Oriola Corporation stock exchange release 27 April 2018 at 8.30 a.m.
Oriola Corporation’s Interim Report 1 January–31 March 2018
Financial performance January–March 2018, continuing operations
- Invoicing increased by 6.4 % (decreased 2.7%) to EUR 848.3 (797.5) million
- Net sales increased by 5.6% (decreased 5.2%) to EUR 388.1 (367.4) million
- Adjusted EBITDA decreased by 22.8% (decreased 9.1%) to EUR 13.8 (17.9) million
- Adjusted EBIT was EUR 6.2 (11.0) million
- Profit for the period totalled EUR 3.5 (7.5) million and earnings per share was EUR 0.02 (0.04)
Business outlook for 2018
Oriola keeps the previously given guidance unchanged: Adjusted EBIT of continuing operations on constant currency basis is estimated to increase from the 2017 level.
President and CEO Robert Andersson:
“In the first quarter of the year, our operations progressed as planned despite challenges in many areas. In the Services Business Area, we succeeded in improving our efficiency and stabilising our operations in Finland, which had been weakened by the introduction of the new ERP and warehouse management system. There is still need for improvement and we expect to normalise deliveries and efficiency in Finland in the second quarter of 2018, and further increase efficiency by the end of the year. Our Consumer business was still challenged by the increasing competition in the pharmacy market in Sweden, and the intensive start-up phase of the new Hehku chain during the first quarter. Despite all this, we managed to increase the Group’s net sales by 5.6% and invoicing by 6.4% compared to the corresponding period last year.
We are competing in the tightening Swedish pharmacy market, where consumers are increasingly moving to use online pharmacy services. By the end of the first quarter, online sales had risen to 9% (6%) of total pharmacy sales in Sweden. Oriola’s online sales continued to grow faster than the market. During the reporting period online sales accounted for 2.4% (1.9%) of Oriola’s Consumer sales in Sweden. Net sales of Consumer business in constant currency grew by almost 4%. However, the weak exchange rate negatively affected our comparable sales and result. In Finland, our joint venture Hehku launched 17 Hehku stores and an online store in the first quarter of the year. The Hehku chain, co-founded with Kesko, is a comprehensive wellbeing chain founded in response to the growing health and wellbeing market in Finland. The establishment of the chain will negatively affect the result of our Consumer business operations this year.
The operative result of our Services Business Area continued to suffer from the difficulties experienced with our new ERP and warehouse management system, implemented in the third quarter of 2017. The system’s delivery capability and efficiency have now improved considerably, and we have implemented many development projects that are important to the customer experience. With these restored capabilities, we have also been able to once again take over distribution of products that had been placed in multichannel distribution. Despite this, the deployment of the new system and the new processes resulted in additional costs of around EUR 2 million for the Services business area for the first quarter of 2018.
In the first quarter, our operations developed well in the Services Business Area in Sweden, helped by both, growth in the pharmaceuticals market and the distribution agreements that were concluded last year. To maintain growth in Sweden, we are investing in expanding and automating our distribution centre in Enköping. The project is proceeding as planned, and the new distribution centre is expected to start deliveries in the fourth quarter of 2018.
There were also positive developments during the first quarter of 2018 in expert services as part of the Services Business Area. We provide our customers the widest range of services in the industry, throughout the medicine’s path from research to pharmaceutical guidance for consumers.
Our Healthcare business grew strongly in the first quarter, making a positive result after four loss-making quarters. Net sales grew by 61% compared to corresponding period last year. Growth was particularly driven by the progress with dose dispensing in Sweden. Despite growing competition, business continued to be stable in Finland. Our dose dispensing services currently cover almost 70,000 patients. Ageing population and the society’s need to increase the proportion of home care are speeding up the development of dose dispensing operations in both Sweden and Finland.
We have made major changes to our Group Management Team during the first quarter of the year. At the beginning of January, Anders Torell started as Vice President of the Consumer business area, and I started as CEO in February. In March Helena Kukkonen took up the position of CFO for the Group and Charlotta Nyström was appointed CIO of the Group. I am confident that with this Group Management Team we can respond to the changing challenges of our operating environment.
The market is rapidly becoming more digital. This is especially evident in Sweden, with fast changes in the pharmaceuticals market both in online stores and in the service offerings of conventional pharmacies. In Finland, we are in the middle of both the debate around the pharmacy market regulations and the comprehensive reforms of the social and healthcare systems.
We have made it through a difficult time, one that placed heavy demands on our customers and our staff. I want to warmly thank our customers for their loyalty and patience. I also want to thank all of our employees for their valuable work especially in maintaining and improving Finland’s pharmaceutical service capabiliity. Your commitment is tremendously valuable”.
|Key figures, continuing operations||2018||2017||Change||2017|
|Adjusted EBITDA %||3.6||4.9||4.4|
|Adjusted EBIT 1)||6.2||11.0||-43.4||39.9|
|Adjusted EBIT %||1.6||3.0||2.6|
|Profit for the period||3.5||7.5||-52.8||25.9|
|Earnings per share, EUR, continuing operations||0.02||0.04||-52.8||0.14|
|Earnings per share, EUR, discontinued operations||-||0.00||0.00|
|Net cash flow from operating activities 2)||32.7||-14.7||23.7|
|Gross capital expenditure||8.8||13.5||46.1|
|Total assets 2)||926.6||908.4||922.4|
|Net interest-bearing debt 2)||84.4||100.7||110.2|
|Gearing, % 2)||48.9||53.5||55.7|
|Net debt / 12-month EBITDA 2)||1.4||1.1||1.7|
|Equity per share, EUR 2)||0.95||1.04||1.09|
|Equity ratio, % 2)||18.9||21.2||21.8|
|Return on equity (ROE), % 2)||7.8||17.2||13.0|
|Return on capital employed (ROCE), % 2)||7.4||14.3||11.7|
|Average number of shares, 1000 pcs 3)||181,293||181,389||181,328|
|Average number of personnel||2,646||2,698||2,686|
|Number of personnel at the end of the period||2,687||2,708||2,619|
|1) Adjustment items are specified in table "Adjusting items included in EBIT"|
|2) Figures in 2017 include discontinued operations|
|3) Treasury shares held by the company not included|
This stock exchange release is a summary of Oriola Corporation’s Interim Report January–March 2018. 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
Oriola Corporation will organize a meeting for investors, analysts and the press on Friday, 27 April 2018 at 10.00 a.m. at Hotel Scandic Simonkenttä, meeting room Ateljee 3, Simonkatu 9, 00100 Helsinki, Finland.
A teleconference on the financial information will be held by Oriola Corporation on the same day starting at 2.00 p.m. Finnish time, tel. +44 20 3936 2999, confirmation code "58 68 01". The event can be followed live as a webcast accessible at www.oriola.com/investors. The language of the teleconference will be English.
Next financial report
Oriola Corporation will publish its half year financial report on 18 July 2018.
Robert Andersson, President and CEO
tel. +358 10 429 2109, email: email@example.com
Helena Kukkonen, CFO
tel. +358 10 429 2112, email: firstname.lastname@example.org
Nasdaq Helsinki Ltd
Orionintie 5, 02200 Espoo