Everybody, and welcome to Orkla's 2nd Quarter Result Presentation. First go through some highlights. We had a favorable profit development in the quarter, improving group EBITA by 19% to NOK751,000,000 compared to Q2 last year. The improvement was driven by structural growth and realization of synergies in branded consumer goods as well as continued progress in Orkla Investments. EBITA margin in branded consumer goods improved by 0.8 percentage points and we see this improvement in all business areas except for confectionery and snacks.
This quarter, we had a positive adjusted organic revenue growth of 0.9% in Branded Consumer Goods, first time for many quarters that we had an organic growth. That was driven by good performance in Orkla Home and Personal, Orkla Food Ingredients and Orkla International. Organic growth is still a challenging is still challenging in Orkla Foods and Orkla Confectionery and Snacks, though we see some sign of improvements in the latter. In terms of Orkla Investments, I want to mention that Gringers experienced great results both in revenue and EBITDA. The results in Sapa JV are still weak, but we see a very positive improvement.
Orkla's earnings per share diluted was NOK0 per share, an improvement from minus NOK7.0 in Q2 2013. Overall, I am satisfied with the results. Our main challenge ahead is organic revenue growth. We must facilitate cooperation, exchange of IDs and knowledge transfer across companies. A number of improvement projects are underway to improve operations profitability in the future.
As communicated, it takes time before improvements from the transformation materialize. We see some very positive trends this quarter both on top line and bottom line, but we still also see some challenges. Orkla Foods top line with negative minus 4.6 percent adjusted organic growth for the quarter is very disappointing. However, we see positive signs for the other business areas. We deliver according to plan on synergies and on the cost programs and margins are improved in 4 business areas in the quarter.
Orkla Foods realized significant cost synergies resulting from the integration of Eribbren and Son. Confectionery and Snacks is lagging behind, but we will see more effects coming in second half of the year. And my focus will continue to be on activities to improve organic growth going forward. We have started a process to optimize our production structure. Here you can see 3, well, quite small examples of factories we have decided to close down.
In Q2, we finalized the moving of Boyfudd's production from Finland to Kymksan in Sweden and decision was made to close and transfer production from Ljerna and Nurodal. Together, they represent a cost saving of redesign within the factories and continuous efficiency programs. And this will take time and we will do small steps hopefully every quarter. I will now go through the business units. The integration of Briebrandsen is still ongoing and it takes its toll on the Foods organization.
The organic growth rate is negatively affected by this. Other factors are tail cutting and focus in improving profitability. Later facing of launches in Sweden compared to 2013 is also affecting the growth rates. Market shares are in general somewhat weaker despite the fact that the launches in the first half year delivered according to our targets. Satisfactory EBITDA development mainly due to synergy effects and cost and efficiency programs.
But there are several activities I want to highlight from Q2. The integration process of Ribe and Son is according to plan in all the companies and run rate on cost synergies end 2014 amounts to SEK 290,000,000 for Orkla in total. Ongoing field sales force projects in Norway and Sweden to increase in store effectiveness and efficiency of operations will go live in Q3 this year. End of the quarter, Orkla Food Sweden acquired the Krogarklaas brand, a series of processed meat products in Sweden, contributing to a stronger position in the Swedish out of home market. Production will be transferred to Orkla Foods' Swin's plant in Sweden.
Here you see some of the products recently launched by Orkla Foods. I will highlight the relaunch of the ketchup range. Orkla Foods has invested in a new process in the ketchup plant in Faugliemara, enabling a total relaunch of the ketchup range in Sweden, Finland and Denmark. The new bottles are more environmentally friendly and offers a more appealing design and user friendly packaging. With our own bottle blower at the production line, we value and margin and is a good example of how Orkla Foods work with cross market launches.
In Confectionery Snacks had an improved performance in Q2 compared to Q1, but the development organic growth is still challenging. In Q1, adjusted organic growth was minus 3.8%. In Q2, it was minus 1.2%. So we see some improvement. Market shares weakened somewhat in Sweden and Denmark, but they are on par in Norway compared to Q2 2013.
