Oriola Corporation’s Interim report 1 January–30 September 2022

Oriola Corporation stock exchange release 27 October 2022 at 8.30 a.m.

Oriola Corporation’s Interim report 1 January–30 September 2022

Q3 2022: Solid performance continued despite the inflationary environment

Reporting information for 2021 has been restated to reflect Oriola’s operating model change announced in October 2021 and the framework merger agreement with Euroapotheca to combine the respective pharmacy businesses in Sweden, announced in February 2022. The restated information, which was published on 26 April 2022, includes the new segment structure. Continuing operations include the old business areas Pharma and Retail combined into a new Oriola Services segment, and discontinued operations consist of the Consumer segment which includes the pharmacy operations in Sweden to be combined with Euroapotheca’s Apoteksgruppen.

July–September 2022 highlights

Continuing operations

• Invoicing increased by 1.4% to EUR 870.6 (858.7) million. On a constant currency basis, invoicing increased by 4.1% and was EUR 894.0 million.
• Net sales increased by 4.1% to EUR 373.9 (359.3) million. On a constant currency basis, net sales increased by 6.9% and were EUR 384.1 million.
• Comparable adjusted EBIT and adjusted EBIT were EUR 6.6 (5.4) million. On a constant currency basis, the comparable adjusted EBIT and adjusted EBIT were EUR 6.8 million.
• EBIT was EUR 6.3 (5.2) million. On a constant currency basis, EBIT was EUR 6.4 million.
• Profit for the period totalled EUR 5.3 (4.3) million and earnings per share were EUR 0.03 (0.02).

Discontinued operations

• Invoicing decreased by 3.2% to EUR 198.7 (205.3) million. On a constant currency basis, invoicing increased by 0.9% and was EUR 207.1 million.
• Net sales decreased by 3.2% to EUR 193.9 (200.2) million. On a constant currency basis, net sales increased by 0.9% and were EUR 202.1 million.
• Comparable adjusted EBIT was EUR 6.9 (5.0) million. On a constant currency basis, the comparable adjusted EBIT was EUR 7.2 million.
• Adjusted EBIT was EUR 13.2 (5.0) million. On a constant currency basis, the adjusted EBIT was EUR 13.7 million.
• Adjusted EBIT includes a positive impact of EUR 6.3 million from lower depreciations, as the non-current assets of discontinued operations are classified as held for sale and not depreciated. Comparable adjusted EBIT excludes the positive impact from depreciations.
• EBIT was EUR 12.9 (4.7) million. On a constant currency basis, EBIT was EUR 13.4 million.
• Profit for the period totalled EUR 9.3 (2.5) million and earnings per share were EUR 0.05 (0.01).

Continuing and discontinued operations

• Invoicing increased by 1.3% to EUR 982.4 (970.2) million. On a constant currency basis, invoicing increased by 4.2% and was EUR 1,010.5 million.
• Net sales increased by 3.3% to EUR 480.9 (465.7) million. On a constant currency basis, net sales increased by 6.4% and were EUR 495.6 million.
• Comparable adjusted EBIT was EUR 13.5 (10.4) million. On a constant currency basis, the comparable adjusted EBIT was EUR 13.9 million.
• Adjusted EBIT was EUR 19.8 (10.4) million. On a constant currency basis, the adjusted EBIT was EUR 20.5 million.
• Adjusted EBIT includes a positive impact of EUR 6.3 million from lower depreciations, as the non-current assets of discontinued operations are classified as held for sale and not depreciated. Comparable adjusted EBIT excludes the positive impact from depreciations.
• EBIT was EUR 19.2 (9.8) million. On a constant currency basis, EBIT was EUR 19.9 million.
• Profit for the period totalled EUR 14.6 (6.8) million and earnings per share were EUR 0.08 (0.04).

January–September 2022 highlights

Continuing operations

• Invoicing increased by 3.8% to EUR 2,661.2 (2,564.5) million. On a constant currency basis, invoicing increased by 6.3% and was EUR 2,725.7 million.
• Net sales increased by 7.1% to EUR 1,141.3 (1,066.0) million. On a constant currency basis, net sales increased by 9.7% and were EUR 1,169.3 million.
• Comparable adjusted EBIT and adjusted EBIT were EUR 16.8 (8.3) million. On a constant currency basis, the comparable adjusted EBIT and adjusted EBIT were EUR 17.2 million.
• EBIT was EUR 16.6 (6.3) million. On a constant currency basis, EBIT was EUR 17.0 million.
• Profit for the period totalled EUR 12.9 (4.8) million and earnings per share were EUR 0.07 (0.03).

