Quarterly Report • May 11, 2022
Quarterly Report
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Orthex has no Russian or Ukrainian suppliers nor any other business in Russia or Ukraine, so Russia's military actions have no direct impact on Orthex's business. However, there can be negative business impacts from volatility, customer behaviour, or cost increases due to the war.
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The first quarter of 2022 was characterised by continued rising cost and balancing between campaign sales, price increases and sales volume, on a weakening market influenced by consumer and customer uncertainty. Raw material prices continued to rise, driven by among other factors, the Russian attack on Ukraine. During the first quarter, the second round of price increases that we communicated to our customers in the third quarter of 2021, started to have an impact and we managed to partly offset the negative effects from surging material cost. During the period between December 2020 and March 2022, the raw material price index has increased by more than 77%. This is an unprecedented pace of continued increase and therefore in our view not strategically feasible to absorb directly or with one single price correction. The time between communicating a price increase and the implementation of it at our customers is approximately 4–9 months and during this period a continued cost increase has a negative impact on the result. We are committed to make price increases as costs keep on rising. The rapid cost development had an impact on Orthex's profitability as the adjusted EBITA margin decreased in
the first quarter to 8.8% (15.3) and the adjusted EBITA to 1.8 million euros (3.3).
In the year 2021, the first quarter invoiced sales increased by 33.5%. In 2022, the conditions have been challenging, and we did not reach the sales of the previous year as invoiced sales declined by 4.2%. As already communicated, we have held back on selling campaigns at reduced prices to offset negative cost impact. This is visible in the export sales, where sales volumes declined, as focus has been on actively defending margins instead of renewing campaigns made in the first quarter of 2021. We have not lost any customers or product distribution. On the contrary, there are interesting new customer opportunities both in the export pipeline and on the Nordic market. In the times of uncertainty, customers have been more careful in their buying behaviour, and in many markets, there seems to be a reluctancy to further fill up the stores or warehouses with goods. Our view, which is based on information and feedback from customers, is that we have not lost market share, but the demand has weakened due to uncertainty in the market.
As COVID-19 came back with a new variant, our most important trade show, the Ambiente show scheduled for February, was cancelled. This has slowed down new customer acquisition opportunities in the export markets. Under current circumstances most customer meetings are centred around price increases and off-setting cost and thus the important topic of building business together and growing consumer sales does not get the undivided attention of our customers.
All the above-mentioned factors had an impact on Orthex's sales as net sales in the first quarter decreased slightly to 20.6 million euros (21.6).
The company's Sustainability Report for the year 2021 was published as a part of the company's first Annual Report in March 2022. In our Sustainability Report we present, for example, the steps we have taken during 2021 to be able to reach our carbon neutrality target. Among others, we made a comprehensive calculation of the carbon footprint of our operations and value chain for the first time and all our factories switched to 100% fossil-free hydropower. We aim to be carbon neutral in our operations by 2030. In line with our strategy, to strengthen the product portfolio made in new sustainable materials, we are expanding the range of products made of old fishing nets to involve a storage concept and some additional household products.
We are committed to implementing our growth strategy with a focus on international growth and sustainability. Raw material prices reached their highest levels so far at the end of March 2022 and currently raw material prices, freight cost and energy price are all on very high levels and future development is hard to predict. There are no immediate indications of change towards more favourable cost or market conditions. In the first quarter of 2022 we again took action that will be implemented according to the schedule described earlier. Unpredictable and fast increases in raw material prices create a profitability challenge due to the delayed effects of implementing price increases or cost savings. Despite the prevailing short-term challenges and market uncertainty, 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 long-term target.
We are putting strong efforts on finding ways to grow sales profitably as demand development is likely to remain uncertain. We believe that the operating environment will eventually stabilise over time which will help to fully focus on actively growing profitable sales on the Nordic market and accelerate business development outside of the Nordics. I want to take the opportunity to thank all our personnel for the strong commitment to navigating wisely by taking active action in the efforts to defend the margins under the current very unusual conditions. We are all prepared and eager to continue improving everyday life with practical and sustainable products.