Increased raw material cost and a challenging market situation contributed to weaker margins and an EBITDA decline. Main activities in Q2 are still related to the integration focus in Norway and Sweden. In the quarter, we went live with a new sales organization in Norway that has been a very demanding operation. Synergy effects from the restructuring are gradually realized as planned and positive effects from integration of sales forces are expected going forward. In Sweden, a new CEO has been appointed with effect from 1 July.
Here you see some examples of the innovations during the quarter. Ballerina chocolate mousse from Confectioners Snacks Sweden is an example of technology driven innovation across markets that was launched this quarter. It's inspired by chocolate mousse, which is a favorite dessert in Sweden. The product combines 2 chocolate biscuits with a milk chocolate mousse filling. Also for the first time in 11 years is a new chocolate launch under the New Energy brand.
New Energy provides a quick shot of energy with less fat than other chocolates. New Energy Nachtobar has been well received in the market and was the 5th most sold chocolate bar in Norway during the last 4 weeks. So it's been a very successful launch. Orkla Home and Personal had a strong organic sales growth in the Q2 on part with Orkla's long term target of 3% to 5%, driven by improvement in most companies. Further, all business units improved market shares in the quarter except Lilibor Norway.
The EBITDA growth of 7% was broad based. Approximately on par with 2013. Activities I want to highlight from the quarter relates to Lilibor through Chanel, Piadubag Group and Orkla House Care. New customer in the industry sector was the main reason for broad based growth in Lilleborg Pruschonewell. For both PiAdupa Group and Orkla House Care, the main driver for improved sales was new and re launches.
Also during the quarter, we have made a new agreement with Unilever, has been signed with effects from 1 July 2014 and will run for a period of 5 years. The new agreement includes continued right to supply finished goods from Unilever, continued license on R and D and marketing know how, termination of licenses regarding 5 Unilever brands currently distributed by Lilibor in Norway, representing approximately NOK 100,000,000 in revenues. The 5 brands are DO, AXE, Vessel and Intensive Care, Domestos and Krogweld, and they represent approximately 2% of Oklahoma personal revenues. A subset of Vaseline Intensive Care portfolio will continue to be licensed for another 5 years. In conjunction with this license termination, Orkla will receive an agreed one time unconditional contractual termination fee from Unilever.
Also in Home and Personal, we had many exciting innovations in the quarter. I will highlight UMO Active Active and Sport is a specially developed laundry detergent for training and outdoor garment. It removes unwanted scent and is effective from 30 degrees Celsius. Oil Clayton National had a strong adjusted organic growth in Q2 5.8%, driven mainly by MTR Foods in India with more than 20% growth. In addition, international had a broad based EBITDA improvement.
In terms of activities in Q2, I want to highlight the following. In May, an agreement signed to sell Dielecta in Poland. The sale is expected to be completed in Q3 after competition authorities approval. The production restructuring in Russia was completed and the sales process is proceeding as planned. And the decision has been made to increase capacity and improve production facility of MTR in Bangalore.
This will In Q2, Orkla Food Ingredients had a very solid volume driven organic sales growth of 8.5%. The EBITDA growth was 30% and that was broad based. During the quarter, Orkla Food Ingredients has seen several positive effects from internal improvement projects as well as from smaller add on acquisitions and expansion investments during the last couple of years. Example of internal improvement projects contributing to improve revenues and EBITDA are increased focus on value added propositions to customers and several cost improvements. We show in this quarter that we deliver are on track with our synergies.
Organic growth is still the challenge and that will be my main focus going forward. Now let me give the word to our new CFO, Jens Stav, that will give you more information about the numbers. Mr. Stav comes from Stadt Krafft, where he has been Executive Vice President and CFO since 2011.
Thank you, Petri. In the following section, I will present the financial performance of Orikla in Q2. The group's operating revenues increased by 7% in the quarter, mainly ascribable to the acquisition of Ribeir. Ribeir was consolidated as of May last year. Currency translation effects had a positive impact of 215 €1,000,000 on revenues in the quarter.
