Orthex financial statements release 2021: Strong growth under increasingly challenging conditions
Orthex Corporation, Stock exchange release, 9 March 2022 at 9.00 a.m. EET
This release is a summary of Orthex Corporation’s financial statements release 2021. The complete report is attached to this release as a pdf-file. It is also available on Orthex’s website at https://investors.orthexgroup.com/.
January–December 2021 in Brief
- Invoiced sales increased by 16.3% and totalled EUR 90.6 million (77.9)
- Net sales increased by 16.9% to EUR 88.7 million (75.9)
- Adjusted EBITDA was EUR 14.8 million (17.1)
- EBITA was EUR 9.4 million (12.3) and adjusted EBITA was EUR 11.0 million (12.9)
- Adjusted EBITA margin was 12.4% (17.0)
- Operating profit was EUR 9.3 million (12.3), adjusted operating profit EUR 10.9 million (12.9)
- Items affecting comparability totalled EUR 1.6 million (0.6)
- Net cash flows from operating activities were EUR 9.0 million (12.7)
- Net debt / Adjusted EBITDA was 1.7x (2.3)
- Earnings per share, basic was EUR 0.35 (0.47)
- Equity ratio increased to 35.8% (22.6)
- Orthex was selected as a pioneering company to the Finnish Innovation Fund Sitra’s list of the most interesting companies in circular economy in Finland
- The Board of Directors proposes a capital return of EUR 0.18 per share, totalling EUR 3.2 million. It is proposed that the capital return be paid in two instalments.
October–December 2021 in Brief
- Invoiced sales increased by 7.1% and totalled EUR 23.5 million (22.0)
- Net sales increased by 6.8% to EUR 23.1 million (21.6)
- Adjusted EBITA was EUR 1.8 million (3.8)
- Adjusted EBITA margin was 7.6% (17.5)
- Operating profit was EUR 1.7 million (3.4)
- Net cash flows from operating activities were EUR 1.8 million (2.6)
- Orthex was granted an ISO 45001 certification, an international standard that specifies requirements for an occupational health and safety management system
Orthex has no Russian or Ukrainian suppliers nor any other business in Russia, so the effect of the Ukrainian crisis is not directly impacting Orthex’s business.
Long-term financial targets
As long-term financial targets the company has adopted to an average annual organic Net sales growth to exceed 5 per cent at the Group level and to exceed 10 per cent outside the Nordics (growth in local currencies), adjusted EBITA margin (adjusted for items affecting comparability) to exceed 18 per cent over time and net debt to adjusted EBITDA ratio to stay below 2.5x. Leverage may temporarily exceed the target range (for example, in conjunction with acquisitions).
The company aims to distribute a stable and over time increasing dividend with a pay-out of at least 50 per cent of net profit, in total, on a biannual basis.
Orthex does not publish a short-term outlook.
Key figures
| EUR million | 10–12/2021 | 10–12/2020 | Change | 1–12/2021 | 1–12/2020 | Change | |
| Invoiced sales | 23.5 | 22.0 | 7.1% | 90.6 | 77.9 | 16.3% | |
| Net sales | 23.1 | 21.6 | 6.8% | 88.7 | 75.9 | 16.9% | |
| Gross margin | 5.1 | 7.1 | -28.3% | 23.2 | 24.6 | -5.7% | |
| Gross margin, % | 22.2% | 33.1% | 26.2% | 32.4% | |||
| EBITDA | 2.7 | 4.4 | -38.7% | 13.2 | 16.5 | -19.6% | |
| EBITDA margin, % | 11.7% | 20.3% | 14.9% | 21.7% | |||
| Adjusted EBITDA | 2.8 | 4.7 | -41.7% | 14.8 | 17.1 | -13.0% | |
| Adjusted EBITDA margin, % | 11.9% | 21.9% | 16.7% | 22.5% | |||
| EBITA | 1.7 | 3.5 | -50.6% | 9.4 | 12.3 | -24.0% | |
| EBITA margin, % | 7.4% | 16.0% | 10.6% | 16.3% | |||
| Adjusted EBITA | 1.8 | 3.8 | -53.3% | 11.0 | 12.9 | -15.0% | |
| Adjusted EBITA margin, % | 7.6% | 17.5% | 12.4% | 17.0% | |||
| Operating profit | 1.7 | 3.4 | -51.3% | 9.3 | 12.3 | -24.7% | |
| Operating profit margin, % | 7.2% | 15.9% | 10.4% | 16.2% | |||
| Net cash flows from operating activities | 1.8 | 2.6 | -32.9% | 9.0 | 12.7 | -29.3% | |
| Net debt / Adjusted EBITDA | 1.7x | 2.3x | 1.7x | 2.3x | |||
| Adjusted return on capital employed (ROCE), % | 5.1% | 12.3% | 33.0% | 40.3% | |||
| Equity ratio, % | 35.8% | 22.6% | 35.8% | 22.6% | |||
| Earnings per share, basic (EUR) | 0.06 | 0.14 | -60.5% | 0.35 | 0.47 | -26.7% | |
| FTEs | 302 | 302 | 0.1% | 314 | 285 | 10.2% | |
Alexander Rosenlew, CEO:
With the first year as a listed company completed, I am very pleased with the strong performance during turbulent conditions and the important strategic steps taken in 2021. I am especially proud of how well our personnel has navigated through the volatile times flavoured by uncertainty and the COVID-19 pandemic. Although the sight is already set on 2022, I am happy to share what we have accomplished together at Orthex in 2021.
