ORIOLA · 2017-10-25 · 8 Oriola Corporation • Market growth: Sweden 3.3 per cent and Finland 2.1 per cent • Invoicing decreased by 2.1 per cent in comparable EUR/SEK • Invoicing

Oriola Corporation1

ORIOLAORIOLA CORPORATION

Interim report January – September 2017Eero Hautaniemi,

President and CEO

25 October 2017

Oriola Corporation2

July – September highlights

• Services profitability suffered from the prolonged ramp-up of the new ERP and EWM system in Finland

• Consumer Sweden developed online services and outperformedonline market growth

• Norrland ramp-up still burdened Healthcare

• Oriola’s and Kesko’s joint health and wellbeing store chain plans to open first stores in the beginning of 2018

• Oriola completed the acquisition of the Swedish services company ICTHS Health Support AB

Oriola Corporation3

• The new ERP and warehouse management system was implemented in the beginning of September. Full batch control of pharmaceuticals implemented. Fulfills the requirements of Falsified medicines directive.

• The ramp-up of the new system had unexpected difficulties. In the first two weeks the delivery capability of pharmaceuticals dropped to average 72% level. Very little non-pharma deliveries during the first three weeks.

• It took a lot of effort to bring the medicine delivery performance onto the level of 95 % by the end of September.

• During October the performance levels in pharmaceutical deliveries have returned to normal, and non-pharmaceuticals will return to normal by the end of the month.

• The personnel of Oriola Finland have done their utmost to resolve the difficulties and secure the delivery of pharmaceuticals. Also pharmacies have worked hard to secure that all of their customers receive their medicines.

ERP and warehouse management system go-live in Finland

Oriola Corporation4

Oriola Key Figurescontinuing operations

ADJUSTED EBIT //NET SALES //INVOICING //

1-9/2017 net sales at comparable EUR/SEK rate EUR 1 151.5 million

1-9/2017 adjusted EBIT at comparableEUR/SEK rate EUR 34.4 million

1-9/2017 invoicing at comparable EUR/SEK rate EUR 2 500.6 million

3 032 3 0123 211

3 364

1-92 506

1-92 465

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2013 2014 2015 2016 2017

EU

R m

illio

n

1 579 1 566 1 578 1 589

1-91 177

1-91 132

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2013 2014 2015 2016 2017

EU

R m

illio

n

36.2

57.8 59.8 59.9

1-944.6

1-933.7

0

10

20

30

40

50

60

70

80

90

2013 2014 2015 2016 2017

EU

R m

illio

n

Oriola Corporation5

Adjusted EBIT January – September 2017continuing operations

ADJUSTED EBIT, QUARTERS// ADJUSTED EBIT, SEGMENTS //

16.515.3

11.013.0

9.7

0

2

4

6

8

10

12

14

16

18

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

EU

R m

illio

n

44.6

33.7

-5.0-5.2 -0.3-0.3

Q3 2016 Consumer Services Healthcare Groupadministration

Q3 2017

EU

R m

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Oriola Corporation6

Reporting

Segments

January –

September

2017

Oriola Corporation7

• Focuses on long-term customer relationships and a wide service offering

• Provides wholesale and logistics services with wide range of value adding services for pharmaceutical companies and pharmacies

• Offers customized wholesale services of OTC and traded goods in Sweden

• Provides staffing Services for Finnish pharmacies

Services Segment

Source: QuintilesIMS, ATY, Apoteksförening and Oriola

31 %

2.3BEUR

FinlandWholesale

46 %

SwedenWholesale

3.9 BEUR

34 %

3 TG/OTC for pharmacies in Sweden

1 BEUR

Services for healthcare actors who want to succeed in the Nordic countries

Oriola Corporation8

• Market growth: Sweden 3.3 per cent and Finland 2.1 per cent

• Invoicing decreased by 2.1 per cent in comparable EUR/SEK

• Invoicing in Q3 increased, Medareplaced Abbvie, OTC/TG wholesale in Sweden grew

