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Orthex Oyj
Annual / Quarterly Financial Statement • Mar 8, 2023
3330_er_2023-03-08_f7eefdd3-4e39-4a97-a7eb-a4ef5e59df8d.pdf
Annual / Quarterly Financial Statement
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Orthex Corporation FINANCIAL STATEMENTS RELEASE
January–December 2022
ORTHEX CORPORATION: FINANCIAL STATEMENTS RELEASE 2022
Nordic sales decrease, growth in European strategic markets, and relative profitability started to improve at the end of the year
OCTOBER–DECEMBER 2022
- Invoiced sales decreased by 12.5% and totalled EUR 20.6 million (23.5)
- Net sales decreased by 11.8% to EUR 20.4 million (23.1)
- Adjusted EBITDA was EUR 2.6 million (2.8)
- Adjusted EBITA was EUR 1.6 million (1.8), representing 7.9% of sales (7.6)
- Operating profit was EUR 1.6 million (1.7)
- Net cash flows from operating activities were EUR 0.3 million (1.8)
- Earnings per share, basic was EUR 0.02 (0.06)
- SBTi approved Orthex's near-term science-based emissions reduction target meaning that Orthex's climate targets are aligned with the target to keep global warming below 1.5°C.
- Orthex signed a new EUR 32.5 million credit facility agreement including a 3+1+1-year term loan of EUR 25.5 million and a revolving credit facility of EUR 7.0 million. The loan agreement includes sustainability linked KPIs.
JANUARY–DECEMBER 2022
- Invoiced sales decreased by 5.3% and totalled EUR 85.8 million (90.6)
- Net sales decreased by 5.2% to EUR 84.0 million (88.7)
- Adjusted EBITDA was EUR 9.3 million (14.8)
- EBITA was EUR 5.3 million (9.4)
- Adjusted EBITA was EUR 5.5 million (11.0), representing 6.5% of net sales (12.4)
- Operating profit was EUR 5.2 million (9.3)
- Items affecting comparability totalled EUR 0.2 million (1.6)
- Net cash flows from operating activities were EUR 6.2 million (9.0)
- Net debt / Adjusted EBITDA was 2.8x (1.7)
- Earnings per share, basic was EUR 0.12 (0.35)
- Orthex has launched a significant research project for the development of future recycled plastic products and related ecosystem.
- Orthex participates in a large cooperation project of seven years that started in Finland in January 2023 to promote the circular economy of plastics.
- The Board of Directors proposes a dividend of EUR 0.11 per share, totalling approx. EUR 2.0 million. It is proposed that the dividend be paid in two instalments.
ALEXANDER ROSENLEW, CEO:
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.
In 2022, driven by lower consumer confidence, Orthex's net sales decreased by 5.2% to EUR 84.0 million. In the strategically important European markets, we managed to deliver growth year-on-year and the growth accelerated towards the end of the year. The positive European sales development is a result of a successful commercial strategy implementation including widened distribution, customer collaboration, new customers gained, price increases and launch of new products that all helped to counter the negative effects of careful customer and consumer behaviour. The sales decreased in the Nordic core markets driven by a few larger Nordic customers that limited their purchases during the fourth quarter. The fourth quarter comparison is against an alltime high sales quarter in 2021. No significant customers or important product listings were lost during the year.
In 2022, profitability was influenced by cost inflation, especially in raw materials. The weakening of the Swedish krona and more expensive purchased products, transports and energy also impacted the result negatively. During the year, active measures to off-set the rising cost levels were taken. Especially adopting the pricing of products to rapidly increasing cost levels was done with a long-term view. The full year adjusted EBITA decreased to EUR 5.5 million (11.0). In the fourth quarter, the adjusted EBITA percentage improved to 7.9% (7.6), adjusted EBITA being EUR 1.6 million (1.8). We are disappointed with the result development for the year. Especially market conditions during the second quarter of 2022 affected the overall result negatively. Towards the end of the year, we already saw improving relative profitability despite uncertainty in customer purchasing behaviour.
We are committed to implementing our growth strategy with a focus on accelerated European and international growth with a strong focus on sustainability. All functions and activities are designed to deliver and support our growth ambition to become the number one brand in the storage category in Europe while strengthening our Nordic category leader position. Orthex's products are sold in more than 40 countries, sales on our European strategic markets grew by 4.7 percentage points. In 2022, sales outside the Nordic core markets accounted for 20.2% (19.4) of Orthex's invoiced sales.
Orthex has been able to utilize its capacity efficiently, which has positively affected our delivery performance. The uncertainty in customer purchasing behaviour is seen in an increase in inventory value towards the end of the year. The inventory value is affected by higher raw material prices and higher stock of our best-selling products in anticipation of sales growth. Focus will be put in 2023 to manage the inventory to ensure more efficient working capital levels.
We reached many significant sustainability milestones during 2022. One major achievement was that SBTi approved Orthex's near-term science-based emissions reduction target, meaning that Orthex's climate targets are aligned with the target to keep global warming below 1.5°C. At the beginning of the year, we took an important step by ISCC PLUS certifying our Lohja factory, which gave us the opportunity to start business with mass balanced renewable materials in selected product series. In addition, we sharpened our sustainability strategy based on feedback from an extensive materiality assessment. In terms of working with transparency, we earned a Nasdaq ESG Transparency Partner certification, improved our rating to B in the CDP Climate Change program and as mentioned our CO2 reduction targets were approved as science-based targets. We also started two important raw material related projects together with partners, the aim of which is to find break-through solutions with which we can increase the use of sustainable raw materials in our products. This is in line with our ambition to reduce our carbon footprint and reach carbon neutrality in production by 2030.
Digitalisation and in-store excellence play an important role in Orthex business development and in our strategy execution. In digitalisation, there are several important milestones achieved in 2022 including the creation of strong in-house e-commerce competencies and thereto related new customer openings in the fast-growing e-commerce business. Our ambition is to be a strong value adding partner both to pure e-commerce players and multi-channel partners. In terms of in-store excellence, we are proud to have implemented several initiatives especially in the storage and kitchen categories together with major retail chains in Europe and the Nordic countries. Making shopping easier benefits both Orthex and its partners and gives the consumer the choice to select increasingly sustainable products in the store. Innovation within our categories will further support our growth. We believe that the demand for sustainable products will continue to increase and therefore we are ensuring that we have a pipeline of exciting and relevant new products to cater for the prevailing consumer trends.
Now with the second year as a listed company behind us, I am pleased with many of the important strategic steps achieved in 2022. Despite the overall challenging conditions, we managed to achieve growth in strategically important markets, we managed to strengthen our product portfolio and we took important steps on our sustainability journey. I am especially proud of our committed and passionate personnel that makes the difference every day despite turbulent and unpredictable conditions.
With many good learnings from 2022, we are excited to start our third year as a listed company. I take this opportunity to thank the whole Orthex team, our stakeholders, and investors for the strong support in 2022.
KEY FIGURES
| EUR million | 10–12/2022 | 10–12/2021 | Change | 1–12/2022 | 1–12/2021 | Change |
|---|---|---|---|---|---|---|
| Invoiced sales | 20.6 | 23.5 | -12.5% | 85.8 | 90.6 | -5.3% |
| Net sales | 20.4 | 23.1 | -11.8% | 84.0 | 88.7 | -5.2% |
| Gross margin | 5.0 | 5.1 | -3.0% | 17.9 | 23.2 | -22.8% |
| Gross margin, % | 24.4% | 22.2% | 21.3% | 26.2% | ||
| EBITDA | 2.6 | 2.7 | -3.1% | 9.2 | 13.2 | -30.8% |
| EBITDA margin, % | 12.8% | 11.7% | 10.9% | 14.9% | ||
| Adjusted EBITDA | 2.6 | 2.8 | -5.0% | 9.3 | 14.8 | -37.2% |
| Adjusted EBITDA margin, % | 12.9% | 11.9% | 11.1% | 16.7% | ||
| EBITA | 1.6 | 1.7 | -5.5% | 5.3 | 9.4 | -43.3% |
| EBITA margin, % | 7.9% | 7.4% | 6.3% | 10.6% | ||
| Adjusted EBITA | 1.6 | 1.8 | -8.3% | 5.5 | 11.0 | -50.1% |
| Adjusted EBITA margin, % | 7.9% | 7.6% | 6.5% | 12.4% | ||
| Operating profit | 1.6 | 1.7 | -5.6% | 5.2 | 9.3 | -43.9% |
| Operating profit margin, % | 7.8% | 7.2% | 6.2% | 10.4% | ||
| Net cash flows from operating activities | 0.3 | 1.8 | -84.3% | 6.2 | 9.0 | -31.2% |
| Net debt / Adjusted EBITDA | 2.8x | 1.7x | 2.8x | 1.7x | ||
| Adjusted return on capital employed | ||||||
| (ROCE), % | 5.0% | 5.1% | 15.9% | 33.0% | ||
| Equity ratio, % | 36.3% | 35.8% | 36.3% | 35.8% | ||
| Earnings per share, basic (EUR) | 0.02 | 0.06 | -66.0% | 0.12 | 0.35 | -65.5% |
| FTEs | 289 | 302 | -4.3% | 295 | 314 | -6.1% |
SmartStore Collect 76 L
LONG-TERM FINANCIAL TARGETS
The company's long-term financial targets remain unchanged. 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.
