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Good morning, and welcome to Oriola's webcast about interim quarter 1 reporting. I'm Katarina Gabrielson, the interim CEO for Oriola. Here with me in the studio, we have also our CFO, Sari Pohjonen; and Communications Manager, Julia Kristensen, who will be moderating your questions from the chats at the end of the webcast. So please start to post your questions already during the presentation.
First, a few words about me. I started at Oriola in 2012 and has been working in various positions in both Oriola Finland and Sweden. And in our earlier structure, I was responsible for business area Retail. Currently, my permanent role is as Vice President of Oriola Sweden. That includes all our business-to-business operations in Sweden. In addition to my role as interim CEO, I'm taking care of my business leader role as well.
And now some words about the segment change. Tuesday this week, we announced a new reporting structure. The structure are based on our earlier announced new operating model and framework merger agreement with Euroapotheca for combining the respective pharmacy businesses in Sweden. The arrangement is subject to regulatory approval and is expected to be completed during the second half of '22 at the latest.
The new reporting structure includes two segments: continuing operations, which combines the old business areas, Pharma and Retail in Finland and Sweden, into the new Oriola Services segment; and discontinued operations, which consists of Consumer segment, including pharmacy operations in Sweden.
Then the highlights from the quarter 1. I'm really pleased to tell you that year '22 has started with a strong first quarter. Our turnaround actions, along with the positive market demand, improved our profit in all operations. Our total net sales increased 7% and comparable adjusted EBIT increased to EUR 11.5 million compared to previous year's EUR 0.3 million.
During the quarter, we continued to work according to our turnaround short-term action plan. We started to operate according to our simplified operating model and further streamlined the model by divesting our pharmacy staffing business in Finland from 1st of April. And we can see that our rigorous cost control activities are progressing well.
In February of '22, we also announced a framework merger agreement with Euroapotheca for combining the respective pharmacy businesses in Sweden. The arrangement is subject to regulatory approval and is expected to be completed during the second half of '22 at the latest. During the quarter, we have also been witnessing the Russian military offense against Ukraine. This has led to increased inflation, and it creates uncertainty market environment for the future.
Now let's have a look at our key financials. First, we will look at the combined continuing and discontinuing operations. In the first quarter of '22, the pharmaceutical market value increased in our operating countries. And this was also visible in Oriola's performance. Our net sales increased by 7.1% to EUR 482 million compared to EUR 450 million previous year. And in constant currency, the increase was 10% or EUR 495 million. Oriola did a strong first quarter with an adjusted EBIT of EUR 15 million in both continuing and discontinuing operations.
Oriola Services improved by EUR 3.8 million compared to last year. The increase was driven by net sales growth and turnaround actions. Our Consumer business improved comparable adjusted EBIT by EUR 7.4 million. The key drivers in Consumer were increased sales, improved efficiency in e-commerce and other turnaround actions.
Group items were unchanged compared to the first quarter of 2021. We also had EUR 3.5 million positive impact from the lower depreciations in Consumer compared to last year. And this means that the comparable adjusted EBIT are EUR 11.5 million. And we will return later to this one in the presentation.
In our continuing and discontinued operations, our invoicing increased by 6.2% to EUR 1,001 million compared to EUR 942 million previous year. On a constant currency basis, invoicing increased by 8.9% and was EUR 1,026 million. Net sales increased by 7.1% to EUR 482 million compared to EUR 450 million. On a constant currency basis, net sales increased by 10% and were EUR 495 million.
The adjusted EBIT was EUR 15 million compared to EUR 0.3 million previous year. And I will say that it is a really good result. On a constant currency basis, the adjusted EBIT was EUR 15.4 million. It should be noted also that the adjusted EBIT includes a positive impact of EUR 3.5 million from lower depreciations as the discontinued operations' noncurrent assets are classified as held for sales and not appreciated.
The comparable adjusted EBIT, excluding the positive impact from depreciations, was EUR 11.5 million compared to EUR 0.3 million. The improved performance compared to earlier years were driven by improved market environment, net sales growth and turnaround actions in all businesses.
