Good morning everyone and a warm welcome to Oriola's Q3 Results Webcast. I am Tua Stenius-Örnhjelm from Oriola's Investor Relations. With me today I have our CEO Katarina Gabrielson and CFO Mats Danielsson. After the presentations we will open up for your questions and as a kind reminder, we will first focus on the questions relating to Oriola's business and financial performance. Like normally, you can start to post your questions through the chat already during the presentations. As a reminder, we are also recording the webcast and the recording will be available on our website later today. Next, we can have a look at the customary disclaimer. Now without further ado, Katarina, please go ahead.
Thank you, Tua, and welcome also on my behalf. This is the agenda for today. It's a quite traditional agenda from our side. We will start with the quarter three highlights, then go to the operating environment, go through the segments, then Mats will take us through the financial review before we go to the Q& A. Let's now start with the quarter three highlights. I'm really, really happy today to be standing here and saying that the sales margin and Adjusted EBITDA has been favorable for us this quarter. The net sales and the sales margin have grown and are supported by both of our segments. The high volumes have partly been part of this and also early vaccine deliveries in the end of quarter three.
This has resulted in higher increased sales margin, and also we had some operating expenses that increased towards the end of the quarter. The net sales landed on 9% above previous year at EUR 463 million. The supply chain operations have been stable during this quarter, and that's a result of the implemented strategic initiatives that we have been doing during not only this quarter, but also during the year overall, where we, for example, can see increased warehouse capacity as one result of this. All of this has meant Adjusted EBITDA has improved from the previous year, and we landed on EUR 9.6 million. With that, I will also take the opportunity to now thank the whole Oriola.
I normally do that in the end, but I would like to do that in the beginning because this is something we can't do without our people and our personnel and also, of course, our customers and owners who believe in us. The ERP project is entering the first phase of deployment in Sweden, and it's something that is really crucial for us when we continue with the strategic initiatives that we have. I'm looking forward to see that entering Sweden now. In the joint venture company Kronans Apotek, we can see that the market share remained stable. The sales were growing by 3%, and it was driven by both the physical pharmacies, but also the e-commerce segment in this area. If we then look at our operating environment, we don't have major changes in operating environment since we were having this presentation last time in quarter two.
What we can see is that the value of the pharmaceutical distribution market is growing in both countries, especially in Sweden. It's a little bit more flat in Finland, but especially in Sweden it's growing. The consumer confidence is weak in both Finland and Sweden. We can see some signs in Sweden now that it will hopefully start now to change a little bit. That will then be favorable for us in the future. Still, in the quarter it has been a weak confidence. Going to our segments, in the distribution segments where we have pharmaceuticals that we distribute from the pharmaceutical wholesaler to pharmacies and hospitals, for example, we can see that the net sales was growing with 6% and landed on EUR 373 million. The volume is growing existing, the total portfolio and also with new customers. We can see that we haven't lost any customers during this quarter.
We have retained all existing customer contracts. We have had earlier vaccine deliveries that I mentioned before in Sweden. We can also see that the overall market growth has affected the sales margin in a positive way. We have a slight increase in the opex due to high volumes. We can see that additional warehouse capacity and the personnel is also then increasing the opex. One part of this is especially in the end of the quarter when we then have the vaccines, that is then giving us higher costs since it's earlier this year compared to last year. In this segment, Adjusted EBITDA increased to EUR 8.4 million. I'm really, really happy to see that this segment is continuing to deliver because that is also the biggest segment that we have in distribution segment.
We are really focusing as well as in other areas about customer centricity and strong partnerships. We can really see that the customer satisfaction is continuing to improve. That is so that it has continued to improve now for quite many quarters. That will then give us the possibility to both retain the existing customer accounts also for the future. We also have a lot of expected new contracts to come and that will affect us, but mainly in the second part of 2026, since we also know that when we have signed a contract it will take some time before it goes into the real production parts. If we then look at the wholesale segment, in the wholesale segments I'm really pleased to see that the net sales was growing 23% to EUR 91 million.
In Sweden we have a growth supported by good development in parallel import of weight loss medicines. In Finland we can see a solid performance in sales, especially to veterinarians in the special licensed medicines area. We can't see right in this segment that growth is then going down to the EBITDA at this point. The positive sign here is that if we look at the first half of this year we weren't on the year-to-year comparison level. In this quarter we are now on the same level as we were last year. That is a positive sign where we can see that both the growth and also the cost consciousness that we have is really giving an effect. Why is there not the EBITDA on a higher level when we have this net sales growth?
The main reason is that we have an unfavorable product mix since we have a little bit lower margin in the parallel import than we have in the other segments and also some higher opex based on the volumes that we have. The other part of the wholesale segment is the advisory products. Here we can see the positive development in digital and data services and that has continued to grow with double-digit growth. That is also some segment in the advisory that we really focus on in the future. In advisory overall, we are now looking at new customer acquisitions and we can see that that is coming. We have also built a partner network for EU-wide assignments. That means that we can take on a little bit other assignments that were possible to take before.
