Orthex Corporation, Stock exchange release, 22 August 2024 at 9.00 a.m. EEST
Continued solid sales growth
This release is a summary of Orthex Corporation's Half-Year Financial Report for the period January-June 2024. The complete report is attached to this release as a pdf-file. It is also available on Orthex's website at https://investors.orthexgroup.com/.
April-June 2024
- Invoiced sales amounted to EUR 21.6 million (20.6)
- Net sales increased by 4.3% to EUR 21.0 million (20.1)
- Adjusted EBITDA was EUR 2.6 million (3.1)
- Adjusted EBITA was EUR 1.6 million (2.1), representing 7.4% of net sales (10.3)
- Operating profit was EUR 1.5 million (2.1)
- Net cash flows from operating activities were EUR -0.4 million (2.0)
- Earnings per share, basic was EUR 0.05 (0.06)
January-June 2024
- Invoiced sales increased by 6.5% and totalled EUR 44.6 million (41.8)
- Net sales increased by 5.9% to EUR 43.0 million (40.6)
- Adjusted EBITDA was EUR 6.5 million (6.5)
- Adjusted EBITA was EUR 4.3 million (4.5), representing 10.0% of sales (11.0)
- Operating profit was EUR 4.3 million (4.4)
- Net cash flows from operating activities were EUR 3.7 million (4.5)
- Net debt / Adjusted EBITDA was 1.6 (2.0)
- Earnings per share, basic was EUR 0.14 (0.13)
The figures in brackets refer to the corresponding period in the previous year unless stated otherwise. The figures are unaudited.
Long-term financial targets
As long-term financial targets the company has adopted to an average annual organic Net sales growth to exceed 5 per cent at the Group level and to exceed 10 per cent outside the Nordics (growth in local currencies), adjusted EBITA margin (adjusted for items affecting comparability) to exceed 18 per cent over time and net debt to adjusted EBITDA ratio to stay below 2.5x. Leverage may temporarily exceed the target range (for example, in conjunction with acquisitions).
The company aims to distribute a stable and over time increasing dividend with a pay-out of at least 50 per cent of net profit, in total, on a biannual basis.
Orthex does not publish a short-term outlook.
Key figures
| EUR million | 4-6/2024 | 4-6/2023 | Change | 1-6/2024 | 1-6/2023 | Change | 1-12/2023 |
| Invoiced sales | 21.6 | 20.6 | 5.0% | 44.6 | 41.8 | 6.5% | 88.0 |
| Net sales | 21.0 | 20.1 | 4.3% | 43.0 | 40.6 | 5.9% | 85.9 |
| Gross margin | 5.7 | 5.2 | 10.2% | 12.4 | 10.6 | 17.0% | 24.3 |
| Gross margin, % | 27.0% | 25.6% | 28.7% | 26.0% | 28.3% | ||
| EBITDA | 2.6 | 3.1 | -15.2% | 6.5 | 6.5 | 0.0% | 14.9 |
| EBITDA margin, % | 12.5% | 15.4% | 15.0% | 15.9% | 17.3% | ||
| Adjusted EBITDA | 2.6 | 3.1 | -15.2% | 6.5 | 6.5 | -0.9% | 14.9 |
| Adjusted EBITDA margin, % | 12.5% | 15.4% | 15.0% | 16.0% | 17.4% | ||
| EBITA | 1.6 | 2.1 | -25.5% | 4.3 | 4.4 | -2.6% | 10.9 |
| EBITA margin, % | 7.4% | 10.3% | 10.0% | 10.9% | 12.6% | ||
| Adjusted EBITA | 1.6 | 2.1 | -25.5% | 4.3 | 4.5 | -3.8% | 10.9 |
| Adjusted EBITA margin, % | 7.4% | 10.3% | 10.0% | 11.0% | 12.7% | ||
| Operating profit | 1.5 | 2.1 | -24.5% | 4.3 | 4.4 | -1.3% | 10.8 |
| Operating profit margin, % | 7.4% | 10.2% | 10.0% | 10.8% | 12.5% | ||
| Net cash flows from operating activities | -0.4 | 2.0 | -119.1% | 3.7 | 4.5 | -18.7% | 10.2 |
| Net debt / Adjusted EBITDA | 1.6x | 2.0x | 1.6x | 2.0x | 1.5x | ||
| Adjusted return on capital employed (ROCE), % | 4.7% | 6.4% | 12.6% | 13.6% | 31.8% | ||
| Equity ratio, % | 39.8% | 36.0% | 39.8% | 36.0% | 40.2% | ||
| Earnings per share, basic (EUR) | 0.05 | 0.06 | -12.7% | 0.14 | 0.13 | 4.5% | 0.39 |
| FTEs | 294 | 280 | 5.0% | 291 | 282 | 3.1% | 281 |
Alexander Rosenlew, CEO:
"Orthex had a strong start of the year, and we kept the positive momentum during the second quarter when Orthex's net sales increased by 4.3% to 21.0 million euros (20.1). Constant currency net sales growth was 4.4%. In the first half of the year, net sales grew by 5.9% and amounted to 43.0 million euros (40.6) driven by improving sell-out performance in the Nordic countries and strong commercial activities.
