Morning. I'm Åge Korsvold, I'm the CEO of Orkla. Welcome to the third quarter results. With me today, I have Mr. Terje Andersen, the CFO, to present you the results. Christer Råberg, the CEO of Confectionery and Snacks, will review the business units with you. First, some introductory comments from me. The third quarter was a demanding quarter. Seen in isolation, we cannot be satisfied with neither top line profitability nor cash conversion. On the other hand, change processes and integration processes are proceeding according to plan, and we are getting the initial results from these programs after initial investments. Furthermore, the speed at which we are leaving the third quarter is more buoyant than the speed at which we entered the third quarter. For the consumer goods business, we are reporting EBITDA of NOK 867 million, which is an increase of 11%.
The group EBITDA is NOK 909. Contribution from acquired businesses is NOK 120 million. If we look at the business units, Orkla Home & Personal and Orkla Food Ingredients are reporting reasonably satisfactory results. There are still challenges inside the Norwegian food business related to the integration processes going on there, while the Baltics and Sweden are reporting progress. We have had a good quarter for Gränges, the old Sapa Heat Transfer. Both volume and profits grow, and cash flow generation is also reasonably satisfactory. As you know, the joint venture with Hydro closed on September 1st. Sapa is now reported as an associate company where we own 50%. I wanted to show you this chart because it underlines another point, which in all the numbers that we talk about is also important, and that is that Orkla is growing.
I think that you cannot underestimate the importance of increasing the platform from which you want to extract synergies. As such, the importance longer term of acquiring Weber and Jordan is important. As you can see here, EBITDA is turning up again. Of course, we are very confident that these acquisitions will meet the return requirements that we have. I would also like to remind you of the four strategic priorities that we outlined at our capital markets day at the end of September. There are four things. First of all, we need to reduce complexity. That work continues and will continue for, I think, a long time. We need to extract costs and improve cash flow. We need to drive organic growth. We need to improve the skill base inside our own organization.
The most common question that we get is how will you grow? There are two sides to the equation. On the one hand, we need to extract synergies and reduce costs, and there are then activities directly related to growth. We will reduce costs through a number of initiatives that we spend a lot of time explaining to you. Restructuring synergies, integrating companies, continuous improvements, improving purchasing, and so on. The importance of the cost initiatives is, of course, that a significant part of the improvements need to be reinvested in the business in order to improve competitive positions. It is that improvement of the competitive position that is a very important element of the growth. In addition, we know that great innovations drive growth, and in addition to that, new categories and new channels will also contribute to growth in the years to come.
The two are linked. We need to release financial resources from cost initiatives and skill improvements, and those resources we need to reinvest in growth. At the Capital Markets Day, we also announced our financial objectives. Our ambition is that Orkla Foods, by the end of this three-year transition period, will grow organically 2%-3% and have an EBIT margin of 15%. Orkla Confectionery & Snacks, our ambition is that they will grow 2%-4% with a 16.5% EBIT margin. For Orkla Home & Personal, 3%-5% organic growth with EBIT margin of 17.5%. We have explained to you that the restructuring synergies so far is estimated to be NOK 400 million-NOK 500 million, and those programs that we have announced are on track. I think we are realizing synergies in accordance with plan.
In addition, we expect gross purchasing savings order magnitude NOK 400 million as we centralize more of the purchasing function at Orkla. Lastly, continuous improvements we expect to be order magnitude NOK 150 million per year. That leaves essentially two elements. The first is that we need to compensate the increase in raw materials and the annual drag from inflation with the price increases. The other unknown is, of course, then the contribution from volume mix, which is the organic growth. Those three elements are, of course, the elements that will define whether we can reach the financial objectives that we have.
I think if you look at the numbers, we feel that the financial objectives are realistic and a significant part of the savings in Confectionery & Snacks we talk about, 50/50 will flow down to the bottom line, and the rest will be reinvested in the business as we go forward, and then as we improve our competitive position. With that, I leave the word to Terje Andersen to take you through the numbers. Thank you.
