Strong growth in profitability excluding Swedish dose dispensing business

Adjusted EBIT for the year 2023 was according to our expectations at EUR 19.5 (11.9) million, when excluding the negative impact of the Swedish dose dispensing business. The reported adjusted EBIT was EUR 16.7 (19.7) million and on a constant currency basis, the adjusted EBIT was EUR 17.1 million. We have successfully managed the inflationary pressure both with strict cost control and by price increases. Operating expenses were below last year’s level, including transport costs in Sweden. The improved efficiency in operations also contributed positively on the result. Our financial position was strong, with cash and cash equivalents at EUR 138.4 (160.6) million and interest-bearing net debt at EUR -20.6 (-23.7) million at the end of the period.

In Q4, net sales on a constant currency basis grew by 4.8% and were EUR 398.2 million, driven by growth in distribution business, especially in Sweden. Adjusted EBIT was EUR 6.2 (1.7) million, excluding the impact of the Swedish dose dispensing business, while the reported adjusted EBIT was EUR 5.4 (2.9) million. On a constant currency basis, the adjusted EBIT was EUR 5.1 million. The improvement in EBIT from the previous year was related to strong sales growth in distribution business, lower operating expenses and efficiency improvements in operations.

During 2023 we continued to focus on developing our commercial and supply chain excellence, while ensuring profitability, efficiency and a collaborative culture. Major milestones of the year included the announcement of our refined strategy, new long-term financial targets and sustainability agenda. With our refined strategy, we are taking the next steps to build the new Oriola with a strengthened focus on wholesale business together with investments in our core capabilities in distribution business. In October, we also announced the sale of the dose dispensing business in Sweden as part of our strategic decision to strengthen focus on wholesale business. The transaction is subject to the approval of the Swedish Competition Authority and is expected to be completed in the second quarter of 2024.

In the joint venture company Kronans Apotek, integration projects are proceeding with several actions being implemented, albeit the benefits are not yet fully visible. Realised synergies were behind the plan while integration costs were below estimate. During the year, Kronans Apotek implemented a new organisation, harmonised its assortment, completed the rebranding of 191 pharmacies and optimised its network by closing some pharmacies, resulting in more than 500 pharmacies operating today under one brand. In addition, Kronans Apotek continued to invest in its omni-channel operating model by strengthening its e-commerce capabilities. Kronans Apotek is today the biggest pharmacy chain in Sweden measured by number of pharmacies, and with its market share of around 24% and a growing e-commerce, it is now set to improve profitability and strengthen its business and brand long-term. In 2024, Kronans Apotek’s profitability is expected to be positively impacted by new legislation on pharmaceutical compensations. Kronans Apotek is an important strategic partner for us, and we will actively support its value creation as a major shareholder. Kronans Apotek expects their full profit potential to materialise by the end of 2025.

At Oriola, we foster a healthier tomorrow through our services and products. Our business, the wholesale of pharmaceuticals and health products, has an essential and positive role in society and people’s lives. This is why sustainability is part of our strategy and our daily work. We measure our success by monitoring the picking quality of our deliveries, which in 2023 reached 99.8%. Our target is to achieve carbon neutrality across our supply chain by 2030, and in our own operations by 2025. Our long-term environmental work has delivered results as we have reduced emissions in our own operations by 73% compared with the base year 2019.

At the start of 2024, we announced the strategically important investment to renew Oriola’s ERP (enterprise resource planning) and warehouse management during the years 2025-2027. This investment is part of our refined strategy and aims to enhance efficiency and operational excellence. The new ERP and warehouse management system will replace the current two separate systems in Sweden and Finland.

In addition, we are initiating an in-depth investigation of the different options for developing our logistics operations in Finland in the long-term. The identified options are to develop the Mankkaa site to be a modern warehousing and distribution centre, to find a new facility with capabilities to incorporate logistics operations, or to build a completely new modern logistics centre. The timing will naturally depend on the chosen option but will be at the least three years from now. 

As we begin a new year, I am very excited about the opportunities we have ahead of us. We are well placed to be a highly efficient company in our distribution business, to grow our share of the high-margin wholesale and advisory businesses, and to further develop our customer value proposition to deliver enhanced customer experience.

Throughout the year, our people have shown strong engagement to collaborate and grow with our customers and partners, and I am confident that we will continue on this path. With the refined strategy in place, we have a deeper understanding of shared priorities as well as greater clarity and alignment.

I want to extend my warmest thanks to everyone at Oriola for their dedication and hard work. I also want to thank our customers, partners and shareholders for their trust and continued support. 

Katarina Gabrielson is the CEO of Oriola Corporation. This text was published in the Financial Statements Release 2023 on 16 February 2024. The complete report can be downloaded from the link below.