Oriola Corporation Financial Statements 2017 · stores and online shop opened in January 2018 ERP...
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13.2.2018 1
Oriola Corporation Financial Statements 201713 February 2018
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Oriola 2017
13.2.2018 2
New contracts in Healthcare Sweden
doubled the business area net
sales
Oriola expert services portfolio grew with Swedish ICTHS
Health Support AB
Sale of the Baltic businesses in
October, focus on Finland and
Sweden
CEO change: Robert Andersson started
on 12 February 2018
Oriola’s and Kesko’sjoint venture
Hehku established, first stores and online shop
opened in January 2018
ERP and warehouse
management system
implementation in Finland was
difficult – delivery reliability at good
level, efficiency and customer
experience to improve
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Invoicing Net sales Adjusted EBIT
Oriola Key Figurescontinuing operations
1-12/2017 adjusted EBIT at comparableEUR/SEK rate EUR 40.6 million
EUR million
1 579 1 566 1 578 1 589 1 528
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2013 2014 2015 2016 2017 0
500
1 000
1 500
2 000
2 500
3 000
3 500
2013 2014 2015 2016 2017
EUR million
36.2
57.8 59.8 59.9
39.9
0
10
20
30
40
50
60
70
2013 2014 2015 2016 2017
EUR million
313.2.2018
3 032 3 012 3 2113 364 3 336
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Adjusted EBIT, Quarters Adjusted EBIT
Adjusted EBIT January – December 2017 continuing operations
59.9
-8.0
-11.1 -0.7 -0.1
39.9
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
2016 Consumer Services Healthcare Group Items 2017
EUR million
15.3
11.0
13.0
9.7
6.2
0
2
4
6
8
10
12
14
16
18
Q4/2016 Q1/2017 Q2/2017 Q3/2017 Q4/2017
EUR million
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13.2.2018 5
Business AreasJanuary –December 2017
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Consumer Segment• Focuses on the needs of consumers for products and services related to health and
wellbeing
• Offers expert advice as well as an extensive selection of products in own pharmacies
• Consistent service experience throughout all service channels, from local pharmacies to online services
13.2.2018 6
18 %
82 %
4.2 BEUR
Pharmacy market in Sweden (Apoteksförening)
Oriola/Kronans ApotekOthers
74 %
10 %
16 %
4.2 BEUR
RxOTC
TG
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• Pharmacy market grew by 3.2% in Sweden, online sales grew by 58% to 7% of the market
• Net sales increased by 0.4% in SEK, online sales grew faster than market. Online sales 2%
• Profitability was weakened by cost of newly established pharmacies, online development and marketing
• Share of OTC and traded goods of net sales 26.6 (27.1)%
• Oriola’s joint venture with Kesko, Hehku chain of comprehensive wellbeing, was launched in Finland
• The first stores and online shop were opened in 25 January 2018. Oriola’s investment in 2017 was EUR 1.6 million and the adjusted EBIT impact EUR -1.1 million
13.2.2018 7
Consumer January – December 2017continuing operations
Adjusted EBIT
7.3
5.38.0
7.6
4.4
0
2
4
6
8
10
12
14
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
EUR million
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13.2.2018
Swedish Pharmacy retail marketPharmacies Market share (Apoteksförening)
Pharmacies 2010Established net 2010 - 2016Established net 2017
Kronans Apotek
Lloyds Apoteket
Others
Apoteksgruppen
Apoteket
Apotek Hjärtat& CURA
Oriola/Kronans ApotekApoteketApotek Hjärtat & CURA
OthersLloyds ApoteketApoteksgruppen
Apotea
31%
32%
18%
9%
4%3%
4%
0
8
2
8
0
4
0 100 200 300 400 500
388
397388
397
46
81
326
186
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Digitalisation opens new business opportunities• Oriola online sales grew faster than the
market in 2017 in Sweden• Cooperation with online medical center
Doktor.se in Sweden• Mobile apps supporting customers
prescription medication • Comprehensive wellbeing online shop
hehku.fi in Finland
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Hehku enters growing wellbeing market in Finland• Hehku offers unique selection of products
and services promoting wellbeing.• First stores were opened in Helsinki and
Vantaa as well as the online shop at 25 January 2018.
• Totally 30 new shops will be opened from Helsinki to Oulu in 2018.
• The new chain will create approximately1 000 new jobs, 200 in the first year.
• Medicines will become part of the concept when the regulation so allows.