MARKET OVERVIEW
Orthex operates in the home storage, kitchenware, plant care and other household products market, which has historically been stable and resilient throughout different economic cycles. The market for household products in Europe is fragmented. According to Orthex's estimate, there are more than 30 significant competitors in Europe, 15 of which are roughly as big as Orthex in terms of net sales. Although the market is competitive, fragmentation lowers the threshold to increase market share and find attractive niches.
The major megatrends supporting Orthex's business include urbanisation and the related increase in the number of households and decrease in living space per household. As the area allocated for housing is sparser and more expensive in growth centres benefiting from urbanisation, consumers often choose location over space, resulting in increasing supply of smaller homes. Small spaces, in turn, drive demand for functional storage solutions and household products that allow efficient use of the living space. More people live in single-person households and family sizes are decreasing. According to Eurostat, the number of single-person households in the EU increased by 28.5% between 2009 and 2021. Despite households being inhabited by fewer people, the need for necessities, such as home storage, food storage and kitchen utensils, remains nearly the same per household.
Consumption patterns supporting Orthex's business are mainly related to how people spend their time at home. One of these is the increased interest in cooking at home, which is becoming more common as a pastime and as a healthy, and less expensive alternative to ready-made meals. Consequently, many households are updating and expanding their kitchen utensil assortments. In addition, consumers are increasingly concerned about climate change and biodiversity and want to do their part in the fight against them by buying sustainable products and sorting and recycling their waste. Tightening legislation also supports this development. However, only a few households have enough pre-installed waste recycling and sorting solutions, which creates a demand for these and for recycling and sorting solutions that can also function as interior design elements.
A third consumption pattern supporting Orthex's business is the demand for houseplants. Houseplants bring fresh air, colour, and cosiness into homes. Their use as design elements is becoming commonplace, particularly in dense urban areas that have limited green spaces. In addition, there is increasing popularity for gardening herbs and vegetables at home and indoors. These trends are driving demand for flowerpots and related products.
Volatility and uncertainty affected the business environment during 2022, with geopolitical disruption and high inflation across the value chain. The world after COVID-19 offered conditions where the scarcity of products and the lack of efficient transport further increased transportation costs both at land and sea to new record levels. Shift in consumer behaviour towards sustainability and digital marketplaces is accelerating post covid. Whilst demand remained overall solid, the pressure of inflation on consumers started to erode the consumption growth across product categories and geographical areas during the year. As a result of the prevailing consumption uncertainty, many retailers are carefully monitoring their inventory levels and limiting buying to ensure efficiency. Orthex product price points are relatively low, and the products are bought to solve real needs, therefore Orthex believes that its product categories will be less affected by careful consumer purchasing behaviour than other more expensive consumer goods categories.
NET SALES AND PROFITABILITY
Net sales and invoiced sales
Invoiced sales by geography
| EUR million | 10–12/2022 | 10–12/2021 | Change | 1–12/2022 | 1–12/2021 | Change |
|---|---|---|---|---|---|---|
| Nordics | 15.4 | 18.8 | -18.2% | 68.5 | 73.0 | -6.2% |
| Rest of Europe | 4.9 | 4.3 | 14.5% | 15.9 | 15.1 | 4.7% |
| Rest of the world | 0.3 | 0.5 | -29.7% | 1.5 | 2.4 | -39.7% |
| Total | 20.6 | 23.5 | -12.5% | 85.8 | 90.6 | -5.3% |
Invoiced sales by product category
| EUR million | 10–12/2022 | 10–12/2021 | Change | 1–12/2022 | 1–12/2021 Change | |
|---|---|---|---|---|---|---|
| Storage | 15.1 | 16.6 | -8.8% | 55.1 | 59.4 | -7.2% |
| Kitchen | 4.0 | 5.2 | -23.0% | 19.8 | 20.1 | -1.5% |
| Plant Care | 0.5 | 0.7 | -23.4% | 5.5 | 5.7 | -2.1% |
| Home & Yard | 0.9 | 1.1 | -11.7% | 5.3 | 5.4 | -1.0% |
| Total | 20.6 | 23.5 | -12.5% | 85.8 | 90.6 | -5.3% |
October–December 2022
In October–December, the Group's Net sales decreased by 11.8% to EUR 20.4 million (23.1). Invoiced sales amounted to EUR 20.6 million (23.5). The decrease of constant currency Net sales was 8.8% compared to October–December 2021.
January–December 2022
In January–December, the Group's Net sales decreased by 5.2% to EUR 84.0 million (88.7). Invoiced sales amounted to EUR 85.8 million (90.6). The decrease of constant currency Net sales was 3.8% compared to January–December 2021.
The review period was characterised by balancing between campaign sales, price increases and sales volume, on a market influenced by customer uncertainty especially in the Nordics.
Development by geography
October–December 2022
Orthex's core market area by geography is the Nordics, where the Group's invoiced sales in October– December amounted to EUR 15.4 million (18.8). Invoiced sales in the rest of Europe increased to EUR 4.9 million (4.3). In the rest of the world, invoiced sales decreased to EUR 0.3 million (0.5).
The sales decreased in the Nordic core markets driven by a few larger customers that limited their purchases during the fourth quarter. In the strategically important European markets, sales development was positive towards the end of the year.
January–December 2022
The Group's invoiced sales in the Nordics amounted to EUR 68.5 million (73.0) in January–December. Invoiced sales in the Nordics totalled 79.8% (80.6) of the Group's total invoiced sales.
The change in customer purchasing behaviour in a few major customers explains the decline in total sales in the Nordics.
Invoiced sales in the rest of Europe increased to EUR 15.9 million (15.1). In the rest of the world, invoiced sales decreased to EUR 1.5 million (2.4).
The positive European sales development is a result of a successful commercial strategy implementation including widened distribution, customer collaboration, new customers, price increases and launch of new products.
Orthex's products are sold in more than 40 countries, and export to non-Nordic countries accounted for 20.2% (19.4) of the Group's invoiced sales during the period.
Development by product category
October–December 2022
Orthex's largest category is Storage with invoiced sales totalling EUR 15.1 million (16.6) during October– December. Products in the Storage category will play a key role in Orthex's expansion in Europe, as Orthex often uses them as flagship products when seeking agreements with new retailers.
Orthex has a strong position in the Nordics in food storage and kitchenware markets. However, the Group's invoiced sales in the Kitchen category decreased to EUR 4.0 million (5.2).
Invoiced sales in the Plant Care category decreased to EUR 0.5 million (0.7).
Invoiced sales in the Home & Yard category decreased to EUR 0.9 million (1.1).
The sales decrease was driven by the changed purchase behaviour of our retail customers. A few major customers limited their overall purchases to lower their inventory levels towards the year-end.
January–December 2022
Invoiced sales in the Storage category totalled EUR 55.1 million (59.4) during January–December and the Group's invoiced sales in the Kitchen category decreased to EUR 19.8 million (20.1).