• ERP and warehouse management system go-live in Finland

• Disruptions and low operational efficiency during the ramp-up in September caused loss of sales and extra costs, EBIT impact EUR -5 million

• The acquisition of the Swedish services company ICTHS Health Support AB was completed

Services January – September 2017continuing operations

ADJUSTED EBIT //

8.59.2

7.7 8.0

3.6

0

2

4

6

8

10

12

14

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

EU

R m

illio

n

Oriola Corporation9

• Focuses on the needs of consumers in health and wellbeing related products and services

• Offers expert advice on health and wellbeing as well as an extensive and high-quality selection of products in own pharmacies

• Consistent service experience throughout all service channels, from local pharmacies to online services

Consumer Segment

4.2BEUR

Pharmacy retail market in Sweden

18%

Source: QuintilesIMS, ATY, Apoteksförening and Oriola

50 % 50 %

Oriola Corporation10

Swedish Pharmacy retail market

MARKET SHARE //PHARMACIES //

Pharmacies 2010

Established net 2010 - 2016

Established net 2017

Source: Apoteksförening and Oriola

323

Apoteket

Apotek Hjärtat & CURA

Apoteksgruppen

LloydsApoteket

ApoteaOthers

31%

32%

18%

9%

4%3%

3%

The share of online sales 7%

2017 YTD Pharmacy market growth

3%

386

391

324

182

-1

4

-1

5

0

0

0 100 200 300 400 500

41

81

387

393

323

183

Oriola Corporation11

• Pharmacy market grew by 3.2 % in Sweden

• The net sales in Consumer segment increased by 0.6 % in SEK

• The profitability was weakened by cost of 2016-2017 established pharmacies, online development and marketing

• Costs of developing Consumer Sweden eBusiness were some 2 million euros by the end of Q3.

• Oriola online sales growth was 105% from last year Q3, while the market growth was 59%.

• Sales of Rx developed favourably, OTC and TG sales faced tough competition

• Share of OTC and traded goods of net sales 26.7 (27.2) %

• The preparation work for the launch of Oriola’sand Kesko’s new chain of comprehensive wellbeing stores in Finland continued. The first stores are planned to open in the beginning of 2018. Cost in Q3 were EUR 0.7 million.

Consumer January – September 2017continuing operations

ADJUSTED EBIT //

9.4

7.3

5.3

8.0 7.6

0

2

4

6

8

10

12

14

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

EU

R m

illio

n

Oriola Corporation12

• The Healthcare segment offers dose dispensing services in Sweden and Finland

• The segment also offers services to hospitals, healthcare centres and other healthcare operators in Sweden

• Finnish healthcare sector in transformation

Healthcare Segment DOSE DISPENSING SERVICES

Svensk Dos in Sweden and PharmaService in Finland are part of Oriola Group specialising in dose dispensing services

PharmaService

Pharmac

YA

Pharmados

Finland

46%

Svensk Dos

Apoteket AB

Apotekstjänst

Sweden

25%

MARKET SHARE DOSE DISPENSING

Circa30 MEUR

Circa230 MEUR

Source: Oriola

Oriola Corporation13

• Oriola dose dispensing companiesprovide service for 68,000 personsin Sweden and Finland

• The dose dispensing sales volume developed well but ramp-up costs of service for Norrland region weakened the result

• The result of the Healthcare segment will stay negative in 2017

• Amortisation related to acquisition of Svensk Dos and PharmaServiceaffected Healthcare EBIT by EUR -1.2 (-1.1) million

Healthcare January – September 2017continuing operations

ADJUSTED EBIT //

0.0 0.2

-0.5-0.8

-0.3

-2

0

2

4

6

8

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

EU

R m

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n

Oriola Corporation14

Development projects

• Oriola’s and Kesko’s health and wellbeing store chain in Finland: Oriola’s share of investment 12 MEUR within next three years, ca. 3 MEUR in 2017

• The ERP and EWM investment in Sweden under re-evaluation

• The extension of the distributioncentre in Enköping continues in 2018

• Investments in 2017 estimated to be approximately 50 MEUR

Oriola Corporation15

• The Adjusted EBIT of continuing operations on constant currency basis is estimated to decrease from the 2016 level. The adjusted EBIT from continuing operations was EUR 59.3 million in 2016.

