Confectionery and Snacks, will come back to in more details when he presents the results for brand and consumer goods. In terms of Orkla Investments, I want to mention that Gringes experienced continued improvements in both revenue and EBITDA in Q1. EBITDA margin of Genelese increased by 2.3 percentage points compared to Q1, 2013. Further an IPO process of the company has been initiated. We have adapted the organization so that it reflects our strategy on focusing on branded consumer goods goods in the Nordics.
Orkla Foods, Confection and Snacks, Home and Personal are the 3 business areas represent branded consumer goods in Nordics and the Baltics. Orkla International had an EBITDA of minus $86,000,000 in 2013. We have started the sales process of Orkla Brands Russia and Elekta in Poland. We remain in Felix, Austria, Vitama in Czech Republic and MTR in India. Orkla Foods Ingredients is the 5th business area and has an organic growth of 2.1% in 20 13 and increasing market shares.
There is no change in the strategy for Orkla Investments, which includes Grahengis, hydropower, financial investments, real estate, SAPA JV with hydro and the shares in Jotun. Orkla investment is a large share of our value and we will focus on getting the fair value and that is more important than speed. There is no change in our strategy. The future growth and value creation will be will come from our from a focused Nordic based branded consumer goods company. The key long term value driver is organic growth and this is where my focus will be.
We have done a lot of structural and organizational changes in the last couple of years going from a very decentralized business model to a more optimized model. It is important that we utilize our local scale, but at the same time utilize Orkla's scale to strengthen competitiveness, leveraging on our substantial local size, our skills and our insights in the markets. As mentioned, my main operational focus is on activities that drive organic growth and improve margins. I will give you some concrete examples in this presentation as will Kristofer later in his presentation. In addition, we will deliver on started and ongoing structural processes to realize synergies and increase efficiencies of our production structure.
I will come back to that also. We have arranged for an optimal structure and we will realize synergies both top line and bottom line of ongoing structural processes. This is not finished and this will take time. I want to update you on 2 concrete examples we have communicated earlier. We communicated cost synergies from the Ribe and Stavrid integration of NOK 250,000,000 to NOK 300,000,000 and the planned run rate effect at the end of 2014 is NOK 275,000,000.
In addition to the cost synergies of $50,000,000 to $70,000,000 from the Orkla Confectionery and Snacks integration, dollars 20,000,000 will come from the cost reduction program at the biscuit factory in Kymjalv. Also, we combined field sales force in confectionery snacks in Norway. This has had a negative impact in the short term, but will have a positive impact in the longer term. That was just finished 1st April this year. Strong innovations from the restructuring units will drive growth in the future.
We have several great examples of top line synergies from the research units already. To the left you can see example how the new confectionery snacks company takes brands across the biscuit, chocolate and snacks categories. The other example is products that results from combining expertise and technologies from the 2 companies, Stabure and Reber that is now merged into one company. For example, Tore had a very good expertise in gluten free products that Sabri did not have and Sabri is now launching a gluten free pizza based on that technology. But we also need to think broader about innovations.
Innovation is not just product development. Packaging is also an important area for innovation and an important area or important way to drive growth. Nura's jam products have more than doubled in 10 years. Growth comes from new packages like the squeezy bottle. Squeeze a bottle is here and the lids that are easier to open in addition to new technologies like fresh frozen jam.
There are also other examples of more functional packaging. This is about new packaging, but also functional packaging with new functions, easier closing mechanism on bags, for example, peanuts from poly and pastels from Dok and some dishwasher tablets, which is soluble with soluble plastic you can put the whole thing into the machine as an example. Our Bamidakt is a fantastic fish sauce in 5 different flavors launched in Sweden in 2011 and has had an annual growth rate of 30% since the launch. The sauce was introduced in Denmark January this year and after 2 months it is the 2nd largest sauce in the market. It has also become the 5th largest SKU in Orkla Foods, Denmark during a few months.
It is also launched in Finland in this quarter. This shows how we can take the same product from one country to another, but maybe under a local brand. We will do more of this and we will do this faster in the future. We focus on building relations with our customers based on our common interest and our common interest is to drive growth, drive sales. The battle of the consumer is in the store and we have to work more with our exposure, more with packaging and other items in the shop together with the stores.
We will ensure that it's easy for the store to expose our products and to make sure that it's natural for the consumer to choose our products when they are shopping. Our most important customers are the retail chains and we are focused on them. Still, we need to keep in mind that consumer trends are changing. We want to be where the consumers are and we will look into other channels as well. It could be in specialist stores, it could be in pharmacies, duty free shops or on the web.