Invoiced sales in the Plant Care category were EUR 5.5 million (5.7), and invoiced sales in the Home & Yard category totalled EUR 5.3 million (5.4).
Profitability
October–December 2022
EBITA was 1.6 million (1.7) during the period. Adjusted EBITA decreased to EUR 1.6 million (1.8) and the adjusted EBITA margin grew to 7.9% (7.6). Operating profit was EUR 1.6 million (1.7). Items affecting comparability totalled EUR 0.0 million (0.1).
January–December 2022
EBITA was 5.3 million (9.4) during the period. Adjusted EBITA deceased to EUR 5.5 million (11.0) and the adjusted EBITA margin decreased to 6.5% (12.4). Operating profit was EUR 5.2 million (9.3). Items affecting comparability totalled EUR 0.2 million (1.6).
Orthex's financial income and expenses during the review period consisted of EUR 2.2 million net expenses (1.6).
Profit before taxes was EUR 3.0 million (7.7) and profit for the period was EUR 2.1 million (6.0).
In 2022, profitability was influenced by cost inflation, especially in raw materials. The weakening of the Swedish krona and more expensive purchased products, transports and energy also impacted the result negatively.
FINANCIAL POSITION AND CASH FLOW
The balance sheet totalled EUR 81.8 million (88.8) at the end of the review period, of which equity accounted for EUR 29.7 million (31.8).
At the end of the review period, the Group's net debt was EUR 26.0 million (25.9). Non-current interestbearing liabilities were EUR 32.0 million (36.0) and Orthex's total interest-bearing liabilities were EUR 36.3 million (40.2). Interest-bearing liabilities include loans from credit institutions, pension liabilities and lease liabilities.
In 2022, Orthex entered into a credit facility agreement of EUR 32.5 million with Nordea Bank Plc. The credit facility agreement includes a 3 + 1 + 1-year term loan of EUR 25.5 million and a revolving credit facility of EUR 7.0 million. If the conditions specified in the credit facility agreement are met, the company may extend the agreement by 1 + 1 year.
During the period January−December 2022, the Group's net cash flows from operating activities were EUR 6.2 million (9.0) and cash conversion was 61.9% (67.7). Capital returns paid during the period had an impact of EUR 3.2 million and repayment of short-term borrowings an impact of EUR 1.5 million on net cash flows. Interest paid during the period totalled EUR 1.1 million. Cash and cash equivalents amounted to EUR 10.3 million (14.3) at the end of the review period.
Net debt/adjusted EBITDA was 2.8x (1.7). Orthex's long-term target is to keep Net debt/adj. EBITDA below 2.5x.
At the end of the review period, the Group's Equity ratio was 36.3% (35.8). Adjusted return on capital employed (ROCE) was 15.9% (33.0) and return on equity (ROE) 6.9% (24.7).
INVESTMENTS, RESEARCH, AND PRODUCT DEVELOPMENT
Orthex's investments during January–December 2022 amounted to EUR 3.6 million (4.8) and were mainly related to increasing the production capacity and moulds for new products.
In 2022, Orthex launched a research project for the development of recycled plastics. The goals of the project are to build an ecosystem aimed at increasing the use of recycled plastic and to generate new information about the use of recycled plastic in different applications, especially in products suitable for food contact. In addition, Orthex announced that starting in January 2023, it will participate in a large seven-year cooperation research project to find new potential renewable plastic raw materials. These investments in research support Orthex's 2030 carbon neutrality target and the target to increase
the use of sustainable raw materials. Research and product development expenses have not been capitalized.
SHARES AND SHAREHOLDERS
Orthex's shares are listed on Nasdaq Helsinki.
The company's registered share capital is EUR 80,000.00 and at the end of the period the company held 17,758,854 fully paid shares. Orthex has one series of shares, and each share entitles to one vote in the company's general meeting. There are no voting restrictions associated with the shares. Trading volume during the period was EUR 37.4 million and 5,653,412 shares. The highest price of the share was EUR 11.29 and the lowest was EUR 3.82. The closing price of the share at the end of December 2022 was EUR 4.68. At the end of the review period, the market value of the share capital stood at EUR 83.1 million. The company did not have any treasury shares at the end of the period.
The number of registered shareholders at the end of the review period was 16,596, including nominee registers. At the end of the period, the ten largest registered shareholders possessed a total of 49.7% of Orthex's shares and votes.
In September 2022, Orthex received information pursuant to Chapter 9, Section 5 of the Securities Market Act, according to which Handelsbanken Fonder AB's ownership of all shares and votes in Orthex had exceeded the five percent limit. The stock exchange releases on notifications of changes in holdings (flaggings) are available on the corporate website at https:/investors.orthexgroup.com/.
The Board of Directors is authorised to issue a total maximum of 1,800,000 shares and special rights entitling to shares in one or several issues. The authorisation will be valid until 6 October 2023.
GOVERNANCE
Annual General Meeting
Orthex Corporation's Annual General Meeting on 6 April 2022 adopted the financial statements and discharged the members of the Board of Directors and the CEO from liability for the financial period 2021. The general meeting also approved the remuneration policy and the remuneration report 2021 for the governing bodies.
The general meeting decided that for the financial period ended on 31 December 2021, shareholders be paid a capital return of EUR 0.18 per share from the invested unrestricted equity fund totalling approximately EUR 3.2 million in two instalments. The first instalment of the capital return amounting to EUR 0.09 per share was paid on 21 April 2022 and the second instalment amounting to EUR 0.09 per share on 11 October 2022.
The general meeting resolved to re-elect Sanna Suvanto-Harsaae, Satu Huber and Jens-Peter Poulsen to the Board and elect Markus Hellström and Jyrki Mäki-Kala as new members to the Board. Ari Jokelainen and Juuso Kivinen stepped down from the Board. Sanna Suvanto-Harsaae continues to chair the Board. The general meeting further resolved that the remuneration of the members of the Board of Directors remain the same and that the Chair of the Board of Directors be paid a monthly fee of EUR 4,000 and other members of the Board of Directors a monthly fee of EUR 2,000.
Ernst & Young Oy, a firm of Authorised Public Accountants with APA Johanna Winqvist-Ilkka as the signing audit partner, was re-elected the company's auditor.
In addition, the general meeting authorised the Board of Directors to decide on the issuance of shares and on the issuance of special rights entitling to shares. A total maximum of 1,800,000 shares and special rights entitling to shares may be issued by virtue of the authorisation corresponding to approximately 10 per cent of all the shares in the company. The authorisation will be valid for 18 months from the decision of the general meeting.
Composition of Shareholders' Nomination Board
The Extraordinary General Meeting on 5 March 2021 decided to establish a Shareholders' Nomination Board for the company and the Nomination Board's charter was approved. The Nomination Board consists of the four largest registered shareholders of the company as of 31 August. According to the shareholders' register, the company's four largest shareholders on 31 August 2022 were Conficap Oy, Alexander Rosenlew, Ilmarinen Mutual Pension Insurance Company, and Thomasset Oy.
On 1 September 2022, the company announced that these shareholders have appointed their representatives to the Shareholders' Nomination Board, the composition of which is as follows:
- Maarit Toivanen, CEO and Chair of the Board of Conficap Oy
- Alexander Rosenlew
- Annika Ekman, Head of Direct Equity Investments, Ilmarinen Mutual Pension Insurance Company
- Mats Söderström, CEO of Thomasset Oy
The Nomination Board has elected Maarit Toivanen as its chair. The Chair of Orthex's Board of Directors, Sanna Suvanto-Harsaae, acts as an expert member of the Nomination Board.
More information on the Nomination Board is available on the corporate website at Nomination Board - Orthex Group.
Group structure
In order to simplify the Group structure, Orthex Corporation's Swedish subsidiary Smartstore AB was merged into its parent company Orthex Sweden AB as of 15 September 2022.
SUSTAINABILITY
Sustainability is a core element in implementing Orthex's growth strategy and key objectives as we strive to be the number one brand in storage products in Europe, and to strengthen our position as a leading houseware company in the Nordics. Sustainability is a key factor in all decision making at Orthex and a significant driver of our development and investment agenda. 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. Orthex's main sustainability target is to reach carbon neutrality in production by 2030.
