Orthex (ORTHEX) Q3 2024 earnings summary

Executive summary

• Net sales increased by 5.3% year-over-year to EUR 65.9 million for January–September 2024, with strong growth outside the Nordics, especially in Rest of Europe (up 12%).

• Profitability declined due to higher production, energy, and commercial costs, with adjusted EBITA margin at 10.9% (down from 12.8%).

• Cash flows from operating activities remained strong at EUR 9.4 million, and leverage improved to 1.3x net debt/adjusted EBITDA.

• Focus on branded household goods, sustainability, and innovation, with 90% of sales under own brands and new product launches driving growth.

• Sustainability remains central, with new products made from recycled plastic and progress toward carbon neutrality by 2030.

Financial highlights

• Q3 2024 net sales rose 4.2% to EUR 22.8 million; adjusted EBITA was EUR 2.9 million (down from 3.5 million), margin at 12.6% (down from 16.1%).

• January–September 2024 adjusted EBITDA was EUR 10.5 million (down from 11.0 million), and adjusted EBITA EUR 7.2 million (down from 8.0 million).

• Gross margin for Q3 was 28.6% (down from 31.6%), and for the nine months 28.7% (up from 28.0%).

• Earnings per share for the nine months was EUR 0.24 (down from 0.27).

• Net cash flows from operating activities for the nine months were EUR 9.4 million (down from 9.8 million).

Outlook and guidance

• Long-term targets: annual organic net sales growth >5% group-wide and >10% outside Nordics; adjusted EBITA margin >18%; net debt/adjusted EBITDA <2.5x; dividend payout ratio >50%.

• Latest reported: 5.3% total sales growth, 11.4% outside Nordics, 10.9% adjusted EBITA margin, 1.3x leverage, 54.1% payout ratio.

• Market conditions remain challenging due to inflation and cautious consumer spending, but some markets show signs of improvement.