| EUR million | 1–3/2022 | 1–3/2021 | Change | 1–12/2021 |
|---|---|---|---|---|
| Invoiced sales | 21.5 | 22.4 | -4.2% | 90.6 |
| Net sales | 20.6 | 21.6 | -4.9% | 88.7 |
| Gross margin | 4.9 | 6.8 | -27.5% | 23.2 |
| Gross margin, % | 23.8% | 31.3% | 26.2% | |
| EBITDA | 2.8 | 2.9 | -6.2% | 13.2 |
| EBITDA margin, % | 13.4% | 13.6% | 14.9% | |
| Adjusted EBITDA | 2.8 | 4.3 | -35.1% | 14.8 |
| Adjusted EBITDA margin, % | 13.4% | 19.7% | 16.7% | |
| EBITA | 1.8 | 2.0 | -9.3% | 9.4 |
| EBITA margin, % | 8.8% | 9.2% | 10.6% | |
| Adjusted EBITA | 1.8 | 3.3 | -45.3% | 11.0 |
| Adjusted EBITA margin, % | 8.8% | 15.3% | 12.4% | |
| Operating profit | 1.8 | 2.0 | -9.5% | 9.3 |
| Operating profit margin, % | 8.7% | 9.1% | 10.4% | |
| Net cash flows from operating activities | 1.9 | 3.2 | -41.3% | 9.0 |
| Net debt / Adjusted EBITDA | 1.8x | 1.5x | 1.7x | |
| Adjusted return on capital employed (ROCE), % | 5.3% | 10.4% | 33.0% | |
| Equity ratio, % | 36.7% | 31.1% | 35.8% | |
| Earnings per share, basic (EUR) | 0.06 | 0.08 | -16.7% | 0.35 |
| FTEs | 294 | 314 | -6.5% | 314 |
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.
Orthex operates in Europe in the home storage, food storage and kitchenware market, which has historically been stable and resilient throughout different economic cycles. The market size was estimated at EUR 8.0 billion in 2019. Household goods are purchased on demand and unit prices are generally low, which means that market downturns have a smaller impact on consumers' purchasing power and demand.
The market for household products in Europe is fragmented. Orthex estimates that it had a leading market position in the Nordic home storage market, with an estimated market share of 20–25 per cent in 2019. Additionally, the company had a strong position in the food storage and kitchenware market. The size of the Nordic home storage market was estimated to be approximately EUR 140 million in 2019.
There were no significant changes in Orthex's market position or competitive situation during the financial years of 2020 and 2021. The management's view is that the fast growth in Europe outside the Nordic market comes from a steadily improving competitive position with presence in new customers and widened distribution in existing customers' shop assortment.
There has typically not been significant seasonal variation in Orthex's sales. However, the uncertain market situation caused by the COVID-19 pandemic may affect the comparability of sales between quarters and financial years. The COVID-19 pandemic affected Orthex's business both positively and negatively during the review period.
As a result of the pandemic, restrictions on movement in some markets had a positive impact on Orthex's sales, as people spent more time at home and focused on, for example, cooking and interior design solutions, including storage solutions. However, in some export markets, restrictions on movement adversely affected the company's sales, as stores selling the company's products were closed for part of 2020 and 2021. Raw material prices fell in the spring of 2020 due to the COVID-19 pandemic, but prices started to rise exceptionally during the latter part of 2020. During 2021, raw material prices rose to exceptionally high levels and have remained at high levels in 2022.
GastroMax Bio nylon
| EUR million | 1–3/2022 | 1–3/2021 | Change | 1–12/2021 |
|---|---|---|---|---|
| Nordics | 17.7 | 17.9 | -1.1% | 73.0 |
| Rest of Europe | 3.5 | 3.7 | -5.7% | 15.1 |
| Rest of the world | 0.2 | 0.8 | -69.1% | 2.4 |
| Total | 21.5 | 22.4 | -4.2% | 90.6 |
| EUR million | 1–3/2022 | 1–3/2021 | Change | 1–12/2021 |
|---|---|---|---|---|
| Storage | 13.2 | 14.7 | -10.2% | 59.4 |
| Kitchen | 4.8 | 4.5 | 7.5% | 20.1 |
| Plant Care | 2.2 | 1.8 | 22.8% | 5.7 |
| Home & Yard | 1.2 | 1.4 | -12.5% | 5.4 |
| Total | 21.5 | 22.4 | -4.2% | 90.6 |
In January–March, the Group's Net sales decreased by 4.9% to EUR 20.6 million (21.6). Invoiced sales amounted to EUR 21.5 million (22.4). The decrease of constant currency Net sales was -4.0% compared to January–March 2021.
The first quarter of 2022 was characterised by balancing between campaign sales, price increases and sales volume, on a market influenced by consumer and customer uncertainty.
Orthex's core market area by geography is the Nordics, where the Group's invoiced sales in January– March amounted to EUR 17.7 million (17.9). Invoiced sales in the Nordics totalled 82.5% (79.9) of the Group's total invoiced sales.
Invoiced sales in the rest of Europe decreased to EUR 3.5 million (3.7). In the rest of the world, invoiced sales decreased to EUR 0.2 million (0.8). The lack of campaigns in a few bigger export customers explains the decline.
