compared to Q3 2013 and amounted to negative NOK 5 million. EBITDA improved for both Vitana and Felix Austria. Despite the negative top-line development, EBITDA for Orkla Brands Russia was flat in the quarter, driven by restructuring programs and other cost improvements. However, the EBITDA level for Orkla Brands Russia is still weak. Finally, on to Orkla Food Ingredients.
Orkla Food Ingredients posted revenue of NOK 1.6 billion in the quarter. Revenue growth was almost 7%, while organic revenue growth was strong at 4%. Revenue growth was driven by increased volume and more favorable product mix. Compared to Q3 last year, EBITDA improved by 21% to NOK 93 million. EBITDA margin improved by 0.6 percentage points to 5.7%. The rise in EBITDA was broad-based and mainly driven by a sound blend of price management effects, a volume mix increase, and internal improvement projects that also contributed to this growth. I will now go through Orkla Investments. Let us first look at Gränges. In Q3, as Peter mentioned, Gränges is presented as net figure on one single line as discontinued operations in the profit and loss. The historical P&L figures are restated in the balance sheet. Gränges is presented on two lines: asset and liabilities.
Cash flow has been restated for 2014 and not for historical figures. The result from Gränges in Q3 was -NOK 119 million, NOK 37 million positive year-to-date. The loss in Q3 includes a write-down of net assets, and Orkla's carrying value was lower than the stock value. That is the reason. There will be no material effect in Q4 related to Gränges as discontinued operations. Orkla sells 60%-69% of Gränges, and the exact percentage will be known at the 11th of November. The remaining 31%-40% will be reported as an associate and accounted for in accordance with the equity method from Q4 2014. Opening carrying value will be stock market capitalization as of the 10th of October 2014. The cash flow effect from Gränges IPO in Q4 will equal net proceeds from the sale of shares and net interest-bearing debt of NOK 392 million.
This is different from the SEK 939 million in net debt that Gränges is reporting. This is due to differences in definition of interest-bearing debt. Moving ahead to the Sapa joint venture. Sapa experienced increased demand compared to the same period last year. Demand for extruded products in North America increased by 7% compared to the same quarter previous year, supported by higher activity in both the automotive and building and construction segments. Demand for extruded products continued to be weak in Brazil. In Europe, demand for extruded products improved 1% compared to the third quarter in 2013. This is the third consecutive quarter of market growth in Europe after several quarters with decline. Global demand for precision tubing continued to be driven by increased demand from the automotive sector. Demand for extruded products is expected to decline in the fourth quarter, mainly due to seasonality.
Underlying EBIT was NOK 201 million, a significant improvement compared to the pro forma result from the same period last year. Positive contribution from restructuring programs contributed to the increase. The restructuring programs within Sapa is progressing according to plan. Restructuring charges will continue to have a negative impact on net profit in Q4. In the third quarter, Orkla's share of the profit was a positive NOK 54 million. Jotun has had a good overall growth in Q3 2014. All segments were growing with improved decorative sales in Scandinavia and continued positive development for the marine new building market. The increase in costs is primarily tied to market development activities in growth markets, as Jotun is continuing to invest and build new factories. Finally, hydropower. Production volumes in hydropower continue on the same trend this quarter and were somewhat higher than the corresponding quarter last year.
Power prices in the third quarter were lower than the third quarter last year. However, EBITDA improved slightly to NOK 46 million in the period. Reservoir levels were somewhat lower at the end of the quarter. This last part will be on the capital structure. Starting with changes in net debt year-to-date. The net debt at the end of the quarter was NOK 8.3 billion, and the main deviation from the end of last year is paid dividend of NOK 2.5 billion. Net sales from shares and financial assets contributed NOK 0.2 billion year-to-date. Cash flow from operation was NOK 0.6 billion in the third quarter and NOK 1.3 billion in the first nine months of 2014. The seasonal buildup of underlying working capital in Branded Consumer Goods was somewhat lower compared to 2013.
Orkla's net interest-bearing debt had an average interest cost of 3% in the third quarter of 2014, with an average maturity of 3.6 years. Net interest-bearing debt was NOK 8.3 billion at the end of the quarter, with a net gearing of 0.28. The net gearing is expected to be lower at the year-end. In summary, Orkla's financial position is robust. I'll give the word back to Peter.
Okay. Thank you. We are sorry for the technical problems here, but at least I can promise you that we will have substantial saving in rent of these premises that will be visible in Q4. Just a few words on the outlook. Our strategy remains firm. There is no change. The future growth and value creation will come from a focused Nordic Branded Consumer Goods company. Orkla Investments is still a large part of our value, and we will focus on getting the fair values, and that is more important than time. In Q3, Orkla Foods signed a distribution agreement with PepsiCo for sale and distribution of Tropicana juice in Sweden, Denmark and Finland. This cooperation will start first quarter 2015.
In terms of strengthening relations with our customers, we believe that Coop's potential acquisition of the Norwegian part of ICA, resulting in three relatively equally strong customers is better in the long term for the suppliers. As mentioned, my main operational focus is on activities that drive organic growth and improve margins. In addition, we will deliver on started and the ongoing structural processes and to realize synergies and increase efficiency throughout the company. This is not finished yet, and it will take time. I think we show in this quarter that we deliver on our strategy and on our plans, which is a result from an increased focus on operations. Still, we have a large operational job ahead of us, and the company is still not streamlined to the extent that we would like.
It's also important that we in Orkla, we can really make a difference. What you see here is the number of products produced and sold from all Orkla companies today. The top figure is today, and the bottom figure is year to date. 2.8 billion, 2.9 billion consumer units year to date. We estimate for 2014 that we will sell approximately 3.2 billion units in our markets. As you can imagine, just minor changes to these large volumes will significantly impact both margin and volume. Just to give you some examples, cost reduction of NOK 0.1 per unit, that constitutes approximately NOK 320 million in cost savings. 5% price increase contribute with NOK 640 million. 0.1 gram less salt in our food products constitute approximately 200 tons of less salt, making a healthier living for our customers, which is important for us.
Thank you all for coming. We are now open for questions.
Yes, thanks. Per Nils from ABG. Can you elaborate a little bit about the development in foods? Is it broad-based? Is it tougher competition? Is it margin pressure? Secondly, is your gearing annual leverage is fairly low going out of Q4. Can you say something about your cash flow priorities going forward, both in terms of cash flow distribution to shareholders or investing in more growth initiatives? Thanks.
Okay. I will answer your question on the food business. Jens Staff will take the second part of your question. As mentioned in the presentation, we are still in the process of merging together the parts of Rieber and Orkla Foods, and especially in Norway, this is and has been a very big operation, merging Toro and Stabburet. We are still not finished, and we see that the new organization or the process to getting into the new organization is taking focus away from the market, away from customers, and it's more internally focused. However, we see this is coming to an end, and we believe that when we are finished with the reorganization, we will have a healthier, better platform to develop. Also during Q3, we merged the sales forces of those two companies, and that has also made disturbances in the sales force in the Norwegian market.
Now to the capital.
The first priority is to acquire a good BCG asset in the Nordic at a fair price. If you are not able to find a good quality asset for a fair price, we will most likely allocate the excess capital back to our shareholders. We have a history of allocating back capital. A special dividend, we will also compare to buyback own.
No other questions? Okay, I just thank you all for being here, and have a nice day.