Oriola Oyj

Good morning everyone and a warm welcome to Aureola's full year results audio cast. I am Tua Stenius-Örnjön from Aureola's Investor Relations. With me today I have our CEO Katarina Gabrielsson and CFO Mats Danielsson. We have now moved to Audiocast, but the setup will be the same as before. After the presentation, we open up for your questions. And as a kind reminder, in the Q&A, we will first focus on questions relating to Oriola's business and financial performance. Like always, you can start posting questions to us already during the presentation through the chat. And finally, please note that we are recording this audio cast and the recording will be available on our website later today. And before handing over to Katariina, here is our customary disclaimer that we all should be aware of. And now, without further ado, Katariina, please go ahead.

Thank you, Tuva. Also welcome on my behalf. The agenda is fairly as it normally is so we will start now to look at what the 2025 years highlights. During 2025 we delivered a steady progress and the second half was particularly strong and that of course is also good for the future. We can see that we have worked a lot with our customers during the year, and that has resulted in a higher customer satisfaction. While doing this, we have strengthened the partnerships. We are also onboarding new customers that we have already talked about during the 2025. And we have also worked more across the markets with our portfolios. And also worked more with the value-adding services, so not only moving products. And value-adding service is for example when we have excess stock, and that means that we are then having extra stock for our pharmaceutical companies in our warehouses, but get paid for that. We can see that we have a stronger supply chain also. So in combination with the customer focus, we have increased, have higher higher efficiency sorry efficiency in our all our warehouses across all sites this has of course given an effect in the costs and efficiency and that means that we have like had a possibility to have a higher touch filling ratio and in combination with higher volumes for example in the vaccine side this is of course giving a positive effect in oreola This means that the net sales increased by 14%. We have also higher sales margin and we have improved the adjusted EBITDA that was growing to 35.1 million euros. That is then exceeding the previous year's level. The ERP project we have commented quite much during the year and we have now done the first deployments in Sweden that's completed in the end of the last year. We are now continuing with planning the second part of the ERP project that is also then planned to go live in Sweden. In the joint venture company Kronan Apotek, we have completed the integration. There has also been a start of a lot of new activities. For example, network adjustments. We are looking at private label parts, how we should work with that for the future. Kronas has also defined its long-term commercial strategy. There is still some way to go to the market level, like we talked about before, that we are expecting Kronas to be at, but we are on the way and we'll continue on that pace. Then looking at our operating environment, like last time we talked about this, there is no major changes in operating environments. We can see that the value of the pharmaceutical distribution market is continuing to grow in both countries. It's a little bit higher in Sweden and more modest in Finland, but it's still growing. And also the customer satisfaction is on the lower levels that we've also touched upon earlier during 2025. If we then go to our segments, and let's start again with the distribution segments, that is then how we distribute, how we then take pharmaceuticals and distribute them from the pharmaceutical companies as a customer to the pharmacies and hospitals, etc. In this segment, the net sales was growing with 11%. We can see that the growth came from both existing portfolio, but also new customers that we also touched upon earlier in 2025. We have an increase in the value adding services that I touched earlier in this presentation, and we can also really see that the vaccines has been growing a lot, especially in Sweden with 20%. In Finland, the dose dispensing business has performed very well, and this has also given efficiency initiatives that we have then talked about here earlier, who is then also good for the distribution segments. All in all, digested EBITDA increased to 8.8 million euros compared to 8.1 million euros last year. Like I said in the beginning of this presentation, we have worked a lot on the customer centricity and customer relationship. We have had all time high in Net Promoter Score, which is the way that we are then measuring our satisfaction with the customers. And