Orthex's products are sold in more than 40 countries, and export to non-Nordic countries accounted for 17.5% (20.1) of the Group's invoiced sales during the period.
Orthex's largest category is Storage with invoiced sales totalling EUR 13.2 million (14.7) during January– March. 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. The Group's invoiced sales in the Kitchen category grew to EUR 4.8 million (4.5) which was both due to new customers and increased assortment among existing customers.
Invoiced sales in the Plant Care category grew to EUR 2.2 million (1.8). The increase was mainly due to the increase in the cultivation of green plants, herbs and vegetables in flowerpots made of recycled plastic material.
Invoiced sales in the Home & Yard category decreased to EUR 1.2 million (1.4).
EBITA was 1.8 million (2.0) during the period and decreased by 9.3%. Adjusted EBITA decreased by 45.3% to EUR 1.8 million (3.3) and the adjusted EBITA margin decreased to 8.8% (15.3). Operating profit was EUR 1.8 million (2.0). Items affecting comparability totalled EUR 0.0 million (1.3).
Orthex's financial income and expenses during the review period consisted of EUR 0.3 million net expenses (0.4).
Profit before taxes was EUR 1.4 million (1.6) and profit for the period was EUR 1.1 million (1.2).
During the period between December 2020 and March 2022, the raw material price index has increased by more than 77%. The rapidly increased costs had an impact on Orthex's profitability.
The balance sheet totalled EUR 89.2 million (87.3) at the end of the review period, of which equity constituted EUR 32.7 million (27.1).
At the end of the review period the Group's net debt was EUR 24.7 million (28.0). Non-current interestbearing liabilities were EUR 35.8 million (39.6) and Orthex's total interest-bearing liabilities were EUR 40.0 million (43.8). Interest-bearing liabilities include loans from credit institutions, pension liabilities and lease liabilities.
During the period January−March 2022, the Group's net cash flows from operating activities were EUR 1.9 million (3.2) and cash conversion was 82.2% (60.8). Cash and cash equivalents amounted to EUR 15.3 million (15.8) at the end of the review period.
Net debt/adjusted EBITDA was 1.8x (1.5). 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 36.7% (31.1). Adjusted return on capital employed (ROCE) was 5.3% (10.4) and Return on equity (ROE) 3.5% (5.7).
Orthex's investments during January–March 2022 amounted to EUR 0.5 million (1.7) and were mainly related to increasing the production capacity for new and existing products.
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 17.5 million and 2,046,307 shares. The highest price of the share was EUR 11.29 and the lowest was EUR 7.10. The closing price of the share at the end of March 2022 was EUR 7.73. At the end of the review period, the market value of the share capital stood at EUR 137.3 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 17,657, including nominee registers. At the end of the period, the ten largest shareholders possessed a total of 48.8% of Orthex's shares and votes.
The stock exchange releases on notifications of changes in holdings (flaggings) are available on the corporate website at https:/investors.orthexgroup.com/. Orthex did not receive any flagging notifications during the first quarter.
Sustainability is a core element in realising Orthex's growth strategy and key objectives for being the number one brand in the Storage product category in Europe, and to strengthen Orthex's position as a leading household item 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 a pioneer in the industry in terms of sustainability by offering timelessly designed, high-quality, safe, and longlasting products, reducing the carbon footprint of its operations and products, and sourcing more and more of its raw materials from bio-based and recycled materials. Orthex has set as a main target 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 https://investors.orthexgroup.com/orthex-as-aninvestment/sustainability/.
Orthex published its Sustainability Report for the year 2021 as a part of the Annual Report on 16 March 2022. As is brought up in the Sustainability Report, the company has continued its investments in the use of bio-based and recycled materials and in building the roadmap towards carbon neutrality.
In March, Orthex's Lohja factory was granted an ISCC+ 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 during the review period.
Smart Store Ocean
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 bio-based 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 bio-based and recycled materials.
The COVID-19 pandemic has caused significant disruption to the global economy and the Group's geographic market. Although the COVID-19 pandemic did not materially impair the Group's operating profit during the review period, prolonged or extended restrictions could have a material adverse effect on business, financial condition and / or operating profit.
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 2021. The main principles of Orthex's financial risk management are described in the notes to the consolidated financial statements. The company's annual report, which includes the Board of Directors' report and the consolidated financial statements with notes for the year 2021, was published on 16 March 2022 and is available on the corporate website.
