Oriola Corporation’s Financial Statements Release 1 January–31 December 2019

Oriola Corporation stock exchange release 7 February 2020 at 08.30 a.m.

January–December 2019 highlights

  • Invoicing increased by 6.1% (increased 5.5%) to EUR 3,733.1 (3,518.4) million. On a constant currency basis invoicing increased by 8.4% and was EUR 3,815.1 million.                                           
  • Net sales increased by 10.9% (increased 1.6%) to EUR 1,721.3 (1,552.2) million. On a constant currency basis net sales increased by 13.6% and were EUR 1,763.4 million.
  • Adjusted EBIT was EUR 20.5 (34.4) million. On a constant currency basis the adjusted EBIT was EUR 20.9 million.
  • Profit for the period totalled EUR 8.0 (10.8) million and earnings per share were EUR 0.04 (0.06).
  • 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.
  • 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.
  • Ramp-up of new automated distribution centre in Sweden started in February 2019.

October–December 2019 highlights

  • Invoicing increased by 5.4% (increased 6.6%) to EUR 978.9 (929.1) million. On a constant currency basis invoicing increased by 7.6% and was EUR 1,000.1 million.                                           
  • Net sales increased by 13.2% (decreased 0.1%) to EUR 446.7 (394.7) million. On a constant currency basis net sales increased by 15.9% and were EUR 457.5 million.
  • Adjusted EBIT was EUR 2.1 (5.0) million. On a constant currency basis the adjusted EBIT was EUR 1.9 million.
  • Profit for the period totalled EUR -0.2 (-8.6) million and earnings per share were EUR -0.00 (-0.05).
  • In Consumer business area in Sweden an error was discovered relating to the valuation of inventories. The error was corrected by restating previous periods.
  • On 19 December Oriola announced, that the company has decided to accelerate the renewal of the Swedish pharmacy online shop IT system to enhance competitiveness and to optimise omnichannel sales. The related impairment of the old system is included in Consumer business area’s adjusting items to EBIT in the last quarter of 2019.

Business outlook for 2020

The adjusted EBIT on a constant currency basis is estimated to increase from 2019 level.

Oriola’s business outlook for 2020 is based on external market forecasts, agreements with pharmaceutical companies and pharmacies, and management assessments.

President and CEO Robert Andersson:

”For Oriola, 2019 was a year of strong growth in invoicing (EUR 3,733.1 million, +6.1%) and net sales (EUR 1,721.3 million, +10.9%). On constant currency basis invoicing grew by 8.4% and net sales by 13.6%. Adjusted EBIT for 2019 was EUR 20.5 million, which is 40.6% lower than in 2018. The year was burdened by the slower than planned ramp-up of the new distribution center in Sweden, and strong price competition in online business in the pharmacy market.

In the fourth quarter, the net sales of Consumer grew by 3.2% on constant currency basis. Online business grew by 20%. The profitability was burdened especially by tough online competition, spending in IT systems as well as increased cost level. The EBIT also included adjusting items mainly consisting of impairment of intangible assets. In Pharma, net sales grew by 26.4% on constant currency basis, driven by pharmaceutical market growth. In Retail, net sales grew by 9.5% on constant currency basis due to good performance of dose-dispensing. Both business areas were burdened by the high distribution costs in Sweden. In Finland however, our distribution operations exceeded our objectives and are performing with high efficiency, stability and excellence.

During 2019 we have progressed on our two strategic programmes. In 20by20 Excellence we systematically review our operations and increase efficiency to achieve annualised savings of EUR 20 million by the end of 2020. During 2019 we have achieved savings especially in resource costs of logistics and in IT costs in Finland. We will continue the programme as planned in 2020. The Customer Experience programme has focused on developing customer experience, and the results at the end of 2019 were encouraging. Customer satisfaction has improved – especially in Finland.

In 2020 we will further increase the efficiency of our operations and renew our ways of working. The actions for turning the company direction are demanding, but we have a solid plan for execution. Our focus is on improving profitability. We will continue to strengthen the customer experience to ensure added value in every customer encounter. In line with our strategy, we will also advance OneOriola culture to harmonise our ways of working and to realise synergies. We are committed to sustainability and have set ambitious long-term goals, such as carbon neutrality by 2030.”

Key figures 2019 2018 Change 2019 2018 Change
  10-12 10-12 % 1-12 1-12 %
EUR million   restated5     restated5  
Invoicing 978.9 929.1 5.4 3,733.1 3,518.4 6.1
Net sales 446.7 394.7 13.2 1,721.3 1,552.2 10.9
Adjusted EBIT1 2.1 5.0 -58.2 20.5 34.4 -40.6
EBIT 0.8 -8.2 109.6 15.3 19.5 -21.6
Adjusted EBIT % 0.5 1.3   1.2 2.2  
EBIT % 0.2 -2.1   0.9 1.3  
Profit for the period -0.2 -8.6 97.7 8.0 10.8 -25.4
Earnings per share, EUR -0.00 -0.05 97.7 0.04 0.06 -25.4
Net cash flow from operating activities 27.3 48.4   84.4 102.8  
             
Gearing, %2       76.1 35.8  
Equity ratio, %3       15.5 19.5  
Return on capital employed (ROCE), %4     4.1 6.2  
             
1 Adjusting items are specified in table "Adjusting items included in EBIT"
2 Gearing in 2019 is impacted by the increase of net debt by EUR 83.9 million and the decrease of retained earnings by EUR 5.7 million due to the application of IFRS 16. Excluding the impact of IFRS 16 gearing would have been 21.9%.
3 Equity ratio in 2019 is impacted by the decrease of retained earnings by EUR 5.7 million and increase of total assets by EUR 78.2 million due to the application of IFRS 16. Excluding the impact of IFRS 16 equity ratio would have been 17.3%.
4 Return on capital employed in 2019 is impacted by the increase of total assets by EUR 78.2 million due to the application of IFRS 16. Excluding the impact of IFRS 16 return on capital employed would have been 4.4%.
5 The figures in 2018 have been restated due to an error related to previous periods. All the figures in the financial statement release affected by the error have been restated. For more information on correction of the error please see section Correction of error relating to previous periods in the notes to the financial statements release.

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 Financial Statements Release.

Disclosure procedure

This stock exchange release is a summary of Oriola Corporation’s Financial Statements Release January­­–December 2019. 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 meeting for investors, analysts and the press on Friday, 7 February 2020 at 10.00 a.m. at Hotel Scandic Simonkenttä, meeting room Mansku, Simonkatu 9, 00100 Helsinki, Finland.

Publication of the Financial Statements

Oriola Corporation will publish its 2019 Financial Statements by 10 February 2020.

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

https://www.oriola.com/