Outlook 2017

Oriola Corporation16

Key

Figures

January –

September

2017

Oriola Corporation17

EUR million 1-9/2017 1-9/2016

Change in working capital -23.0 -48.4

Net cash flow from

operating activities *) 12.7 14.4

Net cash flow from investing activities -36.2 -64.8

Net cash flow from financing activities -21.6 -2.2

Net change in cash -45.1 -52.6

Cash and cash equivalents at the end of period 15.7 69.5

Cash flowincluding discontinued operations

QUARTERLY NET CASH FLOW FROM OPERATING ACTIVITIES //

*) Operating cash flow negatively impacted by ERP go-live in Finland. Trade receivables temporarily up by EUR 30 million

16

31

-27

22 1926

-15

51

-24

-40

-30

-20

-10

0

10

20

30

40

50

60

EU

R m

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n

Oriola Corporation18

EUR million30 Sep

201730 Sep

2016

Bank loans (syndicated & term)

60.3 67.6

Commercial papers 36.0 45.0

Advance payment from pharmacies

36.9 34.4

Other 3.0 4.2

Cash and cash equivalents 15.7 69.5

Net interest-bearing debt 120.5 81.7

Sold trade receivables 106.7 115.2

Gearing, % 59.8 42.5

Net Interest-Bearing Debtincluding discontinued operations

NET INTEREST-BEARING DEBT //

7

51

66

8272

101

84

121

0

20

40

60

80

100

120

140

Q4/2015 Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q1/2017 Q2/2017 Q3/2017

EU

R m

illio

n

Oriola Corporation19

EUR million

7-92017

7-92016

Change%

1-92017

1-92016

Change%

1-12 2016

Invoicing 823.1 812.2 1.3 2,464.8 2,505.7 -1.6 3,364.2

Net sales 377.6 382.9 -1.4 1,132.5 1,177.4 -3.8 1,588.6

Adjusted EBITDA 16.7 23.0 -27.3 54.5 63.7 -14.4 85.4

Adjusted EBIT 9.7 16.5 -41.5 33.7 44.6 -24.4 59.9

EBIT 10.7 16.3 -34.6 33.9 43.6 -22.2 57.6

Profit for the period 8.0 11.8 -32.2 23.8 31.0 -23.3 41.8

Key Figurescontinuing operations

Oriola Corporation20

EUR million30 Sep

201730 Sep

201631 Dec

2016

Goodwill 286.8 282.0 286.8

Equity 201.4 192.3 205.2

Interest-bearing debt 136.2 151.2 133.1

Interest-bearing net debt 120.5 81.7 72.3

Balance sheet total 950.8 929.3 925.4

Equity ratio, % 22.0 21.5 22.7

Return on equity (ROE), % 16.3 22.7 21.4

Return on capital employed (ROCE), % 13.9 18.3 17.8

Gearing, % 59.8 42.5 35.2

Equity per share, EUR 1.11 1.06 1.13

Earnings per share (EPS), EUR (cont. operations) 0.13 0.17 0.23

Average number of shares, 1000 pcs 181,357 181,374 181,389

Balance Sheet and Key Ratiosincluding discontinued operations

Oriola Corporation

People and Society

• Competent and contented staff• Diversity and equality

• Stakeholder responsibilty

The Channel for Health

• Safety and availability of products and services

• Responsibility in the supply chain

• Data security

Environment• Energy efficiency

• Climate actions

• Waste reduction and safe handling

Governance and

Compliance

Transparent governance

Ethical business practices

Oriola Corporation