This shows an overview of the Nordic and Baltic brand consumer goods production structure and it's quite obvious that this is not the optimal structure. We have 70 factories in the Nordics and this is obviously is not the optimal structure as I said. There is a potential, but there is also a challenging due to issues around countries inside outside EU, short seasons productions in some areas, vegetables especially and of course local adaptations. We have started working on this and 2 initiatives are currently being reviewed just to be mentioned to small examples. Liliana will be decided in Orkla Foods Norge Board meeting on the 22 May and the production from Boyford in Finland producing herring was moved to Kungshan in Sweden yesterday.
Just two examples and more examples will come to optimize the production structure in the future. We show in this quarter that we deliver and are on track with our synergies. Organic growth is the challenge and that will be my main focus going forward. And I can promise you we are all committed to deliver on these targets. Thank you.
And let me give the word to CFO, Terje Andersson, who will give you more information on the financials. Thank you. I will go through the key financials starting with the group income statement. Operating revenues increased by 15% in the quarter, mainly ascribable to the acquisition of Reber. And as you remember Reber was consolidated as of May last year.
Currency translation effects had a positive impact of SEK 422,000,000 on revenues in the quarter. EBITDA increased by 23% and ended at $763,000,000 of which approximately 90% came from branded consumer goods. And I will refer to the EBITDA bridge on the next page. Other income expenses amounted to a negative €35,000,000 almost all of it has cash effect and the costs were largely related to continued restructuring within Branded Consumer Goods. Profit from associate is mainly related to Jotun and the Sapa joint venture.
Net profit from the Sapa joint venture was a negative SEK51 1,000,000 in the Q1. And profit contribution from financial assets was reduced by the disposal of the share portfolio. The market value of financial assets was approximately SEK1 1,000,000,000 at the end of the quarter. If you have a look at cash flow and at the EBITDA development, you see that reported EBITDA was $140,000,000 higher than in Q1 last year. Both acquired and organic growth contributed to an increase of SEK 76,000,000 for Branded Consumer Goods, and Christa will shortly present BCG in more detail.
Grengis had a satisfactory quarter, driven by both volume growth and cost improvements, while hydropower benefited from high precipitation and significantly higher volume in the Q1. Restructuring and organizational changes had a negative impact on headquarter cost also in this quarter. However, we expect a more positive trend regarding headquarter cost in the second half of this year. Some comments to cash flow and balance sheet. Working capital increased in Q1 due to normal seasonality.
However, the increase was somewhat less than last year. This was more than offset by profit from operations and cash payment of the Grengis insurance settlement of $300,000,000 Net interest bearing debt was reduced to 7 point $6,000,000,000 and Orkla retained a strong balance sheet with an equity ratio of 60% and net gearing at 0 point 24%. And then I hand it over to Christer to go into VCG in more detail.
Thank you, Thierry. If we start with Branded Consumer Goods, we presented rolling 12 month EBITA trend, which is positive, and this is really mainly driven by synergies and improved financial performance as we get a greater scale in consumer goods. In this quarter, it's important to note that we have changed the reporting calendar of a number of companies. This has resulted in a difference in number of invoicing days or selling days in the quarter compared to quarter 1 last year. This means that we have adjusted our organic growth numbers also including the Easter impact because we believe that that is the best and most transparent way of presenting adjusted organic growth.
So as we come further into the presentation, you will see the adjusted organic growth numbers with these two things included. Orkla Foods presents a broad based underlying EBITDA improvement. This is driven by margins improvements across the board and Q1 for 2014 obviously includes Reber, but so was not the fact in 2013. So if we had a pro form a Q1 for including Reber in Q1, 2013, the EBITDA margin would have been 2 percentage points lower in Q1 last year compared to this year. So 2 percentage points improvement.
Top line is still challenging. Reported organic growth or reported growth is 32%, but adjusted organic growth is minus 2.7%. This is mainly driven by the fact that campaign pressure in Denmark and somewhat in Norway has been a bit lower in Q1 this year. Reebok cost synergies, as Peter said, is clearly on track. And by the end of this year, we will have a run rate of approximately SEK 275,000,000.
There are still some synergy projects going on and there is field sales projects in both Norway and Sweden to increase both the efficiency and the effectiveness of the field sales operations in these two markets. And as Peter mentions, we've just done a move of the fish factory in Finland to Kungsam in Sweden. The EBITDA improvement of close bit more than SEK 60,000,000 as I said is driven by the larger scale and synergies coming into the business. Overall, we feel that we have an innovation program for consumer goods, which is somewhat stronger in 2014 than in 2013. It's really focused across the board behind our biggest brands and our biggest positions.
