Orthex Q1: Excellent growth in all product categories and market areas
Orthex Corporation, Stock exchange release, May 11, 2021 at 9.00 a.m. EEST
This release is a summary of Orthex Corporation’s Interim Report January–March 2021. The complete report is attached to this release as a pdf-file. It is also available on Orthex’s website at https://investors.orthexgroup.com/.
January–March 2021 in Brief
- Invoiced sales increased by 33.5% and was EUR 22.4 million (16.8)
- Net sales increased by 32.4% to EUR 21.6 million (16.3)
- Adjusted EBITDA was EUR 4.3 million (3.0) (adjusted for IPO related costs EUR 1.3 million)
- EBITA was EUR 2.0 million (1.9)
- Adjusted EBITA was EUR 3.3 million (1.9)
- Adjusted EBITA margin was 15.3% (11.9)
- Operating profit was EUR 2.0 million (1.9)
- Adjusted operating profit increased by 69.5% to EUR 3.3 million (1.9)
- Net cash flows from operating activities were EUR 3.2 million (2.6)
- Earnings per share, basic was EUR 0.08 (0.05)
- Orthex was listed on Nasdaq Helsinki, and the number of shareholders in Orthex increased to more than 21,400 shareholders after the initial public offering. Trading in Orthex’s shares started on the pre-list of Nasdaq Helsinki Ltd on 25 March 2021 and on the official list on 29 March 2021.
Long-Term Financial Targets
As long-term financial targets the company has adopted to an average annual organic Net sales growth to exceed 5 percent at the Group level and to exceed 10 percent outside the Nordics (growth in local currencies), EBITA margin (adjusted for items affecting comparability) to exceed 18 percent 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 percent of net profit, in total, on a biannual basis.
Orthex does not publish a short-term outlook.
| Key Performance Indicators | ||||
| EUR million | 1–3/2021 | 1–3/2020 | Change | 1–12/2020 |
| Invoiced sales | 22.4 | 16.8 | 33.5% | 77.9 |
| Net sales | 21.6 | 16.3 | 32.4% | 75.9 |
| Gross margin | 6.8 | 4.9 | 38.2% | 24.6 |
| Gross margin, % | 31.3% | 30.0% | 32.4% | |
| EBITDA | 2.9 | 3.0 | -1.3% | 16.5 |
| EBITDA margin, % | 13.6% | 18.3% | 21.7% | |
| Adjusted EBITDA | 4.3 | 3.0 | 42.7% | 17.1 |
| Adjusted EBITDA margin, % | 19.7% | 18.3% | 22.5% | |
| EBITA | 2.0 | 1.9 | 2.6% | 12.3 |
| EBITA margin, % | 9.2% | 11.9% | 16.3% | |
| Adjusted EBITA | 3.3 | 1.9 | 70.0% | 12.9 |
| Adjusted EBITA margin, % | 15.3% | 11.9% | 17.0% | |
| Operating profit | 2.0 | 1.9 | 1.7% | 12.3 |
| Operating profit margin, % | 9.1% | 11.8% | 16.2% | |
| Net cash flows from operating activities | 3.2 | 2.6 | 21.6% | 12.7 |
| Net debt / Adjusted EBITDA | 1.5x | n/a | 2.3x | |
| Adjusted return on capital employed (ROCE), % | 10.4% | 6.2% | 40.3% | |
| Equity ratio, % | 31.1% | 19.3% | 22.6% | |
| Earnings per share, basic (EUR) | 0.08 | 0.05 | 60.4% | 0.47 |
| FTEs | 314 | 277 | 13.4% | 285 |
Alexander Rosenlew, CEO:
I am happy that Orthex’s first quarter as a listed company was particularly strong. Demand for our products was high throughout the period and led to very strong growth both in sales and results on all our key markets. Net sales for the first quarter was up by 32.4% and amounted to EUR 21.6 million compared to EUR 16.3 million in quarter one 2020. Strong growth in many of our European key customers outside the Nordic countries was accomplished by successful roll-out of our products assortment and product innovations. In this area the invoiced sales growth was as high as 42.5%. Overall, all our key product categories performed strongly and our biggest category Storage with the brand SmartStore continued to deliver fast growing sales. Our second largest category Kitchen with the GastroMax brand also performed at a convincing 16.7% growth rate. The smaller categories Home & Yard grew by 31.0% and the Plant Care category fuelled by good growth in flowerpots made of recycled plastic grew by 69.1%.