how we have done it is very much to be in closer dialogue with our customers. And we have also really shown that we are an active partner to our customers. We are doing this when we're trying to understand the whole value chain. And you will hear a little bit more about that when we come to the C&D later this spring, how we do this. So we are trying then to integrate the service offering that we do and also the strong market support. one thing that we really do is to try to reduce the complexity to our customer. Because we believe that if we have a profitable and successful customer, then we will also be successful in there. And when we go down to the wholesale segment, that is when the pharmacist is buying things from us, but also as well, pharmaceutical companies buying services from us. We are also working in the customer side on this one. So in the same ways we do in the distribution segment, we are doing it in the wholesale segment. Work in close connection together with the customers, try to get them to be successful, because then we will also be successful. And this has also in this segment given higher MPS results than promoters score results. So also on this side, we are on a higher level than we have been in a lot of years. We have developed the capabilities to service also in this one cross market. And also we can see that we have, for example, started to deliver full pallets delivery in Sweden to the e-com players, which is important for them when they should deliver to their customers. In advisory, we have worked a lot with the digital parts. We have mentioned that before also during the year. For example, in the AI part, where we have AI driven tools to enhance services, including commercial data and also medical information. In the wholesale segment the net sales has been growing with 26% and the growth was driven then by the wholesale business in Sweden as well as in Finland. In Sweden it's a lot about the parallel import as it has been also earlier in 2025 and especially in the weight loss medicines. In Finland the strong sales was particularly coming from the veterinarians and special licensed medicines. In advisory, like I said here before, data services and so on. All in all, the adjusted EBITDA was 2.8 million euros, a little bit better than last year, and still there is some things to be done with this segment to get the profitability to the level where we want it to be. In the beginning of this year we also announced that we are then going to have a state-of-the-art distribution center in Järvenpää. And that's a modernization of the Finnish operation that we today have in Manka. We are doing this based on the market requirements that we see and also to be able to continue our growth for the future and improve our profitability. This distribution center is highly automated logistics center that supports the growth ambitions that we have and also helps us to reach our financial targets for the future. It will also strengthen our competitiveness long term. It's financed through lease arrangements and that means that we will have efficient use of capital and also a low upfront costs in this project. distribution center strengthens our logistic capabilities in response to the growth of pharmaceutical markets we're also looking at the products that our customers is then you know like having their in their pipeline and also of course e-commerce expansion etc And this means that you see here in the slide that the pallet storages, for example, is on the ambient side growing with 30%. And also the cold storage capacity is growing with 80% compared to today. And if I could take the cold storage, for example, as an example, it's so that if we look at the product mix that we get from the pharmaceutical side, this is the area that is growing most. So this is a response to that, what happens on the market. The pallet storage will be over 20,000 pallets and the pallet storage will be safeguarded by oxygen reduction system, which eliminates the risk of ignition. And this will constitute the largest low oxygen fire prevention system in Finland. So it's really like a modern automation center that we then build. The Järvenpäs Center is also supporting our sustainability ambition and will strengthen our position as part of Finland's critical healthcare infrastructure and will ensure reliable pharmaceutical distribution for society. The building is planned to be constructed to bring excellent level standards, utilize some geothermal energy, solar panels, and also sustainable materials. It will be 50% more energy efficient and reduce our scope one and two carbon dioxide emission in Finland. So it's not only for the efficiency, it's also for the environmental part that we are doing this. With this said, I will leave now the word to Mats to go through the financial review.

