CEO’s review
Orthex purpose is to improve consumers’ everyday life with practical, beautiful, and sustainable products. We want to give consumers the opportunity to choose products that are better for the environment, therefore we constantly strive to improve the sustainability of our products and our operations.
From Half-Year Financial Report Jan-June 2024: Continued solid sales growth
Alexander Rosenlew, CEO:
““Orthex had a strong start of the year, and we kept the positive momentum during the second quarter when Orthex’s net sales increased by 4.3% to 21.0 million euros (20.1). Constant currency net sales growth was 4.4%. In the first half of the year, net sales grew by 5.9% and amounted to 43.0 million euros (40.6) driven by improving sell-out performance in the Nordic countries and strong commercial activities.
The second quarter invoiced sales in the Nordics improved by 5.4% compared to last year and were 17.2 million euros (16.3). In the Rest of Europe, the timing of orders resulted in balanced sales growth of 6.2%, delivering in total 4.2 million euros in sales (3.9).
We are currently developing our German operations into an entity responsible for the whole DACH region. This is an important step to cater for growing cross-border customer demand from key partners with retail chains throughout this larger geographic region. The change is intended to make it possible to accelerate future growth in the area.
The biggest category Storage continued to perform well and grew by 5.0% compared to April–June last year. The Kitchen category showed sales growth of 7.0% thanks to widening customer distribution and the successful rebranding of SmartStoreTM food storage products. The Home & Garden category sales improved slightly by 2.2% compared to the second quarter last year.
Orthex’s profitability declined compared to Q2 in the previous year, with adjusted EBITA margin at 7.4% (10.3) and the adjusted EBITA at 1.6 million euros (2.1). Considering the one-time energy price compensation received last year in Sweden (0.8 million euros), the comparable EBITA improved by 16%. Fixed costs developed according to plan, particularly influenced by growth related costs such as additional commercial resources, strong instore marketing activities and salary inflation.
Cash flows in the second quarter amounted to -0.4 million euros (2.0). During the period, preparations were made for summer maintenance breaks at the factories and working capital was increased, but the cash position remains strong. The net debt to adjusted EBITDA ratio (leverage) was 1.6 (2.0) at the end of the period.
Orthex aims to be the industry forerunner in sustainability by offering timelessly designed, high-quality, safe, and long-lasting products, reducing the carbon footprint of its operations and products, and sourcing more and more of its raw materials from renewable and recycled materials. During times of lower consumer confidence, the general market offering can get skewed towards cheaper, lower quality products, which are often not the most sustainable solutions. For Orthex, it is extremely important to enforce the quality and sustainability of its products through strong communication and giving the consumer and the retail professional buyers the opportunity to select long-lasting products with strong brands and up to 10 years guarantee.
Orthex invests in novelties on a continuous basis and the latest addition is the modern range of SmartStoreTM Essence storage baskets made of recycled plastic.
Despite the somewhat depressed consumer sentiments, our systematic customer and distribution acquisition efforts kept progressing well in Europe and our qualitative products are gaining more space and visibility store by store.
Our strategy is working well, and I am grateful that we have a strong, dedicated and aligned team implementing value adding activities with our partners.”