Our EBITA development was strong. This is due to strong sales growth, the scalability of our business model and our efficiency measures. The adjusted EBITA was EUR 3.3 million compared to EUR 1.9 million in the first quarter of 2020. Tightness of supply of our main raw materials on the market resulted in fast increasing raw material prices towards the end of the quarter. However, the increased price level has not yet had a significant impact on gross margin in the first quarter.
As part of our sustainability strategy we are continuously aiming to reduce our carbon footprint, and this includes increasing the use of recycled and bio-based raw materials. Our innovations performed well during quarter one. Especially the all new stylish series of SmartStore products for recycling and sorting of waste at home called SmartStore Collect should be mentioned as one of the stars of the year so far. We published our yearly sustainability report in April where more details of the development in this important part of our strategy can be read.
During the COVID-19 pandemic, our priority has been to take all necessary precautions to ensure the safety of our employees. COVID-19 has influenced us, some major export customers have been closed due to restrictions and that has limited our amount of sales to these areas for the duration of the store closures. Customer meetings have been harder to organise and in-store activities more challenging to implement. We have seen increased demand in the Nordic countries, probably driven by consumers spending more time at home and less time and money on travelling. We can also see increase in the development of e-commerce activities. Measures to keep our employees safe and our factories operational, have resulted in higher sick absence in production for precautionary reasons. This comes at an increased cost in the form of over-time work and temporary personnel. I am happy that our personnel have not been severely hit by COVID-19 and our safety measures seem to have limited the spreading of the disease in the organisation. I am especially thankful for all the positive efforts shown by our personnel during these unusual and unpredictable circumstances.
Our ambition is to be the best partner for our customers and our highest priority is to ramp up the capacity in the fastest growing areas of the assortment. We have sped up the investment pace in new plastic injection machines, automation, and duplicate moulds. We have already received a total of 3 new injection moulding machines, and there are at least 4 more arriving this year. The increase in capacity investment is about EUR one million more than originally planned for the year. Overall, the start of the year has been positive, but we have to prepare for unpredictable and rising raw material cost level.
Press conference on financial results
Orthex’s CEO Alexander Rosenlew and CFO Saara Mäkelä will present the Interim Report on 11 May 2021 at 11:00 a.m. EEST in a webcast. The webcast can be joined through this link. The webcast presentation will be held in English.
Q&A
Questions to the management can be sent through the meeting chat.
Presentation material
The presentation material will be shared in the online meeting and it can be downloaded the same day on Orthex’s website at: https://investors.orthexgroup.com/.
Recording of the event
After the event a recording will be available on the company’s website https://investors.orthexgroup.com/.
Further enquiries
Alexander Rosenlew, CEO, Orthex Corporation
Tel. +358 (0)40 500 3826
alexander.rosenlew@orthexgroup.com
Saara Mäkelä, CFO, Orthex Corporation
Tel. +358 (0)40 083 8782
saara.makela@orthexgroup.com
Orthex in brief
Orthex is a leading Nordic houseware producer that strives to make consumers’ everyday life easier with its products that are presented under the consumer brands SmartStore™ in storage products, GastroMax™ in kitchenware and Orthex™ in home and plant care categories. Orthex aims to be the industry forerunner in sustainability.
Orthex’s net sales in 2020 was 75.9 million euros and operating profit 12.3 million euros. The company has customers in more than 40 countries and local sales offices in Finland, Sweden, Norway, Denmark, Germany, France, and the United Kingdom. Orthex is listed on the Nasdaq Helsinki stock exchange.