Good morning, everyone, and a warm welcome to Oriola's Q2 audiocast. I am Tua Stenius-Örnhjelm from Oriola's Investor Relations.

With me today, I have our CEO, Katarina Gabrielson, and CFO, Mats Danielsson. We'll start with Katarina's presentation, followed by Mats' financial review.

After the presentation, we open up for your questions. As a kind reminder, in the Q&A, we will 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. Finally, please note that we are recording this audiocast, and the recording will be available on our website later today.

Before handing over to Katarina, here is the disclaimer that we all should be aware of. Now, without further ado, Katarina, please go ahead.

Thank you, Tuula, and welcome also on my behalf, and good morning. In Oriola, we could see a positive sales development in the wholesale business in Finland during the second quarter.

This is a development that we have seen since the end of last year, I'm really pleased to see that it has continued also in the second quarter. Also the volumes in the specialty flows has been remaining on high levels.

In the specialty flows, we see, for example, vaccine and export volumes going from Sweden as well as in Finland. We could also see that the demand for Oriola's pharmaceutical distribution services was somewhat weaker than anticipated during the second quarter.

The profitability landed on last year's level despite that we had higher freight costs driven by increase fuel prices. We have taken measures during the quarter to mitigate the impact more effectively going forward, especially when it comes to the fuel prices.

In quarter two, the net sales was growing by 1.7% and landed on €51.8 million, and adjusted EBITDA was €8.1 million, which was in line with last year's level. In the supply chain, I'm pleased to see that the operations remain stable, and we have made important improvements during the quarter that will make effects also positive effects going into the second half of the year.

One example is that we have moved the vaccine distribution for the northern Sweden from Gothenburg area to the Stockholm area, which means that we can take down the air freights and go with road transportation instead. That will ease up our costs and will also be positive for environmental footprint.

Kronans Apotek delivered a quarter of revenue growth as well as profitability has improved. This has been based on the execution of the short-term actions that we talked about earlier this year, and also in the CMD.

Kronans will now continue to execute on the commercial and operational improvement to further strengthen the profitability. In Oriola, we are continuing to replanning our ERP program, and we are taking into the learnings that we made with the first deployment in Sweden.

We are in the design phase for the second deployment, and that's ongoing, and we'll continue more on this further when it's ready to be commented. If we then look at operating environment, our market share was stable both in Finland and Sweden.

We could see that in the second quarter, the value of the pharmaceutical distribution market was growing in Sweden with around 10%, while the growth in Finland remained quite flat. We are affected by the geopolitical development that we can see during the quarter has continued to contribute to uncertain operating environments.

One example is the higher freight fuel prices that I already have mentioned, but there is also some inflationary pressure. Like I said before, when it's coming to the fuel prices, we are taking actions to mitigate the high fuel prices.

The pharmaceutical companies is also continuing to building inventories in both Sweden and Finland, and that is to ensure then the availability in both markets, which is benefiting us positively since we have higher volumes to expect for the future. In the advisory services, it's continued to be cautious customers, and we can see that in their decision-making.

There is longer lead times, and there is also take more time then to get the contract and the new engagements signed with customers in this area. This is mainly based on what happened in the US and how the product is then coming to Europe.

The consumer confidence indicator is weak in Finland as well as in Sweden. We could see some improvements during the end of the quarter.

Like I've said before also in these sessions, this is affecting mainly the traded goods, and especially the traded goods and over-the-counter products, since this is the out-of-pocket spend from the customers in the pharmacies. It's also so that there will changes then from more expensive products to lower priced products.

If we then look at our segments, the service segments has a decline in the net sales with 2%. The decline is due to the weaker quarter, especially in the pharmaceutical distribution in Sweden, but also in advisory services.

If we look at the pharmaceutical distribution part in Sweden, we are continued to see that the weight-loss products has increased in volumes. The increase here is based on that it's going to be parallel imported products in Sweden.

We are less strong in this customer portfolio, which is affecting the volumes in the distribution area in Sweden. The volumes in the specialty flows, such as vaccine, exports, and animal health, remained high level for Oriola.

That is something we have seen for a while now, and we are expecting that will continue for the future. In advisory services, We have taken restructuring measures based on the longer lead time with the contracts, and we have also by that implemented to reduce the personnel costs, which will be positive for the second half.

The adjusted EBITDA decreased in this segment to €9 million, and the main reason for the decline was the high freight costs. Then going to the product segment.

In this segment, the net sales was growing by 11% and landed on €16.9 million. The growth was supported by both the wholesale and the dose dispensing business in Finland.