If we then look at the continuing operations, invoicing increased by 6.3% to EUR 887 million compared to EUR 834 million. On a constant currency basis, invoicing increased by 8.9% and was EUR 908 million. The net sales increased by 7.6% to EUR 373 million compared to EUR 346 million. On a constant currency basis, net sales increased by 10.2% and were EUR 382 million.
The adjusted EBIT for continuing operations increased to EUR 4.7 million compared to EUR 0.9 million. On a constant currency basis, adjusted EBIT was EUR 4.8 million. The improved performance compared to earlier years were driven by improved market environment, net sales growth and turnaround actions.
And then the figures for the discontinued operations. The invoicing increased by 2.6% to EUR 210 million compared to EUR 204 million previous year. On a constant currency basis, invoicing increased by 6.3% and was EUR 217 million. The net sales increased by 2.7% to EUR 205 million compared to EUR 200 million previous year. On a constant currency basis, net sales increased by 6.4% and were EUR 212 million.
The adjusted EBIT was EUR 10.3 million compared to minus EUR 0.6 million. On a constant currency basis, the adjusted EBIT was EUR 10.6 million. Like noted earlier, adjusted EBIT includes a positive impact of EUR 3.5 million from lower depreciations as discontinued operations noncurrent assets are classified as held for sale and not appreciated.
The comparable adjusted EBIT, excluding the positive impact from depreciations, was EUR 6.8 million compared to minus EUR 0.6 million. In addition to the lower depreciation, the increased sales, improved efficiency in e-commerce operations and other turnaround actions improved adjusted EBIT in Consumer.
The profitability in our discontinued business for quarter 1 is good. But it should also be noted, like you can see here in the graph, that 2021 had exceptionally low adjusted EBIT compared to 2018 to 2020. And 2021 was affected then by the COVID that we had in the society last year.
Then if we go to the operating environment, we can see that in our operating environment, we can see a clear recovery in the pharmaceutical wholesale market compared to previous year. When we're looking at the value development in the wholesale prices in Sweden, the growth was 7.6% in the Swedish krona in the first quarter. In Finland, the market value grew by 4%. Based on our estimates, Oriola's share of the pharmaceutical wholesale market was approximately 45% in Sweden and about 44% in Finland in the first quarter.
In dose dispensing business, Oriola offers pharmaceutical and dose dispensing for private and public health care sectors. The total market size for dose dispensing is approximately 250,000 patients in Sweden and around 90,000 patients in Finland. The patients we are serving in that dose dispensing business has been growing in both Sweden -- in Sweden to approximately 105,000 patients and stayed stable in Finland at about 28,000 patients.
The pharmacy market in Sweden grew by 9.7%. The total online pharmacy market growth was stabilizing from 2021. The growth was 12% in quarter 1. We have, during the COVID pandemic since the beginning of 2020, been witnessing fast online sales growth. Now we can see that the growth has been stabilizing and is growing with the total pharmacy market. The online pharmacy shares of the total market was slightly growing and was approximately 20% by the end of March. Oriola's online sales growth was slightly stabilizing, and it grew by 8%. And our market share in the Swedish pharmacy market in quarter 1 was 15.9%.
Then looking at our segments review for quarter 1, it looks like this. And we will start now with the continuing operations in Oriola Services and our performance there. Both the pharmaceutical market value and volume grew in quarter 1 in both Sweden and Finland. The quarter 1 invoicing increased by 6.3% to EUR 887 million compared to EUR 834 million and the net sales by 7.6% to EUR 373 million compared to EUR 346 million.
This growth was driven by the market growth as well as the new customer agreements in the pharmaceutical distribution and growth in dose dispensing. The adjusted EBIT increased to EUR 7 million compared to EUR 3 million, driven by the market and net sales growth, improved operational efficiency in our logistics services and other turnaround actions as well as continued strong performance in the dose dispensing services.
Then let's look at the discontinued operations, that's the Consumer segment. In Consumer, we witnessed increasing customer -- consumer activity and the demand increased compared to the first quarter in 2021. Oriola's Consumer net sales increased by 2.7% to EUR 205 million compared to EUR 200 million. In constant currency, the growth was 6.4%. Our online channel grew slightly slower than the market in the first quarter.
In the beginning of the year, there was also high demand for certain product categories, like the COVID-19 antigen tests. But this started to even out towards the end of the year -- end of the quarter, sorry. Also, the Russian military offense against Ukraine increased the consumer demand for some pharmaceuticals and other health products in the market during some parts of the quarter.