Orthex Corporation's Annual General Meeting was held on 6 April 2022, at the company's headquarters in Espoo, Finland. To limit the spread of the corona virus pandemic, the Annual General Meeting took place without shareholders' and their proxy representatives' presence at the meeting venue. The shareholders of the company participated in the meeting and exercised their shareholder's rights by voting in advance. A total of 35 shareholders were represented at the meeting representing 10,602,030 shares and votes. All the proposals made to the Annual General Meeting were approved.
The general meeting adopted the financial statements and discharged the members of the Board of Directors and the CEO from liability for the financial period 2021. As proposed by the Board of Directors, the general meeting decided that no dividend will be distributed for the financial period ended on 31 December 2021. Instead, the general meeting decided that 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 as follows:
The first instalment of the capital return amounting to EUR 0.09 per share was paid to a shareholder who was registered in the company's shareholder register held by Euroclear Finland Oy on the record date of the first instalment of the capital return 8 April 2022. The first instalment of the capital return was paid on 21 April 2022. The second instalment of the capital return amounting to EUR 0.09 per share will be paid in October 2022 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 capital return 3 October 2022. The second instalment of the capital return will be paid on 11 October 2022.
The general meeting also authorised the Board of Directors to resolve, if necessary, on a new record date and date of payment for the second instalment of the capital return, should the rules of Euroclear Finland Oy or statutes governing the Finnish book-entry system change or otherwise so require.
The general meeting approved the remuneration policy and the remuneration report 2021 for the governing bodies.
As proposed by the Shareholders' Nomination Board, the general meeting 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. It was further resolved that reasonable travel and other expenses related to the Board work will be reimbursed in accordance with the company's travel rules.
As proposed by the Shareholders' Nomination Board, the general meeting resolved that the Board of Directors consists of five (5) members and Sanna Suvanto-Harsaae, Satu Huber and Jens-Peter Poulsen were re-elected to the Board and Markus Hellström and Jyrki Mäki-Kala were elected as new members to the Board, all for a term of office ending at the end of the next Annual General Meeting. Further information on the members of the Board of Directors is available on the corporate website at https://investors.orthexgroup.com/corporate-governance/board-of-directors/.
At the constitutive meeting of the Board of Directors held on 6 April 2022, Sanna Suvanto-Haarsae was re-elected to chair the Board.
Ernst & Young Oy, a firm of Authorised Public Accountants, was re-elected the company's auditor. Ernst & Young Oy has informed the company that Johanna Winqvist-Ilkka, Authorised Public Accountant, will continue as the signing audit partner. The remuneration of the auditor was resolved to paid according to a reasonable invoice approved by the Board.
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 referred to in Chapter 10, Section 1 of the Finnish Limited Liability Companies Act in one or several issues as follows:
A total maximum of 1,800,000 shares may be issued by virtue of the authorisation (including shares that can be issued based on the special rights) corresponding to approximately 10 per cent of all the shares in the company.
The Board of Directors was authorised to decide on all terms and conditions related to the issuance of shares and the issuance of special rights entitling to shares. The issuance of shares and special rights entitling to shares may also take place in deviation from the shareholders' pre-emptive subscription right (directed share issue) if there is a weighty financial reason for doing so from the company's point of view as referred to in the Finnish Limited Liability Companies Act. The authorisation may then be used for mergers and acquisitions or to finance other business-related investments, to maintain and increase the group's solvency, to implement an incentive scheme, to expand the ownership base and to develop the capital structure.
The authorisation will be valid for 18 months from the decision of the general meeting.
SmartStore Collect
Orthex will publish its financial reports in 2022 as follows:
25 August 2022, Half year financial report January–June 2022
11 November 2022, Interim report January–September 2022
ORTHEX CORPORATION Board of Directors
Alexander Rosenlew, CEO, +358 (0)40 500 3826 Saara Mäkelä, CFO, +358 (0)40 083 8782
Analysts and investors: Saara Mäkelä, CFO, +358 (0)40 083 8782 Media: Hanna Kukkonen, CMO, +358 (0)40 053 8886
Questions to the management can be sent through the meeting chat.