We could see that the positive development in the wholesale business, like I mentioned before, has continued, and it's supported by the growth both in the e-commerce as well as the retailers and in the pharmacy channels. The renewal of our own brands that we have talked about earlier during the year has progressed, and we can see that the renewal of the brands what we have done is now growing with in some areas with double digits.

We can also see new listings that will contribute more in the second half of the year. The sales of the specialises medicines were also strong during the quarter, and we have succeeded in capturing market opportunities in this area, which is something we will continue to strive for.

The adjusted EBITDA was €1 million, and that's a small decline compared to last year, and that is mainly due to higher operating expenses. Let's now go more into the financial figures, and Mats will do presentation on that, please, Mats.

Thank you, Katarina, and welcome also from from my side. I will start from from from the invoicing and and net sales, and and and this quarter was a bit softer than than quarter one.

If we we start by looking at the at the invoicing for the for the quarter, of course, the the main part of the invoicing is coming from the from the service segment, where we had a we had a low low volume growth in in in the segment. Still, invoicing grew by 5.3%.

If we then look at at net sales, with we had a growth of 1.7%, the low net sales growth is is direct directly linked to the to the volume growth in the in the service segment. Service segment is about 70% of of of net sales, and I I will come back to that a bit more in the in the ser- service services segment.

If we look at the year-to-date numbers, pretty much the same development as as in quarter one. If we eliminate for the Swedish dose dispensing business year-to-date, we had a we have had a net sales growth of 3.5%.

Bit better in the in the first quarter and now a bit softer in the in the second quarter. Looking at the EBITDA, we had we stayed at the same level in in in in the quarter as in in in '25, EBITDA margin 15.6% compared to 15.8%.

Adjusting items a bit lower than than than than last year. This is mainly due to the fact that we have been We are more in a planning planning phase than execution right now, and and and and we have had used less consultants during the during the during the quarter.

EBITDA year-to-date is slightly higher, and and the EBITDA margin also, 15.5% compared to 15.3%. In general, if we look at the the the quarter two EBITDA staying flat, it of course, it's the it's the volume growth that is lacking, and and and and that gives a don't give us the opportunity to to to to grow profitability.

Then we had some headwind in the in the advisory, especially in or or both in the full H1. Then we have the Like Katarina mentioned, we have some freight extra freight costs at the at the latter part of quarter two.

Then we have a we have more some more cost and and pass and and not good enough pass-through margin on in the product segment, and that affected the the profitability to to stay at the same level. Then if we move into the services segment, here the the we had a low volume growth, and as Katarina said, we had the growth was mainly coming from from from, for example, vaccines and and export.

The invoicing growing 5.2%, and 6.8% year-to-date. Then if we look at the the net sales, this volume volume growth is is directly impacting then the net sales due to the fact that we have a especially on the growing categories, the there was a transaction-related pricing, and that that means that the the regardless of the the price increases, we get we get paid by by by the transaction volume.

Then we have a headwind in in the advisory that gives a small decline in the in the net sales, and and that compared to the to the to the growth still in the invoicing. Year-to-date, 0.7% growth in net sales.

If we then look at the adjusted EBITDA, like Katarina said, we have the freight cost now hitting us as a as a delay in in in quarter in quarter two. We also have the the low net sales and and the and the volume growth that is affecting the the EBITDA.

Then we have the slowness in in the advisory business. A slight decrease in in in profitability both in the quarter and and and and year-to-date.

In the product segment, we have a good development that continued from from quarter one if we If we adjust for the for the Swedish dose dispensing business, we have a 11% growth in in quarter two, but also with the correction, it's it's around 11% year-to-date. If we look at adjusted EBITDA for the quarter, it was bit small disappointment not reaching reaching the level of last year, some more cost, operating expenses, some freight, and and then the pass-through margin was a bit lower than than than we had ex- expected.

Still, year-to-date, we are well ahead of of 2025 both in euros and in in the EBITDA percentage that is 9.7% compared to 6.9%. Then if we look at the bridge for the for the net profit, we have improved the net profit.

A few just a few highlights on that. As said before, we had some less adjusting adjusting items this year compared to last year, the EBITDA was higher.

Another thing is that last year we had a write-down on on the Swedish dose dispensing business that hit the depreciations. Then of course, Kronans had a better first half-year than last year.

That ends gives us a a a loss of -€3.2 million compared to €11 million last year, which is a clear improvement. Then we look at the cash flow.

Few few comments on on the cash flow. We have the change in the working capital is a is -35.2.

Here we have a few things that that that that have happened. We have decreased one of the factoring customers in Sweden.

