Solid sales growth in Distribution business, strong financial position
CEO Katarina Gabrielson comments on Oriola’s third quarter in 2023: The stable sales development continued in the third quarter. Oriola’s net sales on a constant currency basis were EUR 376.5 million, which is at last year’s level.
We saw good development in our core business, the Distribution of pharmaceuticals, especially in Sweden. This has offset the negative impact of lower volumes in the Swedish dose dispensing business. Our share of the pharmaceutical distribution market remained stable both in Sweden and Finland. During the third quarter the overall development in the pharmaceutical distribution market was a bit softer than during the first half of the year, although we believe that the solid underlying long-term market drivers remain unchanged.
Adjusted EBIT declined from the previous year to EUR 4.4 (6.6) million. Profitability in the third quarter was mainly burdened by lower volumes in the Swedish dose dispensing business and as the Swedish krona has further weakened it has had some impact on the EBIT-line as well. Adjusted EBIT on a constant currency basis was EUR 4.7 million. Adjusted EBIT excluding Swedish dose business was EUR 5.2 (4.8) million. Operating expenses were below last year’s level mainly following the restructuring of the Swedish dose dispensing business. Oriola’s financial position has remained strong with a positive cash flow from operating activities in the third quarter and net working capital at a normalised level. At the end of the reporting period, net debt was close to zero.
In the third quarter, we have continued to focus on developing our commercial and supply chain excellence while ensuring profitability, efficiency and a collaborative culture. We have continued to strengthen our commercial capabilities with training and our focus is strongly on enhancing our understanding of how we can increasingly create relevance and value to our customers. The tighter collaboration between the sales teams and supply-demand planning improves our efficiency in deliveries.
The decline of adjusted EBIT in the joint venture company Kronans Apotek related to lower revenues compared to Q2 mainly affected by customer flows. A focus within Kronans Apotek remains on operations and integration activities, and synergies are proceeding according to plan.
In October, after the reporting period, we announced the sale of Svensk dos AB to Apotekstjänst Sverige AB. Consequently, we will exit the dose dispensing business in Sweden. Svensk dos has lost market share during the past 12 months and in our ongoing strategy review we have not identified a recovery in the foreseeable future of the business due to the prevailing Swedish tender market conditions. While this transaction gives continuity to Svensk dos, it also supports our decision to strengthen focus on our core distribution business. The transaction is subject to approval by the Swedish Competition Authority, and we expect it to be completed no later than in the first quarter of 2024. Going forward, we aim to deepen our pharmacy health products supply cooperation with Apotekstjänst.
In connection with the announcement about Svensk dos AB, we gave a new outlook for 2023. We expect the adjusted EBIT, excluding the dose dispensing business in Sweden, for the year 2023 to be on the same level as adjusted EBIT for 2022 (EUR 19.7 million). The recent overall inflationary environment and related cost pressures may have an impact on Oriola’s profitability.
We continue to focus on the long-term transformation of Oriola. Our people have shown great dedication and motivation during the whole year, and this is something I am very proud of.
Katarina Gabrielson is the CEO of Oriola Corporation. This text was published in the Interim Report January-September 2023. The complete report can be downloaded from the link below.