On top of what Peter mentioned, obviously, the Hillmax launch in Q1 has been a very key priority for the Foods business. And year to date, we have sold about 1,000,000 pieces of Hillmax and the launch is off to a good start. However, innovations in Norway was somewhat launched later in the quarter than it was last year and that's also somewhat impacting top line. Orkla Sweden, Orkla Foods Sweden is also launching into Shield Ready Meals, which is an expanding sector with heat and eat Shield Pasta Ready Meals and there are more examples to come. Orkla Confection and Snacks had a weak top line and bottom line quarter.
Operating revenues reported improved by 1.4% and that is helped by not least currency impacts, but the underlying growth is minus 3.8, primarily related to a very weak start in Sweden and Norway in the beginning of the quarter. And I will come back to the point about the demanding integration process, particularly in the Norwegian market. This is also impacted by the fact that compared to 2013, in the quarter for the whole market, listing improvements, innovations and somewhat campaigns were more geared towards the end of the quarter than starting strong in the beginning of the quarter, and we were off to a weak start in these two markets. Rising raw material prices, both on the raw material side but also impacted by currency, has weakened the margins in the quarter, which we see as a temporary impact in the first half of the year. Overall market shares are somewhat weakened across the board with exception of Baltics.
And in Baltics, we can see that we continue to have a very strong development in terms of both top line growth and the markets as such are developing very well. The quarter EBITDA of 116,000,000 dollars is significantly weaker than the same period last year. Confectionery and Snacks was announced as a new business unit in end of 2012. However, the integration started by the second half of twenty thirteen and this has no doubt been a demanding restructuring process. And it has impacted both our top line and bottom line a bit more than we had anticipated.
We're still convinced that we will deliver on both the top line and the bottom line synergies as we have communicated, but going from 7 businesses to 3 in our 3 largest markets has been a demanding process. The single biggest activity in terms of integration was the integration of field sales in Norway, which took place in Q1 2013 or 2014, sorry. This involved more than 200 people in this Norwegian organization across all the geographies of Norway and that work finished off and the new structure started working operationally as of 1st April 2014. But there is no doubt that, that has had a negative impact on our top line performance in the Q1 of the year in Norway, which is our largest market. Synergies will be delivered.
We have said SEK 50,000,000 to SEK 70,000,000 and this will continue to deliver as we go along. On top of that, we will see further supply chain efficiencies, as Peter mentioned also. And we see that we can improve both top line and margins. And clearly, this will come into play as of second half of the year. Innovations are more focused behind our biggest positions on our biggest brand.
Poly is today launched now also in chocolates coming from the nut sector as Peter mentioned and is one of the best selling chocolate tablets so far this year in Norway. The cost initiatives on top of synergies will be mainly centered around the supply chain area, focused on all our categories and throughout the whole value chain. We will also in this year do some pricing initiatives, not particularly important in the Norwegian market linked to raw material cost increases. Also that we'll see will impact the second half of the year. Innovations, most of this has been mentioned, but also in Sweden, we are gearing up our innovation portfolio in the snacks category and several strong concepts are being launched on our biggest brands in the quarter.
And overall, we feel that the 2014 innovation program is stronger than the one we had in 2013. Home and Personal Care delivered improvements in revenue and EBITDA across all segments compared to Q1 2013, dollars 1,300,000,000 of revenues is a revenue growth of 5.7% and organic growth of 2%. This has been caused by broad based sales growth in most markets also for Orkla House Care and Pierre Robert Group has been off to a very good start. Lilleborg had a somewhat weaker start in the quarter, but that has been compensated by House Care and International Markets. The EBITDA of SEK 230,000,000 is a significant improvement versus the $214,000,000 of the same period last year and this has been a stable and solid performance.
A couple of examples of a strong innovation portfolio also in Home and Personal Care. The OMA launch, interactives and sports is meeting a need of very more and more active consumers facing a need to get order out of sport clothing in a way that hasn't been really possible before. So new technology meeting new consumer needs. Pierre Robert making exciting launches into stockings and been off to a very good start and having both limited technical innovations in the stocking category. So strong programs across all the 3 major consumer units in terms of innovation.
Orkla International reports $660,000,000 revenue in the quarter, which is a significant revenue growth of 62%, mainly driven by the fact that we now have new business in as a consequence of the Reebra acquisition. As Peter mentioned, we have a structural sales process going on for the Russian business and our EBITDA of minus 28,000,000 is less weak than the same period last year, but all units all our strategic units except Russia have improved their performance in the beginning of the year. In particular, India has continued to perform very solidly with an organic growth of 18% in the quarter. And profit improvements has been stable across the board, but as we said, we have challenges in the Russian market. Orkla Food Ingredients, historically Q1 is always the lower quarter in terms of profitability, but operating revenues of close to SEK 1,500,000,000 is up close to 9% in the quarter.