We are have been using factoring for retail pharmaceutical retail chains, pharmacy retail chains, and we have now taken out one one customer from that, with which has had an impact that is roughly one third of of this -35. Then from the customer mix in the on on the in the in the invoicing growth, we have had some impact on on on on on also on the on the change.

The main main point here is that this is a kind of a normal normal volatility. We still have invoicing of more than €300 million each month, there's small small and and very large payments, this will always fluctuate a bit.

Then another point here is the are the investments, €7.6 million. This consists of the of the Järvenpää land area, and then some automation in Enköping that we have also talked about earlier.

If we look at the net debt, -€35 million. If we compare this to the last year, with the without the sold receivables, we would be at the same level as as we were last year, no no big change.

Then the financial position, we have no no big changes in in in in in in gearing or equity ratio. Gearing as compared to last quarter is a bit is a bit lower due to the to the to the cash flow, but compared to last year, we are at the quite the same level.

Then if I look at at Kronans, Kronans had a had a very good quarter. Net sales in local currency grew by 5.3%.

Kronans had some really successful activities in the pharmacies. They have had a good cost control.

If you look at the adjusted EBIT, we are we have a we have a now an improvement of of more than €4 million for from last the quarter last year, and and also, even though we had a quite Kronans had a quite bad bad quarter first quarter, we are now ahead of in the adjusted EBIT compared to last year. Then if we look at the outlook, we still we keep the same outlook as before.

We expect the adjusted EBITDA to increase from the previous year, and and this is very much related that we believe in the in a in a in a in a growing market, and and and then the strategy execution and the actions that we have have related to that. That was my part.

Thank you.

Thank you, Mats. If we go then for the key takeaways before we go to the questions, we will continue with the net sales growth, like Mats mentioned here, in the product segments.

We can also see that the volumes in our specialty flows remained at a high level. That is something that has been done during the quarter two and specifically.

Also going forward, we believe in this. The supply chain during quarter two remained stable despite operating environment uncertainties that we can see and also some higher costs.

In the second half, the net sales growth and efficiency improvements is expected to continue. One of our key priorities is the cost discipline, both to get the cost to the customers as well as looking at all the costs that we can work on in Oriola itself.

That's the key takeaways for the quarter, and now we open up for questions. Great.

Thank you, Katarina and Mats, for your presentations. As a reminder, please use the chat to send in your questions.

In the Q&A, we will first focus on the questions relating to Oriola's business and financial development, and then take the questions about the joint venture. We already have quite a few questions in the chat, and I will do my best to group those questions that are relating to the same topic.

Let's start with the first questions that we have received. There are a few questions relating to the ERP program.

Could you estimate what is the remaining amount of ERP costs to be booked as one-time costs? Has the original amount of ERP costs changed, and if yes, how much?

Like Katarina mentioned in the beginning, we have now been, and I noted that also, that we have taken the learnings from the release one, and now we have during the first and the second, mainly the second quarter, we are now planning and designing the release two. That, of course, will have some impact, but we don't have any numbers to rely on yet, we have to come back on later.

Okay. Relating to the cost, do you want to comment anything about how the costs will be divided between H2 '26 and the years '27, '28?

That is very much dependent on the planning and the details that we are doing right now.

Okay. Then, okay, there are two other questions relating to the ERP costs, but maybe we take this one, that, you have booked €6 million costs for H2 H1, sorry, for the ERP project.

Is the level expected to be similar for H2?

The level might be close to that, but the details are to be still developed, so.

Okay. Then, have the findings from the first deployment of ERP in Sweden caused any costs?

I will say like this, the findings, It's the learnings we are taking from the findings now. We should also remember that we're infrastructure critical, we need to when we're going to the next phases, we need to be able to deliver on that once.

Findings and how do we then both look at the costs, of course, going forward, but how can we also make sure that we make a secure deployment when we go to the next releases?

Okay. Thanks.

I think those were all the questions relating to the ERP that we had, let's continue with the other ones. In addition to the buyback program, Oriola has paid for €0.4 million when purchasing own shares.

Could you describe more in detail what kind of payments these have been, relating to what purchases?

These are mainly related to the incentive programs, and also for the board compensations that we pay, those are the items.

Good. Thank you.

Then there's a question relating to the cash position. You continue to run a sizeable cash position while paying meaningful financial costs.

When are you planning to optimize this to decrease the financial costs?

We still have quite the volatility in the cash balance, and that is something that we work on all the time. It's a bit dependent on things that we cannot affect, and therefore, at the end of the month, it looks quite different than during the middle of the month.

We are working on this, and like I said, we have now discontinued with one customer the factoring program also to take the interest costs down.

Okay. Then questions relating to the free cash flow.

