Oriola Corporation Stock Exchange Release 16 February 2023 at 8.30 a.m. EET
Oriola Corporation's Financial Statements Release 1 January-31 December 2023
Strong growth in profitability excluding Swedish dose dispensing business
October-December 2023 highlights
- Invoicing increased by 6.2 % to EUR 963.4 (906.9). On a constant currency basis, invoicing increased by 9.7% and was EUR 994.7 million.
- Net sales increased by 1.7% to EUR 386.6 (380.0) million. On a constant currency basis, net sales increased by 4.8% and were EUR 398.2 million.
- Adjusted EBIT was EUR 5.4 (2.9) million. On a constant currency basis, the adjusted EBIT was EUR 5.1 million.
- EBIT was EUR 5.2 (-7.1) million and included adjusting items of EUR -0.2 (-10.0) million related to the sale of dose dispensing business in Sweden. On a constant currency basis, EBIT was EUR 5.0 million.
- Profit for the period totalled EUR -2.8 (-8.1) million and earnings per share were EUR -0.02 (-0.04).
Excluding Swedish dose business:
- In October 2023, Oriola announced the sale of Svensk dos AB to Apotekstjänst Sverige AB. The transaction is subject to the approval of the Swedish Competition Authority and is expected to be completed in the second quarter of 2024.
- Net sales were EUR 384.1 (364.4) million.
- Adjusted EBIT was EUR 6.2 (1.7) million.
Key events:
- Oriola's refined strategy, new financial targets and new sustainability agenda were announced on 31 October 2023
- Oriola changes its segment reporting and the Group will have two reporting segments from 1 January 2024
January-December 2023 highlights
- Invoicing increased by 0.6% to EUR 3,587.7 (3,568.0) million. On a constant currency basis, invoicing increased by 5.7% and was EUR 3,770.3 million.
- Net sales decreased by 2.9% to EUR 1,493.8 (1,539.1) million. On a constant currency basis, net sales increased by 2.0% and were EUR 1,569.5 million.
- Adjusted EBIT was EUR 16.7 (19.7) million. On a constant currency basis, the adjusted EBIT was EUR 17.1 million.
- EBIT was EUR -5.3 (9.5) million and included adjusting items of EUR -21.9 (-10.2) million mainly related to an impairment loss on goodwill in Dose dispensing cash generating unit. On a constant currency basis, EBIT was EUR -4.9 million.
- Profit for the period totalled EUR -20.7 (4.8) million and earnings per share were EUR -0.11 (0.03).
Excluding Swedish dose business:
- Net sales were EUR 1,475.7 (1,463.3) million.
- Adjusted EBIT was EUR 19.5 (11.9) million.
| Key figures | 2023 | 2022 | Change | 2023 | 20221,2 | Change |
| EUR million | 10-12 | 10-12 | % | 1-12 | 1-12 | % |
| Continuing operations | ||||||
| Invoicing | 963.4 | 906.9 | 6.2 | 3,587.7 | 3,568.0 | 0.6 |
| Net sales1 | 386.6 | 380.0 | 1.7 | 1,493.8 | 1,539.1 | -2.9 |
| Adjusted EBIT2, 3 | 5.4 | 2.9 | 84.9 | 16.7 | 19.7 | -15.4 |
| EBIT2 | 5.2 | -7.1 | 173.6 | -5.3 | 9.5 | -155.1 |
| Adjusted EBIT % | 1.4 | 0.8 | 1.1 | 1.3 | ||
| EBIT % | 1.3 | -1.9 | -0.4 | 0.6 | ||
| Profit for the period | -2.8 | -8.1 | 65.9 | -20.7 | 4.8 | -534.9 |
| Earnings per share, EUR, continuing operations | -0.02 | -0.04 | -0.11 | 0.03 | ||
| Earnings per share, EUR, discontinued operations | - | -0.16 | - | -0.04 | ||
| Net cash flow from operating activities4 | 22.9 | 36.1 | 9.6 | 77.9 | ||
| Gearing, % 4 | -12.1 | -10.5 | ||||
| Equity ratio, % 4 | 18.5 | 23.8 | ||||
| Return on capital employed (ROCE), % 4 | -1.6 | 2.4 |
1 Comparative information has been restated due to a correction of an error in the elimination of net sales and cost of goods sold. The gross effect on the total correction is EUR 23.6 million. The correction has no impact on the Group's profit or the statement of financial position.
2 Year 2022 Adjusted EBIT and EBIT have been changed retroactively and these items no longer include the share of result in joint venture (presented below EBIT).
3 Adjusting items are specified in note Adjusting items.
4 Comparative figures include continuing and discontinued operations.
In order to reflect the underlying business performance and to enhance comparability between financial periods, Oriola discloses certain performance measures of historical performance, financial position and cash flows, as permitted in the "Alternative performance measures" guidance issued by the European Securities and Markets Authority (ESMA). These measures should not be considered as a substitute for measures of performance in accordance with the IFRS. The calculation methods of these measures are provided in note Alternative performance measures in the notes to this Interim Report.
Dividend proposal
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.07 (0.06) per share be paid for 2023.
Outlook for 2024
In 2024, the pharmaceutical distribution market is expected to continue to grow. A continuation of a weak consumer confidence might impact the wholesale market development. The recent overall inflationary environment and related cost pressures may have an impact on Oriola's profitability.
Oriola expects the adjusted EBIT, excluding the dose dispensing business in Sweden, for the year 2024 to increase from the adjusted EBIT for 2023 (EUR 19.5 million).
CEO Katarina Gabrielson:
In 2023 our focus was on strengthening our distribution business and our role as an infrastructure company in securing the availability of pharmaceuticals in society. We made strong progress in the distribution business throughout the year, by signing new distribution agreements and improving overall efficiency in operations.
