Oriola Corporation’s Half Year Financial Report 1 January – 30 June 2022

Oriola Corporation Stock Exchange Release 22 July 2022 at 8.30 a.m.

Oriola Corporation’s Half Year Financial Report 1 January – 30 June 2022

Q2 2022: Solid performance continued – operating environment remains uncertain

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 planned to be merged with Euroapotheca’s Apoteksgruppen.

April–June 2022 highlights

Continuing operations

• Invoicing increased by 3.7% to EUR 903.9 (871.6) million. On a constant currency basis, invoicing increased by 6.0% and was EUR 923.6 million.
• Net sales increased by 9.5% to EUR 394.6 (360.3) million. On a constant currency basis, net sales increased by 12.0% and were EUR 403.4 million.
• Comparable adjusted EBIT and adjusted EBIT was EUR 5.5 (2.0) million for continuing operations. On a constant currency basis, the comparable adjusted EBIT and adjusted EBIT was EUR 5.6 million.
• EBIT was EUR 7.0 (1.2) million. On a constant currency basis, EBIT was EUR 7.2 million.
• Profit for the period totalled EUR 5.5 (0.7) million and earnings per share were EUR 0.03 (0.00).

Discontinued operations

• Invoicing decreased by 2.4% to EUR 208.0 (213.1) million. On a constant currency basis, invoicing increased by 0.8% and was EUR 214.9 million.
• Net sales decreased by 2.5% to EUR 202.3 (207.5) million. On a constant currency basis, net sales increased by 0.7% and were EUR 209.0 million.
• Comparable adjusted EBIT was EUR 3.1 (2.0) million. On a constant currency basis, the comparable adjusted EBIT was EUR 3.0 million.
• Adjusted EBIT was EUR 9.8 (2.0) million. On a constant currency basis, the adjusted EBIT was EUR 9.9 million.
• Adjusted EBIT includes a positive impact of EUR 6.8 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 9.7 (1.9) million. On a constant currency basis, EBIT was EUR 9.8 million.
• Profit for the period totalled EUR 6.5 (0.3) million and earnings per share were EUR 0.04 (0.00).

Continuing and discontinued operations

• Invoicing increased by 3.5% to EUR 1,019.0 (984.5) million. On a constant currency basis, invoicing increased by 5.9% and was EUR 1,042.5 million.
• Net sales increased by 7.8% to EUR 504.0 (467.5) million. On a constant currency basis, net sales increased by 10.4% and were EUR 516.4 million.
• Comparable adjusted EBIT was EUR 8.6 (4.1) million. On a constant currency basis, the comparable adjusted EBIT was EUR 8.6 million.
• Adjusted EBIT was EUR 15.3 (4.1) million. On a constant currency basis, the adjusted EBIT was EUR 15.6 million.
• Adjusted EBIT includes a positive impact of EUR 6.8 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 16.7 (3.0) million. On a constant currency basis, EBIT was EUR 17.0 million.
• Profit for the period totalled EUR 12.0 (0.9) million and earnings per share were EUR 0.07 (0.01).

January–June 2022 highlights

Continuing operations

• Invoicing increased by 5.0% to EUR 1,790.6 (1,705.8) million. On a constant currency basis, invoicing increased by 7.4% and was EUR 1,831.6 million.
• Net sales increased by 8.6% to EUR 767.4 (706.7) million. On a constant currency basis, net sales increased by 11.1% and were EUR 785.3 million.
• Comparable adjusted EBIT and adjusted EBIT was EUR 10.2 (2.9) million for continuing operations. On a constant currency basis, the comparable adjusted EBIT and adjusted EBIT was EUR 10.4 million.
• EBIT was EUR 10.3 (1.1) million. On a constant currency basis, EBIT was EUR 10.6 million.
• Profit for the period totalled EUR 7.6 (0.5) million and earnings per share were EUR 0.04 (0.00).

Discontinued operations

• Invoicing was EUR 417.5 (417.4) million and remained at the previous year’s level. On a constant currency basis, invoicing increased by 3.5% and was EUR 431.9 million.
• Net sales were EUR 407.4 (407.2) million and remained at the previous year’s level. On a constant currency basis, net sales increased by 3.5% and were EUR 421.4 million.
• Comparable adjusted EBIT was EUR 9.9 (1.5) million. On a constant currency basis, the comparable adjusted EBIT was EUR 9.9 million.
• Adjusted EBIT was EUR 20.2 (1.5) million. On a constant currency basis, the adjusted EBIT was EUR 20.5 million.
• Adjusted EBIT includes a positive impact of EUR 10.2 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 19.7 (1.4) million. On a constant currency basis, EBIT was EUR 20.0 million.
• Profit for the period totalled EUR 13.3 (-1.3) million and earnings per share were EUR 0.07 (-0.01).

Continuing and discontinued operations

• Invoicing increased by 4.8% to EUR 2,019.6 (1,927.0) million. On a constant currency basis invoicing increased by 7.4% and was EUR 2,068.6 million.
• Net sales increased by 7.5% to EUR 986.2 (917.7) million. On a constant currency basis net sales increased by 10.2% and were EUR 1,011.7 million.
• Comparable adjusted EBIT was EUR 20.1 (4.4) million. On a constant currency basis, the comparable adjusted EBIT was EUR 20.4 million.
• Adjusted EBIT was EUR 30.3 (4.4) million. On a constant currency basis, the adjusted EBIT was EUR 31.0 million.
• Adjusted EBIT includes a positive impact of EUR 10.2 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 30.0 (2.5) million. On a constant currency basis, EBIT was EUR 30.6 million.
• Profit for the period totalled EUR 20.8 (-0.7) million and earnings per share were EUR 0.11 (-0.00).