Organic growth is plusminus0 and EBITDA improved with SEK 5,000,000. Last year's EBITDA had some one off positive effects. The underlying EBITDA improvement in ingredients is actually somewhat stronger than what you see on this chart. Across the board, you could see that some of the smaller units in Czech, Slovakia, Poland, etcetera, had strong solids improvements and ingredients is off to a good start in the year.
Thank you. I will then give some brief comments to some of the key holdings under Orkla Investments. Starting with Sapa JV. Sapa experienced improvement improved markets and volume was up both in North America and Europe by 5 percent and 2% respectively. Most key end markets show a stable to positive trend.
Underlying EBIT was $155,000,000 and both volume growth and improvement programs contributed to this increase. The restructuring program is progressing according to plan. An example of this was Sapa's recent announcement of its intention to close a factory in Italy. Restructuring charges will however have a negative impact on net profit in 2014 and Orkla's share of profit in the Q1 was a negative $51,000,000 Sapa had a seasonal increase in working capital in the Q1 and net debt increased to $2,300,000,000 at the end of the quarter. And as you probably remember, Sapa has a credit facility of €700,000,000 A good quarter for hydropower where high precipitation contributed to significantly higher production volume than last year.
This more than offset lower prices and EBITDA ended at $58,000,000. This was levels were somewhat higher than normal at the end of the quarter, but this will have only a moderate impact on production volume in the second quarter. On the other hand, expected spot prices for Q2 are 35% to 40% lower than last year and estimated profit in Q2 is lower than the $58,000,000 in Q1. Jotun on the report financials on a 4 monthly basis and we cannot present official figures for Jotun. However, Jotun has had a satisfactory start in 2014 and can report sales growth in all segments, including Marine Coatings.
Shipbuilding Industry continues to recover after a global slowdown. Due to somewhat higher cost in growth markets, EBIT was more in line with last year. Gringis had a strong quarter with volume growth in both Europe and Asia. Automotive which accounts for approximately 90% of Gengiz end market continued to show a positive trend and Gringus has a special strong position in the fast growing Chinese market. In addition, the restructuring process in the Swedish made a positive contribution in this quarter.
In total, EBITDA increased by €30,000,000 to €117,000,000 and this is an all time high result for Gringes on a quarterly basis. EBITA margin increased to 11% in the quarter. And as Peter mentioned, Orkla has in line with the corporate strategy initiated an IPO process for Grengis and assumed venue for this is the Stockholm Stock Exchange. And then we move on to Q and A.
And secondly, for Peter, if you're still regarding value in consumer goods, I can see that you have kept your financial targets for 50, 16 unchanged from the Capital Markets Day in last year. But we still see the underlying growth still on the soft side. So I get your point with all of the product innovations and
I think Terje, our machine will answer the question regarding Sapa and Genghis first and then we'll come back to your second question. Yes, it's right that there is a positive demand trend from both Sapa and Gringus out of Q1 and into Q2, we see stable to positive trends for most end markets, both in North America and Europe. And the automotive market, which is important for both of them, but in especially grengis, is positive into Q2 and especially the Chinese and Asian markets. So it's a positive trend into second quarter. Regarding the long term targets for Branded Consumer Goods, we as I said, we are committed to reach those targets.
It's obvious, I think, for everyone that it will be challenging. It's not an easy job to reach those targets, but we believe it's possible. Mainly, it's effects from the restructurings. We are in the middle of right now, fulfill the restructurings, reach the synergies to improve the margins, reduce cost and improve margins. Then I think more successful stronger innovations will help organic growth and also selling, looking into new channels, as I mentioned, web, exports, new retail formats and so on.
So we believe it's possible. I don't know if you want to add some comments.
I think if you look at foods and confectionery snacks in common, there's no doubt that the Reebur integration and the internal integrations in confectionery snacks has meant that we have lost a bit of momentum in our execution performance. But there is nothing wrong with our brands. The categories where we operate, we still see can deliver the type of growth. So if we can come back and strengthen our market shares, which are somewhat weakened, we think that this is no doubt a stretching target, but it's absolutely a possible target.
Just to your follow-up on that regarding the somewhat weaker market shares. What kind of structural shifts or trends do you see in the market? Are you facing tough competition across the board? Is it private label store pretty much taking market shares? Could you please put some comments on that?
Yes. Business between markets, I think across the board, we don't see that we're losing market shares based on the fact that there are completely new consumer trends taking consumers off in a completely different direction. That's not the case. But it's been tough competition both from local competitors, international competitors as well as private labels. In the Swedish markets and in Danish markets, private label has clearly made some headway.
