CEO's review - Oriola-KD's Annual report 2013
In Sweden we had a very successful year in 2013. We acquired Medstop and increased our market share above 20 per cent. The integration process has gone very much according to plan, and currently we run approximately 300 pharmacies under the Kronans Apotek brand.
In Russia we signed a lease agreement for a new distribution centre and in autumn an agreement to purchase the necessary automation. Overall the project for the new distribution centre has gone according to plan.
With our third goal, improving profitability, we have also succeeded quite well across the businesses except in the Russian wholesale business. This was especially so in Sweden, where we saw a significant improvement in both of our businesses, retail and wholesale. 2013 was the first year when profitability in Sweden was higher than in Finland.
In Finland and the Baltics, profitability improved well in wholesale. In the Finnish wholesale business we saw a clear improvement in efficiency and quality, and we also succeeded well in the Baltics. At the same time, in Consumer Health we had a challenging year but we started a number of programmes that should bring results in the coming years.
The Russian market continued to be challenging for us. We introduced a new warehouse management system at the beginning of the year, which caused temporary difficulties in delivering products, especially in the Moscow area. As a result of this we lost some customers in Moscow. This was partially offset by the growth of hospital sales and regional sales, but in general the performance of our Russian wholesale business was disappointing. In retail we had a good year and we managed to achieve a profitable performance for the full year.
FINANCIAL PERFORMANCE IN 2013
In 2013 our sales grew by some 5 per cent, which is a little less than we have been used to in recent past. At the same time especially the Russian ruble, weakened quite sharply towards the end of the year, which had a negative impact on our sales growth in euros. Our operating profit excluding one-off items increased, but it did not quite rise to the levels we had targeted. Earnings per share were clearly below our expectations and this was partially a result of the restructuring costs after the Medstop acquisition. This also increased our interest costs and our gearing ratio, which was higher than our long-term targets.
GOALS FOR 2014
For 2014 we have three main goals:
- Successful implementation of the new main logistics centre in Russia in spring 2015
- Improvement of the performance in pharmaceutical wholesale Russia
- Completing the integration of the Swedish retail business by the end of the second quarter
I would like to take this opportunity to thank our customers for their support and our employees for their hard work. I am looking forward to a successful 2014.