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/
| EUR thousand | 1–3/2022 | 1–3/2021 | 1–12/2021 |
|---|---|---|---|
| Net Sales | 20,577 | 21,634 | 88,694 |
| Cost of sales | -15,675 | -14,871 | -65,490 |
| Gross Margin | 4,902 | 6,763 | 23,204 |
| Other operating income | 78 | 52 | 549 |
| Selling and marketing expenses | -1,901 | -2,473 | -8,468 |
| Administrative expenses | -1,299 | -2,375 | -6,035 |
| Operating profit | 1,781 | 1,968 | 9,250 |
| Financial income and expenses | -348 | -350 | -1,586 |
| Profit before taxes | 1,433 | 1,618 | 7,664 |
| Income taxes | -308 | -370 | -1,629 |
| Profit for the period | 1,125 | 1,248 | 6,035 |
| Profit for the period attributable to: | |||
| Equity holders of the parent | 1,125 | 1,248 | 6,035 |
| Earnings per share, basic (and diluted), EUR | 0.06 | 0.08 | 0.35 |
| Other comprehensive income, net of tax | |||
| Items that may be reclassified subsequently to profit or loss: | |||
| Translation differences | -229 | -634 | -622 |
| Items that will not be reclassified to profit or loss: | |||
| Remeasurement gains/(losses) on defined benefit plans | - | - | -58 |
| Other comprehensive income for the period, net of tax | -229 | -634 | -680 |
| Total comprehensive income for the period | 896 | 614 | 5,355 |
| Total comprehensive income attributable to: | |||
| Equity holders of the parent | 896 | 614 | 5,355 |
| EUR thousand | 31 Mar 2022 | 31 Mar 2021 | 31 Dec 2021 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Intangible assets | 23,747 | 23,993 | 23,901 |
| Property, plant and equipment | 12,848 | 11,774 | 13,131 |
| Right-of-use assets | 7,796 | 8,880 | 8,030 |
| Other non-current assets | 230 | 103 | 94 |
| Deferred tax assets | 1,325 | 1,191 | 1,163 |
| Total non-current assets | 45,945 | 45,940 | 46,320 |
| Current assets | |||
| Inventories | 14,092 | 10,924 | 12,647 |
| Trade and other receivables | 13,782 | 14,608 | 15,528 |
| Derivative financial instruments | 13 | - | 14 |
| Income tax receivables | - | 5 | - |
| Cash and cash equivalents | 15,345 | 15,843 | 14,334 |
| Total current assets | 43,232 | 41,381 | 42,522 |
| Total assets | 89,177 | 87,321 | 88,842 |
| Equity and liabilities | |||
| Equity attributable to the equity holders of the parent company | |||
| Share capital | 80 | 80 | 80 |
| Invested unrestricted equity fund | 11,047 | 11,119 | 11,047 |
| Retained earnings | 20,263 | 14,409 | 19,138 |
| Translation differences | 1,303 | 1,520 | 1,532 |
| Total equity | 32,693 | 27,128 | 31,798 |
| Non-current liabilities | |||
| Loans from credit institutions | 23,738 | 26,667 | 23,720 |
| Lease liabilities | 7,336 | 8,356 | 7,544 |
| Pension liabilities | 4,722 | 4,624 | 4,742 |
| Deferred tax liabilities | 853 | 569 | 742 |
| Total non-current liabilities | 36,649 | 40,216 | 36,748 |
| Current liabilities | |||
| Loans from credit institutions | 3,000 | 3,000 | 3,000 |
| Lease liabilities | 1,208 | 1,151 | 1,214 |
| Trade and other payables | 14,389 | 13,867 | 13,692 |
| Derivative financial instruments | - | 15 | - |
| Income tax liabilities | 1,237 | 1,944 | 2,390 |
| Total current liabilities | 19,834 | 19,977 | 20,296 |
| Total liabilities | 56,484 | 60,192 | 57,044 |
| Total equity and liabilities | 89,177 | 87,321 | 88,842 |
| Invested | ||||||
|---|---|---|---|---|---|---|
| Share | Treasury | unrestricted | Retained | Translation | Total | |
| EUR thousand | capital | shares | equity fund | earnings | differences | equity |
| As at 1 Jan 2022 | 80 | - | 11,047 | 19,138 | 1,532 | 31,798 |
| Profit for the period | 1,125 | 1,125 | ||||
| Translation differences | -229 | -229 | ||||
| Total comprehensive income | 1,125 | -229 | 896 | |||
| At 31 Mar 2022 | 80 | - | 11,047 | 20,263 | 1,303 | 32,693 |
| As at 1 Jan 2021 | 3 | -71 | 1,775 | 13,161 | 2,154 | 17,022 |
| Profit for the period | 1,248 | 1,248 | ||||
| Translation differences Total comprehensive income |
1,248 | -634 -634 |
-634 614 |
|||
| Transactions with owners: | ||||||
| Increase in share capital | ||||||
| Cancellation of treasury shares | 78 | -78 | - | |||
| 71 | -71 | - | ||||
| Share issue | 10,000 | 10,000 | ||||
| Expenses related to the share issue | -614 | -614 | ||||
| Discount related to the personnel | ||||||
| share issue | 106 | 106 | ||||
| At 31 Mar 2021 | 80 | - | 11,119 | 14,409 | 1,520 | 27,128 |
| 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.