EBITA increased by 19% and ended at €751,000,000 dollars of which approximately 94% came from branded consumer goods. I will revert to the EBITDA bridge shortly. Other income and expenses amounted to a positive 59,000,000 from Unilever, which was partly offset by costs related to restructuring within branded consumer goods. Profit from associates is mainly related to Jotun and the Sapa joint venture. Net profit from the Sapa joint venture was $44,000,000 in the 2nd quarter.
The market value of the financial assets was approximately $926,000,000 at the end of the quarter. Profit before tax improved by 416,000,000 dollars to €930,000,000 while earnings per share diluted improved from minus 0 point 7 in Q2 2013 to a positive NOK0.7 in Q2 this year. Let's look at the EBITA bridge Q on Q. EBITA growth of 19% in the quarter related to acquisitions and positive currency translation effects as well as margin improvements in branded consumer goods. Branded consumer goods had 9% underlying EBITA growth.
4 out of 5 areas had improved EBITA in the quarter. The exception was confectionery and snacks. Oikla Investments had in total EBITDA on par with last year, where the EBITA improvement for Grengis of $34,000,000 was offset by lower EBITA for hydropower. So in total, a positive change of NOK119,000,000. This slide shows the revenue growth for branded consumer goods Q on Q.
Branded consumer goods had an increase in revenue in Q2. The growth was mainly ascribable to the acquisition of Ribeiro and Son, boosting the revenues by over 4%. And positive consolidation effects due to the weakened Norwegian kroner. Revenues were also boosted by 1.6% related to timing effects from Easter sales. Adjusted organic growth was 0.9%, largely driven by satisfactory top line development in Orkla Home and Personal, Orkla International and Orkla Food Ingredients.
Let's look closer at each business area within branded consumer goods. In Orkla Foods, we saw increase in EBITA of 27% to 333,000,000 dollars The EBITA margin increased by 1.6 percentage points to 12.6%. The main driver for this improvement were the realized cost synergies from the integration of Rebe and from the merger of Abba and Prokodia last year. Underlying EBITA margin improved during the quarter by 1.9 percentage points. The focus on realization of cost synergies and improvements on margin has affected the underlying top decline in organic growth was driven by lower volume and somewhat weaker market shares.
The growth challenge is fairly evenly distributed across Scandinavian markets, while the Baltic operations are delivering a healthy growth. Oikla Confectionery and Snacks reported revenues of SEK 1,100,000,000 in the 2nd quarter and the revenue growth of 3.4%. Underlying revenue adjusted for Easter was negative by 1.2%, mainly due to weaker sales performance in Norway and Sweden. Organic revenue growth is still challenging. However, Q2 showed signs of improvements compared to Q1.
The market shares weakened somewhat in Sweden and Denmark, but were on par in Norway compared to Q2 2013. The internal focus on the integration processes in Norway and Sweden have had negative impact on turnover and profits. However, there were signs of improvements in the revenue development in Norway towards the end of the quarter. EBITA ended at $109,000,000 in the quarter, which was a decline by $10,000,000 Q on Q. EBITA margin was down 1.2 percentage points.
Raw material price increases and weaker currency as well as one off costs to kick start the cost initiatives contributed to weaker margins in Norway and Sweden. The synergy effects are gradually realized according to plan. Finland and Denmark had profit growth in the quarter. In the Baltics, both Lot Food snack business in Latvia and the kalav chocolate business in Estonia showed solid improvement in sales and profits. In Orkla Home and Personal, broad based improvements contributed to both growth in revenue and EBITDA in the 2nd quarter.
Reported revenues was almost $1,200,000,000 an increase of 6.7 percent. Adjusted for Easter, the organic revenue growth is still strong at 4.5%. Reported EBITA was $176,000,000 and margin was on par with last year. Inoikla International reported revenues of 6.8 $6,000,000 an increase of 17% compared to Q2 last year. The increase was mainly due to the consolidation of Rever and Son.