Thank you, Katariina. We will start from the top line and look at invoicing and net sales. If you look at this year, the growth, or 2025, the growth from invoicing and net sales have been driven both by the distribution and wholesale segment. If you look on the left hand on the picture, we see the quarter four, 2024 and 2025. we had actually a fairly good end of last of 2024 also so we made really good numbers we had some vat changes in finland and regular other regulatory regulatory changes that impacted the 24 numbers and we managed even though we managed now to grow 13 the the invoicing and 14% the net sales. So we are very happy with this achievement. If we look at the full year numbers, we grew 11% on invoicing and 13% on net sales. Then if you look at move into the sales margin, looking back at the whole year 2025, we have had a steady growth in all quarters, growing the sales margin, which is really important to us. Year to date, we have an improvement of 7 million euro. This is coming both from the distribution and the wholesale segment. Then we move into EBITDA. And if we look at quarter four, both segments were improving, growing from 9.4 to 9.9 million. We have had more adjusting items this year compared to last year. That's mainly the ERP project that is driving the cost. So we have a lower reported EBITDA compared to last year. declining from 7 to 5.8 million. If we look at the full year, mainly distribution driven improvement from 33.4 to 35.1. Here we can also see that the reported EBITDA is lower due to the ERP project cost. It's 9.6 million this year and 5.9 last year. So a heavy burden from the project. now in in in 25. then if we move into the segments uh the distribution segment had had a good year steady 11 growth in in invoicing uh both in the in the quarter and year to date uh and like katarina said this this growth is coming both from existing and new customers uh we have had a lot of value-added services, we have had higher vaccine volumes in Sweden, and in general, a good market growth, especially in Sweden. And if you look at the adjusted EBITDA, we can see that there was an increase from 8.1 to 8.8 million in the fourth quarter, and if you look at the year-to-date numbers, It's a five million euro growth in EVTA supported by both growth and then an increased sales margin. The wholesale segment had an especially a good traction in port to four both in finland and sweden growing in excess by 26 percent in sweden it was the parallel import with and and mainly the weight loss medicines in finland we had a good development in veterinarians and special licensed medicines Also, the year-to-day growth was good with the 9% increase. If we look at the adjusted EBITDA, this was actually the first quarter for the year where we improved the EBITDA in the wholesale segment from 2.7 million to 2.8. However, the full year is a bit lower. It's 2.2 million lower than last year. uh if we then look at the net profit uh there there's three main factors affecting the the lower net profit it's it's the erp cost project cost it's the the the svensk boost impairment that we had earlier in in the year and then the impairment related to Krunasaputek and the result from Krunasaputek in quarter four and if you look at the waterfall we can see that there's the EBITDA unadjusted is lower than last year we can see also that the depreciation amortization and impairments we see a higher number of 17.7 million including the 5.7 from the dues and then we see that Kronan's share of results in joint ventures, which is minus 22.8 million. That leads us to a net profit of minus 27.2 million. Then we look at the cash flow. We have had a good cash flow compared to last year. The EBITDA, of course, as said earlier, was lower due to to the reasoning earlier ERP cost the big part here affecting then we have the change in working capital we have a negative working capital so with the growth we should be able to increase the cash flow through the working capital and that we can see here also now that we are improving from compared to last year And we have a free cash flow of 58.4 million compared to 43.4 million last year, full year. If you look at the net debt, we have had a good cash flow and debt is minus 82 million. We have a cash and cash equivalents of 152 million compared to 113.5 on that side. Then if we look at the financial position, we have as the gearing percentage, of course, due to the good cash flow is minus 81. Then we see the equity ratio going down to 10.8% and that's due to the fact that we have the mainly due to the fact that we have now in the quarter Kroonans and earlier this year we have had a lot of costs with the ERP affecting the net result. Then if we move into Kroonans Apotheek, of course for us a disappointing result, but there are Also good things, KRUNAS have completed the integration. They are now working in one system, having one company, and that's, of course, a good start for 2026. We can see on the left side in the quarter the EBIT, including the impairment, the result is minus 39.3 million, on the same level as last year, and the year-to-date EBIT is minus 45. If we look at the adjusted EBIT, which is adjusted with the integration cost only, showing minus 6.4 million compared to minus 5.1. So this is not comparable to the adjustments that we do in the group of Oriola. So there's kind of a bit of a different definition definition on what is adjusted here in this number. The underlying business is doing better than the adjusted EBIT. The outlook We repeat what we said last year that we expect the adjusted EBITDA to increase from 2025. This is based on the growth journey. It's dependent on the efficiency initiatives that we have taken and will give result already this year. And then in general, the strategy execution that is underway. Then as we communicated in the beginning of January, we will go through, review our long-term plan, our financial targets and capital allocation framework, plus our dividend policy and communicate all those later. We have a capital markets day planned for in May. So we hope you to save the 12th of May in your calendars to be able to attend this event.