Orion Group Interim Report 1–3/2023
Orion Group Interim Report 1–3/2023
INTERIM REPORT 1–3/2023
27 APRIL 2023 at 12:00 EEST
Orion Group Interim Report 1–3/2023
This is a summary or Orion’s Interim Report 1–3/2022. The complete report is attached to this stock exchange release and is available at https://www.orion.fi/en/investors/reports-and-presentations/
- Net sales totalled EUR 277.9 (1–3/2022: 270.6) million
- Operating profit was EUR 55.5 (71.5) million
- Profit before taxes was EUR 55.1 (72.1) million
- Equity ratio was 56.9% (52.9%)
- Return on capital employed before taxes (ROCE) was 22.0% (35.7%)
- Return on equity after taxes (ROE) was 21.4% (33.1%)
- Basic earnings per share were EUR 0.31 (0.41)
- Cash flow from operating activities per share was EUR 0.03 (0.24)
- Outlook for 2023 is unchanged, but with the addition of a note on the possible transfer of the Orion Pension Fund’s B fund to a pension insurance company. Orion estimates that net sales in 2023 will be slightly higher than in 2022 without the EUR 228 million impact from the ODM-208 upfront payment (net sales in 2022 without the impact of the ODM-208 upfront payment were EUR 1,113 million). Operating profit is estimated to be slightly higher or higher than in 2022 without the EUR 208 million net impact from the ODM-208 upfront payment and without the possible transfer of the insurance portfolio of Orion Pension Fund’s B fund (operating profit in 2022 without the net impact of the ODM-208 upfront payment was EUR 232 million).
|Net sales, EUR million||277.9||270.6||+2.7%||1,340.6|
|EBITDA, EUR million||67.7||83.0||-18.4%||487.1|
|% of net sales||24.4%||30.7%||36.3%|
|Operating profit, EUR million||55.5||71.5||-22.4%||439.6|
|% of net sales||20.0%||26.4%||32.8%|
|Profit before taxes, EUR million||55.1||72.1||-23.6%||440.3|
|% of net sales||19.8%||26.7%||32.8%|
|Profit for the period, EUR million||43.8||57.3||-23.6%||349.5|
|% of net sales||15.8%||21.2%||26.1%|
|Research and development expenses, EUR million||31.7||31.5||+0.6%||133.2|
|% of net sales||11.4%||11.6%||9.9%|
|Capital expenditure, excluding acquired in business combinations, EUR million||18.1||11.1||+62.8%||109.6|
|% of net sales||6.5%||4.1%||8.2%|
|Acquired in business combination, net of cash, EUR million||0.0||82.0|
|Interest-bearing net liabilities, EUR million||110.8||-126.8||-187.4%||-118.7|
|Basic earnings per share, EUR million||0.31||0.41||-23.4%||2.49|
|Cash flow from operating activities per share, EUR||0.03||0.24||-87.9%||3.09|
|Equity ratio, %||56.9%||52.9%||60.9%|
|Return on capital employed (before taxes), %||22.0%||35.7%||45.1%|
|Return on equity (after taxes), %||21.4%||33.1%||42.2%|
|Average personnel during the period||3,546||3,358||+5.6%||3,472|
President and CEO Liisa Hurme:
Nubeqa® becomes Orion’s best-selling product
“In January-March 2023, our net sales increased by 2.7% to EUR 277.9 million and our operating profit decreased by 22.4% to EUR 55.5 million. The operating profit decline from the comparative period was expected, and the year has started largely according to our plans.
The Innovative Medicines business division’s revenue increased significantly thanks to the good performance of Nubeqa®, which topped the list of Orion’s best-selling products for the first time. The net sales of the Branded Products business division, on the other hand, decreased clearly. The Easyhaler® product family continued to grow, but the timing of partner deliveries of Parkinson’s medicines and lower sales of the Divina® series weighed on net sales. In Finland, sales of generics and OTC products increased due to strong volume growth. However, the overall sales of the Generics and Consumer Health division declined due to generic competition and declining prices of Simdax® and dexmedetomidine products for human use, together with the significant contraction of operations in Russia. Net sales of the Animal Health business division include the turnover of the animal health company VMD (Inovet), acquired in June 2022, which explains the strong increase from the comparative period.
The decline in operating profit is explained by lower gross profit and increase in fixed cost. The gross profit was depressed by cost inflation, price declines and product mix. The effect of the contraction of operations in Russia on the gross profit was approximately EUR 7 million negative. The impact of Nubeqa on gross profit was twofold compared to the comparative period. On the one hand, royalties increased significantly, on the other hand Orion supplied Nubeqa to Bayer at a lower price than in the comparative period. The lowered Nubeqa delivery price has only a temporary effect on the timing of Orion’s profits, as it will correspondingly decrease the deductions from future royalties. Operating costs increased as expected. Sales and marketing expenses increased because in the comparative period COVID-19 still limited promotional activities in some areas. In addition, sales and marketing expenses as well as administrative expenses now also include the expenses of the acquired animal health company VMD (Inovet), which were absent in the comparative period.
