Oriola-KD Corporation January-December 2012 Eero Hautaniemi - - PowerPoint PPT Presentation

Oriola-KD Corporation January-December 2012

Eero Hautaniemi President and CEO 7 February 2013

2 7 February 2013

Key Figures in 2012

• Net sales grew by 15.3% to 2,474.7 Me.
• Operating profit excluding one-off items increased by 14.7

Me to 27.9 Me.

• Earnings per share was 0.11 EUR (-0.16 EUR)

– Adjusted earnings per share was 0.08 EUR (0.02 EUR).

• Gearing ratio was 2.1% (6.4% )
• Return on equity was 5.6% (-7.4% )

3 7 February 2013

Focus Areas during 2012

• Profitability improvement
• Retail in Sweden and Russia

–

Develop the pharmacy portfolio

–

Improve the competitiveness of individual pharmacies

• Wholesale Russia
• Improve logistics efficiency
• Improve operational reliability
• I ncrease regional sales
• Wholesale Sweden
• Develop services to pharmaceutical companies
• Develop logistics services for pharmacy chains
• Wholesale Finland and Baltics
• Develop the traded goods assortment and increase sales

4 7 February 2013

Reporting Segments

5 7 February 2013

* ) Source: IMS Health 86 98 336 381 9 10 34 36 11 11 45 44 1 0 6 1 1 8 4 1 5 4 6 1 100 200 300 400 500 Q4/ 11 Q4/ 12 Year 2011 Year 2012 4 .4 5 .4 2 0 .6 2 1 .6 5 10 15 20 25 Q4/ 11 Q4/ 12 Year 2011 Year 2012

Net Sales Operating Profit

Me Me Wholesale Finland Wholesale Baltics Consumer Health

• Pharmaceutical market grew by 3.0%

(1.0% ).*

• The wholesale business in Finland

performed positively

–

Invoicing 1,040 Me (970 Me).

–

Market share 47.0% (45.1% ).*

• Competition in the Consumer Health

business has increased from the previous year.

• All operating countries within

Pharmaceutical Trade Baltics made an

• perating profit.

Pharmaceutical Trade Finland and Baltics January-December 2012

6 7 February 2013

Pharmaceutical Trade Sweden January-December 2012

Retail

• Market share 13.4% (13.5% ).* *
• Pharmacies 219 (209)

– 10 (20) pharmacies have been opened during 2012.

• The growth in the relative share of sales of traded

goods, the OTC assortment and parallel imports has increased the gross margin.

• Costs related to implementation of IT systems no

longer affected profit.

• In Q3 was booked one-off item of a receivable write-
• ff of EUR 1.1 million associated with the bankruptcy
• f cash transport company Panaxia AB.

Wholesale

• Invoicing 1,401 Me (1,424 Me).
• Market share 35.8% (38.1% )* *

– The increase in the share of parallel imports and generic pharmaceuticals decreased the market share.

• Delivery of purchasing and logistics services to

pharmacies has started according to plan at the beginning of October

– Burdened 2012 operating profit by 0.7 Me. – Financial benefits of the service will be felt in full as

• f the second half of 2013.
• The profitability strengthened during Q4 2012.
• Pharmaceutical market decreased by 1.7% (grew

2.0% ).* *

* * ) Source: IMS Health Me Me Wholesale Retail

Net Sales Operating Profit excluding one-offs

151 204 617 637 121 126 483 503 2 5 9 2 9 2 1 0 4 2 1 0 6 1 200 400 600 800 1000 1200 Q4/ 11 Q4/ 12 Year 2011 Year 2012 2 .6 4 .6 1 0 .6 1 6 .2 2 4 6 8 10 12 14 16 18 20 Q4/ 11 Q4/ 12 Year 2011 Year 2012*

* ) Excluding 1.1 Me write-off of receivable in retail business

7 7 February 2013

Pharmacies in Sweden

100 200 300 400 DocMorris (Celesio) Cura Apoteket (ICA) Others

3 0

2010 established

5 0 1 9

192 Apoteket (state) Apotek Hjärtat (Altor) Kronans Droghandel (Oriola-KD) Apoteksgruppen (private/ state) Medstop (Segulah) Vårdapoteket (Priveq & Investor) 2010 pharmacies

3 1 5 2 0 8 1 7 0 1 5 0 6 2 2 4

120

= 2 7 = 4 7 = 3 1 = 2 1 9 = 1 5 8

2011 established

= 3 7 0 = 2 7 7

1 9 1 4 2 0 4

= 7 7 = 6 5

Pharmacies + 37 % 1271

Num ber of pharmacies

2012 established 30

1 0 3 0 1 1 6

929

1 2 2 0 -1 Source: KPMG report 01/ 12 and Oriola-KD 02/ 13 6 5 4 3 1 1 1 5 0 3 1 -4