Orthex has identified priority sustainability topics in the areas of economic, environmental, and social responsibility. For each topic, the company has defined key performance indicators and targets. Further information is available on the corporate website at Sustainability - Orthex Group.
Sustainability highlights in 2022
In March, Orthex's Lohja factory was granted an ISCC PLUS certificate. The international Sustainability and Carbon Certification (ISCC) is a globally applicable sustainability certification system, which covers all sustainable feedstocks, including agricultural and forestry biomass, circular and bio-based materials, and renewables. To further strengthen the company's sustainability resources, a new position in the company, ESG Advisor, was established and recruited in March 2022.
During Q2, Orthex conducted a sustainability materiality assessment of the company's sustainability topics to align Orthex's sustainability work with stakeholders' (customers, employees, shareholders, suppliers, and consumers) expectations. More than 500 replies to the materiality questionnaire were received, and the assessment results were supplemented by interviews with selected customers, shareholders, and suppliers. In April, Orthex was certified as a Nasdaq ESG Transparency Partner. This certification is used by Nasdaq to show engagement in the market transparency and raising environmental standards. In addition, Orthex disclosed environmental data in CDP Climate change program to meet the demands of investors and customers and to increase transparency. In June, Orthex promoted recycling of plastics in Finland by participating in awareness-raising campaign, organised by the Finnish Plastics Industries Federation.
In September, Orthex launched a significant research project for the development of recycled plastics. The goals of the project are to build an ecosystem aimed at increasing the use of recycled plastic and to generate new information about the use of recycled plastic in different applications, especially in products suitable for food contact. In addition, Orthex announced that starting in January 2023, it will participate in a large seven-year cooperation research project to find new potential renewable plastic raw materials. These significant investments in research support Orthex's 2030 carbon neutrality target and the target to increase the use of sustainable raw materials.
During Q3, Orthex started using ISSC PLUS certified renewable raw materials applying mass balance approach in the production of its popular SmartStore™ Compact and Compact Clear storage boxes. In addition, Orthex extended its selection of products made from recycled plastics by launching
SmartStore™ Collect Slim recycling solution. Orthex also participated in a competition for the most sustainable product in Finland with two products: Orthex bucket from old fishing nets and the SmartStore™ Collect sorting solution. Out of 291 pre-screened products, the competition panel selected Orthex bucket from old fishing nets as one of the 11 finalists.
In November, the Science Based Targets initiative (SBTi) approved Orthex's near-term science-based emissions reduction target, which means that Orthex's climate targets are aligned with the target to keep global warming below 1.5°C in accordance with the Paris Agreement.
Orthex will publish its Annual and Sustainability Report for the year 2022 on the corporate website during week 12 at the latest. As will be brought up in the report, the company has continued its investments in building the roadmap towards carbon neutrality and in the use of renewable and recycled materials to reduce the carbon footprint of its products and production.
SHORT-TERM RISKS AND UNCERTAINTIES
Plastic polymers are the largest group of raw materials, and the prices are typically negotiated annually. Fluctuations in raw material prices and supply disruptions may have a negative effect on profitability. The Group is not hedged against fluctuations in raw material prices but can better manage risks by tying prices to the plastic polymer supply chain. There is less volatility in the prices of renewable and recycled materials and merchandise. However, there has been shortage on the market because of higher demand and this can lead to higher prices also in renewable and recycled materials.
Increased inflation, raising interest rates, Russia's war against Ukraine, and political tensions impact the global economic trend as well as the development of consumers' purchasing behaviour and, as a result, can have an impact on Orthex's business. Russia's war against Ukraine does not directly affect Orthex's business as Orthex's products are not manufactured or sold in Russia, Belarus or Ukraine and the company does not source raw materials from these countries. However, Russia's war against Ukraine causes disturbances in global supply chains and contributes to the general economic situation and consumers' purchasing power and behaviour. These factors may affect the company's sales and profitability as well as operational reliability and efficiency. The Group has hedged part of its interestbearing liabilities against rising interest rates with interest derivatives. In addition, some of the electricity contracts have been purchased at fixed prices due to the strong volatility of market electricity.
Thanks to its own production, the Group can control the quality of its products and the health and environmental aspects of production and products. Significant disruptions or interruptions in production and operations would materially impair the Group's ability to deliver its products and adversely affect its business and operating profit.
Orthex has operations in several countries, so the company is exposed to transaction and translation risk. The Group is typically not hedged against currency risk, except for certain large purchases under the Kökskungen brand. Fluctuations in exchange rates and interest rates can have a material adverse effect on the Group.
Further information on the company's risk management principles and on the main strategic, operative, and financial risks is included in the Board of Directors' report for the year 2022. The main principles of Orthex's financial risk management are described in the notes to the consolidated financial statements. The company's Annual and Sustainability Report, which includes the Board of Directors' report and the consolidated financial statements with notes for the year 2022, will be published on the corporate website during week 12 at the latest.
BOARD OF DIRECTORS' PROPOSAL FOR DISTRIBUTION OF ASSETS
According to the financial statements to be adopted for the financial year ended 31 December 2022, the parent company's distributable funds amount to EUR 12,305,159.20, including the profit for the period of EUR 4,303,730.55.
The Board of Directors proposes to the general meeting that based on the financial statements to be adopted for the financial year ended on 31 December 2022, shareholders be paid a dividend of EUR 0.11 per share totalling approximately EUR 2.0 million based on the number of registered shares in the company at the time of the proposal.
The dividend is proposed to be paid in two instalments as follows:
- The first instalment of the dividend amounting to EUR 0.06 per share will be paid to a shareholder who is registered in the company's shareholder register held by Euroclear Finland Oy on the record date of the first instalment of the dividend payment 20 April 2023. The Board of Directors proposes that the first instalment of the dividend be paid on 27 April 2023.
- The second instalment of the dividend amounting to EUR 0.05 per share will be paid in October 2023 to a shareholder who is registered in the company's shareholder register held by Euroclear Finland Oy on the record date of the second instalment of the dividend payment 2 October 2023. The Board of Directors proposes that the second instalment of the dividend be paid on 10 October 2023. The Board of Directors further proposes that the Board be authorised to decide, if necessary, on a new record date and date of payment for the second instalment of the dividend should the rules of Euroclear Finland Oy or statutes governing the Finnish book-entry system change or otherwise so require.
There have been no significant changes in the parent company's financial position after the financial year-end. The company's liquidity is good, and the Board of Directors deems that the company's solvency will not be jeopardised by the proposed dividend distribution.
EVENTS AFTER THE REVIEW PERIOD
On 24 January 2023, Orthex Corporation disclosed the Shareholders' Nomination Board's proposals to the Annual General Meeting 2023 regarding the composition and remuneration of the Board of Directors.
The Shareholders' Nomination Board proposes that the Board of Directors would consist of five (5) members and that Sanna Suvanto-Harsaae, Markus Hellström, Jyrki Mäki-Kala and Jens-Peter Poulsen would be re-elected to the Board and that Anette Rosengren be elected as a new member to the Board, all for a term of office ending at the end of the next Annual General Meeting.
Satu Huber was no longer available for re-election to the Board.
All director nominees have consented to their election and confirmed that they are independent of the company and its significant shareholders. Background information on the director nominees is available on the corporate website Board of Directors - Orthex Group.
Regarding the remuneration of the members of the Board of Directors, the Shareholders' Nomination Board proposes that the Board fees remain the same and that the Chair of the Board of Directors be paid a monthly fee of EUR 4,000 and other members of the Board of Directors a monthly fee of EUR 2,000. The Nomination Board further proposes that reasonable travel and other expenses related to the Board work be reimbursed in accordance with the company's travel rules.
MARKET OUTLOOK
Volatility and uncertainty affected the business environment during 2022, with geopolitical disruption and high inflation across the value chain. Whilst demand remained overall solid, the pressure of inflation on consumers started to erode the consumption growth across product categories and geographical areas during the year.
To ensure effective implementation and adoption of its strategy, Orthex is constantly evaluating consumer trends, customer demands and market conditions. The strategy is designed to deliver the specified long-term financial targets. In addition, an overall focus on sustainability is at the heart of business development. It is likely that the unpredictable market conditions seen in 2022 will continue, including volatile cost drivers with quick changes in cost components and high overall or increasing cost levels compared to the year 2022.