Thank you. I start with the group income statement. Group's operating income increased by 17% in the third quarter compared to last year. Acquired companies, mainly Rieber & Søn and Jordan, contributed with NOK 1.2 billion, while currency translation effects were positive with NOK 245 million. EBITDA ended at NOK 909 million in the quarter. The EBITDA bridge is shown on this slide. The growth in Branded Consumer Goods is driven by acquisitions, while Heat Transfer had both volume and profit growth in the quarter. Orkla realized significant gains from sale of real estate during 2012. This explained the negative deviation in the quarter for financial investments. Headquarter and other costs are somewhat higher than last year. Orkla Insurance Company DAC has in the quarter made an allocation for claims by NOK 15 million. Other income and expenses total NOK 228 million in the quarter.
These costs are mainly driven by the restructuring program currently running in the group, immediate recognition of M&A costs, and impairment of a Danish food brand in the quarter. Cash effect is estimated to be approximately NOK 160 million. After the establishment of the Sapa JV September 1, these investments will be presented on the line for associates and joint ventures. Profit contribution from Sapa JV in September was negative with NOK 35 million. Orkla continued to sell shares and financial assets during the third quarter and booked a gain of NOK 56 million in the quarter. Process of selling down the financial share portfolio has been successful, and the market value was somewhat below NOK 1 billion at the end of the quarter. Discontinued operation is mainly related to 2 months' profit from Sapa Profiles.
As Åge mentioned, working capital has a seasonal increase in the third quarter, but is expected to come down towards the end of the year. Cash flow from operation ended at NOK 561 million in the quarter. Looking at net debt. Net interest-bearing debt was NOK 9.9 billion at the end of the quarter. This represents an increase by roughly NOK 5 billion year to date, largely related to the acquisition of Rieber and paid dividends, but also due to currency effect on the debt portfolio. The increase was partly offset by the sale of shares and financial assets, a positive cash flow from operation, as well as received payment from the Sapa joint venture. Balance sheet is still strong, net gearing was 0.33 at the end of the quarter, and our financial flexibility is there to support the strategy going forward.
Some comments to the other businesses, starting with Heat Transfer or Gränges, which will be the official name going forward. Gränges had both volume and profit growth in the quarter. EBITDA in the quarter ended at NOK 90 million, compared to NOK 65 million last year. Swedish operation achieved volume growth despite a negative trend in the European automotive market. Improvement programs that have been conducted over the last year contributed positively to the EBITDA and margin growth. Further restructuring in Sweden has been announced in the quarter, which will result in a reduction of approximately 65 employees. Chinese operation in Shanghai contributed also positively with both volume growth and positive effects from improvement programs. Cash flow year-to-date was approximately NOK 280 million, representing a cash conversion of 108%. Hydropower had a quarter on par with last year. Significantly higher prices were offset by lower production volume.
Total production was 545 gigawatt-hour, compared to 760 gigawatt-hour last year. Reservoir levels were somewhat lower than normal at the end of the quarter, production volume will be lower this year than last year. Jotun continues its positive growth trend and achieved a 6% increase in sales and 19% increase in operating profit in the first 8 months. Volume growth in all segments, except Marine and higher gross margin, contributed to the profit improvement. Marine was still affected by the general decline in new shipbuilding activity in Asia. Year-to-date sales in Scandinavia were also lower than last year, largely due to a cold spring in this region. In line with the company's growth strategy, Jotun has continued its comprehensive investment program during the year, the most important investments are the construction of new factories in Brazil, Russia, and China.
Jotun has also continued the geographical expansion and has entered several new markets, such as Myanmar, Bangladesh, and Morocco. Lastly, the Sapa joint venture with Hydro. After the final approval from Chinese competition authorities, the joint venture with Hydro was established September 1. Integrating the two organizations and realization of the synergy potential will be the main focus going forward. Sapa JV had pro forma operating revenues of almost NOK 11 billion in the quarter, and the pro forma sales volumes increased by approximately 1%. U.S. automotive market contributed positively, and the total volume for extruded products in North America increased by 2% in the quarter. Europe, on the other hand, had a continued decline in the general extrusion demand. The trend is, however, somewhat more positive in Q3 than previous in the year.
As mentioned earlier, Orkla's net profit from the JV in September was booked on the line for associates and joint venture with a negative amount of NOK 35 million. I leave the floor to Christer Råberg.