For the full year, we expect operating profit to be slightly higher or higher than in 2022. This estimate is based on assumptions including continued good performance of Nubeqa, easing of cost inflation in the second half of the year, levelling off of the decline in sales of Simdax and dexmedetomidine products for human use, and a EUR 30 million milestone payment related to the sales of Nubeqa.
Research & development pipeline is progressing according to our strategy. During the review period, we expanded our clinical development programme with our partner Bayer for darolutamide and initiated a new multi-year Phase III ARASTEP study in early-stage prostate cancer. Nubeqa also dominated Orion’s news flow during the period with the approval of the product in Japan, the European Union and China for the treatment of metastatic hormone-sensitive prostate cancer (mHSPC). With our partner MSD, we plan to take the ODM-208 molecule into Phase III by the end of this year. The Phase II study with ODM-208 continues as planned. Our other active clinical phase development projects, namely the Phase III ARANOTE study with darolutamide in collaboration with Bayer and the Phase I study with ODM-111 for pain, have also continued as planned. We look forward to continuing all our R&D projects to develop new treatments for the benefit of patients who need them.”
Possible transfer of pension insurance portfolio to a pension insurance company
Orion is exploring the possibility of transferring the insurance portfolio of the Orion Pension Fund’s B fund to an external pension insurance company at the end of 2023. The transfer would have a one-off impact on profit and cash flow. The magnitude of these impacts would be determined at the time of the transfer, which would be estimated to take place on 31 December 2023.
The impact of the possible transfer on profit or loss will depend in particular on the development of discount rate used when calculating the value of the pension liability during 2023. As an indicative benchmark, the positive impact of the transfer on the result, calculated at current interest rates, would be around EUR 20 million. The profit will increase when discount rate decreases and decrease when discount rate increases.
The cash flow impact of a possible transfer will depend in particular on the return on investment assets during 2023. As an indicative benchmark, based on the investment portfolio at the end of 2022, the cash-flow impact of the transfer would be positive for the company of around EUR 60 million, calculated at current valuation levels.
The objective would be to transfer the portfolio to a pension insurance company by the end of 2023, so the decisive date for the valuation and therefore for the profit and cash flow impact would be 31 December 2023. There is currently no certainty that the transfer will take place.
In view of its one-off nature, administrative nature, uncertainty and valuation linked to the transfer date, the impact of a possible portfolio transfer is not included in Orion’s outlook for 2023, and the outlook continues to be presented without it.
Outlook for 2023
Orion estimates that net sales in 2023 will be slightly higher than in 2022 without the EUR 228 million impact from the ODM-208 upfront payment (net sales in 2022 without the impact of the ODM-208 upfront payment were EUR 1,113 million).
Operating profit is estimated to be slightly higher or higher than in 2022 without the EUR 208 million net impact from the ODM-208 upfront payment and without the possible transfer of the insurance portfolio of Orion Pension Fund’s B fund (operating profit in 2022 without the net impact of the ODM-208 upfront payment was EUR 232 million).
News conference and conference call
A webcast and a conference call for analysts, investors and media representatives will be held on Thursday, 27 April 2023 at 13.30 EEST.
A link to the live webcast is available on Orion’s website at www.orion.fi/en/investors. A recording of the event will be available on the website later the same day.
Confenrence call can be joined by registering through the following link:
Phone numbers and the conference ID to access the conference will be provided after the registration. In case you would like to ask a question during the conference, please dial *5 on your telephone keypad to enter the question queue.
Questions can also be presented in writing through the question form of the webcast.
|Capital Markets Day||Thursday 25 May 2023|
|Half-Year Financial Report January-June 2023||Monday 17 July 2023|
|Interim Report January-September 2023||Thursday 26 October 2023|
Espoo, 27 April 2023
Board of Directors of Orion Corporation
For additional information about the report:
Jari Karlson, CFO tel. +358 50 966 2883
Tuukka Hirvonen, Investor Relations tel. +358 10 426 2721 or +358 50 966 2721
Orion is a globally operating Finnish pharmaceutical company – a builder of well-being. We develop, manufacture and market human and veterinary pharmaceuticals and active pharmaceutical ingredients. Orion has an extensive portfolio of proprietary and generic medicines and self-care products. The core therapy areas of our pharmaceutical R&D are oncology and pain. Proprietary products developed by Orion are used to treat cancer, neurological diseases and respiratory diseases, among others. Orion’s net sales in 2022 amounted to EUR 1,341 million and the company had about 3,500 employees at the end of the year. Orion’s A and B shares are listed on Nasdaq Helsinki.