Orthex Corporation, Stock exchange release, 15 May 2025 at 9.00 a.m. EEST
Negative consumer sentiment affected sales and profitability
This release is a summary of Orthex Corporation's Interim Report for the period January-March 2025. 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 2025
- Invoiced sales amounted to EUR 21.8 million (22.9)
- Net sales decreased by 4.7% to EUR 21.0 million (22.0)
- Adjusted EBITDA was EUR 2.9 million (3.8)
- Adjusted EBITA was EUR 1.7 million (2.8), representing 8.2% of net sales (12.6)
- Operating profit was EUR 1.7 million (2.8)
- Net cash flows from operating activities were EUR 4.7 million (4.1)
- Net debt / Adjusted EBITDA was 1.2 (1.3)
- Earnings per share, basic was EUR 0.07 (0.09)
The figures in brackets refer to the corresponding period in the previous year unless stated otherwise. The figures are unaudited.
Long-term financial targets
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.
Key figures
| EUR million | 1-3/2025 | 1-3/2024 | Change | 1-12/2024 |
| Invoiced sales | 21.8 | 22.9 | -4.9% | 92.3 |
| Net sales | 21.0 | 22.0 | -4.7% | 89.7 |
| Gross margin | 5.8 | 6.7 | -13.0% | 25.7 |
| Gross margin. % | 27.7% | 30.4% | 28.6% | |
| EBITDA | 2.9 | 3.8 | -23.4% | 14.3 |
| EBITDA margin. % | 14.0% | 17.4% | 15.9% | |
| Adjusted EBITDA | 2.9 | 3.8 | -23.4% | 14.6 |
| Adjusted EBITDA margin. % | 14.0% | 17.4% | 16.3% | |
| EBITA | 1.7 | 2.8 | -37.9% | 9.8 |
| EBITA margin. % | 8.2% | 12.6% | 11.0% | |
| Adjusted EBITA | 1.7 | 2.8 | -37.9% | 10.2 |
| Adjusted EBITA margin. % | 8.2% | 12.6% | 11.4% | |
| Operating profit | 1.7 | 2.8 | -37.8% | 9.8 |
| Operating profit margin. % | 8.2% | 12.5% | 11.0% | |
| Net cash flows from operating activities | 4.7 | 4.1 | 14.6% | 11.8 |
| Net debt / Adjusted EBITDA | 1.2x | 1.3x | 1.4x | |
| Adjusted return on capital employed (ROCE). % | 5.1% | 8.2% | 29.7% | |
| Equity ratio. % | 44.2% | 41.0% | 41.9% | |
| Earnings per share. basic (EUR) | 0.07 | 0.09 | -16.8% | 0.34 |
| FTEs | 283 | 287 | -1.3% | 288 |
Alexander Rosenlew, CEO:
"The first quarter was influenced by uncertainty coming from geopolitical challenges, careful consumer behaviour and strikes in Finland continuing the tough business climate. In the first quarter, Orthex's net sales decreased by 4.7% to 21.0 million euros (22.0) compared to a strong first quarter in 2024. Constant currency net sales decreased by 4.8% to 21.0 million euros (22.0). During the quarter, credit risks continued in some customers, and as a precaution we restricted shipments, which had a negative sales impact especially outside the Nordics. In the Nordics, strikes hit us and the Finnish trade, therefore we missed a week of overall efficient operations and two weeks of goods delivery to Finnish customers.
Invoiced sales for the first quarter in the Nordics decreased by 1.1% to 17.3 million euros (17.5). Invoiced sales in the Rest of Europe decreased by 18.6% compared to the Q1 in the previous year. The set back came from a few customers, with quite specific different issues relating to timing of campaigns, slower sell-out, and limited shipments due to credit risk mitigation.
Storage is the biggest category representing most of the business outside the Nordic countries and the negative sales development in the Rest of Europe is visible in the Storage category's invoiced sales which decreased by 7.0% to 14.5 million euros (15.6) compared to Q1 last year. Sales of Kitchen category decreased by 13.1% to 4.1 million euros (4.7), mostly affected by business and production disruptions in the Nordics. The Home & Garden category sales performed better increasing by 22.8% to 3.2 million euros (2.6) driven by growing flowerpot sales.
Orthex's Q1 profitability decreased with the adjusted EBITA margin at 8.2% (12.6%) and the adjusted EBITA at 1.7 million euros (2.8) compared to the same period last year. The lower sales had the biggest negative effect on the EBITA. Overall fixed costs related to operations and organisation were kept at the last year's level, but that was not enough to protect the profit margins with the decline in sales. The growing geopolitical and macroeconomic challenges resulted in very low consumer confidence across all our markets and influenced our first quarter performance. The outcome is weaker than our ambitions, thus the focus is on sharpening our efforts and improving our result despite the reality we operate in.
Cash flows in the quarter improved to 4.7 million euros (4.1) and the net debt to adjusted EBITDA ratio (leverage) was down at a healthy 1.2 (1.3) at the end of the period. A healthy cash flow and a strong balance sheet give us room to invest in future growth.
The Ambiente fair in Frankfurt in February was one of the commercial highlights of the quarter, the fair facilitated more relevant customer dialogue than ever. During the fair, we launched three significant storage novelties of which the SmartStoreTM Compact Access container was awarded with the "Winner" recognition at the German Design Awards 2025. Thanks to our professional sales teams and excellent stand execution, Orthex stood out as a significant supplier of quality products in Europe. Our increasing presence in Europe was proven by the big interest in our solutions from both our existing and potential new customers. As a quality supplier and category expert, we are dedicated to becoming the number one brand in the storage category in Europe and adapt to the market conditions by increasing our in-store visibility activities, by launching new exciting products and by driving the sales through engaging campaign activation.
Orthex published its Annual and Sustainability Report for the year 2024 in March. Orthex continued its systematic work in all the key areas of sustainability. Our efforts in promoting circular economy, increasing the use of recycled raw materials, and enhancing resource efficiency mark important steps on our road towards carbon neutral production. As a manufacturer of our products, we can ensure an authentic sustainability strategy from start to finish.
The systematic implementation of our growth strategy continues customer by customer and everyone in the organisation is aligned and eager to explore ways to accelerate growth. I want to thank everyone at Orthex and especially the commercial team for perseverance during unfavourable market conditions and strike-related operational inefficiencies and for keeping the eyes on the target to strengthen our position in Europe."
Press conference on financial results:
Orthex's CEO Alexander Rosenlew, CFO Saara Mäkelä and CMSO Hanna Kukkonen will present the report today in a webcast starting at 11.00 a.m. EEST. 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 in the same day on the corporate website at Reports & presentations - Orthex Group.
Recording of the event:
After the event, a recording will be available on the corporate website at Reports & presentations - Orthex Group.
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
Distribution:
Nasdaq Helsinki Ltd
Main media
https:/investors.orthexgroup.com/
Orthex in brief
Orthex (ORTHEX, Nasdaq Helsinki, Finland) is a leading Nordic houseware company. Orthex offers a broad assortment of practical and durable household products with a mission to make consumers' everyday life easier. Orthex main consumer brands are SmartStore in storage products, GastroMax in kitchenware and Orthex in home and garden products. Orthex aims to be the industry forerunner in sustainability by offering safe and long-lasting products and reducing its carbon footprint by increasing the share of recycled and renewable raw materials. Read more www.orthexgroup.com.
Orthex's net sales in 2024 were 89.7 million euros. The company has customers in more than 40 countries and local sales organisations in the Nordics, Germany, France, the UK, and the Benelux.
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