When we exclude the positive impact from the depreciations, the comparable adjusted EBIT was EUR 6.8 million compared to minus EUR 0.6 million previous year, which is above both 2021 and 2020 levels. The performance was driven by increased sales in both channels, improved efficiency and other turnaround actions. Quarter 1 adjusted EBIT increased to EUR 10.3 million compared to minus EUR 0.6 million.
And now I will invite Sari Pohjonen to tell a little bit more about the technical stuff.
Thank you, Katarina, and good morning also on my behalf. As you can see here, following the good overall result development, also the profit for the period and the EPS, they were increasing compared to the previous year. So last year, we even had a negative EPS and negative profit for the quarter in the first quarter. Now both of them were positive. And our EPS landed at EUR 0.05 per share.
In the same manner, also our net cash flow from operating activities for total Oriola, and this is now including both continuing and discontinued operations, that improved in January-March, as you can see from the graph here. It's good to note that this was thanks to 2 things: partly to the good result development; partly, it was due to the changes -- positive changes in working capital.
For our business, I would like to remind our listeners that very, very strong fluctuations in working capital are typical for us. You can see that partly on the graphs here as well, looking into some of the previous quarters. So partly, the change now came from that one, which is somewhat cyclical or can be even a bit seasonal and then partly coming from the improvement in the result. On the right-hand side, you can see that our CapEx spending was pretty modest during this quarter. And then overall, the cash position developed very positively.
This next slide is illustrating our net interest-bearing debt and also the net debt development overall. Here, I would like to highlight that the comparison period on the left-hand side and also on the right-hand side, those include the discontinued operations as well, so meaning Oriola Consumer. So in a way, you need to bear in mind when you are looking at the table, especially the lease liabilities, there's a difference now due to the fact that we are reporting Oriola Consumer as discontinued operations. And that is reflected in the graph here as well.
Then if we take a look at our equity ratio, it improved from the previous year from the same quarter and now landed at 19.1%. This is including now both continuing and discontinued operations. And on the right-hand side, we have the gearing, which went down to approximately 8%. However, here, the comparison periods include also discontinued operations, whereas for '22, we are now reporting gearing based on continuing operations only.
Then as a reminder, our outlook for the year. So we do estimate that Oriola's comparable adjusted EBIT will increase from the '21 level. And as a reminder, our '21 level was EUR 26.3 million. All in all, of course, as you know, I think for every company at the moment, we are not immune to inflation and related cost pressures. And in our case, that is particularly related to labor costs, freight costs and energy prices. Those could have a significant impact on our profitability. And please also note that the outlook is based on our current group structure, meaning that it includes both continuing operations as well as the discontinued operations. And now back to Katarina and our turnaround actions.
Thank you, Sari. We have mentioned the turnaround several times during this presentation, and we will look a little bit deeper into this.
First, I can assure you also that the whole management team have been part of creating the turnaround plan. And we are very well committed to do these actions and to further improve our realized profitability. We know what to do and what to be able to improve our efficiency and also grow together with the entire organization. And I'm well aware that this is a little bit like of -- a lot of information in this picture. So we will stay on this one for a while, and I will try to explain this to you.
Our turnaround short-term action plan consists of four key priority areas: it's cost savings; it's efficiency in net working capital management; it's excellent customer relationship management; and it's commercial excellence. And we will look into all these areas. And the one we will first look into is then the cost saving priorities.
In the cost saving priorities, we have three main areas. First, we have the simplified operating model. And we have, during this quarter, moved into a country-based model from the beginning of January. This is cutting our cost base by EUR 7 million from the first quarter and onwards. To streamline our operations further, we have also divested the pharmacy staffing business in Finland as of 1st of April this year as we have announced.
Secondly, we are focusing on reducing our operating costs. We have high focus on our distribution centers to take down the costs. And especially, it has been in Enköping during this quarter. The third area is cost control. In the whole group, we have and we will continue to implement strict cost control with centralized sourcing and cost management practicalities.
