Attending this Q2 Midsona call. Before we get into the actual presentation, I would just like to make you aware that there might be certain forward-looking statements in this presentation, and that those statements may be subject to risk. For a full view of our risk and opportunities, we refer to the latest published annual report. By that, I would like to get into Q2, first of all, a short summary of what has been achieved. During the quarter, we made major progress on our pricing initiatives and cost-saving measures. That led to an improved EBITDA before one-off items. That said, we are facing declining sales in the quarter. The main reason to this being discontinued licensing agreements. Those discontinued agreements drew sales down by, in total, SEK 66 million.
If you adjust for that effect, we would have a slight net sales growth. It should be said also that quarter two was the peak season for many of the discontinued products, and therefore, the effect will be lesser in quarter three and quarter four. Also, the market for organic food was somewhat depressed. That said, we are as convinced as ever that the long-term prospect for organic foods are good, and that we talk more about that later in the presentation. We saw continued good to very good demand for conventional health food brands, and Friggs was really the shining star in the quarter with a growth of 19%. I would say that Friggs corn and rice cakes are products that do resonate very well with the current consumer sentiment, products that are both affordable and healthy.
Our gross profit strengthened considerably, something that. Or gross margin, I should say, with the support of price increases that have been implemented according to our master plan. Still, we are somewhat behind our target level, and the main reason to this is the weak Swedish and Norwegian krona. We have also not seen raw material prices for organic raw materials coming down significantly as we would have expected. Lastly, and as already mentioned, we are improving EBITDA before one-off items, and thereby we break a negative profit spiral that we have been in for quite some time. We see this as a first sign of a turnaround and clear a step in the right direction, but of course, we are still far from satisfied. Let's take a look at the measures that we are currently taking or have taken.
Improving our gross margins by pricing has been a key thing that we have done in the last couple of quarters. Most of it was done in quarter one, and at the beginning of quarter two, and we now see the full effects of that. They have been implemented as planned, the price increases. As already mentioned, we're still not at target levels due to unfavorable exchange rates development, especially the weakening of the Swedish and the Norwegian krona. Hence, we are now considering new selective price increases in the second half of the year. Our cost savings programs are on track to deliver the committed SEK 60 million. Still, considering the depressed market for organic products, we are now implementing further cost-saving measures. We also continued to streamline and simplify our portfolio in the second quarter.
We have discontinued a number of underperforming brands and are taking in Q2. Finally, volume has been a challenge as some consumers have resorted to cheaper, less healthy, and less sustainable offerings. We are committed to fight, and there is no question that there still will be a market for healthy, natural, organic, and sustainable products. We are ramping up our brand marketing, and we're also looking at select profitable private label options. For those of you who have listened in before, this is a slide that you have seen before, but now we have, of course, also added Q2 2023. We had a sharp downturn in gross margins starting in 2021 and beginning 2022. In Q1 this year, we were again slightly ahead of last year, and in Q2, we are now clear ahead.
These are some good steps in the right direction, but still not at historical levels. We continue to follow this very closely. I've talked about exchange rates, that has not been favorable to us. Raw material prices have not really come down to the extent that we had expected, especially on the organic side. We also monitor this closely, and if needed, we will consider selective price increases to take us to our target levels. This is a slide that summarize portfolio development, and, as discussed, we have slight negative growth for organic portfolio. The organic markets have been tough. A lot of consumers have moved to conventional alternatives or deeper private label products as a response to their depressed purchasing power. Our commercial brands continue to grow.
Again, Friggs is the shining star with a 90% growth, but we also see stable demand for our other key brands. Actually, what is declining in the quarter is low-margin private label contract because we have exited quite a few of those contracts. We are actually selling a better mix nowadays. We have a huge decline in consumer health products. It's completely due to discontinued licensed brands. We have growth for our own brands. One can say that for our own brands products, we have a relatively stable development, but then we have the negative effect of the discontinued brands, and that effect is especially big in Q2, because it was peak season for some of those discontinued brands. Let us take a look at our different divisions. The Division Nordics is performing very well. We're actually very proud of the performance.
Sales is down, that is solely due to discontinued license brands. It's in the Division Nordics that we have those licensed brands. This has, of course, been quite a big effect both on profitable sales for us. Still, we are improving EBITDA in the division. I would say that this is our conventional brands doing very well. A little bit tougher for market than other from the organic brands. We've a negative sales development, which we are now taking measures to improve. In Division North Europe, which is the DACH region and primarily Germany, we had a challenging quarter. Sales were down, the overall market for organic product in Germany is challenging, and here we see a clear market decline and consumers moving towards private label products with lower margins for us.