Orthex will strive to navigate as efficiently as possible, adopting swiftly to potentially fast changing conditions. In 2021, we successfully increased the production capacity in our factories, and we are prepared for growth. We are also prepared to further increase capacity when needed. Product and process innovation and testing new sustainable materials will have a continued important role in the commercial strategy. The focus will be on growing the sales of our branded products throughout Europe, thus improving everyday life with practical sustainable products.
Russia's war against Ukraine does not directly affect Orthex's business as Orthex's products are not manufactured or sold in Russia, Belarus or Ukraine and the company does not source raw materials from these countries. However, Russia's war against Ukraine causes disturbances in global supply chains and contributes to the general economic situation and consumers' purchasing power and behaviour.
FINANCIAL RELEASES IN 2023
Orthex will publish its financial reports in 2023 as follows:
17 May 2023: Interim report January–March 2023 24 August 2023: Half-year financial report January–June 2023 7 November 2023: Interim report January–September 2023
The company's Annual and Sustainability Report, including the financial statements, the Board of Directors' report and the auditor's report for the financial year 2022, will be published on the corporate website during week 12 at the latest. Orthex Corporation's Annual General meeting will be held on 18 April 2023 starting at 10.00 a.m. EEST.
Espoo, 7 March 2023
ORTHEX CORPORATION Board of Directors
Additional information:
Alexander Rosenlew, CEO, +358 (0)40 500 3826 Saara Mäkelä, CFO, +358 (0)40 083 8782
Contacts:
Analysts and investors: Saara Mäkelä, CFO, +358 (0)40 083 8782 Media: Hanna Kukkonen, CMO, +358 (0)40 053 8886
The results presentation will be held on 8 March 2023 at 11.00 a.m. EET as a webcast meeting.
Webcast meeting
Access meeting online here.
Q&A
Questions to the management can be sent through the meeting chat.
Presentation material and webcast recording
The presentation material will be shared in the online meeting, and it can be downloaded on Orthex's website at https:/investors.orthexgroup.com/. A recording of the event will be available later at the same address.
Distribution: Nasdaq Helsinki Ltd Main media https:/investors.orthexgroup.com/
ORTHEX FINANCIAL STATEMENTS RELEASE JANUARY–DECEMBER 2022
Consolidated statement of comprehensive income
| EUR thousand | 10–12/2022 | 10–12/2021 1–12/2022 | 1–12/2021 | |
|---|---|---|---|---|
| Net Sales | 20,357 | 23,076 | 84,048 | 88,694 |
| Cost of sales | -15,388 | -17,952 | -66,129 | -65,490 |
| Gross Margin | 4,969 | 5,124 | 17,919 | 23,204 |
| Other operating income | 13 | 93 | 206 | 549 |
| Selling and marketing expenses | -2,112 | -2,308 | -7,846 | -8,468 |
| Administrative expenses | -1,290 | -1,237 | -5,089 | -6,035 |
| Operating profit | 1,579 | 1,672 | 5,191 | 9,250 |
| Financial income and expenses | -736 | -435 | -2,182 | -1,586 |
| Profit before taxes | 843 | 1,237 | 3,009 | 7,664 |
| Income taxes | -500 | -225 | -888 | -1,629 |
| Profit for the period | 344 | 1,012 | 2,121 | 6,035 |
| Profit for the period attributable to: | ||||
| Equity holders of the parent | 344 | 1,012 | 2,121 | 6,035 |
| Earnings per share, basic (and diluted), EUR | 0.02 | 0.06 | 0.12 | 0.35 |
| Other comprehensive income, net of tax | ||||
| Items that may be reclassified subsequently to profit or loss: | ||||
| Translation differences | -364 | -198 | -2,053 | -622 |
| Items that will not be reclassified to profit or loss: | ||||
| Remeasurement gains/(losses) on defined benefit plans | 1,042 | -58 | 1,042 | -58 |
| Other comprehensive income for the period, net of tax | 678 | -256 | -1,011 | -680 |
| Total comprehensive income for the period | 1,021 | 756 | 1,110 | 5,355 |
| Total comprehensive income attributable to: Equity holders of the parent |
1,021 | 756 | 1,110 | 5,355 |
Consolidated statement of financial position
| EUR thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Intangible assets | 22,377 | 23,901 |
| Property, plant, and equipment | 13,547 | 13,131 |
| Right-of-use assets | 7,011 | 8,030 |
| Other non-current assets | 95 | 94 |
| Deferred tax assets | 760 | 1,163 |
| Total non-current assets | 43,790 | 46,320 |
| Current assets | ||
| Inventories | 14,283 | 12,647 |
| Trade and other receivables | 13,387 | 15,528 |
| Derivative financial instruments | 93 | 14 |
| Cash and cash equivalents | 10,284 | 14,334 |
| Total current assets | 38,047 | 42,522 |
| Total assets | 81,837 | 88,842 |
| Equity and liabilities Equity attributable to the equity holders of the parent company |
||
| Share capital | 80 | 80 |
| Invested unrestricted equity fund | 7,851 | 11,047 |
| Retained earnings | 22,301 | 19,138 |
| Translation differences | -521 | 1,532 |
| Total equity | 29,711 | 31,798 |
| Non-current liabilities Loans from credit institutions |
22,363 | 23,720 |
| Lease liabilities | 6,480 | 7,544 |
| Pension liabilities | 3,179 | 4,742 |
| Deferred tax liabilities | 769 | 742 |
| Total non-current liabilities | 32,791 | 36,748 |
| Current liabilities Loans from credit institutions |
3,000 | 3,000 |
| Lease liabilities | 1,290 | 1,214 |
| Trade and other payables | 14,000 | 13,692 |
| Derivative financial instruments | 8 | - |
| Income tax liabilities | 1,037 | 2,390 |
| Total current liabilities | 19,335 | 20,296 |
| Total liabilities | 52,126 | 57,044 |
| Total equity and liabilities | 81,837 | 88,842 |
Consolidated statement of changes in equity
| Equity attributable to the equity holders of the parent company | |||||||
|---|---|---|---|---|---|---|---|
| EUR thousand | Share capital |
Treasury shares |
Invested unrestricted equity fund |
Retained earnings |
Translation differences |
Total equity |
|
| As at 1 Jan 2022 | 80 | - | 11,047 | 19,138 | 1,532 | 31,798 | |
| Profit for the period Translation differences Remeasurement gains/(losses) on |
2,121 | -2,053 | 2,121 -2,053 |
||||
| defined benefit plan | 1,042 | 1,042 | |||||
| Total comprehensive income | 3,163 | -2,053 | 1,110 | ||||
| Capital returns | -3,197 | -3,197 | |||||
| At 31 Dec 2022 | 80 | - | 7,851 | 22,301 | -521 | 29,711 | |
| As at 1 Jan 2021 | 3 | -71 | 1,775 | 13,161 | 2,154 | 17,022 | |
| Profit for the period | 6,035 | 6,035 | |||||
| Translation differences | -622 | -622 | |||||
| Remeasurement gains/(losses) on | |||||||
| defined benefit plan | -58 | -58 | |||||
| Total comprehensive income | 5,977 | -622 | 5,355 | ||||
| Transactions with owners: | |||||||
| Increase in share capital | 78 | -78 | - | ||||
| Cancellation of treasury shares | 71 | -71 | - | ||||
| Share issue | 10,000 | 10,000 | |||||
| Expenses related to the share issue | -686* | -686 | |||||
| Discount related to the personnel | |||||||
| share issue | 106 | 106 | |||||
| At 31 Dec 2021 | 80 | - | 11,047 | 19,138 | 1,532 | 31,798 |
*In 2021, the company's fees and expenses related to the listing amounted to EUR 2,281 thousand, of which EUR 857 thousand was recognised as expenses in connection with the offering against the funds received in the invested unrestricted equity fund less deferred tax of EUR 171 thousand.