Organic revenue growth was strong at 5.8%, driven by MTR with an organic growth of 20%. MTR had strong revenue growth across all categories and markets. Orkla Branch Russia had continued negative revenue growth in the quarter, but the rate of decline is leveling. EBITA for Orkla International amounted to negative minus $14,000,000 an improvement of $26,000,000 compared to Q2 last year. The EBITA improvement was broad based.
EBITA improved for Orkla Brands Russia. However, the EBITA level is still weak. So in total, a broad based improvement in international Q on Q. Oiklaa Food Ingredients posted revenue of SEK 1,600,000,000 in the quarter along with an EBITA of SEK 100,000,000 This is the highest quarterly EBITA delivered by the business area. Compared to Q2 last year, EBITA improved by 30% to $23,000,000 EBITA margin improved by 0.8 percentage points to 6.2%.
Revenue growth was almost 15%. The organic revenue growth was solid at 8.5%. Revenue growth was driven by increased volume and more favorable product mix. EBITA improvement in the quarter was broad based, mainly driven by internal improvement projects. And I would like to remind you that Oikla Food Ingredients will meet stronger comparison in the next quarters.
Let's now look at the development of Orkla Investments. Geringis continued the positive trend in the 2nd quarter. EBITA was SEK 118,000,000, an improvement of 29% compared to the same quarter last year. This is the highest quarterly EBITA delivered by Genghis and corresponds to an EBITA margin just over 11%. A continued strong contribution from restructuring process in the Swedish factory was the main driver behind the EBITDA increase both in the quarter and year to date.
Volume increased with 2% in the first half year compared with the same period last year. Sapa experienced increased demand compared to the same period last year. In North America, demand for extruded products grew with 5% in quarter, supported by growth in the automotive industry and the building and construction markets. In Europe, demand grew by 2%, also supported by the automotive industry. This was the 2nd consecutive quarter growth in Europe after several quarters with the decline.
Underlying EBIT was 3 $50,000,000 a significant improvement compared to the Prufoilma results from the same period last year. Both volume growth and effects from the significant restructuring programs contributed to this increase. The restructuring program is progressing according to plan and the restructuring charges will continue to have negative effect on the net profit in 2014. In the dollars Jotun has had a satisfactory start in 2014. In the second quarter, Jotun has had growth in both revenue and EBIT.
Jotun is continuing to invest in and build new factories. Ongoing plant investments include Russia, Brazil and Oman. Produced volume in hydropower was higher than the corresponding quarter last year, also in the second quarter. Power prices in the second quarter was, however, significantly lower than the Q2 last year, resulting in a lower EBITDA in the period. In addition, the Q2 last year was positively affected by a gain of SEK 17,000,000 from sale of real estate.
RSI levels at the end of the quarter was somewhat lower than normal. Lastly, I will comment on the development of Oiklaas capital structure in the first half of twenty fourteen. Net debt as of the second quarter was SEK 9,300,000,000. Dollars The main deviation from the end of last year is paid dividend by 2,500,000,000 Net sales from shares and financial assets contributed to $100,000,000 year to date. The cash flow from operation was SEK 0.6000000000 in the 2nd quarter and SEK 1,400,000,000 in the first half of twenty fourteen.
And the seasonal buildup of the working capital in the branded consumer goods area was somewhat lower in the first half compared to 2013. Oleg Lars net interest bearing debt has an average interest cost of 3 point 6% in the first half of twenty fourteen with an average maturity of 3.6 years. As mentioned, the group's interest bearing debt, net debt was SEK 9,300,000,000 at the end of the quarter with the net gearing of SEK 0.31 billion. This increased net gearing is ascribable to the dividends paid in the Q2 and is expected to decrease in the second half of twenty fourteen. Oikla's financial position is robust with cash reserves and committed credit lines that will cover non capital expenditures in 2014.
Let me give the word back to Petri.
Okay. Well, as communicated also during Q1, there is no change in our strategy. The future growth and value creation will come from a focused Nordic based branded consumer goods company. Orkla Investments is a large share of our value and we will focus on getting the fair value and that is more important than timing of the exit. As mentioned, my main operational focus is on activities that drive organic growth our margins.
