Oriola Oyj ($ORIOLA)

[Audio Gap] Okay. But maybe we start. As you probably noticed or you noticed when you are in the call, we had a release on Friday, and we sent out some numbers also regarding the changes we have in our reporting. And in the big picture, I would say that with this change, we are striving to show the true nature of the company and our business as a service company with a product assortment. And that, of course, including value-adding logistics and advisory services also in that package. So what we have now done is we have changed our revenue recognition policy. The management has made a judgment on that. And then as an effect of that, we have also looked at our segments. And in relation to that revenue recognition change, we have also changed the segment with a certain logic. What will change? We will -- we have looked at the primarily on the products that we buy into our own stock where we don't really have the full control and the risk, and we will start to recognize those on a net basis. This is how we have already treated the consignment agreements today. And this will now then show more of the value added that we do in Oriola to the products and the customers. And what is not changing, we are not changing the consignment agreements -- treatment of those that we have with the pharmaceutical companies. We already act as an agent to those. So that remains unchanged. For the wholesale, where we buy the products, store them and sell them if they are our own brands or other brands, there, we will have no change either. And it will have no change on the customer contracts. With the new revenue recognition, this is only a group level change. It will affect the group's consolidated financial statements. It will not affect the EBITDA and not the cash generation or the net working capital in the company. Those will be unchanged. On the right-hand side, you see really what is changing. Invoicing is not changing. We are invoicing for our customers, around EUR 4 billion. That will continue to be shown as a KPI. Net sales will be changed. We will not anymore report the sales margin that we have done on a quarterly basis in 2025. EBITDA, as said, no change. Profit for the period, no change. Cash flow will remain with no change. The balance sheet will have an impact for the fact that we will not show the inventory and those -- the inventory will be, so to say, netted with the trade payables on a customer basis. And then there will be a net that will affect the prepayments when they are not totally matching. Equity ratio, the balance sheet will be slightly smaller and will then naturally impact the equity ratio also. If we look at the income statement, you have the arrows on the right-hand side. So you see where it's changing. It's really the net sales. If we look at the 2025 numbers from EUR 9.5 billion -- EUR 1.9 million, now EUR 204.8 million of net sales. EBIT then below that adjusted EBITDA and the KPIs will not change, except, of course, for the percentages that are in relation to net sales. And you also see that the equity ratio improved slightly to 13.1%, which maybe reflects a bit better the risk with the large balance sheet that we have. Here, you can also see the impact on the balance sheet. You see that the inventories go down. And then on the -- and on the other side of the balance sheet, you have the trade payables also go down. And then there are some amounts that are not netted and will stay in the balance sheet, but it will not stay as in inventory. It will be treated as prepayments. So the balance sheet for 2025 goes down from EUR 946.1 million to EUR 778.4 million. Then moving into the segments. Here, we have combined now 2 segments that should reflect quite well the business we are in. We have the services. The main part of our business is our services, and this consists of the distribution of pharmaceuticals, value-adding services and parallel import in the Nordics. This also includes advisory services and commercial data solutions. Then we have the second segment, which is the products actually consists of 2 different things. It's the wholesale of traded goods and over-the-counter products, covering Oriola's owned brands and special licensed medicines in Finland and Sweden. And then we have the dose dispensing business in Finland. Now we are on the -- on the comparison, we also have the dose dispensing business in Sweden that we had in 2024, and we had in the first quarter of 2025 also, so that's included in the numbers. But this is really the products are the products where we have the risk and the responsibility if something happens and full control and sourcing of those products. Then if we look at the details on the -- by segment on the financials, we see that the invoicing remains, the total, as before, no changes just the segment split. And then we see the net sales by services and products, EUR 150.6 million last year in services products, EUR 65.4 million, and then there's a sale between the segments. So EUR 204.8 million, and we have also included below the tables. We have put those dispensing is that we saw in April, the numbers that are included in the tables of those. Adjusted EBITDA adjusting items, no changes. We will start the reporting by reporting the quarter one numbers with this new setup and the new segments and that will be published on the 29th of April. And we start -- our silent period starts now end of March. So if there are any questions after this meeting also, so please revert as soon as possible, and we can have discussions regarding the changes that we have had now. So any questions? Yes, Rauli.

Yes. Maybe the first question is that is there any particular trigger why you are doing the change now in the revenue recognition, this is obviously kind of known issue for years in Oriola and I think a good change as such, but any particular reason for the timing?

I don't -- there's no specific reasoning for the timing. I think it's just that we have been trying to improve our communication and how to see the company and what we are doing and where we are adding value and how we are adding value to that, so I think this is kind of in line with that. There's no specific timing on doing the change as such.

Okay. Okay. Clear. And then did I follow correctly that since you are not anymore booking the inventories, which you anyway have, but they are not kind of in your balance sheet, but the cash flow impact of that will anyway be shown in the working capital, basically, but just in a different way.

Yes. I mean the net of the working capital will be the same, but the parts will, of course, little bit different, yes. And then Jerker you had a...