Consolidated statement of cash flows
| EUR thousand | 1–12/2022 | 1–12/2021 |
|---|---|---|
| Cash flows from operating activities | ||
| Profit before taxes | 3,009 | 7,664 |
| Adjustments: | ||
| Depreciation, amortisation and impairment | 3,964 | 3,976 |
| Financial income and expenses | 2,182 | 1,586 |
| Other adjustments | 204 | -48 |
| Cash flows before changes in working capital | 9,358 | 13,179 |
| Changes in working capital | ||
| Decrease (+) / increase (–) in trade and other receivables | 1,324 | -1,489 |
| Decrease (+) / increase (–) in inventories | -2,358 | -2,905 |
| Decrease (–) / increase (+) in trade and other payables | 1,155 | 2,326 |
| Cash flows from operating activities before financial items and taxes | 9,479 | 11,112 |
| Interests paid | -1,135 | -1,331 |
| Income taxes paid | -2,167 | -801 |
| Net cash flows from operating activities | 6,177 | 8,979 |
| Cash flows from investing activities | ||
| Investments in tangible and intangible assets | -3,553 | -4,797 |
| Sale of tangible and intangible assets | 28 | 132 |
| Net cash flows from investing activities | -3,525 | -4,665 |
| Cash flows from financing activities | ||
| Proceeds from share issue | - | 10,000 |
| Costs from share issue recognised in equity | - | -857 |
| Capital returns paid | -3,197 | - |
| Repayment of lease liabilities | -1,312 | -1,286 |
| Proceeds from long-term borrowings | 25,500 | - |
| Repayment of long-term borrowings | -25,500 | - |
| Repayment of short-term borrowings | -1,500 | -3,000 |
| Net cash flows from financing activities | -6,008 | 4,857 |
| Net change in cash and cash equivalents | -3,356 | 9,172 |
| Net foreign exchange differences | -694 | -88 |
| Cash and cash equivalents at the beginning of the period | 14,334 | 5,250 |
| Cash and cash equivalents at the end of the period | 10,284 | 14,334 |
NOTES TO THE GROUP'S FINANCIAL STATEMENTS RELEASE
Basis of preparation
Orthex's financial statements release has been prepared in compliance with the IAS 34 Interim Financial Reporting standard. The same accounting principles have been applied to the financial statements release as to the consolidated financial statements.
Orthex's Board of Directors has approved this financial statements release in its meeting on 7 March 2023. Figures in the financial statements release have been rounded and consequently the sum of individual figures may deviate from the presented sum figure.
The figures in the financial statements release are based on Orthex Corporation's 2022 financial statements. The figures are unaudited.
Accounting estimates and management judgements made in preparation of the financial statements release information
The preparation of the financial statements release information requires management to make accounting estimates and judgements as well as assumptions that affect the application of the preparation principles and the accounting estimates on assets, liabilities, income, and expenses. Actual results may differ from previously made estimates and judgements. Estimates and judgements are reviewed regularly. Changes in estimates are presented in the period during which the change occurs if the change only affects one period. If it affects both the period under review and following periods, the changes are presented in the period under review and following periods.
The significant management judgements and accounting estimates concerning key uncertainty factors in connection with the preparation of this financial statements release information are identical to those applied to the consolidated financial statements for 2022.
Related party transactions
Transactions with related parties are made on an arm's length basis.
Orthex did not have any related party transactions during the reporting period. In 2021, the company's related party transactions consisted of one purchase of EUR 25 thousand from a member of the Board.
Property, plant and equipment, Intangible assets, and Right-of-use assets
| Intangible | Property, plant, | Right-of | |||
|---|---|---|---|---|---|
| EUR thousand | asset | Goodwill | and equipment | use assets | Total |
| Acquisition cost at 1 Jan 2022 | 1,189 | 23,680 | 66,938 | 12,313 | 104,121 |
| Additions | 30 | 5,414 | 980 | 6,425 | |
| Disposals | -32 | -284 | -34 | -349 | |
| Transfers | 30 | -30 | 0 | ||
| Translation differences | - | -1,428 | -3,059 | -563 | -5,050 |
| Acquisition cost at 31 Dec 2022 | 1,218 | 22,252 | 68,979 | 12,697 | 105,147 |
| Accumulated depreciation, amortisation, and | |||||
| impairment at 1 Jan 2022 | 969 | - | 53,807 | 4,283 | 59,059 |
| Depreciation and amortisation | 126 | 2,435 | 1,403 | 3,964 | |
| Accumulated depreciation and amortisation on | |||||
| disposals and transfers | -2 | 1,850 | 1,848 | ||
| Translation differences | -2,660 | -2,660 | |||
| Accumulated depreciation, amortisation and | |||||
| impairment at 31 Dec 2022 | 1,094 | - | 55,432 | 5,686 | 62,211 |
| Carrying amount at 1 Jan 2022 | 221 | 23,680 | 13,131 | 8,030 | 45,062 |
| Carrying amount at 31 Dec 2022 | 125 | 22,252 | 13,547 | 7,011 | 42,935 |
| Acquisition cost at 1 Jan 2021 | 935 | 24,072 | 68,241 | 12,082 | 105,331 |
| Additions | 5 | 4,547 | 607 | 5,159 | |
| Disposals | -18 | -4,721 | -209 | -4,948 | |
| Transfers | 268 | -268 | - | ||
| Translation differences | -392 | -861 | -167 | -1,420 | |
| Acquisition cost at 31 Dec 2021 | 1,189 | 23,680 | 66,938 | 12,313 | 104,121 |
| Accumulated depreciation, amortisation, and | |||||
| impairment at 1 Jan 2021 | 858 | - | 56,859 | 2,837 | 60,555 |
| Depreciation and amortisation | 129 | 2,401 | 1,446 | 3,976 | |
| Accumulated depreciation and amortisation on | |||||
| disposals and transfers | -18 | -4,721 | -4,739 | ||
| Translation differences | -733 | -733 | |||
| Accumulated depreciation, amortisation, and | |||||
| impairment at 31 Dec 2021 | 969 | - | 53,807 | 4,283 | 59,059 |
| Carrying amount at 1 Jan 2021 | 77 | 24,072 | 11,382 | 9,244 | 44,776 |
| Carrying amount at 31 Dec 2021 | 221 | 23,680 | 13,131 | 8,030 | 45,062 |
Fair value of financial assets and liabilities
| Financial assets | ||
|---|---|---|
| EUR thousand | 31 Dec 2022 | 31 Dec 2021 |
| Level 2 | ||
| Assets measured at fair value | ||
| Derivative financial instruments: | ||
| Foreign exchange forward contracts and interest hedging | 93 | 14 |
| Total | 93 | 14 |
| Financial liabilities | ||
| EUR thousand | 31 Dec 2022 | 31 Dec 2021 |
| Level 2 | ||
| Liabilities measured at fair value | ||
| Derivative financial instruments: | ||
| Foreign exchange forward contracts | 8 | - |
| Total | 8 | - |
The derivatives have been presented in the note above. The carrying amounts of other financial assets and liabilities in the balance sheet equal their fair value.
Commitments
| EUR thousand | 31 Dec 2022 | 31 Dec 2021 |
|---|---|---|
| Guarantees and mortgages given on own behalf: | ||
| Enterprise mortgages | 50,060 | 53,514 |
| Property mortgages | 10,192 | 10,192 |
| Other guarantees | 50 | 55 |
| Total | 60,303 | 63,762 |
Contingent liabilities
Orthex Group was subject to a tax audit of Orthex Corporation regarding the financial years 2020 and 2021. Orthex Corporation received early in May 2022 a tax audit report from the Finnish tax authorities. The tax audit report included subsequent taxes and tax increases amounting to a total of EUR 0.3 million relating to the VAT deductibility of IPO related costs. The company disagrees with the interpretation made in the tax audit. The company was requested to pay additional taxes in accordance with the interpretations set out in the tax audit report. The company paid the subsequent taxes and tax increases in June 2022 but has filed a claim for adjustment to its taxation to the Assessment Adjustment Board of the Finnish tax authority. The Group has not recognised the subsequent taxes and tax increases in the consolidated statement of comprehensive income.
