Typical Oriola. The further down the lines you read, the more negative numbers start appearing, and then you’d need some kind of accounting degree to understand if the result is good or bad.
Tried to make sense of the adjustment items, but even there, inconsistencies immediately caught a layman’s eye:
Other adjustment items in the text: 1.2+0.3, i.e., a total of 1.5 MEUR in expenses, but the table only shows 0.9. I can only assume that 0.6 was a positive balance carried over from previous quarters.
Otherwise, I’m starting to see red again because of these expenses. A logistics study for over a million? Quite a consulting project! ERPs for 1.7 Million. So, the meager profit they manage to squeeze out, they spend on a project spending spree, which will hopefully someday lead to better profitability. Waiting for that…
The only good thing is that the valuation isn’t dizzying. And still, if only things could be made a little more profitable, there would be plenty of upside potential. I’ve just lost a bit of faith myself.
EDIT: another good thing is that the mentions of the pharmacy joint venture seemed positive. Integration almost complete, sales grew, and market share remained stable.
Rauli has already commented on Oriola’s Q3 results.
Oriola’s result improved slightly more than we expected, both in its own operations and in the joint venture Kronans. The full-year guidance for improving adjusted operating profit was reiterated as expected, and after nine months, the company is 1 MEUR ahead of the comparison period. The result brings slight upward pressure to our forecasts.
Rauli already got to interview Oriola’s CEO Katarina Gabrielson.
Topics:
00:00 Introduction
00:11 Q3 development
00:36 Distribution segment brought profit improvement
01:22 Swedish market is growing
01:43 Wholesale segment saw growth without profit improvement
02:35 Investments
02:54 Joint venture better this time
03:56 Entry of an activist investor
04:35 Free cash flow has been volatile
05:29 Guidance remained unchanged
Now I’m worried because it was mentioned that “The renewal of the distribution center and the IT system update are significant projects for Oriola”. The previous IT system update was botched really badly, hopefully something was learned from it, or it might just be a faint memory now.
Here are Rauli’s comments regarding Oriola preparing for a new distribution center.
Oriola announced yesterday that it would initiate change negotiations with the entire staff of its Espoo office regarding the construction of a new distribution center in Järvenpää. However, the investment itself has not yet been decided, nor has the company published more detailed information about it. The renewal or construction of a new distribution center has been known, and in our forecasts, the investment is scheduled for 2027-28. Thus, the announcement does not cause any need for changes to our forecasts at this stage.
In fact, the location of the new distribution center will be confirmed immediately after the change negotiations are concluded. Decisions cannot be made before said negotiations have taken place.
I looked at this Pharmacy Tax Proposal from the government from a few sources. I can’t really assess the effects on Oriola with certainty, but for example, in this article, it is implied that pharmacy operations are not being liberalized, but the 20 most popular over-the-counter medicines would be available for free sale (i.e., in supermarkets). Against this background, I personally don’t believe that Kesko would be in a buying mood regarding Oriola. As mentioned, it may be that I understand the cause and effect relationships far too poorly.
Here are Rauli’s comments on the write-down of Kronans’ value.
Oriola’s joint venture Kronans Apotek is recording an impairment related to delays in the integration and ERP project. In practice, this means that the company’s own assessment of the joint venture’s value has decreased. The write-down will weigh on Oriola’s reported result for the end of the year by 16 MEUR, but it does not affect cash flow or adjusted figures. We have previously highlighted the risk related to the joint venture’s balance sheet value, and the current write-down is a small step towards a more realistic valuation level, although the balance sheet value still remains clearly higher than our estimate. The news will lower our reported earnings forecast for 2025, but does not cause changes to adjusted earnings forecasts. It also pushes the company’s already low equity ratio even lower.
Here are Atte’s comments on Oriola’s distribution center plans and the key themes of the upcoming strategy.
On Wednesday, Oriola announced that it is making a significant investment in a new distribution center in Järvenpää. The core idea of the investment is to improve Oriola’s productivity and guarantee more capacity for future growth. In addition to the investment news, the company announced it has started preparing a new strategy and provided key themes for its new strategy period, which it will address at its Capital Markets Day in May. We will review the impact of the news on our forecasts by the Q4 earnings preview at the latest.
Greetings from Oriola’s IR team. It is important to us that our investor communications serve all stakeholders as well as possible – including private investors.
Last week, we announced an investment in a new distribution center in Järvenpää as well as a review of our long-term plan. You will hear more about these at our Capital Markets Day on 12 May 2026.
We want to develop Oriola’s investor communications and take private investors’ views into account so that we can serve you better in the future. We will also use your comments and feedback in the preparations for the Capital Markets Day.
What are your thoughts on Oriola’s investor communications? Here are a few example topics to support your feedback:
How clear and credible do you find Oriola’s strategy?
How do you assess the quality and transparency of the investor communications?
What are the key areas for development in the company’s investor communications and reporting?
Which factors have increased or weakened your trust in the management?