If we then look at the net working capital management, we are -- we have ongoing improvement activities to enhance end-to-end sales and operations planning and supply chain planning. And we are crystallizing and optimizing our assortment portfolio. These actions are leading especially to better warehouse management and also, hopefully then, a change in the net working capital, too, in a good direction.
For us, excellent customer relationship management and commercial excellence means to improve -- the improvements related to commercial management. We have started our core service portfolio crystallization and implemented value-based pricing models. This is an even more important action now when we are facing severe inflations that Sari told about and especially then in fuel prices.
This is then our action plans to improve the performance. And we have already seen many results from the work here, like you can see in the quarter 1 results. But we are still -- have a long way to go. And we are also continuing to planning new actions. Me as well as the entire management team, like I told you about, are fully committed for this journey. We have been jointly planning these short-term action plans and we know what to do and where to focus.
While I'm on this picture, I would also like to take the opportunity to thank all our employees in the group, both for like working with us on the turnaround actions but also, of course, for delivering a really excellent quarter 1. I'm so proud to work with all of you, so -- and I hope we can continue to work one way or another together.
If we then look at the key takeaways from this presentation, we had like a quarter behind us that was really, really good. As a result, we have strong profit improvements driven by turnaround actions and market demand. We started to operate according to our new structure and therefore implemented a new segment structure for financial reporting that we have told you about.
The new Oriola Service segments include our business-to-business in Sweden and in Finland, former business area Pharma and business area Retail. This is also our continuing operations after the planned merger in Swedish pharmacy operations, which are now reported as discontinuing operations under Consumer segment. All our businesses grew in quarter 1 in both net sales and in adjusted EBIT. And that, I'm really happy about. Comparable adjusted EBIT increased to EUR 11.5 million compared to previous year's EUR 0.3 million.
Our planned merger is on competitor authority approval process right now and is expected to be finalized during the second half of '22. We have been continuing our turnaround actions. And to simplify our structure, we have a new operating model and have divested our pharmacy staffing business. And we're also working with ongoing cost control in all our operations.
During the turnaround, our focus is to reach our goals as well as to secure the well-being of our employees. And once more, I'm really thankful for all the employees and what they do every day to really take part of this turnaround. And I also know that you have struggled a lot during the pandemic situation we have had. And with our committed employees, we as a company are every day doing our utmost to secure the pharmaceuticals' availability on the market according to our purpose, Health for life.
Also, I want to take this opportunity to say then that, like we announced on this Tuesday, we will postpone our scheduled Capital Market Day until the announced planned merger of the pharmacy operations in Sweden has been completed. And therefore, our next event will then be the half year financial reporting.
Thank you for attention for this presentation. And now Julia, it's time for some questions.
Yes. Good morning also from my behalf. So yes, we already have a few questions. But please keep them coming if you still have something to ask. So first, Katarina, this goes for you. The result for Q1 was very good compared to many previous quarters. So can we estimate same performance to coming quarters?
Like Sari said in her presentation, if you look at the outlook, we are saying that we should have like a better performance than last year. But we are also looking for uncertainties in the markets and heavy, heavy inflations. So that's what we are like saying at this point. I don't know if you want to add something, Sari, on this one.
Yes, exactly correct that way. And maybe also to remind a couple of things. So last year, during the Q1, especially our pharmacy business was kind of hit, one could say, by the very strict COVID restrictions. And now the situation, of course, has been better in that respect. And we have also mentioned that we even saw now some, one could say, very high demand, for instance, for COVID home test, this antigen test, in the beginning of the year. That, however, was kind of evening out towards the end of the quarter.
And to some extent, we even experienced in our pharmacy business in Sweden some temporary high demand when the war in Ukraine started. One could say that it was a rather similar effect that we had a couple of years ago in Finland during the spring of 2020, when people were rushing to pharmacies to buy medicine and other products to make sure that there would be availability. So those are maybe some of the things that we could highlight from the first quarter.
The next question is about the EBIT drivers. So can you comment in more detail about the EBIT drivers in Services in quarter 1?
I can maybe start and then you, Katarina, continue. Two things there, and one could say, very simple and basic things for any business. So one was the volume impact. And as you saw in our markets, there has been good growth, good volume growth in that respect. And then the second one is our own turnaround actions, be it about better cost efficiency in our operations and streamlining the organization and all the actions that we are working on. So those are the two key factors.