| EUR thousand | 1–3/2022 | 1–3/2021 | 1-12/2021 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit before taxes | 1,433 | 1,618 | 7,664 |
| Adjustments: | |||
| Depreciation, amortisation and impairment | 982 | 976 | 3,976 |
| Financial income and expenses | 348 | 350 | 1,586 |
| Other adjustments | 46 | -190 | -48 |
| Cash flows before changes in working capital | 2,808 | 2,754 | 13,179 |
| Changes in working capital | |||
| Decrease (+) / increase (–) in trade and other receivables | 1,535 | -566 | -1,489 |
| Decrease (+) / increase (–) in inventories | -1,515 | -977 | -2,905 |
| Decrease (–) / increase (+) in trade and other payables | 721 | 2,350 | 2,326 |
| Cash flows from operating activities before financial items and taxes | 3,549 | 3,561 | 11,112 |
| Interests paid | -148 | - | -1,331 |
| Income taxes paid | -1,526 | -368 | -801 |
| Net cash flows from operating activities | 1,875 | 3,193 | 8,979 |
| Cash flows from investing activities | |||
| Investments in tangible and intangible assets | -491 | -1,668 | -4,797 |
| Sale of tangible and intangible assets | - | - | 132 |
| Net cash flows from investing activities | -491 | -1,668 | -4,665 |
| Cash flows from financing activities | |||
| Proceeds from share issue | - | 10,000 | 10,000 |
| Costs from share issue recognised in equity | - | -586 | -857 |
| Repayment of lease liabilities | -324 | -302 | -1,286 |
| Repayment of short-term borrowings | - | - | -3,000 |
| Net cash flows from financing activities | -324 | 9,112 | 4,857 |
| Net change in cash and cash equivalents | 1,059 | 10,637 | 9,172 |
| Net foreign exchange differences | -48 | -44 | -88 |
| Cash and cash equivalents at the beginning of the period | 14,334 | 5,250 | 5,250 |
| Cash and cash equivalents at the end of the period | 15,345 | 15,843 | 14,334 |
Orthex's interim report 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 previous consolidated financial statements taking into account.
Orthex's Board of Directors has approved this interim report in its meeting on 10 May 2022. Figures in the interim report have been rounded and consequently the sum of individual figures may deviate from the presented sum figure. The figures are unaudited.
The preparation of 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 in the consolidated financial statements for 2021.
Transactions with related parties have been made on an arm's length basis.
Orthex did not have any related party transactions during the review period. In January–March 2021, the company's related party transactions consisted of one purchase of EUR 25 thousand from a member of the Board.
| EUR thousand | 31 Mar 2022 | 31 Mar 2021 | 31 Dec 2021 |
|---|---|---|---|
| Guarantees and mortgages given on own behalf: | |||
| Enterprise mortgages | 53,469 | 53,521 | 53,558 |
| Property mortgages | 10,192 | 10,192 | 10,192 |
| Other guarantees | 54 | 55 | 55 |
| Total | 63,716 | 63,768 | 63,806 |
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 will have to pay the subsequent taxes in accordance with the interpretations presented in the tax audit report, but the company will apply for an adjustment to its taxation from the Tax Adjustment Board. The Group has not recognised any liabilities for subsequent taxes and tax increases.