I'll take you through some further details on the Branded Consumer business and the 5 different business units we have there. Starting off with Orkla Foods. Orkla Foods has had a significant growth in the quarter, a bit more than 30%, but that's more or less entirely driven by the Rieber acquisition, and the organic growth is minus 3.5%. This has really been driven by unsatisfactory performance in the Norwegian market. There is no doubt that the integration process has been demanding on both the original Orkla side and the acquired Rieber side, and mainly on the innovation side, we have lost a bit of momentum. We have satisfactory performance in Sweden, where we're improving our shares. Also Finland and Baltics are strengthening their performance, both on top line and bottom line.
On the comparable side, the sales of real estate from last year, NOK 11 million, contributed positively to last year's performance. Overall, we have somewhat weaker market shares, and that's mainly driven by the Norwegian performance. That means that operating revenues of NOK 2.6 billion and the EBITDA of NOK 364 million, means an EBIT margin of 14% in the quarter, which is the strongest quarter so far this year, but below last year's level. A bit further details on the Rieber acquisition. What is important to say is it's following the plan on the synergy side. The synergies of NOK 250 million-NOK 300 million will come through. We expect a running rate of NOK 150 million by the end of this year. The effect in Q3 was NOK 15 million, and we will see further effects on the P&L as of Q4.
As I mentioned earlier, the organic decline of Rieber is 8% in the quarter. This is mainly driven by the low innovation rate that we had in the quarter. We expect this also to improve as we come into next year. Rieber contributed NOK 71 million of EBIT in the quarter. As you can see, the split of synergies is that half of the synergies more or less comes from FTEs and people. A significant part comes from purchasing. The others group totals up to NOK 250 million-NOK 300 million, which we are convinced that we will deliver in line with the plan we communicated earlier. Innovations has been strong in the Swedish market. We have had some successful launches of Felix. This has helped to improve the performance in the Swedish market.
The Paulúns health brand position that we have established, we continue to grow. A couple of significant launches in the year, we are ahead of the targets on Paulúns. As we said earlier, we're lacking somewhat behind on the innovations in Norway. We expect that to improve as of next year. We have also started reinvesting in the core brand Toro, coming from the Rieber portfolio. You might have seen that also on Norwegian market in terms of advertising. We'll also pass you one of the new innovations on Toro as you leave here today, which is the Toro Tom Kha Gai. Sorry for that pronunciation, Atle. Orkla Confectionery & Snacks, as we said on the Capital Markets Day, we have challenging market conditions.
We can see that we're coming out of the quarter somewhat stronger than we entered the quarter. There's no doubt that this is still very disappointing performance. There's been high activity rates from our competitors, both from the private label side and local and international competitors. Markets overall are somewhat stable. We have an organic decline of 3.5%. Reported growth is slightly ahead of last year, thanks to currency. EBITDA declines. We report 16.1% EBITDA margin, which is below last year, but it's the strongest quarter so far this year. Organic revenue growth Q2 was -4.8%. This quarter is -3.6%. We know that we have a somewhat stronger innovation program by the end of this year. We also have a stronger activity program. We don't anticipate any positive hockey sticks effects.
This will be gradual improvements as we come along and further strengthen our program. This is a turnaround case. We can clearly see the potentials. We have lost a bit of momentum on our core business across the different geographies and lost to different types of competitors in the different markets. We are standing firm behind our 2016 targets of 2%-4% organic growth on a yearly basis and +16.5% EBIT margin. We do think that we can grow the top line significantly beyond where we are today. That is really investing in the number 1 and number 2 positions that we have across the different geographies. We see no weaknesses on our brand positions and brand health overall. We have now merged businesses in three different markets.
Three businesses has been merged into one in Norway, two in Sweden into one business, and two in Finland into one. We have lost a bit of momentum as well as we've done in food. When you integrate, somewhat internal focus goes up, and our competitive short term in the external marketplace hasn't been as strong. We are convinced that we have a much stronger business now as we go forward and meeting our customers with one face as a much stronger operation. We have appointed a few new leaders, and we had a new CEO in place in Sweden as of 1st of October. We are gearing up on our innovation program. We have some pockets of success this year, but we're not successful on a broad base, and that's what we intend to be going forward.