We are now working hard on measures to strengthen our German brand Urtekram. At the same time, it is our ambition to act upon profitable private label opportunities. We are growing in Division South. We make less of losses. Of course, we cannot be satisfied by a loss of SEK -2 million EBITDA. We are far behind the desired level. The main issue is still production-related issues in Spain. We are now having a task force in place to address those issues and get Division South back in black. One of our main opportunities is to make our organic brand more relevant in a new consumer context. Clearly, the health of many people, as well as the planet, could be better. Personally, I would say that it's a pity that so many consumers are downgrading their eating habits.
It's bad for them, it's bad for the planet. In reality, choosing organic and more plant-based diet has a huge advantage for both people and planet, and in the grand scheme of things, the cost is not that big. Therefore, I'm convinced that we have good long-term perspective for organic. What we have done now is that we've worked with a very renowned agency to create a new category concept for our organic brands. We will use a 360-degree approach to implement in both media and in store. Here you see some of the examples that we are rolling out under the Kung Markatta brand. We are also doing the same for our other organic brands. If we turn to the next page, you can see the same type of concept, but then for, sorry, the Danish Urtekram brand.
We have high hopes on this as a way to really insight more consumers to shop and consume our organic brands. If you look at our forward focus, I would say that there are three main things that we will focus on. First of all, to manage our margin, and that means that we are looking at selective price increases for the second half of the year because we have not yet been able to reach the desired target levels for our brands. Volume and volume field is very important. Volume has been a challenge when consumers are changing their spending patterns. As I've already said, I and we are 100% convinced that there is a big market for healthy and sustainable foods in the future.
What we're now doing is that we do activate our brands with a special focus on the organic brands and the concept that you just saw. We are working very hard to find new business opportunities for our core brands. It could be new listings and customers, and we do have quite a few promising prospects around Europe. Private label is booming, and we are in a process where we are part of a lot of tenders, and we have good hopes that we will be able to secure new private label contract at good profitable margins. I already talked that in the quarter 1 call that we have said that EBITDA and cash before net sales right now, we are very committed to improve our EBITDA net, cash and EBITDA cash over time. We are implementing further cost savings.
We are accelerating our complexity reduction program, which in itself will lead to further cost savings. We are quite picky on private label and food service contract. They have to be at the right margin, for sure there is demand and opportunity out there. We will continue our inventory reduction over the year. These are the three focus areas that we see. I will come back at the end of the presentation and make a short summary before the questionnaire, I now leave the word to Max Bokander, CFO.
Thank you, Peter. As a financial summary for the quarter, the net sales were down 6.6%, but the gross margin improved with 2.8 percentage points, and the EBITDA improved by SEK 5 million. The net sales, however, landed on SEK -32 million, impacted further by restructuring costs and higher financing costs. Additionally, the net result was negatively impacted by a tax cost versus a tax income last year. The tax cost is a result of good profits in some entities, while not continuing to activate taxable losses for some entities. Finally, on this page, we delivered SEK 8 million in free cash flow, which was lower than last year due to a less favorable effect from payables in this quarter. Looking at the sales development, the organic growth landed on -11%.
As Peter already mentioned, this is largely explained by the discontinued distribution agreements. Excluding this effect, the organic development would have been calculated to - 4%. Our own brands developed better than the other business, and some brands demonstrated strong growth, like already mentioned, Friggs. Licensed brands were down 49.2% year. Again, excluding the discontinued distribution agreements, the organic development would have been calculated to - 8%. Private label developed weaker than previous quarters. This due to cancellation of certain low margin contracts having effect in this quarter. Explaining the EBITDA development compared to last year, the negative organic sales growth, or in this case labeled as volume, resulted in SEK 27 million lower contribution. This was, however, almost fully compensated by the improved gross margin that generated SEK 26 million higher contribution.
The improved gross margin was driven by the corrective pricing, which more than compensated for the unfavorable FX exchange rates during the quarter. The sales and admin expenses were still under tight control and were SEK 8 million lower than last year, which in total was the thing that drove the improved EBITDA. This was partly offset by a provision made for bad debts booked in the other operating income and cost section, since it's related to a rental income booked in this section. As a summary, the EBITDA landed on SEK 39 million for the quarter, which is SEK 5 million better than last year. Focusing on the sales and admin expense development. As already mentioned, it's down SEK 8 million, excluding FX effect. The net cost for own personnel reduced with SEK 5 million compared to last year, which represents a 5% net saving.