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Finland Wholesale (ATY) Sweden Wholesale (Reveal and Oriola estimate)
Services
36 %
64 %4.2 BEUR
• Focuses on long-term customer relationship and wide service offering• Provides wholesale and logistics services with wide range of expert services for
pharmaceutical companies and pharmacies• Offers customized wholesale services of OTC and traded goods in Sweden • Provides staffing services for Finnish pharmacies
46 %54 % 2.3 BEUR
Oriola Oriola Others Others
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• Market growth: Sweden 2.1% and Finland 1.2%• Invoicing decreased by 1.3% with comparable
currency, Q4 invoicing grew by 1.0%• The decrease is mainly due to the end of the
distribution agreement with Abbvie in the beginning of 2017, Meda distribution started in May
• Expert services growth was strong• ICTHS acquisition completed
• ERP and warehouse management system go-live in Finland, adjusted EBIT impact EUR -9 million (EUR -4 million in Q4)
• Roche distribution agreement in Finland was lost in the end of the year, limited assortment of Orion products in multichannel distribution in 2018
13.2.2018 12
Services January – December 2017continuing operations
Adjusted EBIT
9.27.7 8.0
3.6 3.2
0
2
4
6
8
10
12
14
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
EUR million
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Investments in efficiency of logistics• Capacity expansion in the Central Warehouse in
Mölnlycke in May 2017• Facilitate our new cooperation with Meda
• Improvements to the ERP and warehouse management system in Finland continue
• Deliveries are working well but improvement of efficiency and customer experience is needed
• The start-up of the new automated warehouse is anticipated in the fourth quarter 2018 in Enköping, Sweden
• Phased start-up to minimise the risks• ERP and EWM implementation being re-
evaluated
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Unique services for pharma industry and pharmacies
• Expert services are growing through acquisitions
• Farenta 2016• ICTHS Health Support 2017
• Services for pharmaceutical companies and pharmacies
• Research and development services• Market access• Regulatory Life Cycle Management• Commercial services • Staffing services
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Healthcare Segment• The Healthcare segment offers pharmaceutical distribution and dose dispensing services for public
and private healthcare providers
• Services to veterinarians in Sweden
• Dose dispensing market ca. 200,000 patients in Sweden, 45,000 in Finland
• Oriola dose dispensing companies cover services for 69,000 persons in Sweden and Finland
13.2.2018 15
Market share dose dispensing (Oriola estimate)
45 %
44 %
4 %7 %
Circa 30 MEUR
Finland
25 %
36 %
39 %Circa
230 MEUR
Sweden
OriolaPharmacYAPharma Dos
OriolaApoteket ABApotekstjänst
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• Dose dispensing volume in Sweden doubled when Norrland service started in May
• Finnish Pharmaservice continued to perform well• Dose fee in Swedish tenders under pressure -
latest tenders with zero or negative dose fee• First contract to supply pharmaceuticals to county
council hospitals started in October with deliveries to Västmanland in Sweden
• The sales doubled in 2017 as a result of new contracts, but ramp-up costs weakened the result
• Amortisation related to acquisitions EUR -1.4 (-1.7) million
13.2.2018 16
Healthcare January – December 2017continuing operations
Adjusted EBIT
0.2
-0.5 -0.8 -0.3 -0.2
-2
0
2
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
EUR million
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We operate in regulated markets
• Sweden: • Pharmacy Bill 2018, obligations to wholesale concerning deliveries to pharmacies and product
returns• Investigation (SOU 2016:95), parallel and direct import by pharmacies to be restricted?• Public tenders in perpetual appeal process
• Finland:• “Sote” - social and healthcare reform - impact to pharmaceutical supply chain still largely
unknown• Pharmacy regulation, studies ongoing• Dose dispensing services underutilized• Distribution system discussion ongoing
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13.2.2018 18
Key Figures January –December 2017
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EUR million 1-12/2017
1-12/2016
Change in working capital -18.2 -41.2
Net cash flow from operating activities
23.7 40.2
Net cash flow from investing activities
-37.7 -80.7
Net cash flow from financing activities
-29.7 -20.5
Net change in cash -43.7 -61.0
Cash and equivalents at the end of period
17.0 60.8
13.2.2018 19
Cash flowincluding discontinued operations
Quarterly net cash flow from operating activities
-27
22 1926
-15
51
-24
11
-40
-30
-20
-10
0
10
20
30
40
50
60
Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q1/2017 Q2/2017 Q3/2017 Q4/2017
EUR million
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13.2.2018 20
Net Interest-Bearing Debtincluding discontinued operations
Net interest-bearing debt EUR million 31 Dec 2017