Free cash flow was -€35 million in H1, driven by the working capital swing, and you cite fewer factoring program customers as one driver. First, is the reduction in factoring participation structural or temporary?

Should we expect sold receivables to recover toward the €120 million level or stabilize lower?

This is a structural. It's not a temporary.

We have reduced one. Then of course, we had €120 million in quarter one, end of quarter one.

Now it of course depends on the sales to the chains, how much we sell, but now with the current level, we are lower than that.

Okay.

Even would have remained with this customer also, it would have been higher.

Okay. A follow-up question.

Does the H1 outcome change the 80% to 100% cash conversion target you presented at the Capital Markets Day, or do you still expect that range for the full year 2026?

We still believe in the full year. Let's say that the working capital and the free cash flow in a quarter is maybe not reflecting.

We have big swings between the months also, we still believe in a very good cash flow. We believe in stronger growth and a better cash conversion and cash flow.

Okay. Then there are two questions that are relating to the freight costs.

It looks like clients are good at pricing as invoicing goes up. Transportation costs have been going up for 5 months due to the war.

It should not be a surprise. Also do you see freight cost headwind existing into H2, or have you been able to compensate by higher prices?

I would say that, no, I agree. It's not a surprise.

We also have some contractual parts that is meaning what we can do with our customers in this aspect. Going forward, we have mitigated the freight costs as much as we can, and I will not see that it's going to be as a surprise as we have had or on these levels as we have had now.

We are mitigating most of it going forward.

We actually knew from the beginning that there will be a small delay due to the fact that the contracts are set up in a certain manner, so.

Okay. Good.

Then there's a question relating to advisory services. You mentioned longer sales cycles and cautious decision-making within advisory services.

What concrete signs are you seeing that demand may normalize during the second half of the year, and what commercial actions are you taking to accelerate the growth?

You can say that, of course, when there's longer lead times, it's also so that for the second half, we will benefit from that the parts that has been longer will now also then go into decision. That is something that is an upside for the second half.

That's the same as with the freight price to some extent. There is a delay in the beginning, and then it's normalizing.

That's what we can see also in the decision-making parts. There is some tenders now up for decisions.

What we do overall is, of course, to be more active together with the customers to try to persuade them to come to us. We have seen, in fact, also during the quarter some more Nordic contracts coming to us, but we also need the bigger ones in our portfolio.

That's where we normally see that the more delay. There is some new customers also in advice from.

Good. Then there is a question relating to the guidance.

What are the main drivers for H2 in order to reach your higher adjusted EBITDA guidance for the year?

We strongly believe in the market growth. We have a good growth in the specialty flows and have had it during the beginning of the first half-year, for example, vaccine distribution.

We know that we have a more efficient supply chain for some of the flows also now for the latter part of the year. We believe also in the sale of the value-added services that we do, and the advisory services, of course, catching up.

On the other hand, we also focus a lot on the cost side, and that's a priority that we work on all the time, and are trying to improve in all areas with the cost. That gives a basis for the full-year outlook also.

Great. Then there's a question relating to employees.

The number of employees has decreased in Sweden and Denmark, but gone up in Finland. Why is this?

If we look at Denmark and Sweden, it's mainly based on the restructuring of advisory. Denmark is even fully advisory with what we have there.

Going up in Finland is to some extent also based on the Skyway program, where we have also backfilled a little bit, and we have done it a little bit more in Finland than we have done in Sweden.

Okay. Just to be clear, the Skyway is related to the ERP program.

It's an internal term.

Thank you, Tuula.

No worries. Just a reminder that please send any questions that you have to us through the chat.

Now they are two questions that are relating to the joint venture. It looks that the measures in Kronans are improving its profitability.

When do the measures presented in CMD concerning Oriola improve its profitability? Is Oriola still on the road to achieve its financial target?

It was more on Oriola, this one.

I would say yes, absolutely. Even if we have a little bit softer quarter two compared to maybe the expectations, we are absolutely there.

We should also remember that we are now on par with last year, and normally we also have a much stronger second half of the year, so that's absolutely something that is going in the right direction here.

Okay. Then, this would be for the time now the last question.

There was an intergroup change in the ownership of shares within other shareowner of joint venture during the spring. Does Oriola see that the commitment of other shareholder is on the same level as before, despite the structural change in ownership?

The short answer on this is yes. What they have done is to make change in the group composition, and they have assured us, and I can't see any changes in their engagements in the joint venture.

Yes.

Good. All right.

Now it looks like there are no more questions in the chat. I would like to thank everyone for joining us us today.

If you have any follow-up questions, please don't hesitate to be in contact with us. Enjoy everyone the summer, and have a good weekend.

Thank you.