To fuel growth, we need to be much more aggressive on cutting costs. Therefore, on Capital Market Day, we announced a cost-saving program of approximately NOK 300 million over a three-year period. Approximately half of that will come through, as Åge said earlier, on the bottom line. There are several cost reduction initiatives that's already been starting, and this is an even firmer plan than we said in the Capital Market Day now. The synergy savings of NOK 50 million-NOK 70 million, we still anticipate to come through. We have announced now that we're integrating field sales operations in Norway, which is not just giving synergies, but it's also actually meaning that we will cover on two of our categories, significantly more stores than we have done before, so improving our executional power. We have announced efficiency improvements in our biggest site for biscuits, Kungälv, which is significant.
We've done some workforce reductions announced last week in Denmark. We kicked off a Design to Value program going through our end-to-end supply chain activities on our products. As Åge said, there are some significant opportunities in the purchasing side. To govern the whole savings program, we have also appointed an SVP operations within Confectionery & Snacks to make sure that we deliver on these plans. Going over to Orkla Home & Personal Care, who reports a stable quarter. NOK 1.2 billion is an organic revenue decline of -1.2%. The growth is delivered by the acquisition of Jordan. Our largest business, Lilleborg, is delivering a solid performance in the quarter, both in terms of top line shares and earnings. We are integrating Jordan ahead of schedule, and we can see that those synergies that we had anticipated will come through with a slightly higher speed than earlier seen.
We have a strong quarter for Orkla House Care, helped by also good strong weather in the painting area. The weather is somewhat helpful in Q3. We also have positive developments in the Pierre Robert Group, and this is coming from a very strong innovation program. We have strong innovations in the underwear area in both Sweden and Norway, and a very good momentum, which has also led that we're taking back listings from where private labels have been very strong in these markets before. That's looking very promising. We have positive share development across key categories. The reason why we have an organic decline in revenue is driven by Orkla Professional, which are meeting demanding market conditions. It's also the fact that we have down prioritized some of the non-strategic Jordan export markets.
That's been done on purpose, that means that the organic revenue growth, minus 1.2%. We have a seasonally very strong quarter from an earnings point of view, and EBITDA margin of 21% is more or less in line with what we had same quarter last year. We believe these margins to be satisfactory for the quarter. As I mentioned earlier, a very strong innovation program, and we launched the woolen underwears in both the Swedish and the Norwegian market, gaining some additional listings with our key customers. We're getting into children's underwear or baby underwear as well, we're very successful. In the toilet cleaning area with the Klorin brand, we have had some significant success with new innovations that is performing ahead of target. Strong performance and solid performance in Orkla Home & Personal Care.
Orkla International, we're reporting a significant revenue growth. This is entirely driven by some of the Rieber markets are reported into, like Poland, for example, are reported into Orkla International. The organic sales decline is minus 1.5%. That is driven by a 12% decline in the Russian market. That is driven by the trade structure changing. We are also restructuring our Russian operation. We expect that to be completed by mid-next year. That is a significant restructuring to make sure that we stop the bleeding of the Russian business. MTR in India continued to do very well, 18% growth in India. That is driven by all the core categories of powder and mixes and spice mixes, which are all performing very well.
We have also positive development in Austria and Poland, while the Czech market has been quite demanding, with very high promotion pressures and therefore margin erosion. New companies also improved the profitability by NOK 10 million. EBITDA margin of minus NOK 8 million all in all includes the NOK 10 million positive from new Rieber businesses. Orkla Food Ingredients is delivering a broad-based growth that is partly driven by the fact that we acquired one ice cream ingredients business in the U.K., but it's also an organic revenue growth of 3% in the quarter. Both from acquisitions and organic. We have somewhat positive foreign exchange effects in Orkla Ingredients. NOK 1.5 billion in revenue, and the EBITDA was NOK 77 million, partly improved by the acquired businesses as well.
Also good performance from bakery ingredients in the Nordics, while profit growth is stable from all the strong market positions we have across the board. We're reporting an EBITDA margin of 5.1% in the quarter, ahead of the 4.3% we had last year. The main driver has been the ice cream ingredient side, which had a strong Q3. That was all. Over and out. Everyone is rushing out to get the innovations. Anything on the web? Okay. Thank you for your questions