Oriola Corporation Stock Exchange Release 25 April 2024 at 8.30 a.m. EEST
Oriola Corporation's Interim Report January-March 2024
Sales growth and improved profitability
January-March 2024 highlights
- Invoicing increased by 5.8 % to EUR 908.4 (858.3). On a constant currency basis, invoicing increased by 6.3% and was EUR 912.4 million.
- Net sales increased by 4.1% to EUR 375.1 (360.4) million. On a constant currency basis, net sales increased by 4.5% and were EUR 376.8 million.
- Adjusted EBIT was EUR 4.0 (3.5) million. On a constant currency basis, the adjusted EBIT was EUR 4.0 million.
- EBIT was EUR 3.7 (3.5) million and included adjusting items of EUR -0.3 (-0.0) million mainly related to the sale of dose dispensing business in Sweden. On a constant currency basis, EBIT was EUR 3.7 million.
- Profit for the period totalled EUR -2.3 (1.1) million and earnings per share were EUR -0.01 (0.01).
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 a decision is expected in the second quarter of 2024.
- Net sales were EUR 372.2 (351.0) million.
- Adjusted EBIT was EUR 4.5 (3.9) million.
Key events:
- Oriola's reporting segments from 1 January 2024 are Distribution and Wholesale
- On 10 January, Oriola announced the investment in ERP and warehouse management as part of the refined strategy to enhance efficiency and operational excellence
| Key figures | 2024 | 2023 | Change | 2023 |
| EUR million | 1-3 | 1-3 | % | 1-12 |
| Invoicing | 908.4 | 858.3 | 5.8 | 3,587.7 |
| Net sales | 375.1 | 360.4 | 4.1 | 1,493.8 |
| Adjusted EBIT1 | 4.0 | 3.5 | 13.0 | 16.7 |
| EBIT | 3.7 | 3.5 | 6.2 | -5.3 |
| Adjusted EBIT % | 1.1 | 1.0 | 1.1 | |
| EBIT % | 1.0 | 1.0 | -0.4 | |
| Profit for the period | -2.3 | 1.1 | -311.3 | -20.7 |
| Earnings per share, EUR, continuing operations | -0.01 | 0.01 | -0.11 | |
| Net cash flow from operating activities | -11.3 | -42.6 | 9.6 | |
| Gearing, % | -6.2 | 8.7 | -12.1 | |
| Equity ratio, % | 17.3 | 22.8 | 18.5 | |
| Return on capital employed (ROCE), % | 5.5 | 4.0 | -1.6 |
1 Adjusting items are specified in note Adjusting items.
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 under Key financial indicators in this interim report.
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:
We had a good start of the year with net sales growing and profitability improving from the previous year. The pharmaceutical distribution market continued a steady growth and we saw the overall operating environment somewhat stabilising from last year, although consumer confidence remained weak.
In the first quarter, Oriola's net sales grew by 4% to EUR 375 million, driven by both Distribution and Wholesale segments. Profitability improved from the previous year and was EUR 4.0 (3.5) million. When excluding the impact of the Swedish dose dispensing business, the adjusted EBIT improved by 14% to EUR 4.5 (3.9) million. Profitability improvement was supported by lower operating expenses compared with the previous year, and lower freight costs. The decrease in freight costs was related to operational improvement and lower fuel prices. Oriola's financial position has remained strong with net interest-bearing debt decreasing.
From the start of this year, we have two reporting segments - Distribution and Wholesale. This change in reporting reflects our strategy and also provides better visibility into the financial development of our business.
In the Distribution segment, which includes pharmaceutical logistics and dose dispensing services, net sales grew by 4% to EUR 294 million and were largely driven by the steady market growth. Profitability improved by 29% to EUR 4.1 (3.2) million, supported mainly by a lower cost base compared with the previous year. In the distribution business, we focus on our core and continue to build on the steady development we saw last year. Our market shares were stable year-on-year both in Finland and Sweden. We have gained new customers and renewed important distribution contracts to support our growth going forward.
The Wholesale segment includes the wholesale of traded goods and OTC products, parallel import, special-licensed medicines as well as advisory services. Net sales in the Wholesale segment grew by 5% to EUR 81 million, with solid growth in the Swedish wholesale business and good development of advisory services. Profitability declined slightly to EUR 2.8 (3.0) million. The profitability decline was related to lower volumes in the Finnish wholesale business. Our long-term strategic goal is to grow the wholesale business by developing our brand portfolio and product categories. Early this year, our focus has been on building our range and technical capabilities to better meet the needs of our growing customer segments. We have also made appointments in key leadership positions.
The implementation of our refined strategy, launched at the end of last year, has progressed well. A key milestone in January was the announcement of the investment to renew Oriola's ERP (enterprise resource planning) and warehouse management in 2025-2027. This important investment aims to enhance efficiency and operational excellence, and enables us to better respond to future customer and business needs. The project was started in the first quarter and is proceeding according to plan. An essential part of rolling out the strategy is actively engaging with our senior management to ensure alignment, strengthen our common understanding and develop our leadership. This will remain a focus throughout the year.
In the joint venture company, Kronans Apotek, e-commerce continued to grow steadily, while the weaker customer flow in the brick-and-mortar compared with Q1 2023 reduced volumes, market share and adjusted EBIT. Kronans Apotek continues to develop its customer experience and product range, both in physical and digital stores. The focus remains on long-term profitability improvement, integration activities and business development. In 2024, Kronans Apotek's profitability is expected to be positively impacted by new legislation on pharmaceutical compensations. On 17 April, Kronans Apotek announced the appointment of Tomas Rupšys as the new CEO. Kronans Apotek is an important strategic partner for us, and we will actively support its value creation as a major shareholder. Kronans Apotek expects its full profit potential to materialise by the end of 2025.
I am very pleased with the positive beginning to the year at Oriola. With the refined strategy we have a clear direction forward and a good understanding of our long-term goals. I want to take this opportunity and thank everyone at Oriola for all their efforts at the start of the year and their commitment to our shared priorities.
Disclosure procedure
This stock exchange release is a summary of Oriola Corporation's Interim Report January-March 2024. The complete report is attached to this release in pdf format and is also available on Oriola's website at www.oriola.com.
Analyst and investor meeting at 10.00 a.m. EEST
Oriola's CEO Katarina Gabrielson and CFO Timo Leinonen will present the Q1 Interim Report at a live webcast meeting today at 10.00 a.m. EEST. Join the meeting: https://oriola.videosync.fi/q1-2024
Financial reporting in 2024
Oriola will publish financial reports in 2024 as follows:
- 18 July 2024: Half Year Financial Report 1-6/2024
- 30 October 2024: Interim Report 1-9/2024
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
Key media