In 2023, Oriola's net sales on a constant currency basis grew by 2% and were EUR 1.6 billion. Growth was driven by the distribution business in both Finland and Sweden. The distribution business grew by 7.3% on constant currency basis in 2023, offsetting the negative impacts of lower volumes in the Swedish dose dispensing business. Our share of the pharmaceutical distribution market remained stable.
Adjusted EBIT for the year 2023 was according to our expectations at EUR 19.5 (11.9) million, when excluding the negative impact of the Swedish dose dispensing business. The reported adjusted EBIT was EUR 16.7 (19.7) million and on a constant currency basis, the adjusted EBIT was EUR 17.1 million. We have successfully managed the inflationary pressure both with strict cost control and by price increases. Operating expenses were below last year's level, including transport costs in Sweden. The improved efficiency in operations also contributed positively on the result. Our financial position was strong, with cash and cash equivalents at EUR 138.4 (160.6) million and interest-bearing net debt at EUR -20.6 (-23.7) million at the end of the period.
In Q4, net sales on a constant currency basis grew by 4.8% and were EUR 398.2 million, driven by growth in distribution business, especially in Sweden. Adjusted EBIT was EUR 6.2 (1.7) million, excluding the impact of the Swedish dose dispensing business, while the reported adjusted EBIT was EUR 5.4 (2.9) million. On a constant currency basis, the adjusted EBIT was EUR 5.1 million. The improvement in EBIT from the previous year was related to strong sales growth in distribution business, lower operating expenses and efficiency improvements in operations.
During 2023 we continued to focus on developing our commercial and supply chain excellence, while ensuring profitability, efficiency and a collaborative culture. Major milestones of the year included the announcement of our refined strategy, new long-term financial targets and sustainability agenda. With our refined strategy, we are taking the next steps to build the new Oriola with a strengthened focus on wholesale business together with investments in our core capabilities in distribution business. In October, we also announced the sale of the dose dispensing business in Sweden as part of our strategic decision to strengthen focus on wholesale business. The transaction is subject to the approval of the Swedish Competition Authority and is expected to be completed in the second quarter of 2024.
In the joint venture company Kronans Apotek, integration projects are proceeding with several actions being implemented, albeit the benefits are not yet fully visible. Realised synergies were behind the plan while integration costs were below estimate. During the year, Kronans Apotek implemented a new organisation, harmonised its assortment, completed the rebranding of 191 pharmacies and optimised its network by closing some pharmacies, resulting in more than 500 pharmacies operating today under one brand. In addition, Kronans Apotek continued to invest in its omni-channel operating model by strengthening its e-commerce capabilities. Kronans Apotek is today the biggest pharmacy chain in Sweden measured by number of pharmacies, and with its market share of around 24% and a growing e-commerce, it is now set to improve profitability and strengthen its business and brand long-term. In 2024, Kronans Apotek's profitability is expected to be positively impacted by new legislation on pharmaceutical compensations. Kronans Apotek is an important strategic partner for us, and we will actively support its value creation as a major shareholder. Kronans Apotek expects their full profit potential to materialise by the end of 2025.
At Oriola, we foster a healthier tomorrow through our services and products. Our business, the wholesale of pharmaceuticals and health products, has an essential and positive role in society and people's lives. This is why sustainability is part of our strategy and our daily work. We measure our success by monitoring the picking quality of our deliveries, which in 2023 reached 99.8%. Our target is to achieve carbon neutrality across our supply chain by 2030, and in our own operations by 2025. Our long-term environmental work has delivered results as we have reduced emissions in our own operations by 73% compared with the base year 2019.
At the start of 2024, we announced the strategically important investment to renew Oriola's ERP (enterprise resource planning) and warehouse management during the years 2025-2027. This investment is part of our refined strategy and aims to enhance efficiency and operational excellence. The new ERP and warehouse management system will replace the current two separate systems in Sweden and Finland.
In addition, we are initiating an in-depth investigation of the different options for developing our logistics operations in Finland in the long-term. The identified options are to develop the Mankkaa site to be a modern warehousing and distribution centre, to find a new facility with capabilities to incorporate logistics operations, or to build a completely new modern logistics centre. The timing will naturally depend on the chosen option but will be at the least three years from now.
As we begin a new year, I am very excited about the opportunities we have ahead of us. We are well placed to be a highly efficient company in our distribution business, to grow our share of the high-margin wholesale and advisory businesses, and to further develop our customer value proposition to deliver enhanced customer experience.
Throughout the year, our people have shown strong engagement to collaborate and grow with our customers and partners, and I am confident that we will continue on this path. With the refined strategy in place, we have a deeper understanding of shared priorities as well as greater clarity and alignment.
I want to extend my warmest thanks to everyone at Oriola for their dedication and hard work. I also want to thank our customers, partners and shareholders for their trust and continued support.
Disclosure procedure
This stock exchange release is a summary of Oriola Corporation's Financial Statements Release 2023. The complete report is attached to this release in pdf format and is also available on Oriola's website at www.oriola.com/investors.
Analyst and investor meeting at 10.00 a.m. EET
Oriola's CEO Katarina Gabrielson and CFO Timo Leinonen will present the full-year results at a webcast meeting today at 10.00 a.m. EET. Please join meeting here: https://oriola.videosync.fi/q4-2023
Next financial reports
Oriola will publish its Annual Report 2023 during week 9 and the Interim Report for January-March 2024 on 25 April 2024.
Further information:
Timo Leinonen
CFO
email: timo.leinonen@oriola.com
Mikael Wegmüller
VP, Communications and Sustainability
email: mikael.wegmuller@oriola.com
Distribution:
Nasdaq Helsinki Ltd
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