Development suggestions to improve Oriola’s attractiveness as an investment?
You can also comment on topics outside of these – all views are valuable.
We are not conducting a separate online survey; instead, we hope for active discussion here on the forum. If you wish, you can also send your thoughts via email (contact details: https://www.oriola.com/fi/sijoittajat/sijoittajasuhteet).
We will monitor the discussion and take into account comments received by 21 January 2026.
Thank you in advance – we look forward to hearing your views!
Excellent opening from the company’s IR; points just for the fact that you want feedback from retail investors as well.
One concrete suggestion is that since Oriola lists a few analysts covering the company, could those analyses be made available on the company’s website? For example, on Talenom’s site, one can view Inderes’ and Danske’s analyses. Not all firms necessarily share their reports, but a summary and analysis figures would be a good addition to the site.
It’s hard to say anything about the company that hasn’t already been said. The assessment of the company is conflicted, especially regarding the balance sheet, as there is good gearing but a very low equity ratio—meaning the value of Kronans is the elephant in the room that should be resolved in some way. Investors do not like a restorative rights issue to cover a write-down of Kronans.
The strategy is, in my opinion, quite clear in itself, but its credibility is still weak. It will certainly improve if the large projects are successfully completed. After all, credibility must be earned.
Oriola would be a more attractive investment if they could exit the associate company at a reasonable price. I am not suggesting that the associate company should be given away, but if a somewhat reasonable price could be obtained for it, it would help many people interpret the figures better. I believe that Oriola is partly a misunderstood company; there is a lot of potential, but you need to know how to interpret the numbers. Also, the very poor performance by the previous management weighs on confidence. For example, the failed ERP project.
Aktivisten has become active in December and published a new letter, which seems to have had an impact at Oriola, as Oriola’s communications have also become more active. Additionally, a presentation given to Oriola’s management in October has been published on Aktivisten’s website. Investment in Oriola | Aktivisten AB
Admittedly, those Aktivisten documents contained some good analysis. I can’t be quite as optimistic as the document in question, but my target price is also €2. The Kronans Apotek IPO is quite an interesting idea and, in my opinion, should definitely be looked into.
In my opinion, Aktivisten has a point regarding Oriola’s operational business; margins are indeed razor-thin, so there is no room for investment mistakes, for example. The balance sheet shows positive net cash, but there Aktivisten is looking through somewhat rose-tinted glasses regarding what is included and what isn’t.
Instead, I don’t understand Aktivisten’s hype about Kronans; frankly, there is a hidden risk of a rights issue (antivaara), not a positive surprise. Kronans’ revenue is 1.2 billion, but operating profit is practically zero and has been for a long time—how would it turn around quickly when the competitive situation is admitted to be tight? Oriola’s book value for its 50% stake in Kronans is approx. 206 MEUR, while Kronans’ interest-bearing net debt was 92.4 MEUR in Q3 (79m Q3/24 and 97m Q4/24). Kronans’ EV should be around 500 MEUR upon divestment to avoid a balance sheet loss for Oriola. Is a 500m EV realistic for a zero-profit retail chain?
Have I misunderstood something regarding Kronans? If Aktivisten wants quick actions regarding Kronans, its divestment could mean a hit to the group’s 118m equity. Even in a listing, can a market value of over 300m be achieved?
The figures above were written based solely on the Q3 report, but the company announced in December that it would be writing down Kronans further. The book value is now 187m, and naturally, equity was also reduced. According to the Inderes analyst, the equity ratio will drop to as low as approx. 11% due to the write-down; that is quite low; equity is probably just over 100m? How can Kronans be listed—i.e., removing 187m from the assets—when equity is only just over 100m?
Rauli has published a new company report on Oriola.
We believe Oriola will announce plans to sell its Kronans Apotek stake and strengthen the company’s equity ratio at the Capital Markets Day this spring. We expect a dividend cut already for last year. However, dismantling the complex structure and fixing the balance sheet issue could also unlock value in the company. We are lowering our recommendation to Reduce, with the target price remaining at EUR 1.25.
I already commented briefly on those thoughts from Aktivisten back in the autumn in this post. I still completely agree (as does @Makex above) that regarding Kronans’ valuation, Aktivisten is way off track. And since Oriola needs to strengthen its balance sheet due to a low equity ratio and the likely write-down of Kronans, Aktivisten’s proposal for aggressive share buybacks is not possible; on the contrary, we at least expect the profit distribution (dividend) to be lowered.
Regarding the core business, I am more aligned with them, and we have also repeatedly said that it is a growing defensive business that should be yielding more profit. For some reason, this just hasn’t been successful for 10 years.
I didn’t actually write the report to downgrade the recommendation, but to update the figures and thoughts on recent news. At the same time, the recommendation changed as the stock had risen to the target price. This view now perhaps emphasizes the risks, such as the negative price impact of a dividend cut and shoring up the balance sheet, more than the potential that clearly exists in the company.