Discontinued operations

• Invoicing decreased by 1.0% to EUR 616.3 (622.7) million. On a constant currency basis, invoicing increased by 2.6% and was EUR 639.0 million.
• Net sales decreased by 1.0% to EUR 601.3 (607.4) million. On a constant currency basis, net sales increased by 2.6% and were EUR 623.5 million.
• Comparable adjusted EBIT was EUR 16.8 (6.4) million. On a constant currency basis, the comparable adjusted EBIT was EUR 17.5 million.
• Adjusted EBIT was EUR 33.3 (6.4) million. On a constant currency basis, the adjusted EBIT was EUR 34.6 million.
• Adjusted EBIT includes a positive impact of EUR 16.5 million from lower depreciations, as the non-current assets of discontinued operations are classified as held for sale and not depreciated. Comparable adjusted EBIT excludes the positive impact from depreciations.
• EBIT was EUR 32.6 (6.1) million. On a constant currency basis, EBIT was EUR 33.8 million.
• Profit for the period totalled EUR 22.6 (1.2) million and earnings per share were EUR 0.12 (0.01).

Continuing and discontinued operations

• Invoicing increased by 3.6% to EUR 3,002.1 (2,897.1) million. On a constant currency basis, invoicing increased by 6.3% and was EUR 3,079.1 million.
• Net sales increased by 6.1% to EUR 1,467.1 (1,383.4) million. On a constant currency basis, net sales increased by 9.0% and were EUR 1,507.2 million.
• Comparable adjusted EBIT was EUR 33.6 (14.7) million. On a constant currency basis, the comparable adjusted EBIT was EUR 34.6 million.
• Adjusted EBIT was EUR 50.1 (14.7) million. On a constant currency basis, the adjusted EBIT was EUR 51.8 million.
• Adjusted EBIT includes a positive impact of EUR 16.5 million from lower depreciations, as non-current assets of discontinued operations are classified as held for sale and not depreciated. Comparable adjusted EBIT excludes the positive impact from depreciations.
• EBIT was EUR 49.2 (12.4) million. On a constant currency basis, EBIT was EUR 50.8 million.
• Profit for the period totalled EUR 35.5 (6.0) million and earnings per share were EUR 0.20 (0.03).

 

Key figures	2022	2021	Change	2022	2021	Change	2021
EUR million	7-9	7-9	%	1-9	1-9	%	1-12
Continuing operations
Invoicing	870.6	858.7	1.4	2,661.2	2,564.5	3.8	3,506.9
Net sales	373.9	359.3	4.1	1,141.3	1,066.0	7.1	1,452.2
Comparable adjusted EBIT1	6.6	5.4	23.4	16.8	8.3	103.0	14.9
Adjusted EBIT1	6.6	5.4	23.4	16.8	8.3	103.0	14.9
EBIT	6.3	5.2	21.7	16.6	6.3	163.2	10.7
Adjusted EBIT %	1.8	1.5		1.5	0.8		1.0
EBIT %	1.7	1.4		1.5	0.6		0.7
Profit for the period	5.3	4.3	23.1	12.9	4.8	167.3	8.6
Earnings per share, EUR, continuing operations	0.03	0.02	23.1	0.07	0.03	167.2	0.05
Earnings per share, EUR, discontinued operations	0.05	0.01	278.0	0.12	0.01		0.01
Continuing and discontinued operations
Invoicing	982.4	970.2	1.3	3,002.1	2,897.1	3.6	3,959.1
Net sales	480.9	465.7	3.3	1,467.1	1,383.4	6.1	1,882.4
Comparable adjusted EBIT1, 4	13.5	10.4	30.4	33.6	14.7	128.3	26.3
Adjusted EBIT1, 2	19.8	10.4	91.4	50.1	14.7	240.8	26.3
EBIT2	19.2	9.8	95.4	49.2	12.4	297.6	20.5
Comparable adjusted EBIT %4	2.8	2.2		2.3	1.1		1.4
Adjusted EBIT %2	4.1	2.2		3.4	1.1		1.4
EBIT %2	4.0	2.1		3.4	0.9		1.1
Net cash flow from operating activities3	-25.8	-16.2		41.8	-2.2		40.0
Gearing, % 3				29.8	64.1		46.5
Equity ratio, % 3				21.8	19.9		20.1
Return on capital employed (ROCE), % 3				15.4	3.7		4.6

 

1 Adjusting items are specified in note 13 Adjusting items.

2 The periods presented in the table are not fully comparable, because a non-current asset classified as held for sale is not depreciated.