And we can see that in both countries, we can also say.
Exactly.
Then continuing a bit on the same theme about the inflation, which you have already talked during both Q4 and now on Q1. Is this cost inflation already visible in your figures? Or do you expect it to have a larger impact in the coming quarters?
Maybe I can continue on that topic. Typically -- and this is a general comment, but it's, in many aspects, relevant for us also. Typically, when there are changes, either cost pressures or either in the prices that you have towards your own customers, depending on the business where you operate, typically, it is so that in the beginning, it takes a while before you start to see the see the impact.
And that is our case also for Oriola and for our -- in the cost items, as I already mentioned, so the labor cost, energy and fuel and then the freight costs, which are related to fuel, they are the most critical ones for us. But of course, as management, we are doing our best to mitigate also the cost impact. But the reality, as we can all read from the media on a daily basis, is that this type of inflation hasn't been there for decades.
Still continuing with the same theme, how do you describe your possibility to increase your revenues when you have these cost inflation pressures?
Of course, our job is always to mitigate these kind of things. And that's also what we're working on. But it's also like a negotiation that you should do with your customers in these aspects. So mitigation is very high on our agenda. But since we are uncertain, that's also why we are sticking to the forecast for the year.
The next question is about the market outlook. So how do you see the market outlook in Services going forward?
You can see that the market is growing with some percent each year. And of course, we should continue at least to have our market share. When it comes to like Oriola's part of the total market, that's something that we are working on in the strategy process and something that we need to come back to.
And maybe as a general comment on the market outlook, even though right now, the impact of COVID is not as big or as negative as it has been in the previous year, so last year or the year before during the same time, it is still an uncertainty. And there is also uncertainty now related to the inflation in general and what the impact for consumers and kind of consumer consumption will be in the future. That is clearly an uncertainty.
Continuing a bit on the pandemic, that still continues. Has there been any extra costs during sick leaves in Services segment?
I don't know if you comment that, to be honest.
We have had a situation, of course, like in these two countries in Finland and Sweden, the situation has been pretty tough regarding COVID in the very beginning of the year. That is, of course, part of our actions that, I would say, that the most critical thing during those weeks was, of course, to do our utmost to ensure the availability of the pharmaceuticals.
And right now, the situation in both countries is much better in that respect. But it was hurting us already, like we said earlier, that towards the end of Q4 and also in the beginning of Q1 due to the fact that so many people were on sick leave. But fortunately, the situation is now better.
Then a question related to the Kronans Apotek potential merger. When and where in reporting will be presented EUR 25 million cash payment from Euroapotheca?
As we have mentioned during this presentation earlier today, the process is still at the hands of the authorities. So we are waiting for the approval from the competition authorities. And only after that then that we can start working on the planned merger. So until then, in that case, it -- we will need to wait still for the approval from the authorities.
Then moving to Sweden and Enköping, there's a question related to efficiency. How would you describe it in Q1 compared with the H2 '21?
Efficiency in Enköping is improving all the time. So in that aspect, I will say is we're going in the right direction. And we can also see that it's like continuously improving. So it looks promising.
Then moving on to the turnaround, you were referring that turnaround is moving to the right direction. But would you still do something differently than what has already been planned with the previous CEO?
The turnaround has been -- all the actions has been done with the whole management team. So we are like sticking to the plan that we have. And of course, this is also like an agile plan, to some extent, that we are not -- we are like doing our actions, like you saw here. But we can also always find new actions and change our actions. And that is the management's decision that we always continue to do.
Continuing a bit of a same theme, have you done your structural arrangements now? Or could we still expect some divestments of your non-core businesses in the future?
Maybe I continue on that one. So as part of the turnaround, we have said that we have been working on our, let's say, organizational structure. And those steps were completed before the year-end. And now we have been divesting the staffing services. All in all, of course, in a turnaround, it is always -- and even if there wouldn't be a turnaround, it is always something that the management will need to assess on a regular basis, whether the structure and whether the business itself is the one which is the best fit for the company.
Thank you, Sari and Katarina. At the moment, we don't have any more questions on the line. So I think we can start wrapping up. And then of course, we will be happy to respond at a later stage if something -- some questions arise. So thank you.
Thank you.
Thank you.