| EUR thousand | 1-3/2022 | 1-3/2021 | 1-12/2021 |
|---|---|---|---|
| Net sales | 20,577 | 21,634 | 88,694 |
| Net sales growth, % | -4.9% | 32.4% | 16.9% |
| Constant currency invoiced sales growth, % | -4.0% | 30.0% | 15.7% |
| Invoiced sales | 21,503 | 22,443 | 90,552 |
| Invoiced sales growth, % | -4.2% | 33.5% | 16.3% |
| Gross Margin | 4,902 | 6,763 | 23,204 |
| Gross Margin, % | 23.8% | 31.3% | 26.2% |
| EBITDA | 2,762 | 2,944 | 13,226 |
| EBITDA margin, % | 13.4% | 13.6% | 14.9% |
| EBITA | 1,812 | 1,999 | 9,380 |
| EBITA margin, % | 8.8% | 9.2% | 10.6% |
| Operating profit | 1,781 | 1,968 | 9,250 |
| Operating profit margin, % | 8.7% | 9.1% | 10.4% |
| Items affecting comparability | - | 1,313 | 1,616 |
| Adjusted Gross Margin | 4,902 | 6,763 | 23,279 |
| Adjusted Gross Margin, % | 23.8% | 31.3% | 26.2% |
| Adjusted EBITDA | 2,762 | 4,257 | 14,842 |
| Adjusted EBITDA margin, % | 13.4% | 19.7% | 16.7% |
| Adjusted EBITA | 1,812 | 3,312 | 10,996 |
| Adjusted EBITA margin, % | 8.8% | 15.3% | 12.4% |
| Adjusted operating profit | 1,781 | 3,281 | 10,867 |
| Adjusted operating profit margin, % | 8.7% | 15.2% | 12.3% |
| Earnings per share, basic (and diluted), EUR | 0.06 | 0.08 | 0.35 |
| FTEs | 294 | 314 | 314 |
| Personnel expenses | 5,072 | 5,426 | 19,693 |
| Key cash flows indicators | |||
| Net cash flows from operating activities | 1,875 | 3,193 | 8,979 |
| Operating free cash flows | 2,271 | 2,588 | 10,046 |
| Cash conversion, % | 82.2% | 60.8% | 67.7% |
| Investments in tangible and intangible assets | -491 | -1,668 | -4,797 |
| Financial position key figures | |||
| Net debt | 24,659 | 27,954 | 25,887 |
| Net debt / adjusted EBITDA last 12 months | 1.8x | 1.5x | 1.7x |
| Net working capital | 13,484 | 11,665 | 14,482 |
| Capital employed excluding goodwill | 33,825 | 31,381 | 34,004 |
| Return on capital employed (ROCE), % | 5.3% | 6.2% | 28.1% |
| Adjusted return on capital employed (ROCE), % | 5.3% | 10.4% | 33.0% |
| Equity ratio, % | 36.7% | 31.1% | 35.8% |
| Return on equity, % | 3.5% | 5.7% | 24.7% |
| EUR thousand | 1-3/2022 | 1-3/2021 | 1-12/2021 |
|---|---|---|---|
| Net sales growth, % | |||
| Net sales | 20,577 | 21,634 | 88,694 |
| Net sales growth, % | -4.9% | 32.4% | 16.9% |
| Constant currency Net sales growth, % | |||
| Net sales | 20,577 | 21,634 | 88,694 |
| FX rate adjustment | - | -189 | - |
| Constant currency Net sales | 20,577 | 21,446 | 88,694 |
| Constant currency Net sales growth, % | -4.0% | 30.0% | 15.7% |
| Invoiced sales | |||
| Net sales | 20,577 | 21,634 | 88,694 |
| Discounts and bonuses | 753 | 693 | 3,067 |
| Other sales and refunds | 172 | 116 | -1,209 |
| Invoiced sales | 21,503 | 22,443 | 90,552 |
| Invoiced sales growth, % | -4.2% | 33.5% | 16,3% |
| Gross Margin | |||
| Net sales | 20,577 | 21,634 | 88,694 |
| Cost of sales | -15,675 | -14,871 | -65,490 |
| Gross Margin | 4,902 | 6,763 | 23,204 |
| Gross Margin, % | 23.8% | 31.3% | 26.2% |
| EBITDA | |||
| Operating profit | 1,781 | 1,968 | 9,250 |
| Depreciation, amortisation and impairment | 982 | 976 | 3,976 |
| EBITDA | 2,762 | 2,944 | 13,226 |
| EBITDA margin, % | 13.4% | 13.6% | 14.9% |
| EBITA | |||
| Operating profit | 1,781 | 1,968 | 9,250 |
| Amortisation and impairment | 32 | 31 | 129 |
| EBITA | 1,812 | 1,999 | 9,380 |
| EBITA margin, % | 8.8% | 9.2% | 10.6% |
| Operating profit | |||
| Operating profit | 1,781 | 1,968 | 9,250 |
| Operating profit margin, % | 8.7% | 9.1% | 10.4% |
| Items affecting comparability / adjustments (Gross Margin) | |||
| Other items affecting comparability | - | - | 75 |
| Items affecting comparability / adjustments (Gross Margin) | - | - | 75 |
| Items affecting comparability / adjustments (EBITDA) | |||
| Other items affecting comparability | - | - | 85 |
| Costs related to listing | - | 1,313 | 1,531 |
| Items affecting comparability / adjustments (EBITDA) | - | 1,313 | 1,616 |
| EUR thousand | 1-3/2022 | 1-3/2021 | 1-12/2021 |
