On July 21, 2022 Karo Pharma reported that Interim report half year 1, 2022 (Press release, Karo Pharma, JUL 21, 2022, View Source [SID1234616837])
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· Revenues amounted to SEK 1,965.3 (1,460.9) million. This corresponds to an increase of +35% for the period.
· The organic growth 1 in the period amounted to +6%. The currency effect was +3%, while the acquisitions of the Sylphar group and E45 from Reckitt contributed to growth of 26%.
· EBIT (Operating profit) amounted to SEK 3.8 (159.1) million, corresponding to a decrease of 98%.
· EBITDA 1 (Operating profit before depreciation) amounted to SEK 394.6 (440.4) million, corresponding to a decrease of 10%. Adjusted for non-recurring items in the form of transaction costs, directly related to business acquisitions, of SEK 92.0 million, EBITDA 1 amounted to SEK 486.6 million, corresponding to an increase of 10%.
· The gross margin, calculated as the gross profit in relation to net sales, amounted to 56.6% (58.6%) for the period. The margin was negatively affected by the mix effect from the acquisitions.
· Cash flow from operating activities amounted to SEK 146.2 (172.1) million. Adjusted for non-recurring items in the form of transaction costs, directly related to the business acquisitions, of SEK 92.0 million, the cash flow [] from operating activities amounted to SEK 238.2 million.
· Earnings per share were SEK -0.56 (0.14), before and after dilution.
1 Alternative Key Figures (APM), see notes for further information.
Comment from CEO Christoffer Lorenzen
Karo continues to develop as a company and organization, and is growing at a rapid pace. During the first half of the year, we ran the business in accordance with the goals for 2022 set out in our annual report for 2021. We have integrated acquired businesses, expanded our geographical footprint and increased investments in resources, (digital) skills and brand activations. We have also raised the organic growth rate from Karo’s existing operations.
In the first half of 2022, revenues increased by 35% compared with the previous year, driven by the acquired business Sylphar and the E45 brand. About 15% of sales now come from brand portfolios within so-called digital-first. Organic growth was 6% in a challenging consumer market.
During H1, Karo has continued to demonstrate strength and stability in a fast-moving and volatile business environment: Karo’s delivery capability (service level) is maintained at levels above 98% despite supply chain disruptions that have adversely affected many international companies. Karo’s gross margins, adjusted for the mix effect from the acquisitions, have increased compared to the previous year. This reflects that we have successfully absorbed and acted on cost increases from our suppliers as a result of increased raw material and energy costs. The reduction in reported gross margin is a result of the acquisitions, which have increased logistics costs, more specifically about SEK 100 million in costs related to Amazon’s logistics service, FBA (Fulfillment By Amazon).
H1 noterade även höga aktivitetsnivåer inom förvärvs-transaktioner, vilket resulterade i engångsposter som inte hör till den vanliga verksamheten på strax under 100 MSEK. Dessa kostnader försvårar jämförelsetalen i de rapporterade siffrorna för nyckeltal så som EBITDA och kassaflöde. Efter normalisering växte vår justerade EBITDA med 10%.
Some highlights from H1:
· The acquisition of Sylphar was completed on 13 January. The company has been integrated and a new organization has been established to leverage Sylphar’s entrepreneurial strengths in digital marketing and e-commerce to drive organic growth under an omni-channel strategy for the entire brand portfolio.
· The E45 transaction was completed on April 1st. The takeover of the brand from Reckitt is on schedule with the first commercial markets operating on 1 July (including Spain and South Africa).
· Fully subscribed rights issue of EUR 250 million completed the financing of Karo’s latest acquisition; change of listing location to Nasdaq First North was completed on March 23.
· ESG goals were established in connection with the annual report for 2021 and set a clear and ambitious agenda for Karo’s continued development and promotion of the important sustainability work.
· Karo organization for direct commercial operations established in Spain, which expands Karo’s footprint to yet another "major-5 market" within the EU.
· Continued development of Karo’s commercial organization with increased investments in marketing as well as in e-commerce and digital assets.
· Karo’s organization has continued strong engagement with eNPS figures increasing to 60 in June 2022 (compared to 52 in June 2021).
· As a result of the war in Ukraine, Karo donated painkillers (1.6 million doses of paracetamol and ibuprofen) and sanitary products (Decubal Hand Wash and DAX Alcogel) to meet the specific needs of Ukrainian hospitals and emergency departments. The donations have been made in collaboration with global aid organizations and the Swedish authorities and are proof that Karo’s brand portfolio is relevant for meeting important health care needs.
Thanks to the above efforts, we are now one step closer to fulfilling our promise to create a highly efficient, leading European platform in everyday health!
Christopher Lorenzen
CEO
Significant events after the end of the reporting period
Nothing to report.
Upcoming reports
Year-end report 2022 February 22, 2023
Annual Report 2021 was published on April 12, 2022 and the Annual General Meeting was held on May 31, 2022