31 Dec 2016
Bank loans (syndicated & term)
60.6 93.9
Commercial papers 50.0 15.0
Advance payment from pharmacies
15.0 21.5
Other 1.7 2.7
Cash and cash equivalents 17.0 60.8
Net interest-bearing debt 110.2 72.3
Sold trade receivables 94.8 118.5
Gearing, % 55.7 35.2
51
66
8272
101
84
121110
0
20
40
60
80
100
120
140
Q1/2016 Q2/2016 Q3/2016 Q4/2016 Q1/2017 Q2/2017 Q3/2017 Q4/2017
EUR million
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Key Figures
EUR million 10-122017
10-122016
Change%
1-122017
1-122016
Change%
Invoicing 871.6 858.5 1.5 3,336.3 3,364.2 -0.8
Net sales 395.2 411.2 -3.9 1,527.7 1,588.6 -3.8
Adjusted EBITDA 13.1 21.7 -39.6 67.6 85.4 -20.8
Adjusted EBIT 6.2 15.3 -59.4 39.9 59.9 -33.3
EBIT 3.9 14.1 -72.1 37.8 57.6 -34.4
Profit for the period 2.1 10.8 -80.2 25.9 41.8 -38.0
13.2.2018 21
continuing operations
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Balance sheet and key ratios
13.2.2018 22
Including discontinued operationsEUR million 31 Dec
201731 Dec
2016
Goodwill 282.7 286.8Equity 197.7 205.2Interest-bearing debt 127.2 133.1Interest-bearing net debt 100.2 72.3Balance sheet total 922.4 925.4
Equity ratio, % 21.8 22.7Return on equity (ROE), % 13.0 21.4Return on capital employed (ROCE), % 11.7 17.8Gearing, % 55.7 35.2
Equity per share, EUR 1.09 1.13
Earnings per share (EPS), EUR (cont. operations) 0.14 0.23Average number of shares, 1000 pcs 181,328 181,389
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13.2.2018 23
Dividend Proposal
• The Board proposes to theAnnual General Meeting thatdividend of EUR 0.09 per sharewill be paid.
EUR million
0,11
0,270,25
0,23
0,14
0,00 0,00
0,13 0,14
0,09 *
0,00
0,05
0,10
0,15
0,20
0,25
0,30
2013 2014 2015 2016 2017
EPS, continuing operations Dividend
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Outlook 2018
• Adjusted EBIT of continuing operations on constant currency basis is estimated to increase from the 2017 level
• Pharmaceutical market growth forecast in Sweden 3.9% and in Finland 1.5%, however:
• Services Business Area development projects ongoing: Enköping DC and IT-systems in Finland impacting the 2018 efficiency
• Hehku chain expanding network of stores
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13.2.2018 25
Operatingenvironment 2018
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-2%
0%
2%
4%
6%
8%
10%
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
MSEK Market growth Sweden
Total Market (MSEK) Annual growth (%)
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
500
1 000
1 500
2 000
2 500
3 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
MEURMarket growth Finland
Total Market (MEUR) Annual growth (%)
Pharmaceutical markets are growingSource: IQVIA
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Megatrends support business growth
13.2.2018 27
Ageing population, increasing healthcare costs
Specialty pharmaceuticals growth needs supporting
services
Increasing spending on health and wellbeing
Digitalisation- opportunities and challenges
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Online pharmacies are growing fast in Sweden• Online trade is growing by 20 % each year while other retail is growing only 4 %• Over 70 % of Swedes under 50 years have shopped online last month• Every 5th Swede had bought at least one product in a month by smartphone, 1 in 8 had bought
two or more products• Declining prices and lower margins in campaigns
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13.2.2018 29
Sustainability
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Sustainability in Oriola
13.2.2018 30
Environment
Energy efficiencyClimate actionsWaste reduction and safehandling
Compliance and supply chainTransparent governanceEthical business and practicesSafety and availability of products and servicesResponsibility in the supply chain
People and Society
Competent and contentedstaffDiversity and equalityStakeholder responsibilty
The Channel for Health
Oriola started preparing reporting in 2016First CDP report in 2017
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Energy efficiency improvements in premises in Finland and Sweden underway
13.2.2018 31
Delivery to 800 pharmacies in Finland, 1 400 in Sweden
Pharmaceutical waste from distribution and collected from consumers
EnvironmentNon-financial information
10 548
12 694
6 843
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
2016 2017
Energy Consumption by Source (MWh)
District heatingRenewable electricityElectricity from mixed resources
242 79016 %
1 301 39184 %
Goods transports: CO2 emissions, kg
Finland Sweden
67 40
413 453
0
100
200
300
400
500
600
2016 2017
Pharmaceutical waste (tonnes)
Finland Sweden
3 446
19 237
5 902
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Sweden Finland Other countries
30 %
45 %
25 %
- under 30 years - 30-49 years- 50 years and over
79 %
21 %
Female Male
Employees by country (FTE)
13.2.2018 32
Employees by gender (headcount) Employees by age groups (headcount)
PeopleNon-financial information
Total FTE 31 December 2017: 2619
73 %
27 % 0%
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13.2.2018 33