Orthex’s net sales growth in the fourth quarter was +6.8% compared to the fourth quarter of 2020, contributing to a total net sales growth of 16.9% for the period January–December 2021 and amounting to 88.7 million euros (75.9). Invoiced sales in the Nordic market grew strongly by 13.9% compared to January–December 2020, amounting to 73.0 million euros (64.1). In line with our strategy, invoiced sales outside of the Nordics grew even faster: in the rest of Europe, invoiced sales grew by 33.4% and amounted to 15.1 million euros (11.4). Invoiced sales in the rest of the world were at the same level as last year at 2.4 million euros (2.4). In total, invoiced sales in 2021 amounted to 90.6 million euros (77.9).
When comparing the quarters between the years, it is important to keep in mind that the demand was weakened in the first half of 2020 due to the beginning of the COVID-19 pandemic but had a strong rebound in the second half of 2020. Demand for our products was more stable and predictable in 2021 due to fewer COVID-19 related restrictions or store closures. Sales growth generated by new customers and new product launches is at a good level, even without the opportunity to conduct a normal number of physical, new business driving customer meetings.
The positive sales development is a result of successful commercial strategy implementation, which includes launch of new products, widened distribution, customer collaboration and new customers.
I am happy to see COVID-19 related obstacles gradually being removed and hopefully we can soon meet our customers in person more often. However, we had higher than usual sick-leave absence rates in our factories. High sick-leave absence rates in production or logistics generally result in less smooth activity planning and some inefficiencies.
As anticipated, adjusted EBITA margin decreased in the fourth quarter to 7.6% (17.5), mostly due to high raw material prices. For January–December, the adjusted EBITA margin was 12.4% (17.0). Adjusted EBITA for the last quarter was 1.8 million euros (3.8), taking the January–December adjusted EBITA to 11.0 million euros (12.9).
Raw material prices started to increase sharply towards the end of 2020 and reached their highest levels so far during the last quarter of 2021. The cost of freights and electric power have also risen and continued to rise in the fourth quarter. Our understanding is that raw material availability has been scarce on the market. However, we have been able to source the needed raw material for production. To ensure stable operations, we deliberately increased our inventories of high-runner products and critical raw materials, which is visible in the increased net working capital. Unpredictable and fast increases in raw material prices create a short-term profitability challenge due to the delayed effects of implementing price increases or cost savings. Our long-term target is to deliver an adjusted EBITA margin exceeding 18%, and we are committed to ensuring that our measures are in line with that target.
Sustainability is at the heart of our strategy. At Orthex, we strive to minimise our impact on the environment and the climate, and all our three factories in Finland and Sweden are already ISO 14001 and 9001 -certified for environmental and quality management. In December 2021, we were granted a new ISO 45001 certification. It is an international standard that specifies requirements for an occupational health and safety management system. The goal with an ISO 45001 certification is to enable organisations to provide safe and healthy workplaces by preventing work-related injuries and health issues.
Orthex has been able to ramp up capacity according to plan to secure delivery performance. We have also been able to speed up our capacity increase which has affected our delivery performance positively. The result can also be seen in a quite sharp increase in inventory value during the fourth quarter. The inventory value is affected by the higher raw material prices and by higher stock of our best-selling products in preparation for continued sales growth.
We are committed to implementing our growth strategy with a focus on accelerated international growth and sustainability. We will continue to actively take measures depending on the raw material prices and cost development. Currently, raw material prices, freight cost and energy price are all still on high levels and future development is hard to predict. Orthex has no Russian or Ukrainian suppliers nor any other business in Russia, so the effect of the Ukrainian crisis is not directly impacting Orthex’s business. However, there can be negative business impacts from volatility or cost increases due to the crisis.
With many good learnings from 2021, we are thrilled to start our second year as a listed company. I take this opportunity to thank the whole Orthex team, our stakeholders, and investors for an exciting year 2021.
Press conference on financial results
Orthex’s CEO Alexander Rosenlew and CFO Saara Mäkelä will present the Interim report on 9 March 2022 at 11:00 a.m. EET in a webcast. The webcast can be joined through this link. The webcast presentation will be held in English.
Q&A
Questions to the management can be sent through the meeting chat.
Presentation material
The presentation material will be shared in the online meeting and it can be downloaded the same day on Orthex’s website at https://investors.orthexgroup.com/.
Recording of the event
After the event a recording will be available on the company’s website at https://investors.orthexgroup.com/.
Further enquiries
Alexander Rosenlew, CEO, Orthex Corporation
Tel. +358 (0)40 500 3826
alexander.rosenlew@orthexgroup.com
Saara Mäkelä, CFO, Orthex Corporation
Tel. +358 (0)40 083 8782
saara.makela@orthexgroup.com
Orthex in brief
Orthex is a leading Nordic houseware producer that strives to make consumers’ everyday life easier with its products that are presented under the consumer brands SmartStore™ in storage products, GastroMax™ in kitchenware and Orthex™ in home and plant care categories. Orthex aims to be the industry forerunner in sustainability.
Orthex’s net sales in 2021 was 88.7 million euros and operating profit 9.3 million euros. The company has customers in more than 40 countries and local sales offices in Finland, Sweden, Norway, Denmark, Germany, France, and the United Kingdom. Orthex is listed on the Nasdaq Helsinki stock exchange.