CEO’s review
From Interim Report Jan-Sept. 2024: Strong sales growth outside the Nordics, higher costs affected profitability
Alexander Rosenlew, CEO:
“In the third quarter, Orthex’s net sales increased by 4.2% to 22.8 million euros (21.9). Constant currency net sales growth for the quarter was 2.8%. January–September net sales grew by 5.3% and amounted to 65.9 million euros (62.5).
Invoiced sales growth outside the Nordics was one of the highlights of the third quarter: growth of 24.1% was reached amounting to a record of 5.5 million euros (4.4).
In the Rest of Europe, increased distribution, campaigns and timing of orders resulted in strong invoiced sales growth of 19.8%, delivering in total 5.1 million euros (4.2). The third quarter invoiced sales in the Nordics improved only moderately by 0.3% compared to the previous year and were 17.9 million euros (17.8) as sell-out in some major accounts were slower than expected.
The biggest category Storage continued to grow, and the invoiced sales increased by 3.8% compared to July–September last year. Most of the growth came from markets outside the Nordics. The Kitchen category showed healthy sales growth of 12.1%. The Home & Garden category sales remained flat compared to the third quarter last year, well reflecting the sentiment on the Nordic market where most of the sales of these items come from.
Orthex’s profitability declined compared to Q3 in the previous year, with an adjusted EBITA margin at 12.6% (16.1) and the adjusted EBITA at 2.9 million euros (3.5). The lower profitability is attributed to increased production cost planned for higher sales, commercial structural enforcement, and investment in commercial activities and campaigns. In addition, the depreciations related to right-of-use assets (IFRS 16) increased, and the impact on EBITA was 0.1 million euros.
The third quarter cash flows were strong and amounted to 5.7 million euros (5.3). The net debt to adjusted EBITDA ratio (leverage) was down at healthy 1.3 (1.4) at the end of the period.
Orthex’s investments in January–September amounted to EUR 3.1 million (1.8) and were related to growth investments in moulds for new products and capacity increases. Orthex invests in novelties on a continuous basis and our modern range of SmartStoreTM Essence storage baskets, launched in the previous quarter, are showing promising consumer take-off. Our latest novelty is a stackable sorting solution Stack-it, an addition to our award-winning SmartStore™ Collect range. As sorting requirements grow, we are expanding this range to meet consumer needs and helping retailers to offer products that solve daily sorting and waste sorting needs. Made entirely from recycled plastic, both new product ranges mark another step towards our sustainability goals and Orthex’s ongoing commitment to increase the use of renewable and recycled materials in production. We have prepared a rich program of new exciting products to be launched in the coming quarters and are working systematically to improve the distribution of already launched novelties.
Our commercial strategy is working well, and our evolvement towards a function driven, European company is progressing according to plan. We will continue supporting our sales growth by consumer understanding, customer partnerships, commercial activities, innovation, and continuous improvement.
I am looking forward to continuing the interesting and rewarding journey together with a dedicated, strong, and ambitious team at Orthex.”