Additionally, strict cost control reduced other costs, which however, was partly offset by inflation in costs like insurance fees, et cetera. Moving over to the cash flow, and the free cash flow, as already mentioned, landed on SEK 8 million for the quarter, compared to SEK 53 million last year. The inventory is kept on a much lower level compared to last year, but did not have the same positive effect in the cash flow this quarter. Following lower purchases of goods, the payables landed on a much lower level than last year, which last year had a very positive effect. It could be mentioned, what you don't see on this slide is that the working capital in relation to sales have improved materially over the year and is now on 15.5% compared to last year, 19%.
Finally, from my side, focusing on our cash and debt situation, we ended the quarter with SEK 446 million in available cash, which represents 12% of the last 12-month sales. It should be noted that we, during the quarter, reduced our revolving credit facility by SEK 250 million to reduce our financing costs. With that, I would like to hand back to you, Peter.
Thank you so much, Max. We are 100% committed to a turnaround, and we will do what it takes to get there. To summarize, we are looking at further selected price increases to offset negative FX effects that we have had. We are very focused on volume, getting our key brands back on track, and we have exciting programs, especially for organic brands. As already mentioned, a lot of our brands are performing well, for example, Friggs. We will selectively secure private label contracts, but at the right margins and at the right profits. We are expanding our cost-saving measures, and we will do more in that respect because of the quite depressed situation that we have for industry right now. Complexity reduction is important. It will simplify our business and over time, also result in further cost savings.
To summarize, times have been challenged for our industry, but we're convinced that there will be a long-term trend towards healthy and sustainable eating, which should benefit us. Research confirms that people still want to eat organic and healthy, and we are one hence 100% sure that we will see a bounce back. Thank you so much for listening in. I now open up for questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Nikola Kalanoski from ABG Sundal Collier. Please go ahead.
Thanks for the presentation, Peter and Max. Just a few questions from my end. Firstly, a clarification, have you completed the identification of products that you would like to discontinue? Could you perhaps tell us how many products are of concern and perhaps the financial impact if a full scope discontinuation is implemented?
Yes, I can start by answering that question. We have discontinued pretty much a handful of brands, but I would say hundreds of products. The exact effect of this, of course, we have a viewpoint on that, but it's kind of hard to measure because it's also those secondary effects that you see in terms of reducing complexity, which means that you can over time have less head count on some, but it's significant, and it also makes us much more streamlined in the way we process the business. We have identified a game plan in terms of how many SKUs that we want to reduce, and we are on track for doing that.
Yep. In terms of timeline, how long do you think that full review and full restructuring of the product offering can take? I know that you touched upon that a little bit, but would this perhaps go into the next year, or is this only 2023?
I would say that the bulk of this will be done this year, but of course, complexity reduction is a still, it's a never-ending process in a way. This is something that we will always try and work on to really boost our high margin, high volume SKUs, and over time, phase out less profitable, less efficient SKUs. As a product, the bulk will be done in 2023.
Yep. Excellent. That's helpful. Finally, you mentioned that you're looking to compensate for current volume declines by pursuing opportunities within your conventional and perhaps low price products. If you do find something that you like, how long would then a potential ramp-up period be to, you know, ramp up new production?
I would say that, many of the projects that we are working on or discussing is technologies that we do have in-house. It's a relatively short process. We are talking about months rather than years, I would say.
All right. Do you think that that would perhaps compensate for the, you know, entire volumes that have been temporarily impacted by some discontinuations lately?
I will not give a forecast on that, but let's try and state some principles on that. First of all, our key focus is EBITDA and cash, actually, before net sales. This is sort of a moving target in that sense, that, yes, for sure, we are, first of all, driving our brands, and we are ramping up marketing activities, especially for the organic brands, number one. Number two, we are looking at the right type of private label and food service opportunities with the right margins, but also the right volumes. At the same time, as contract expires, especially on the private label side and on the food service side, we do not renew a contract at the current levels because they are not profitable enough for us. I will not give a forecast.
It is our ambition is clearly to improve both EBITDA and cash, and of course, cash has become so much more important nowadays, and especially keeping our inventory down. We have seen that with current financing costs, having a big inventory does cost a lot of money, which means that a lot of the private label products that were previously okay, are not okay anymore. it's a moving target in that sense. Again, EBITDA and cash before net sales.
Yep, that sounds healthy. That's all for me. Thank you very much, Peter.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
I would like to thank you for your attendance. As you have understood, we are very committed to make this turnaround happen. We are convinced that there is a long-term trend towards healthy and sustainable eating, and we will continue to work on that, to get fully back on track again. Thank you so much for listening in, and I wish you all a nice summer, and see you again in quarter three. Bye.