Oriola Corporation’s Interim Report January 1– March 31, 2019

Oriola Corporation stock exchange release 26 April 2019 at 3.00 p.m.

Oriola January 1– March 31, 2019


January–March 2019 highlights

  • Invoicing increased by 5.4% (increased 6.4%) to EUR 894.4 (848.3) million. On a constant currency basis invoicing increased by 8.7% and was EUR 922.2 million.                                        
  • Net sales increased by 2.3% (increased 5.6%) to EUR 397.1 (388.1) million. On a constant currency basis net sales increased by 5.8% and were EUR 410.6 million.
  • Adjusted EBIT was EUR 3.9 (6.2) million. On a constant currency basis the adjusted EBIT was EUR 4.1 million.
  • Profit for the period totalled EUR 1.9 (3.5) million and earnings per share were EUR 0.01 (0.02).
  • Two Group-wide strategic programmes kicked off: 20by20 Excellence to ensure operational excellence and cost efficiency and Customer Experience to strengthen customer trust and satisfaction.
  • New customer focused organisation with new business areas Consumer, Pharma and Retail as well as logistics and sourcing function Operations became effective as of 1.1.2019.
  • Ramp-up of new automated distribution centre in Sweden started in February.

Business outlook for 2019

The adjusted EBIT on a constant currency basis is estimated to increase from the 2018 level.

Oriola’s business outlook for 2019 is based on external market forecasts, agreements with pharmaceutical companies and pharmacies, and management assessments.

President and CEO Robert Andersson on the first quarter of 2019:

“Oriola’s invoicing (EUR 894 million, +5.4%) and net sales (EUR 397 million, + 2.3%) continued to grow in the first quarter compared to the previous year. On a constant currency basis invoicing grew by 8.7% and net sales by 5.8%. Inefficiencies and high operating costs as well as a challenging consumer market in Sweden impacted profitability negatively.

Ramp-up of our new distribution centre in Sweden started in February. The main ramp-up phase is expected to continue to the end of the second quarter, and by the end of 2019 we expect to reach efficiency.

Our new organisation based on customer focused business areas Consumer, Pharma and Retail has been effective from the beginning of this year.

Consumer focuses in pharmacy operations in Sweden, where consumer behavior is fast changing towards online. We continued to invest in online and our online business grew by 59%, which was faster than the market (34%). Price competition and lower margins affected Consumer result negatively.

Pharma offers wholesales and expert services for pharma products. Pharma continued to grow in both Sweden and Finland. Invoicing increased 11.4% year-on-year and net sales increased 11.6% on a constant currency basis. Inefficiency in Operations still burdened the result in Sweden but improved efficiency in Finland had a positive impact on Pharma result.

Retail offers a wide product and service portfolio for pharmacies, groceries and other wellbeing operators. The Retail first quarter was not satisfying mainly due to the inefficiencies of Operations in Sweden and renewal of parts of the portfolio. We started dose dispensing deliveries to Stockholm’s Läns Landsting (SLL) in February, making us the market leader in Sweden with over 90,000 patients.

Our two strategic programmes, 20by20 Excellence and Customer Experience, are progressing according to plans. In 20by20 Excellence programme, the targeted savings of EUR 20 million are expected to materialise gradually from the second half of 2019, with full effect by the end of 2020.”

Key figures 2019 2018 Change 2018
EUR million 1-3 1-3 % 1-12
Invoicing 894.4 848.3 5.4 3,518.4
Net sales 397.1 388.1 2.3 1,552.2
Adjusted EBIT1 3.9 6.2 -37.1 36.9
EBIT 3.9 5.6 -29.5 22.0
Adjusted EBIT % 1.0 1.6 2.4
EBIT % 1.0 1.4 1.4
Profit for the period 1.9 3.5 -45.8 12.7
Earnings per share, EUR 0.01 0.02 -45.8 0.07
Net cash flow from operating activities -25.4 32.7 102.8
Gearing, %2 126.4 48.9 35.1
Equity ratio, %3 15.3 18.9 19.8
Return on capital employed (ROCE), %4 4.6 7.4 6.9
1 Adjustment items are specified in table "Adjusting items included in EBIT"
2 Gearing in 2019 is impacted by the increase of net debt by EUR 99.4 million and the decrease of retained earnings by EUR 6.1 million due to the application of IFRS 16. Excluding the impact of IFRS 16 gearing would have been 60.9%.
3 Equity ratio in 2019 is impacted by the decrease of retained earnings by EUR 6.1 million and increase of total assets by EUR 93.2 million due to the application of   IFRS 16. Excluding the impact of IFRS 16 equity ratio would have been 17.4%.
4 Return on capital employed in 2019 is impacted by the increase of total assets by EUR   93.2 million due to the application of IFRS 16. Excluding the impact of IFRS 16 return on capital employed would have been 4.5%.

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 section Alternative performance measures of this interim report.

Disclosure procedure

This stock exchange release is a summary of Oriola Corporation’s Interim Report January­­–March 2019. The complete report is attached to this release in pdf format and is also available on Oriola’s website at www.oriola.com.

Analyst and investor meeting

Oriola Corporation will organise a meeting for investors, analysts and the press on Friday, 26 April 2019 at 4.00 p.m. at Hotel Scandic Simonkenttä, meeting room Mansku, Simonkatu 9, 00100 Helsinki, Finland.

Further information:

Robert Andersson, President and CEO
tel. +358 10 429 2109, email: robert.andersson@oriola.com

Helena Kukkonen, CFO
tel. +358 10 429 2112, email: helena.kukkonen@oriola.com

Distribution:

Nasdaq Helsinki Ltd
Key media

Released by:

Oriola Corporation
Orionintie 5, 02200 Espoo
www.oriola.com