ORIOLA. ORIOLA CORPORATION Interim report January September 2017 Eero Hautaniemi, President and CEO 25 October Oriola Corporation

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1 ORIOLA ORIOLA CORPORATION Interim report January September Eero Hautaniemi, President and CEO 25 October 1

2 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 outperformed online 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 2

3 ERP and warehouse management system go-live in Finland 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. 3

4 EUR million Oriola Key Figures continuing operations EUR million EUR million INVOICING // NET SALES // ADJUSTED EBIT // / invoicing at comparable EUR/SEK rate EUR million / net sales at comparable EUR/SEK rate EUR million / adjusted EBIT at comparable EUR/SEK rate EUR 34.4 million 4

5 EUR million EUR million Adjusted EBIT January September continuing operations ADJUSTED EBIT, QUARTERS// ADJUSTED EBIT, SEGMENTS // Q3 Q4 Q1 Q2 Q3 Q3 Consumer Services Healthcare Group administration Q3 5

6 Reporting Segments January September 6

7 Services Segment 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 for healthcare actors who want to succeed in the Nordic countries Finland Wholesale 46 % Sweden Wholesale 34 % 3 TG/OTC for pharmacies in Sweden 31 % 2.3 BEUR 3.9 BEUR 1 BEUR 7 Source: QuintilesIMS, ATY, Apoteksförening and Oriola

8 EUR million Services January September continuing operations Market growth: Sweden 3.3 per cent and Finland 2.1 per cent ADJUSTED EBIT // Invoicing decreased by 2.1 per cent in comparable EUR/SEK Invoicing in Q3 increased, Meda replaced 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 Q3 9.2 Q4 7.7 Q1 8.0 Q2 3.6 Q3 8

9 Consumer Segment 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 Pharmacy retail market in Sweden 18% 4.2 BEUR 50 % 50 % Source: QuintilesIMS, ATY, Apoteksförening and Oriola 9

10 Swedish Pharmacy retail market PHARMACIES // MARKET SHARE // Others Apotea Apoteksgruppen LloydsApoteket 9% 3% 4% 3% 31% Apotek Hjärtat & CURA % % Apoteket Pharmacies 2010 Established net Established net YTD Pharmacy market growth 3% The share of online sales 7% 10 Source: Apoteksförening and Oriola

11 EUR million Consumer January September continuing operations 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 - established pharmacies, online development and marketing ADJUSTED EBIT // 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 s and Kesko s new chain of comprehensive wellbeing stores in Finland continued. The first stores are planned to open in the beginning of Cost in Q3 were EUR 0.7 million Q3 7.3 Q4 5.3 Q Q2 Q3 11

12 Healthcare Segment 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 DOSE DISPENSING SERVICES Svensk Dos in Sweden and PharmaService in Finland are part of Oriola Group specialising in dose dispensing services MARKET SHARE DOSE DISPENSING Sweden 25% Finland Circa 230 MEUR Svensk Dos Apoteket AB Apotekstjänst Circa 30 MEUR 46% PharmaService Pharmac YA Pharmados 12 Source: Oriola

13 EUR million Healthcare January September continuing operations Oriola dose dispensing companies provide service for 68,000 persons in 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 Amortisation related to acquisition of Svensk Dos and PharmaService affected Healthcare EBIT by EUR -1.2 (-1.1) million ADJUSTED EBIT // Q3 Q4-0.5 Q1-0.8 Q2-0.3 Q3 13

14 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 The ERP and EWM investment in Sweden under re-evaluation The extension of the distribution centre in Enköping continues in 2018 Investments in estimated to be approximately 50 MEUR 14

15 Outlook The Adjusted EBIT of continuing operations on constant currency basis is estimated to decrease from the level. The adjusted EBIT from continuing operations was EUR 59.3 million in. 15

16 Key Figures January September 16

17 EUR million Cash flow including discontinued operations QUARTERLY NET CASH FLOW FROM OPERATING ACTIVITIES // EUR million 1-9/ 1-9/ Change in working capital Net cash flow from operating activities *) Net cash flow from investing activities Net cash flow from financing activities Net change in cash Cash and cash equivalents at the end of period *) Operating cash flow negatively impacted by ERP go-live in Finland. Trade receivables temporarily up by EUR 30 million 17

18 EUR million Net Interest-Bearing Debt including discontinued operations NET INTEREST-BEARING DEBT // Q4/2015 Q1/ Q2/ Q3/ Q4/ Q1/ Q2/ Q3/ EUR million Bank loans (syndicated & term) 30 Sep 30 Sep Commercial papers Advance payment from pharmacies Other Cash and cash equivalents Net interest-bearing debt Sold trade receivables Gearing, %

19 Key Figures continuing operations EUR million Change % Change % 1-12 Invoicing , , ,364.2 Net sales , , ,588.6 Adjusted EBITDA Adjusted EBIT EBIT Profit for the period

20 Balance Sheet and Key Ratios including discontinued operations EUR million 30 Sep 30 Sep 31 Dec Goodwill Equity Interest-bearing debt Interest-bearing net debt Balance sheet total Equity ratio, % Return on equity (ROE), % Return on capital employed (ROCE), % Gearing, % Equity per share, EUR Earnings per share (EPS), EUR (cont. operations) Average number of shares, 1000 pcs 181, , ,389 20

21 The Channel for Health Safety and availability of products and services Responsibility in the supply chain Data security Governance and Compliance Transparent governance Ethical business practices People and Society Competent and contented staff Diversity and equality Stakeholder responsibilty Environment Energy efficiency Climate actions Waste reduction and safe handling

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