APPENDIX:
Key Performance Indicators
| EUR thousand | 10–12/2022 | 10–12/2021 | 1–12/2022 | 1–12/2021 |
|---|---|---|---|---|
| Net sales | 20,357 | 23,076 | 84,048 | 88,694 |
| Net sales growth, % | -11.8% | 6.8% | -5.2% | 16.9% |
| Constant currency invoiced sales growth, % | -8.8% | 6.5% | -3.8% | 15.7% |
| Invoiced sales | 20,607 | 23,546 | 85,794 | 90,552 |
| Invoiced sales growth, % | -12.5% | 7.1% | -5.3% | 16.3% |
| Gross margin | 4,969 | 5,124 | 17,919 | 23,204 |
| Gross margin, % | 24.4% | 22.2% | 21.3% | 26.2% |
| EBITDA | 2,611 | 2,693 | 9,154 | 13,226 |
| EBITDA margin, % | 12.8% | 11.7% | 10.9% | 14.9% |
| EBITA | 1,611 | 1,704 | 5,317 | 9,380 |
| EBITA margin, % | 7.9% | 7.4% | 6.3% | 10.6% |
| Operating profit | 1,579 | 1,672 | 5,191 | 9,250 |
| Operating profit margin, % | 7.8% | 7.2% | 6.2% | 10.4% |
| Items affecting comparability | 6 | 60 | 173 | 1,616 |
| Adjusted gross margin | 4,969 | 5,184 | 17,919 | 23,279 |
| Adjusted gross margin, % | 24.4% | 22.5% | 21.3% | 26.2% |
| Adjusted EBITDA | 2,617 | 2,753 | 9,328 | 14,842 |
| Adjusted EBITDA margin, % | 12.9% | 11.9% | 11.1% | 16.7% |
| Adjusted EBITA | 1,617 | 1,764 | 5,490 | 10,996 |
| Adjusted EBITA margin, % | 7.9% | 7.6% | 6.5% | 12.4% |
| Adjusted operating profit | 1,585 | 1,732 | 5,364 | 10,867 |
| Adjusted operating profit margin, % | 7.8% | 7.5% | 6.4% | 12.3% |
| Earnings per share, basic (and diluted), EUR | 0.02 | 0.06 | 0.12 | 0.35 |
| FTEs | 289 | 302 | 295 | 314 |
| Personnel expenses | 4,391 | 4,981 | 18,300 | 19,693 |
| Key cash flows indicators | ||||
| Net cash flows from operating activities | 278 | 1,769 | 6,177 | 8,979 |
| Operating free cash flows | 786 | 1,637 | 5,774 | 10,046 |
| Cash conversion, % | 30.0% | 59.5% | 61.9% | 67.7% |
| Investments in tangible and intangible assets | -1,831 | -1,116 | -3,553 | -4,797 |
| Financial position key figures | ||||
| Net debt | 26,028 | 25,887 | 26,028 | 25,887 |
| Net debt / adjusted EBITDA last 12 months | 2.8x | 1.7x | 2.8x | 1.7x |
| Net working capital | 13,670 | 14,482 | 13,670 | 14,482 |
| Capital employed excluding goodwill | 33,487 | 34,004 | 33,487 | 34,004 |
| Return on capital employed (ROCE), % | 5.0% | 5.0% | 15.4% | 28.1% |
| Adjusted return on capital employed (ROCE), % | 5.0% | 5.1% | 15.9% | 33.0% |
| Equity ratio, % | 36.3% | 35.8% | 36.3% | 35.8% |
| Return on equity, % | 1.2% | 3.2% | 6.9% | 24.7% |
Reconciliation of APMs
| EUR thousand | 10–12/2022 | 10–12/2021 | 1–12/2022 | 1–12/2021 |
|---|---|---|---|---|
| Net sales growth, % | ||||
| Net sales | 20,357 | 23,076 | 84,048 | 88,694 |
| Net sales growth, % | -11.8% | 6.8% | -5.2% | 16.9% |
| Constant currency Net sales growth, % | 20,357 | 23,076 | 84,048 | 88,694 |
| Net sales | - | -747 | - | -1,291 |
| FX rate adjustment | 20,357 | 22,329 | 84,048 | 87,403 |
| Constant currency Net sales | -8.8% | 6.5% | -3.8% | 15.7 % |
| Constant currency Net sales growth, % | ||||
| Invoiced sales | ||||
| Net sales | 20,357 | 23,076 | 84,048 | 88,694 |
| Discounts and bonuses | 810 | 937 | 3,182 | 3,067 |
| Other sales and refunds | -560 | -468 | -1,437 | -1,209 |
| Invoiced sales | 20,607 | 23,546 | 85,794 | 90,552 |
| Invoiced sales growth, % | -12.5% | 7.1% | -5.3% | 16.3 % |
| Gross margin | ||||
| Net sales | 20,357 | 23,076 | 84,048 | 88,694 |
| Cost of sales | -15,388 | -17,952 | -66,129 | -65,490 |
| Gross margin | 4,969 | 5,124 | 17,919 | 23,204 |
| Gross margin, % | 24.4% | 22.2% | 21.3% | 26.2% |
| EBITDA | 1,579 | 1,672 | 5,191 | 9,250 |
| Operating profit | 1,032 | 1,021 | 3,964 | 3,976 |
| Depreciation, amortisation, and impairment | 2,611 | 2,693 | 9,154 | 13,226 |
| EBITDA EBITDA margin, % |
12.8% | 11.7% | 10.9% | 14.9% |
| EBITA | ||||
| Operating profit | 1,579 | 1,672 | 5,191 | 9,250 |
| Amortisation and impairment | 32 | 32 | 126 | 129 |
| EBITA | 1,611 | 1,704 | 5,317 | 9,380 |
| EBITA margin, % | 7.9% | 7.4% | 6.3% | 10.6% |
| Operating profit | 1,579 | 1,672 | 5,191 | 9,250 |
| Operating profit | 7.8% | 7.2% | 6.2% | 10.4% |
| Operating profit margin, % | ||||
| Items affecting comparability / adjustments (Gross margin) | ||||
| Other items affecting comparability | - | 60 | - | 75 |
| Items affecting comparability / adjustments (Gross margin) | - | 60 | - | 75 |
| Items affecting comparability / adjustments (EBITDA) Other items affecting comparability |
6 | 60 | 173 | 85 |
| Costs related to listing | - | - | - | 1,531 |
| Items affecting comparability / adjustments (EBITDA) | 6 | 60 | 173 | 1,616 |
| Adjusted gross margin Gross margin 4,969 5,124 17,919 23,204 Adjustments (Gross margin) - 60 - 75 Adjusted gross margin 4,969 5,184 17,919 23,279 Adjusted gross margin, % 24.4% 22.5% 21.3% 26.2% Adjusted EBITDA Operating profit 1,579 1,672 5,191 9,250 Depreciation, amortisation, and impairment 1,032 1,021 3,964 3,976 Adjustments (EBITDA) 6 60 173 1,616 Adj. EBITDA 2,617 2,753 9,328 14,842 Adj. EBITDA margin, % 12.9% 11.9% 11.1% 16.7% Adjusted EBITA Operating profit 1,579 1,672 5,191 9,250 Amortisation and impairment 32 32 126 129 Adjustments (EBITA) 6 60 173 1,616 Adj. EBITA 1,617 1,764 5,490 10,996 Adj. EBITA margin, % 7.9% 7.6% 6.5% 12.4% Adjusted operating profit Operating profit 1,579 1,672 5,191 9,250 Adjustments 6 60 173 1,616 Adj. operating profit 1,585 1,732 5,364 10,867 Adj. operating profit margin, % 7.8% 7.5% 6.4% 12.3% Earnings per share, basic (and diluted), EUR Profit for the period 344 1,012 2,121 6,035 Average number of shares 17,759 17,759 17,759 17,426 Earnings per share, basic (and diluted), EUR 0.02 0.06 0.12 0.35 Operating free cash flows Adj. EBITDA 2,617 2,753 9,328 14,842 Investments in tangible and intangible assets -1,831 -1,116 -3,553 -4,797 Operating free cash flows 786 1,637 5,774 10,046 Cash conversion, % Operating free cash flows 786 1,637 5,774 10,046 Adj. EBITDA 2,617 2,753 9,328 14,842 Cash conversion, % 30.0% 59.5% 61.9% 67.7% Net debt Total interest-bearing liabilities 36,312 40,220 36,312 40,220 Cash and cash equivalents -10,284 -14,334 -10,284 -14,334 Net debt 26,028 25,887 26,028 25,887 Net debt/ Adj. EBITDA Net debt 26,028 25,887 26,028 25,887 Adj. EBITDA. 12 months 9,328 14,842 9,328 14,842 Net debt/ Adj. EBITDA 2.8x 1.7x 2.8x 1.7x |
EUR thousand | 10–12/2022 | 10–12/2021 | 1–12/2022 | 1–12/2021 |
|---|---|---|---|---|---|
| EUR thousand | 10–12/2022 | 10–12/2021 1–12/2022 | 1–12/2021 | |
|---|---|---|---|---|
| Net working capital | ||||
| Inventories | 14,283 | 12,647 | 14,283 | 12,647 |
| Trade and other receivables | 13,387 | 15,528 | 13,387 | 15,528 |
| Trade and other payables | -14,000 | -13,692 | -14,000 | -13,692 |
| Net working capital | 13,670 | 14,482 | 13,670 | 14,482 |
| Capital employed excluding goodwill | ||||
| Total equity | 29,711 | 31,798 | 29,711 | 31,798 |
| Net debt | 26,028 | 25,887 | 26,028 | 25,887 |
| Goodwill | -22,252 | -23,680 | -22,252 | -23,680 |
| Capital employed excluding goodwill | 33,487 | 34,004 | 33,487 | 34,004 |
| Return on capital employed (ROCE), % | ||||
| Operating profit | 1,579 | 1,672 | 5,191 | 9,250 |