3 Includes discontinued operations.

4 Includes depreciations for the period in which the non-current assets are classified as held for sale.

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 “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 12 Alternative performance measures in the notes to this Interim Financial Report.

Outlook for 2022

On 3 October 2022, Oriola issued a new outlook for 2022 after finalizing the combining of Oriola’s Kronans Apotek and Euroapotheca’s Apoteksgruppen into a new jointly owned company.

The new outlook for 2022 (published on 3 October 2022)

The adjusted EBIT for the continuing operations is estimated to increase from the 2021 level. The new outlook is based on Oriola’s continuing operations.

The COVID-19 pandemic continues and the severity as well as the duration of the pandemic remain unclear in Oriola’s operating environment. Furthermore, the recent overall inflationary increases and related cost pressures may have a significant impact on Oriola’s profitability.

The comparable adjusted EBIT in 2021 was EUR 14.9 million for the continuing operations.

The previous outlook for 2022 (published on 18 February 2022)

The comparable adjusted EBIT is estimated to increase from the 2021 level.

The COVID-19 pandemic continues and the severity as well as the duration of the pandemic remain unclear in Oriola’s operating environment. Furthermore, the recent overall inflationary increases and related cost pressures may have a significant impact on Oriola’s profitability.

The outlook remains based on the current group structure, including both continuing operations and discontinued operations. The comparable adjusted EBIT in 2021 was EUR 26.3 million.

CEO Katarina Gabrielson:

“We had a good quarter as Oriola Group improved its comparable adjusted EBIT to EUR 13.5 million, which is 30% higher than in 2021. The improvement was driven by efficiency and cost saving actions related to our turnaround initiatives as well as good market demand in both markets. In addition, our balance sheet has strengthened throughout the year due to improved cash flow and increased result.

I’m pleased with the continuing Services business, which was able to achieve a solid result in the current inflationary environment. For continuing operations, our invoicing increased 4.1% on constant currency basis and our adjusted EBIT improved, reaching EUR 6.6 million (+23%).

Right after the end of the reporting period, we finalized the combination of Kronans Apotek and Apoteksgruppen pharmacy businesses in Sweden into a new jointly owned company. This transaction, which has required plenty of preparations from our organization, supports us on the journey towards a pharmaceutical infrastructure and healthcare distribution company. In addition, it strengthens Oriola’s focus as a service provider to pharmaceutical companies and pharmacies.

During the quarter, we announced a new operating model to further improve our operational, commercial and supply chain excellence. It will help us to create synergies and to ensure seamless work across markets. Oriola’s local presence is a strength and by combining our knowledge and expertise we will be even more agile and efficient. Our aim is to capture the full value of our business by optimizing the operating model and simplifying the structure. In conjunction, we also made some changes to the management team that became effective in early October.

Our near-term focus will continue to be on the rigorous implementation of the turnaround initiatives and transformation. All the actions related to our EUR 7 million cost savings target have been implemented in 2022 in both continuing and discontinued operations. We have also progressed further in improving our efficiency, portfolio management and product pricing. This is vital for our near-term success given the acceleration in inflation during this year.

In addition to the continued turnaround plan and transformation, we will build on the new operating model based on cross-market responsibilities going forward. Furthermore, we will continue the strategy work and announce Oriola’s new strategy in due course.

To conclude, I would like to thank all our employees for their commitment and our customers for the good cooperation in this somewhat challenging environment.”

Disclosure procedure

This stock exchange release is a summary of Oriola Corporation’s Interim Report January–September 2022. The complete report is attached to this release in pdf format and is also available on Oriola’s website at https://www.oriola.com.

Analyst and investor meeting

Oriola Corporation will organise a live-webcast meeting for investors, analysts and the press on Thursday, 27 October 2022 at 10.00 a.m. The event can be followed as a live-webcast accessible through this link: https://oriola.videosync.fi/2022-q3-interimreport.

Further information:

Mikael Wegmüller
VP, Communications and Sustainability
Tel. +358 40 776 2314
email: mikael.wegmuller@oriola.com

Distribution:
Nasdaq Helsinki Ltd.
Key media

Released by:
Oriola Corporation
Corporate Communications
Orionintie 5
FI-02200 Espoo, Finland
www.oriola.com