Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales grew by 13% to EUR 440 million, driven by both distribution and wholesale segments.
- Adjusted EBIT improved by 53% to EUR 5.1 million, indicating better profitability.
- Lower operating expenses and freight costs contributed to profitability improvement.
- The ERP and warehouse management investment is progressing as planned.
- Oriola Corp (FRA:O5O, Financial) has a strong financial position with a significant reduction in interest-bearing debt.
Negative Points
- The Swedish Competition Authority prohibited the sale of Svensk dos AB, impacting strategic plans.
- Volumes in the Finnish market have declined, affecting overall performance.
- Adjusted EBIT in the distribution segment, excluding Swedish dose, declined slightly.
- Kronans Apotek's adjusted EBIT declined significantly from EUR 2.3 million to EUR 0.3 million.
- Equity ratio has declined from 21.2% to 17.2%, indicating a weaker balance sheet.
Q & A Highlights
Q: Net sales in the distribution segment grew by over 15%, but market growths are presented as 7% and 3.8%. Oriola's market share is not growing. What is behind Oriola's outperforming the market? Have there been any changes within the product portfolio compared to last year?
A: (Timo Leinonen, CFO) The portfolio we currently have has performed stronger during Q2. There are no significant changes in the market, but fluctuations occur from quarter to quarter.
Q: Why do you now treat ERP costs as adjusting items?
A: (Timo Leinonen, CFO) To provide clarity in our reporting. These costs will yield positive benefits only after several years, so separating them helps in understanding the underlying business development.
Q: According to the latest news and court decision, you don't have the right to appeal regarding Svensk dos. Would you like to comment?
A: (Katarina Gabrielson, CEO) We don't have the right to appeal, but we fully support Apotekstjänst Sverige AB's appeal. We believe the decision by Konkurrensverket was not justified and are confident in our argumentation.
Q: What kind of earnings should we expect from Svensk dos in the second half, some losses or around breakeven like Q2?
A: (Timo Leinonen, CFO) We will not comment on specific earnings for Svensk dos. However, we are supporting the business and maintaining the same volumes.
Q: What were the main reasons behind your low cash flow in Q2?
A: (Timo Leinonen, CFO) Mainly the repayment of loans, which was intentional to reduce interest-bearing debt, especially given the high interest rates.
Q: The increase in the number of personnel was quite high during Q2. Why is that, and is there a risk of increasing OpEx?
A: (Katarina Gabrielson, CEO) We have strengthened the wholesale segment as part of our strategy. We do not expect this increase to continue as most necessary additions have been made.
Q: Why didn't the good sales growth show in your profitability?
A: (Timo Leinonen, CFO) The value of sales and volumes are different factors. Transaction-based agreements do not fully translate to profitability. However, increasing volumes will positively impact profitability.
Q: What is the status of the ERP and warehouse management investment?
A: (Katarina Gabrielson, CEO) The investment has progressed according to plan. We are reaching the end of the design phase and will move into the build phase during the second half of the year.
Q: How is the performance of Kronans Apotek?
A: (Timo Leinonen, CFO) E-commerce continues to grow steadily, while brick-and-mortar is stabilizing. New measures have been implemented to improve performance, and we expect full profit potential to materialize by the end of 2025.
Q: What is your outlook for 2024?
A: (Timo Leinonen, CFO) We expect the adjusted EBIT, excluding the Swedish dose dispensing business, for 2024 to increase from the adjusted EBIT for 2023, which was EUR19.5 million. We anticipate continued growth in the pharmaceutical distribution market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