| Average capital employed excluding goodwill | 31,530 | 33,742 | 33,746 | 32,920 |
| Return on capital employed (ROCE), % | 5.0% | 5.0% | 15.4% | 28.1% |
| Adjusted return on capital employed (ROCE), % | ||||
| Adjusted operating profit | 1,585 | 1,732 | 5,364 | 10,867 |
| Average capital employed excluding goodwill | 31,530 | 33,742 | 33,746 | 32,920 |
| Adjusted return on capital employed (ROCE), % | 5.0% | 5.1% | 15.9% | 33.0% |
| Equity ratio, % | ||||
| Total equity | 29,711 | 31,798 | 29,711 | 31,798 |
| Total assets | 81,837 | 88,842 | 81,837 | 88,842 |
| Equity ratio, % | 36.3% | 35.8% | 36.3% | 35.8% |
| Return on equity, % | ||||
| Profit for the period | 344 | 1,012 | 2,121 | 6,035 |
| Total equity (average for the first and last day of the period) | 29,200 | 31,420 | 30,754 | 24,410 |
| Return on equity, % | 1.2% | 3.2% | 6.9% | 24.7% |
Orthex presents alternative performance measures as additional information to financial measures presented in the consolidated income statement, consolidated balance sheet and consolidated statement of cash flows prepared in accordance with IFRS. In Orthex's view, alternative performance measures provide significant additional information on Orthex's results of operations, financial position and cash flows to management, investors, analysts, and other stakeholders.
Alternative performance measures should not be viewed in isolation or as a substitute to the IFRS financial measures. All companies do not calculate alternative performance measures in a uniform way, and therefore Orthex's alternative performance measures may not be comparable with similarly named measures presented by other companies.
Calculation of key figures
| Key Performance Indicators | Formula |
|---|---|
| Constant currency invoiced sales growth, % | Invoiced sales growth calculated by using previous year's revenue translated at average foreign exchange rates for the current year |
| Invoiced sales | Product sales to resale customers excluding off invoice discounts, customer bonuses and cash discounts |
| Invoiced sales growth, % | Increase in invoiced sales |
| Gross margin | Net sales less Cost of sales |
| Gross margin, % | Gross margin / Net sales |
| EBITDA | Operating profit before depreciation, amortisation, and impairment |
| EBITDA margin, % | EBITDA / Net sales |
| EBITA | Operating profit before amortisation and impairment |
| EBITA margin, % | EBITA / Net sales |
| Operating profit | Operating profit |
| Operating profit margin, % | Operating profit / Net sales |
| Items affecting comparability | Material items outside ordinary course of business including restructuring costs, net gains or losses from sale of business operations or other non-current assets, strategic development projects, external advisory costs related to capital reorganisation, impairment charges on non-current assets incurred in connection with restructurings, compensation for damages and transaction costs related to business acquisitions |
| Adjusted gross margin | Gross margin excluding items affecting comparability |
| Adjusted gross margin, % | Adjusted gross margin / Net sales |
| Adjusted EBITDA | EBITDA excluding items affecting comparability |
| Adjusted EBITDA margin, % | Adjusted EBITDA / Net sales |
| Adjusted EBITA | EBITA excluding items affecting comparability |
| Adjusted EBITA margin, % | Adjusted EBITA / Net sales |
| Adjusted operating profit | Operating profit excluding items affecting comparability |
| Adjusted operating profit margin, % | Adjusted operating profit / Net sales |
| Earnings per share, basic (and diluted), EUR | Profit for the period attributable to the owners of the parent divided by weighted average number of shares outstanding |
| FTEs | Full-Time Equivalents |
| Personnel expenses | Total personnel expenses during the period |
| Key cash flows indicators | Formula |
|---|---|
| Net cash flows from operating activities | Net cash from operating activities as presented in the |
| consolidated statement of cash flows | |
| Operating free cash flows | Adjusted EBITDA less investments in tangible and intangible |
| assets | |
| Cash conversion, % | Operating free cash flows / Adjusted EBITDA |
| Investments in tangible and intangible assets | Investments in tangible and intangible assets as presented in the consolidated statement of cash flows |
| Financial position key figures | Formula |
|---|---|
| Net debt | Current and non-current interest-bearing liabilities less cash and cash equivalents |
| Net debt / adjusted EBITDA last 12 months | Net debt / Adjusted EBITDA |
| Net working capital | Inventories, trade, and other receivables less trade and other payables |
| Capital employed excluding goodwill | Total equity and net debt and less goodwill |
| Return on capital employed (ROCE), % | Operating profit / Average capital employed excluding goodwill |
| Adjusted return on capital employed (ROCE), % | Adjusted operating profit / Average capital employed excluding goodwill |
| Equity ratio, % | Total equity / Total assets |
| Return on equity, % | Result for the period / Total equity (average for the first and last day of the period) |
ORTHEX IN BRIEF
Orthex is a leading Nordic houseware company. Orthex designs, produces, and sells household products with a mission to make consumers' everyday life easier: Orthex strives to create functional, long lasting, and sustainable high-quality household products. Orthex's products cover multifunctional assortment of storage boxes, kitchen products and products for home and yard. Orthex markets and sells its products under three main consumer brands: SmartStoreTM, GastroMaxTM and OrthexTM. In addition, it sells externally produced kitchen products under the KökskungenTM brand.
Orthex has more than 100 years of experience in the production, design, and marketing of household products, and it has approximately 800 customers in more than 40 countries. Orthex's core geographic markets are the Nordics and the export markets. The export markets are divided into the rest of Europe and the rest of the world. Orthex is headquartered in Espoo, Finland, and it currently has seven local sales offices located in the Nordics, Germany, France, and the United Kingdom. Orthex's production facilities are located in Tingsryd and Gnosjö, Sweden, and in Lohja, Finland. In addition, Orthex has centralised warehousing in Sweden and Finland in connection with its Tingsryd and Lohja production facilities, as well as an outsourced warehouse in Überherrn, Germany.
Orthex aims to be the industry forerunner in sustainability by promoting safe and long-lasting products, reducing the carbon footprint of its operations and products, as well as by sourcing an ever-increasing amount of raw materials from renewable and recycled materials. Orthex aims for its production to be carbon neutral by 2030.
Orthex Epoque window box 60 cm with self-watering insert
SmartStore Basket recycled. On the front page: GastroMax BIO food storage
Orthex Corporation www.investors.orthexgroup.com