In the Norwegian market, we can see some other movements. But in general terms, the brands that we have are highly relevant We haven't lost consumer interest. And therefore, we're also confident that they can bounce back as we get more externally focused as well.
Okay. Thanks. And then a couple of comments on Russia. You're trying to find an exit on the assets in Russia. And then what is left is then amongst other assets the Indian operation.
What are basically our plans for Orkla International? I would like you to see that you can stick on with the assets in India to develop that asset or could we expect that to also try to find an excess of the assets in India?
As communicated, we so far regarding Orkla International, we are in the process of selling Russia and Elekta in Poland. For the time being, we will remain in Czech Republic, Vitthalar, Czech Republic, Helix Austria and MTR in India. All those businesses are developing positively and especially MTR in India is developing very positively. So for the time being, there is no change in that strategy. Okay.
Then the last question from my side. Peter, you talked about optimizing the production structure. And you also mentioned 2 examples that you're looking into. Any way that you can put some color on the restructuring synergies that you might see out of these two examples you mentioned? Thanks.
The fish example, that's the most recent and starting off basically in Q2. That should deliver $15,000,000 to $20,000,000 saving a year once that has been finalized for the Foods business.
Peri Venas Korpersen, Carnegie. A couple of questions. First, could you give an update on the negotiations with Unilever? I believe the agreement is about to end now during spring.
Basically similar picture as we said in the last report. What we talk about here, I think it's important to note is less than 10% of Lilibar's turnover, which is really up for discussion. And there's good constructive discussions and negotiation. We don't see that this in any way will impact 2014 performance, but we haven't finalized the negotiations.
Also on the legacy of the listings and product placements in their stores. You are mentioning that you are doing a lot of restructuring on the field sales force and it seems like you have to do that again 1 year down the road. Would that be positive for the margins in Orkla? Or would it be negative and Nordiskillipun get price reductions?
I think there's more question than one there. But I think in general terms, there's no doubt that we have big field operations and we're offering services to our stores and our customers and that's a service they can decide to have or not decide to have and that's part of our offering. We will continue to visit stores in Norway across the chains with sales reps whatever the future says. And I think that's clear. So we talk about one part of our offering to the stores, which is the merchandising.
These are we're in discussion right now with Norge Groupon and I'll obviously not comment that in detail. But we see that this will not weaken our competitive performance. It's sort of something that happens in the market. We have seen it in other markets, but we will obviously make sure that this is done in the best possible way if it's done in our key categories. But I don't really want to get into too much detail about our customer negotiations.
Goldman Sachs from Net. In the report you write on the confectionery and snacks section that you look to reduce the cost base by €300,000,000 over the next 3 years. Is this an expansion of previous guidance in terms of efficiency improvements?
This is in line with what we have said
So it's a combination of synergies
plus what we're doing in the value chain improvements. So this is fully in line with what we have said earlier.
Question. Cash flow from operations from Orkla Brands improved much more than the EBITA improvement in Q1 compared to 2013. Is there a real sustainable improvement in cash conversion that we observe? Or are there other reasons for this?
No. There are no fundamental changes there. So this is more timing effects for Orkla Brands in this quarter.
Yes, thanks. A couple more questions please. Can we expect any changes in innovation spending, R and D spending? You talk a lot about product innovations and I sense that you might be stepping up initiatives.
I don't
think we see an increase in overall spending. I think we see a clearer focus on where we invest those money. So I think on a general basis, we don't intend to step up the absolute amounts, but I think they will certainly be more focused behind our biggest positions. And as we also benefit more, as Peter said, of initiative across markets that also gives some efficiency, some scope for investing elsewhere without increasing the absolutes in innovation.
Okay. And you also commented on finding exit for Russian assets and also the one important. But on the acquisition side, any changes in how you are looking at bolt on acquisitions in the BCG division?
I think our main focus now is to realize the synergies of the acquisitions we have done and of the restructuring we are in the middle of doing and focusing on daily operations and to improve top line growth. That's our main focus going forward. So we are we don't have any plans for any big acquisitions like EIBR for instance, no.
Does that still
mean that we could expect smaller bolt on towards the end of the year or into next year?
That might happen.
And are you still considering bolt ons with complementary categories or within categories you're still in? And also on the geographical side, is it still the Nordics that would be most realistic to expect any acquisitions?
Well, we have communicated that the Nordics and the Baltics is our main markets and that's where we will focus going forward. And regarding new categories, we will just have to wait and see. Okay. Since there are no more questions, so thank you very much for