Oriola Corporation’s Half-Year Report January-June 2023

Oriola Corporation Stock Exchange Release 21 July 2023 at 8.30 a.m. EEST

Oriola Corporation’s Half-Year Report January-June 2023

Solid performance in Distribution business, profitability burdened by Dose Sweden

April–June 2023 highlights

• Invoicing was EUR 904.3 (903.9) million and slightly above the previous year’s level. On a constant currency basis, invoicing increased by 6.0% and was EUR 958.2 million.
• Net sales decreased by 2.8% to EUR 383.6 (394.6) million. On a constant currency basis, net sales increased by 3.0% and were EUR 406.5 million.
• Adjusted EBIT was EUR 3.4 (5.5) million. On a constant currency basis, the adjusted EBIT was EUR 3.6 million.
• EBIT was EUR 3.2 (7.0) million and included adjusting items of EUR -0.2 (1.5) million. On a constant currency basis, EBIT was EUR 3.4 million.
• Profit for the period totalled EUR 1.2 (5.5) million and earnings per share were EUR 0.01 (0.03).

January–June 2023 highlights

• Invoicing decreased by 1.6% to EUR 1,762.7 (1,790.6) million. On a constant currency basis, invoicing increased by 3.6% and was EUR 1,854.9 million.
• Net sales decreased by 3.8% to EUR 738.4 (767.4) million. On a constant currency basis, net sales increased by 1.2% and were EUR 776.9 million.
• Adjusted EBIT was EUR 6.9 (10.2) million. On a constant currency basis, the adjusted EBIT was EUR 7.3 million.
• EBIT was EUR 6.7 (10.3) million and included adjusting items of EUR -0.2 (0.1) million. On a constant currency basis, EBIT was EUR 7.1 million.
• Profit for the period totalled EUR 2.3 (7.6) million and earnings per share were EUR 0.01 (0.04). 

Key figures	2023	2022	Change	2023	2022	Change	2022
EUR million	4-6	4-6	%	1-6	1-6	%	1-12
Continuing operations
Invoicing	904.3	903.9	0.0	1,762.7	1,790.6	-1.6	3,568.0
Net sales	383.6	394.6	-2.8	738.4	767.4	-3.8	1,515.5
Adjusted EBIT1, 2	3.4	5.5	-38.7	6.9	10.2	-32.3	19.7
EBIT	3.2	7.0	-54.7	6.7	10.3	-35.3	9.5
Adjusted EBIT %	0.9	1.4		0.9	1.3		1.3
EBIT %	0.8	1.8		0.9	1.3		0.6
Profit for the period	1.2	5.5	-77.6	2.3	7.6	-69.3	4.8
Earnings per share, EUR, continuing operations	0.01	0.03	-77.6	0.01	0.04	-69.3	0.03
Earnings per share, EUR, discontinued operations	-	0.04		-	0.07		-0.04
Net cash flow from operating activities3	19.2	38.9		-23.4	67.7		77.9
Gearing, % 3				4.5	-4.6		-10.5
Equity ratio, % 3				21.2	19.8		23.8
Return on capital employed (ROCE), % 3				3.9	4.6		2.4

1 Year 2022 Adjusted EBIT and EBIT have been restated and exclude the share of result in joint venture.
2 Adjusting items are specified in note Adjusting items.
3 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 Half Year Financial Report.

Outlook for 2023

Oriola expects the adjusted EBIT to remain on the same level compared to 2022.

The outlook takes into consideration the significant negative impact on Oriola’s profitability from the loss of public tenders and consequently of patients in the dose dispensing business in Sweden. The dose dispensing business in Sweden will focus on new customer segments to develop the business. Furthermore, the recent overall inflationary environment and related cost pressures may have an impact on Oriola’s profitability.

The adjusted EBIT in 2022 was EUR 19.7 million, excluding the contribution from the joint venture company Swedish Pharmacy Holding AB.

CEO Katarina Gabrielson:

A stable second quarter with net sales growing by 3% to EUR 407 million in constant currency. Growth was driven by our core business, the Distribution of pharmaceuticals and traded goods, where we saw solid development both in Sweden and Finland supported by a growing market and stable market shares. For Oriola, the significant headwind from the weak Swedish krona in the second quarter was visible mainly in the reported invoicing and net sales figures. Due to the further weakening of the Swedish krona in the second quarter, the negative impact was also to some extent visible on adjusted EBIT.

In the second quarter, Oriola’s profitability declined from the previous year to EUR 3.4 (5.5) million due to the low volumes in the Swedish Dose dispensing business, as communicated earlier. Overall cost inflation has stabilised while costs have remained at a high level. To mitigate the inflationary pressure, we have implemented price increases across all businesses. Our operating expenses were below last year’s level largely driven by cost restructuring in the Swedish Dose dispensing business, improved efficiency in our Swedish operations and overall strict cost control. Our financial position is still strong with positive cash flow in the second quarter and a strong balance sheet.

Profitability of our joint venture company Kronans Apotek continued to improve driven by good customer inflow in pharmacies and synergy savings achieved from integration. We booked a positive contribution of EUR 0.2 million from Kronans Apotek to our profit and loss account in the second quarter.

Oriola’s focus continues to be the long-term transformation of the company by developing our commercial and supply chain excellence while ensuring profitability, efficiency and a collaborative culture. I am very pleased that our new commercial operating model, which extensively focuses on collaboration across the markets, has already shown good progress with the signing of new distribution contracts. We have also continued to strengthen our commercial capabilities by sales training focusing on account management to support a unified customer experience, and our new customer segmentation provides focus and enhances understanding of how we can create relevance and growth. In supply chain, we have continued to simplify and harmonise processes across Oriola, including core IT systems. We have also improved our efficiency in deliveries through improved demand-supply planning and tighter collaboration with the sales teams. Developing a strong culture is one of our key priorities, and during the second quarter we engaged with our people to renew Oriola’s value descriptions.

At Oriola, we believe that a sustainable future starts with health, and therefore sustainability is embedded in everything we do. Our sustainability work has been guided by ambitious long-term goals and a systematic approach to development. In June, Oriola was awarded the gold medal in the EcoVadis sustainability rating with a result placing us among the top 5% performing companies worldwide. This is a great recognition and demonstrates our commitment to sustainability.

Looking at the full year, we continue to expect Oriola’s adjusted EBIT to remain on the same level compared to last year. We expect the volumes in the Swedish Dose business to remain at the current level during the second half. We expect the pharmaceutical distribution market to continue to grow. Our strength is in the Distribution business that has performed strongly during the first half of the year and where we have new customers onboarding during the second half. We continue with price increases and strict cost control to mitigate the high cost inflation. I am very pleased with the achievements of our people during the second quarter, and this is a great opportunity to thank everyone for their dedication and hard work.

Disclosure procedure

This stock exchange release is a summary of Oriola Corporation’s Half-Year Report January-June 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. EEST

Oriola’s CEO Katarina Gabrielson and CFO Timo Leinonen will present the Half-Year Report at a live webcast meeting today at 10.00 a.m. EEST. Please join meeting here: https://oriola.videosync.fi/q2-2023

Financial reporting in 2023

Oriola will publish Interim Report for January-September 2023 on Tuesday 31 October 2023.

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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