Just a quick one for me. Could you just quickly elaborate on the invoice between the segments?

Well, there's -- yes, there's -- of course, there's it's just in between the different because you see also that we have -- we do not have too many, but we have different companies in both in the countries and then we have between -- we have the dose business also. There has been transaction going between sourcing and this kind of things. It's no specific topic on that has just been going between the segments. Yes, it's just intercompany eliminations between the segments. Sanna?

Yes. I have a couple of questions. Firstly, regarding kind of the future revenue development. I assume that -- or previously a part of your revenue growth was based on kind of the normal inflation of the pharmaceutical products, if I'm correct. How should we look at this going forward? Is your fee kind of indexed to that inflation or can you elaborate kind of the growth structure going forward?

Yes. Yes, it will. I mean, our pricing is -- we have 2 different types of pricing. One is related to the sales of our customers' sales. So that will continue. And that's actually more than 50% of the kind of impacting the net sales of the new net sales now. So you will see correlation between -- it's not 100%, but it's still there, yes.

All right. Then another question regarding the segments. Just a little bit more color behind the new segment structure. Why is this more durable than the previous one or makes more sense, kind of?

I think that we have been quite well on fitting in now what we actually do as a service because we are not having the risk or the responsibility for the products that we have in the service segment. These are -- this is what we do for the -- we do it from the pharmaceutical companies or we do something for the pharmacies chains in Sweden or we'll do some -- then it's not on our risk what then with the kind of what is in our balance sheet. Then again, with the products is more or less or 100% on our risk, what happens to the dose dispensing on the wholesale that we have with the products and we need to source, we need to sell, and we need to take responsibility if something happens on the -- the financial risk is there, so to say. And still, to one question back when you had that are following -- if you look at the -- if you take out the dose -- the Swedish dose dispensing business from the last year's figures. So on the services, I mean services are growing 11.5% and 3.6% in the products and a total close to 12%. So we are quite close to the numbers that our customers are doing also in that sense. Any other comments or questions. Happy to hear any comments on the change also if you have -- don't have to have questions.

I could take one maybe unrelated to this, but since we're online that considering the recent hike in the fuel prices. And can you comment on what kind of agreement you have in the logistics side and when kind of we should start to see an impact of that in your numbers, assuming that they will stay at the current levels?

Of course, there's -- there is an impact on fuel prices. We have a bit of different contracts. And of course, I mean, usually try to hedge ourselves also in the contracts against a situation like this. But of course, now it's been quite rapid so probably be a small impact at some stage, but we don't see -- I mean, quarter 1 will be safe, but then depending on the length of the crisis, of course, the inflation and the fuel prices will be having impact on us also, we cannot avoid that. Probably not fully kind of yes, put in prices and so on.

Makes sense. Yes. And as a comment I already mentioned the change in the sales recognition makes a lot of sense in my view, but it's unfortunate that the segment reporting kind of has changed again since you have had quite a few reporting changes. So it's a bit that, that will that the earnings track by segment will again kin d of disappear for -- but I see the logic in the new segments, but that's still unfortunate.

Yes, yes. I understand, but we saw this as an opportunity also to be able to explain the development in a better way. Now by these segments. Back to the transportation cost also. So I mean if you look at the transportation cost, we have, so it's not fully like looking at that number and increase that by the fuel cost increases. A lot of the cost in the transportation is -- those are the stops that we do. So it's not only the fuel is a smaller part than the rest of the kind of transportation as such.

If I may continue, I had one question regarding kind of your peers or competitors in the pharmaceutical distribution industry, they are most of them reporting on the gross basis as you used to. So the comparison is harder now. Would you like us to kind of benchmark you more to logistics service companies in the future? Or how do you see that?

I mean, yes, you can say that we have been -- I've been looking into that also quite a lot. And it's actually so that if you take big companies that report have this are in the same business as we are. Most of them have some kind of retail or other businesses where they actually recognize net sales, but they also have a huge portion where they do distribution like we are doing, where we only -- they only show the net -- so it's -- I mean we had a problem to benchmark ourselves in the gross category because other businesses have much higher margins due to the fact that they had pharmacies or some other businesses. Now we are in the net, and we are 100% almost net except for the product segment. And now we are having a hard time to compare ourselves. But we will continue to look into this, what would be a kind of -- because it's a challenge, but it's both ways. It was not easy to compare us in the way we have been reporting so far either because competitors or companies in the business are -- they have a different structure. We have not found any company that are in the same situation as we are only kind of fixed to the distribution. And of course, we will still -- I mean, in the local books, we will still show the old definition, so to say. So in the -- on a company level in Finland and Sweden, we will have the numbers that we have now also. So any other questions? Then we have -- then we will have the quarter one as the next stop. And then we have the Capital Markets Day. So we will -- in both of these, we will have some more discussions on the new policies and also the segments. So if there are any questions, just send in or see even end of April. All right. Thank you very much for your time and see you in April then. Thank you. Bye.