CEO’s review
Orthex purpose is to improve 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 Orthex’s Half-year financial report Q2/2023:
“In the second quarter, constant currency net sales development was flat at -0.1%. With currency effect, Orthex’s net sales decreased by 4.1% to 20.1 million euros (21.0). The strategy of accelerating sales in the Rest of Europe delivered invoiced sales growth of 13.5% and sales were 3.9 million euros (3.5). International distribution build-up continued with Orthex’s sales team being very committed to meeting customers and to attending trade and customer fairs. Active presence on our key markets is an important part of the growth strategy.
The sales in the Nordics were slowed down by careful consumer behaviour and weak currencies. The impact resulted in overall Nordic invoiced sales development of -6.9% mostly driven by the weak Swedish and Norwegian currencies.
The biggest category Storage represents most of the business outside of the Nordic countries. The positive sales development outside the Nordics took the overall Storage category growth to 3.1% compared to the same period last year. Kitchen, Plant Care and Home and Yard product categories, traditionally strong in the Nordics, declined overall because of the careful Nordic customer and consumer behaviour.
Orthex’s profitability improved significantly compared to the same period last year. The adjusted EBITA margin in the second quarter was 10.3% (-0.8) and the adjusted EBITA was 2.1 million euros (-0.3). The more favourable raw-material prices, cost control and adapting the operations to lower volumes affected the result positively. In addition, Orthex received one-off support of 0.8 million euros relating to high electricity prices in Sweden between October 2021 and September 2022. The result was negatively influenced by cost inflation and the continued weak value of the Swedish and Norwegian Krona. Second quarter cash flows improved to 2.0 million euros (-0.4) and inventory level decreased according to plan.
Sales volumes have declined, however mostly off-set by increasing sales value. We are adapting our actions to the fast-changing market conditions to ensure future long-term success. Thus, we have increased our investment in commercial activity, strengthened the commercial team and put additional focus on improving in-store execution. We are constantly strengthening our pipeline of interesting new products for the years to come.
Sustainability is an important part of the core strategy. During the second quarter, Orthex participated for the first time in the EcoVadis ESG assessment and was awarded a silver medal for sustainability performance. The result places Orthex globally among the top 18 percent of companies assessed by EcoVadis. In May, Orthex’s Gnosjö factory was granted an ISCC PLUS certificate, to extend the usage of renewable raw materials applying the mass balance approach in production. Granting of the certificate supports Orthex’s long-term carbon neutrality target, and the target to increase the share of sustainable raw materials in production. In June, Orthex was awarded the Nasdaq ESG Transparency Partner badge for 2022 ESG reporting.
Strong dedication to the strategy, along with our proactive approach in adapting to fast changing market conditions, is yielding positive traction. The strong efforts of our employees and the support from our stakeholders are key factors in achieving success. We are devoted and determined to capitalize and build on the momentum to accomplishing our long-term objectives.”