|---|---|---|---|
| Adjusted Gross Margin | |||
| Gross Margin | 4,902 | 6,763 | 23,204 |
| Adjustments (Gross Margin) | - | - | 75 |
| Adjusted Gross Margin | 4,902 | 6,763 | 23,279 |
| Adjusted Gross Margin, % | 23.8% | 31.3% | 26.2% |
| Adjusted EBITDA | |||
| Operating profit | 1,781 | 1,968 | 9,250 |
| Depreciation, amortisation and impairment | 982 | 976 | 3,976 |
| Adjustments (EBITDA) | - | 1,313 | 1,616 |
| Adj. EBITDA | 2,762 | 4,257 | 14,842 |
| Adj. EBITDA margin, % | 13.4% | 19.7% | 16.7% |
| Adjusted EBITA | |||
| Operating profit | 1,781 | 1,968 | 9,250 |
| Amortisation and impairment | 32 | 31 | 129 |
| Adjustments (EBITA) | - | 1,313 | 1,616 |
| Adj. EBITA | 1,812 | 3,312 | 10,996 |
| Adj. EBITA margin, % | 8.8% | 15.3% | 12.4% |
| Adjusted operating profit | |||
| Operating profit | 1,781 | 1,968 | 9,250 |
| Adjustments | - | 1,313 | 1,616 |
| Adj. operating profit | 1,781 | 3,281 | 10,867 |
| Adj. operating profit margin, % | 8.7% | 15.2% | 12.3% |
| Earnings per share, basic (and diluted), EUR | |||
| Profit for the period | 1,125 | 1,248 | 6,035 |
| Average number of shares | 17,759 | 16,409 | 17,426 |
| Earnings per share, basic (and diluted), EUR | 0.06 | 0.08 | 0.35 |
| Operating free cash flows | |||
| Adj. EBITDA | 2,762 | 4,257 | 14,842 |
| Investments in tangible and intangible assets | -491 | -1,668 | -4,797 |
| Operating free cash flows | 2,271 | 2,588 | 10,046 |
| Cash conversion, % | |||
| Operating free cash flows | 2,271 | 2,588 | 10,046 |
| Adj. EBITDA | 2,762 | 4,257 | 14,842 |
| Cash conversion, % | 82.2% | 60.8% | 67.7% |
| Net debt | |||
| Total interest-bearing liabilities | 40,004 | 43,798 | 40,220 |
| Cash and cash equivalents | -15,345 | -15,843 | -14,334 |
| Net debt | 24,659 | 27,954 | 25,887 |
| Net debt/ Adj. EBITDA | |||
| Net debt | 24,659 | 27,954 | 25,887 |
| Adj. EBITDA. 12 months | 13,348 | 18,328 | 14,842 |
| Net debt/ Adj. EBITDA | 1.8x | 1.5x | 1.7x |
| EUR thousand | 1-3/2022 | 1-3/2021 | 1-3/2021 |
|---|---|---|---|
| Net working capital | |||
| Inventories | 14,092 | 10,924 | 12,647 |
| Trade and other receivables | 13,782 | 14,608 | 15,528 |
| Trade and other payables | -14,389 | -13,867 | -13,692 |
| Net working capital | 13,484 | 11,665 | 14,482 |
| Capital employed excluding goodwill | |||
| Total Equity | 32,693 | 27,128 | 31,798 |
| Net debt | 24,659 | 27,954 | 25,887 |
| Goodwill | -23,527 | -23,702 | -23,680 |
| Capital employed excluding goodwill | 33,825 | 31,381 | 34,004 |
| Return on capital employed (ROCE), % | |||
| Operating profit | 1,781 | 1,968 | 9,250 |
| Average capital employed excluding goodwill | 33,915 | 31,608 | 32,920 |
| Return on capital employed (ROCE), % | 5.3% | 6.2% | 28.1% |
| Adjusted return on capital employed (ROCE), % | |||
| Adjusted operating profit | 1,781 | 3,281 | 10,867 |
| Average capital employed excluding goodwill | 33,915 | 31,608 | 32,920 |
| Adjusted return on capital employed (ROCE), % | 5.3% | 10.4% | 33.0% |
| Equity ratio, % | |||
| Total Equity | 32,693 | 27,128 | 31,798 |
| Total assets | 89,177 | 87,321 | 88,842 |
| Equity ratio, % | 36.7% | 31.1% | 35.8% |
| Return on equity, % | |||
| Profit for the period | 1,125 | 1,248 | 6,035 |
| Total equity (average for the first and last day of the period) | 32,246 | 22,075 | 24,410 |
| Return on equity, % | 3.5% | 5.7% | 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.
| 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 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: SmartStore, GastroMax and Orthex. In addition, it sells externally produced kitchen products under the Kökskungen 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 bio-based and recycled materials. Orthex aims for its production process to be carbon neutral by 2030.
SmartStore Classic
Orthex Corporation www.investors.orthexgroup.com
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