 

Key figures	2022	2021	Change	2022	2021	Change	2021
EUR million	4-6	4-6	%	1-6	1-6	%	1-12
Continuing operations
Invoicing	903.9	871.6	3.7	1,790.6	1,705.8	5.0	3,506.9
Net sales	394.6	360.3	9.5	767.4	706.7	8.6	1,452.2
Comparable adjusted EBIT1	5.5	2.0	170.0	10.2	2.9	250.7	14.9
Adjusted EBIT1	5.5	2.0	170.0	10.2	2.9	250.7	14.9
EBIT	7.0	1.2	503.6	10.3	1.1	819.7	10.7
Adjusted EBIT %	1.4	0.6		1.3	0.4		1.0
EBIT %	1.8	0.3		1.3	0.2		0.7
Profit for the period	5.5	0.7	721.2	7.6	0.5	1,384.0	8.6
Earnings per share, EUR, continuing operations	0.03	0.00		0.04	0.00		0.05
Earnings per share, EUR, discontinued operations	0.04	0.00		0.07	-0.01		0.01
Continuing and discontinued operations
Invoicing	1,019.0	984.5	3.5	2,019.6	1,927.0	4.8	3,959.1
Net sales	504.0	467.5	7.8	986.2	917.7	7.5	1,882.4
Comparable adjusted EBIT1, 4	8.6	4.1	110.7	20.1	4.4	361.1	26.3
Adjusted EBIT1, 2	15.3	4.1	276.7	30.3	4.4	596.0	26.3
EBIT2	16.7	3.0	449.7	30.0	2.5	1,086.4	20.5
Comparable adjusted EBIT %4	1.7	0.9		2.0	0.5		1.4
Adjusted EBIT %2	3.0	0.9		3.1	0.5		1.4
EBIT %2	3.3	0.7		3.0	0.3		1.1
Net cash flow from operating activities3	38.9	28.2	38.0	67.7	14.0	382.3	40.0
Gearing, % 3				18.7	53.8		46.5
Equity ratio, % 3				19.8	18.0		20.1
Return on capital employed (ROCE), % 3				14.5	1.1		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 Half Year Financial Report.

Outlook for 2022

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

The COVID-19 pandemic continues, and severity as well as 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 current group structure, including both continuing operations and discontinued operations. The comparable adjusted EBIT in 2021 was EUR 26.3 million.

CEO Katarina Gabrielson:

“In the second quarter, Oriola delivered a solid performance in both Oriola Services and Oriola Consumer. The comparable adjusted EBIT for Oriola Group increased to EUR 8.6 million, which is 111% higher than in 2021. For continuing operations adjusted EBIT improved clearly, reaching EUR 5.5 million (+170%). The improved result was driven by continuing high market demand and increased sales in all areas, particularly in Finland. In addition, our turnaround measures, especially in operational efficiency and product pricing and portfolio management, progressed well. Furthermore, overall cost savings contributed to mitigating inflationary cost pressures.

At the end of June, we received positive news from The Swedish Competition Authority (Konkurrensverket), as they approved the planned merger of Oriola’s Kronans Apotek and Euroapotheca’s Apoteksgruppen pharmacy businesses in Sweden. Preparations for the completion of the merger are ongoing and the completion of the merger is expected to take place in early October 2022. The transaction is motivated by the opportunity to create significant synergies and increase the scale and market presence for the new joint pharmacy company.

During the second quarter, we continued implementing our short-term action plan to secure Oriola’s turnaround. We proceeded with further improving our efficiency and paid special attention to portfolio management and product pricing. In April, we divested our pharmacy staffing business in Finland to focus on our core businesses. These actions are even more important now, as we are witnessing an all-time high inflation. Oriola’s business is affected by the increasing fuel, energy and labour costs as well as weakening consumer confidence. We also must, once again, pay attention to the increasing COVID-19 infection levels.

Our focus at Oriola is to continue the rigorous turnaround measures and our work for the successful merger of our pharmacy operations. We also want to keep our customer promise and secure the wellbeing of our employees at all times. Our new streamlined operating model enables us to work even more efficiently and in agile ways, so that we can fulfil our purpose of “Health for life” to all our stakeholders, every day.    

In addition, I would like to express my thanks to all our employees for their great work that has enabled us to keep our customer promise. Without your everyday commitment, this would not have been possible.”

Disclosure procedure

This stock exchange release is a summary of Oriola Corporation’s Half Year Financial Report January-June 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 Friday, 22 July 2022 at 10.00 a.m. The event can be followed as a live-webcast accessible through this link: https://oriola.videosync.fi/2022-q2. The event will be arranged only as a webcast.

Further information

Tuula Lehto
VP, Communications and Sustainability
tel. +358 40 5885 343
email: tuula.lehto@oriola.com

Sari Pohjonen, CFO
email: investor.relations@oriola.com

Distribution:
Nasdaq Helsinki Ltd.
Key media

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