In addition, we will deliver on started and ongoing structural processes to realize synergies and increase efficiency in the value chains. This is not finished and this will take time. We show in this quarter that we deliver on our strategy and our plans. I see clear results from an increased focus on operations, but still we have a large operational job ahead of us, especially when it comes to creating organic growth even though we had positive organic growth this quarter of 0.9% in total for the Brand Consumer Goods Company. So thank you for all coming and we are now open for questions.
Can start with a couple of questions from the web. Under the new contract with Unilever, this is a question from Hakon Aska from DNB. Under the new contract with Unilever, can we compete can you compete with Unilever in Norway?
We can definitely compete with Unilever in Norway. I think we have a very strong position. And as I mentioned, the termination of the 5 brands with Unilever only accounts for 2% of Oklahoma Personal total revenues. So I think we can we'll compete very well based on our long history and strong position in the market.
And one more question from Hakon. Very strong quarter for Ingredients. What were the drivers? Stronger underlying growth or Orca taking market share?
I think both taking market share, but also the market has been quite favorable. But you have to remember that Orkla Food Ingredients is a very broad based has a very broad based operation in almost all of Europe. Some markets are improving, some probably retracting. But I think in general both positive development in markets and taking market shares.
And a question about Orca Foods. Can you break down the negative organic growth of Foods? What contributes to the negative development from Q1? And how did Giber do in Q2?
I think as I mentioned, there has been after the acquisition of Ribe, we have been through very demanding organizational changes merging Ribbrenson and Stambure in Norway, merging 3 companies in Sweden. And that has taken a lot of focus from organization. I think the Turo brands in Norway are developing actually quite well. And I expect that to see positive signs going out of this year for Orkla Foods in general.
Question about Grangez. Please can you update us on the Grangez IPO process?
Well, as mentioned during the Q1 presentation, we have initiated the process to see if an IPO is favorable and that process is going on. I cannot say anything more about timing.
This is from Martin Stensohn in Danske. Congratulations with a solid Q2. Regarding Sapa JV, could you please comment further on the outlook for Sapa JV?
I think as mentioned by Jens' staff, we see well, actually we have good we have had a good development in the North America for a long time. We see for the Q2 now the improvement in Europe in the markets in general. And Sapa has been through very, very demanding restructuring processes in Europe, closing of a lot of factories, moving factories and so on. And I think they are well prepared to take the market growth that we expect that will come. So I think the outlook is quite bright for Sapa.
And they are well prepared.
Could you say something about the size of the termination fee from Unilever?
The termination fee is in the area of NOK 300,000,000.
One more question about Sapa joint venture. How much restructuring charges could we expect in the second half of twenty fourteen?
[SPEAKER KARL HENRIK SUNDSTROM:] You know, we have to be honest, I don't have details.
No, I think we will see restructuring charges as we go along in accordance with their improvement of restructuring programs. And I think we'll have to revert on the specific numbers going out of this year.
There's a question from Haider Malmuster in Dan. You spoke about new projects in Okla Foods. Can you say something about the development of those new products? Because they're obviously innovative, but are they in terms of their development, have they been successful?
Are you talking about do you mean innovations or the
new Well, because previous projects have proven badly or done pretty bad. So my question is, can you just say something about those new products being environmentally friendly, but have they proven successfully financially?
Yes. Well, of course, the examples I show on my slide, they have been successful. Otherwise I would not use them. But they have been successful. I showed 3 products.
1 was the ketchup bottle that has been very successful. The other one was gluten free pizza and gluten free LaSalle. And of course, that is quite small, small that market is quite small. So we didn't have very high expectation. But we think that's important to offer also alternatives to people that needs gluten free products.
So in terms of or according to our expectation, they have been delivering, yes.
Okay.
No more questions? Then I think it remains just to wish you all a peaceful and relaxing summer holiday. Thank you all for coming. And I hope you'll enjoy our products during the holiday. Thank you very much.