Quite valid points, largely the same issues I have raised regarding this myself. Coincidentally, I was just reviewing Oriola, so let’s include one image here that shows in a rather stark way how Kronans Apotek’s profitability has melted away, even though the 2022 merger should have brought synergies.
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Kronans Apotek AB: the turnaround this year is indeed a central question regarding the stock’s valuation. Perhaps a few observations: the merger was only completed last year, and this year attention can be shifted toward costs. From the perspective of IFRS 36 impairment testing, it is significant how the company management can convince the auditors of future cash flows. There is still a risk of write-downs, but much has already been recorded. At least for me, it has been a bit difficult to understand Oriola’s releases. According to the releases, Kronans Apotek has written down an extra amount of goodwill in 2024 and 2025. In reality, Swedish Pharmacy has written down those amounts under the balance sheet item Finansiella Anläggningstillgångar (Financial Non-current Assets) and Oriola then in its subsidiary shares. Kronans Apotek then has 554 MSEK of goodwill remaining on its own balance sheet for 2025, and it writes it down by approximately 110-115 MSEK annually. This is its own specific goodwill, with an amortization period of 20 years, of which five remain.
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Another comment on Jussi Halme’s video regarding Oriola’s investments: A significant portion of this year’s Q1 sum of EUR 7.7 million went towards the land area for the Järvenpää logistics center. The “lead time” (paistoaika) for this is long, and thus it also burdens the result slightly on an annual basis. If I understand correctly, during the construction phase of the logistics center, SEB Leasing pays the capital costs to the contractor according to the agreement, and Oriola is responsible for paying the interest on that capital to SEB. Then, once the project is completed, Oriola pays leasing rent for the building. This is what capital efficiency means. Therefore, hundreds of millions of Oriola’s own capital will not be tied up in the project.
How Oriola will operate two logistics centers in Finland simultaneously in 2027 will likely be a challenge for the company, not least from the perspective of IT systems.
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