8 7 February 2013

Supply Chain Structure for RX, OTC and Traded Goods in Sweden

TG RX OTC

Pharm acy chains Pharm aceutical distributors

14% 35% 22% 4% Total market share of 4 pharmacy chains 25 % Approxim ate m arket share

Contracts Contracts

Sales m ix by pharm acies 75%

2010 2012

80% 12% 10% 13% 10%

9 7 February 2013

Retail

• Pharmacies 240 (249) in Moscow

– Stary Lekar 169 (181) and 03 Apteka 71 (68).

• 13 (32) pharmacies opened and 22 (37) closed.
• Efficiency boosted and sales of individual pharmacies

increased.

• EBITDA positive during 2012 and operating profit

positive in Q4/ 2012.

Wholesale

• The operating loss decreased as a result of increased

sales, increased efficiency and improved delivery reliability

– Operating profit positive in Q4/ 2012. – Net sales of the regions increased by some 64% and sales of pharmaceuticals to hospitals over doubled.

• Payment times from the customers have increased

which has led to an increase in credit loss risks

– Credit loss write-offs of 2.7 Me (1.9 Me) have been booked to the trade receivables in 2012, the collection is actively continuing. – Payment term s shortened, collection process clarified and collection department strengthened.

• Oriola-KD has signed a letter of intent on a 10-year

lease agreement to transfer a new main logistics centre in Moscow region and on the logistics centre’s automation solution.

• Pharmaceutical market grew by 22.7% (12.4% ) in

rubles.* *

* * ) Source: Pharmexpert Me Me Retail Wholesale

Net Sales Operating Result

Pharmaceutical Trade Russia January-December 2012

165 265 591 831 36 41 132 149 1 9 5 2 9 7 6 8 9 9 5 3 100 200 300 400 500 600 700 800 900 1000 1100 Q4/ 11 Q4/ 12 Year 2011 Year 2012 0 .2 3 .1

• 1 2 .6
• 2.3
• 14
• 12
• 10
• 8
• 6
• 4
• 2

2 4 Q4/ 11 Q4/ 12 Year 2011* Year 2012

* ) Year 2011: excluding impairment charge of 33.4 Me

10 7 February 2013

Net Sales and Operating Profit January-December 2012

Net Sales, Me Operating Profit, Me Year 2 0 1 2 Year 2 0 1 1 Q4 2 0 1 2 Q4 2 0 1 1 Year 2 0 1 2 Year 2 0 1 1 Q4 2 0 1 2 Q4 2 0 1 1 Pharmaceutical Trade Finland and Baltics 461 415 118 106 21.6 20.6 5.4 4.4 Pharmaceutical Trade Sweden 1061 1042 292 259 16.2* 10.6 4.6 2.6 Pharmaceutical Trade Russia 953 689 297 195

• 2.3
• 12.6* *

3.1 0.2 Group administration

• 7.7
• 5.5
• 2.3
• 1.4

Total, excluding one-

• ff items

2474 2146 708 559 27.9* 13.2* * 10.7 5.8

* ) Operating profit excluding 1.1 Me write-off of receivable in Sweden * * ) Operating profit excluding 33.4 Me impairment charge of the Stary Lekar brand

11 7 February 2013

Year 2 0 1 2 Year 2 0 1 1 Change % Q4 2 0 1 2 Q4 2 0 1 1 Change % Net sales, Me 2474 2146 15 % 708 559 27 % Operating profit excluding one-

• ff items, Me

27.9* 13.2* 111 % 10.7 5.8 85 % Operating profit, Me 26.8

• 20.2
• 10.7

5.8 85 % Net profit, Me 17.2

• 24.1
• 11.6

4.0 188 % Earnings per share, Euro 0.11

• 0.16
• 0.08

0.03 188 % Earnings per share, Euro* * 0.08 0.02 396 %

* ) operating profit excluding 1.1 Me write-off of receivable in Sweden (2011 excluding 33.4 Me impairment charge of the Stary Lekar brand). * * ) earnings per share with adjustments for financial income with no cash flow effect related to the acquisition of the minority share in the Swedish retail company, the impact of the tax rate reduction in Sweden, and a one-off item of a receivable write-off associated with Panaxia AB (2011 does not include the impairment charge related to the Russian Stary Lekar brand)