The second quarter invoiced sales in the Nordics improved by 5.4% compared to last year and were 17.2 million euros (16.3). In the Rest of Europe, the timing of orders resulted in balanced sales growth of 6.2%, delivering in total 4.2 million euros in sales (3.9). We are currently developing our German operations into an entity responsible for the whole DACH region. This is an important step to cater for growing cross-border customer demand from key partners with retail chains throughout this larger geographic region. The change is intended to make it possible to accelerate future growth in the area.
The biggest category Storage continued to perform well and grew by 5.0% compared to April-June last year. The Kitchen category showed sales growth of 7.0% thanks to widening customer distribution and the successful rebranding of SmartStoreTM food storage products. The Home & Garden category sales improved slightly by 2.2% compared to the second quarter last year.
Orthex's profitability declined compared to Q2 in the previous year, with adjusted EBITA margin at 7.4% (10.3) and the adjusted EBITA at 1.6 million euros (2.1). Considering the one-time energy price compensation received last year in Sweden (0.8 million euros), the comparable EBITA improved by 16%. Fixed costs developed according to plan, particularly influenced by growth related costs such as additional commercial resources, strong instore marketing activities and salary inflation.
Cash flows in the second quarter amounted to -0.4 million euros (2.0). During the period, preparations were made for summer maintenance breaks at the factories and working capital was increased, but the cash position remains strong. The net debt to adjusted EBITDA ratio (leverage) was 1.6 (2.0) at the end of the period.
Orthex aims to be the industry forerunner in sustainability by offering timelessly designed, high-quality, safe, and long-lasting products, reducing the carbon footprint of its operations and products, and sourcing more and more of its raw materials from renewable and recycled materials. During times of lower consumer confidence, the general market offering can get skewed towards cheaper, lower quality products, which are often not the most sustainable solutions. For Orthex, it is extremely important to enforce the quality and sustainability of its products through strong communication and giving the consumer and the retail professional buyers the opportunity to select long-lasting products with strong brands and up to 10 years guarantee.
Orthex invests in novelties on a continuous basis and the latest addition is the modern range of SmartStoreTM Essence storage baskets made of recycled plastic.
Despite the somewhat depressed consumer sentiments, our systematic customer and distribution acquisition efforts kept progressing well in Europe and our qualitative products are gaining more space and visibility store by store.
Our strategy is working well, and I am grateful that we have a strong, dedicated and aligned team implementing value adding activities with our partners."
Press conference on financial results:
Orthex's CEO Alexander Rosenlew, CFO Saara Mäkelä and CMSO Hanna Kukkonen will present the report today in a webcast starting at 11.00 a.m. EEST. The webcast can be joined through this link. The webcast presentation will be held in English.
Q&A:
Questions to the management can be sent through the meeting chat.
Presentation material:
The presentation material will be shared in the online meeting, and it can be downloaded in the same day on the corporate website at Reports & presentations - Orthex Group.
Recording of the event:
After the event, a recording will be available on the corporate website at Reports & presentations - Orthex Group.
Further enquiries:
Alexander Rosenlew, CEO, Orthex Corporation
Tel. +358 (0)40?500 3826
alexander.rosenlew@orthexgroup.com
Saara Mäkelä, CFO, Orthex Corporation
Tel. +358 (0)40 083 8782
saara.makela@orthexgroup.com
Distribution:
Nasdaq Helsinki Ltd
Main media
https:/investors.orthexgroup.com/
Orthex in brief
Orthex (ORTHEX, Nasdaq Helsinki, Finland) is a leading Nordic houseware company. Orthex offers a broad assortment of practical and durable household products with a mission to make consumers' everyday life easier. Orthex main consumer brands are SmartStore in storage products, GastroMax in kitchenware and Orthex in home and plant care categories. Orthex aims to be the industry forerunner in sustainability and to become carbon neutral in its production by 2030. Read more www.orthexgroup.com.
Orthex's net sales in 2023 was 85.9 million euros. The company has customers in more than 40 countries and local sales offices in the Nordics, Germany, France, the UK, and the Benelux.
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