Financial Performance January-December 2012

12 7 February 2013

Balance Sheet and Key Financial Figures January-December 2012

Balance Sheet 3 1 .1 2 .2 0 12 3 1 .1 2 .2 0 11 Equity, Me 315 299 Operative working capital, Me

• 109
• 83

Interest-bearing net debt, Me 6.7 19.2 Balance sheet, total, Me 1319 1273 Key Financial Figures 3 1 .1 2 .2 0 12 3 1 .1 2 .2 0 11 Equity ratio, % 24.9 % 24.4 % Net gearing, % 2.1 % 6.4 % Return on equity, % 5.6 %

• 7.4 %

13 7 February 2013

Net cash flow effect of selling of sales receivables programs to operating activities

• Working capital decreased by 23.1 Me

(decreased 11.8 Me)

– Effect of sales receivables programs 11.0 Me.

• Gross investments 22.6 Me (28.8 Me)

– Pharmacy establishments. – Information systems. – Improvem ents in logistics efficiency.

• Depreciations 18.8 Me (16.1 Me).
• In February 2012, Oriola-KD renewed all long-

term external loan agreements

– Maturity of the new committed revolving credit facility April 2014. – New committed revolving credit facility of 100 Me unused at the end of the reporting period.

• Short-term credit account limits of 43 Me with

the banks were unused.

• 44 Me (0 Me) of the 150 Me commercial paper

programme was in use.

• A trade receivables sales programme from

Swedish county councils was launched in the retail business in Sweden.

Finance and Cash Flow

2 8 4 6

• 2 7
• 3 5

1 1 1

• 4 0
• 3 0
• 2 0
• 1 0

1 0 2 0 3 0 4 0 5 0

Net cash flow from operating activities Net cash flow from investing activities Net cash flow after invest ing activities

Me

Year 2 0 1 1 Year 2 0 1 2

14 7 February 2013

Personnel 31 December 2012

Operating segment

3 1 .1 2 .2 0 1 2 3 1 .1 2 .2 0 1 1 Change, %

Pharmaceutical Wholesale Finland and Baltics

476 492

• 3 %

Pharmaceutical Retail Sweden

1064 988 + 8 %

Pharmaceutical Wholesale Sweden

260 235 + 11 %

Pharmaceutical Retail Russia

1309 1464

• 11 %

Pharmaceutical Wholesale Russia

1747 1675 + 4 %

Total

4856 4854 + 0 %

10% 27% 63% Finland and Baltics Sweden Russia

(11% ) (25% ) (64% )

15 7 February 2013

Profit Distribution Proposal

• Oriola-KD’s parent company is Oriola-KD Corporation,

whose distributable assets based on the balance sheet on 31 December 2012, were EUR 225.3 million (EUR 221.9 million).

• Oriola-KD Corporation’s net profit in 2012 was EUR 15.5

million (EUR 64.6 million).

• The Board proposes to the Annual General Meeting that a

dividend of EUR 0.05 per share (EUR 0.05 per share) is paid for 2012, and that EUR 0.04 per share (EUR 0.03 per share) is distributed from the reserves of unrestricted equity as repayment of equity, totaling EUR 0.09 per share (EUR 0.08 per share) in distributed assets.

16 7 February 2013

Outlook of Net Sales and Operating Profit 2013

• Oriola-KD estim ates that net sales and operating profit

excluding one-off item s will increase from 2012 level

– Growth of the net sales of Pharmaceutical Trade Russia will slow down in the first part of the year and operating profit will be weaker than the previous year, as a result of challenges related to the implementation

• f the warehouse management system started in January 2013.

17 7 February 2013

2013 Key Focus Areas

• 1. Continue planned measures to improve profitability.
• 2. Prepare for successful implementation of new

automated distribution center in Moscow during 2014.

• 3. Active participation in market change in Sweden.

18 7 February 2013

Annual General Meeting and Annual Report

• Annual General Meeting

– Oriola-KD Corporation’s Annual General Meeting will be held

• n 20 March 2013 at 5.00 p.m. at the Helsinki Fair Centre.

– The notice of the Annual General Meeting will be published in the Helsingin Sanomat newspaper on 27 February 2013 at the latest.

• Publication of the annual report

– Oriola-KD Corporation will publish its annual report for 2012

• n 27 February 2013 at the latest.

• The assumptions, opinions, estimates and views expressed in this

presentation are solely the opinions and views of the company unless a reference to the source of the information is stated

• They reflect the current view of the company with regard to the

discussed issues

• Several factors can however cause changes to these opinions and

views

• Neither the company nor its management can answer for any future

accuracy of the opinions or views expressed in this presentation or the actual occurrence of any forecasts