We have also made some investments in the wholesale parts when it comes to the brands that we especially have in Finland. What you see on this slide is also our Apteekkarin brand where we have done a rebranding to better align with customer expectations and also today's consumer to make it a little bit more modern towards the consumer. With that I'm done with the business review and we will then go on with the financial review. Please.
Thank you, Katarina, and welcome. Also from my side to this session, we will start from the top line and look at invoicing and net sales. We had a good growth also this quarter. It has continued during the year. We have in the distribution segment, we have existing customers growing. We have also the new customers that we have been onboarding have been growing very well. We have in the distribution segment also started with vaccine deliveries slightly earlier than last year. In September, we have been handling those, which has generated also more invoicing. Also, in the wholesale business, as Katarina mentioned, the parallel import has generated net sales on that part. Overall, if you look at the year-to-date numbers, we are growing well and mainly generated still from the bigger distribution business sales margin.
Of course, I said before it's very important for and a very important KPI that we follow closely in the company. We have been growing each quarter, and it's mainly been driven by the distribution business. We also had a good quarter in the wholesale business generating sales margin. On the year-to-date, we have been increasing the sales margin by EUR 6.3 million. This is mainly driven by the growth in the business, driving for more volumes and more sales margin. Looking at the EBITDA, we have a good quarter. As said, wholesale was flat compared to last year. We have had a decline in the EBITDA in the wholesale the first two quarters, but now it was flat. The distribution segment continues to drive EBITDA growth at the same pace as earlier. We also have a tight cost control in place.
We try to increase the profitability by following the costs very closely. If we look at now the adjusting items, we have much more than last year. It's the ERP project mainly driving those. We also had those in Sweden impacting the adjusting items. Then we have some smaller topics there. We have a feasibility study on the [Mankkaa] distribution center also in there, taking down the reported EBITDA to a lower level of EUR 14.5 million. If we look at the distribution segment, the good growth is continuing. It's with the new and current customers that we have. I said also in the quarter there were some more vaccine deliveries affecting positively the quarter. 10% growth on year-o n- year, the first three quarters EBITDA is growing.
It's related to the volume growth and following the same pace as beginning of the year the wholesale segment had a good growth partly dependent on the parallel import related to weight loss medicines in Sweden. 16% increase year- to-date Adjusted EBITDA. I said on the quarter it was flat. If we look at the year to date we are still lower than last year, but it was a good development in this quarter. If we look at the net profit we have had, as said more adjusting items affecting the reported EBITDA. Even though we increased Adjusted EBITDA, we are lower on reported EBITDA.
We have the impairment of those also affecting the net result, $5.7 million in the impairment, and then we have some other small improvement but we are landing on a -$9.3 million negative net profit which is lower than last year free cash flow. Even though we have a lower EBITDA, we have a better cash flow, free cash flow mainly related to the working capital items that were. We have a volatility in the working capital so it might go a bit up and down depending on the reporting day but in general the working capital is. The trend is of course with the negative working capital. The more we invoice and sell, the better the cash flow will be. If we look on the net debt we are slightly small change from last quarter but comparing to a year ago we are on a lower level than that.
The net interest bearing debt has been improving then. If we look at the equity ratio and gearing, equity ratio has been now on a 13% level. We know that this is of course as earlier said, it's affected by the ERP project and impairments that we have had during this year and also last year. We know that the ERP project is burdening the equity ratio but we know that there will be an end to that also. While we are taking all the cost now in the profit and loss, we know that we will have almost no depreciation from this implementation after that. The gearing of course is on a good level due to a good cash flow, in general. Kronans is doing a bit better also this quarter having a small positive impact on our numbers also good with Kronans.
The market share remained stable this quarter, not gaining, not losing any market share and they are now finalizing completing the ERP project and integration project during the last quarter. That will be ready and rolled out. We are keeping the outlook unchanged. We are expecting the EBITDA to increase from previous year, and there is no change on that. Thank you, that was my part.
I think you can stay here for the questions. Like I said when I started this one, I'm really, really happy about the result we have. I really see that we have a solid quarter three results and that the sales and sales margin is growing in a positive way like it has done also in the beginning of the year. I'm also really pleased to see now because last time we said that we didn't get the pass through margin. It's not where we want it to be, but we can see that we're also improving now Adjusted EBITDA in another level than that we did in the beginning of the year.
With that said, of course the focus for the rest of the year is really, of course to continue to grow on the sales and sales margin, but also really remain cost consciousness because we really also want to grow the EBITDA even more. With that, let's go to the questions.
Great. Thank you, Katarina, Mats, for your presentations. We have already some questions in the chat, and as a reminder to everyone, keep on sending them to us. I will try to group the questions so that we first start with the questions relating to Oriola. If there are any questions relating to Kronans Apotek, we take them last. Okay, let's start here then. This one goes to Mats. It's about the equity ratio. Equity ratio is 12.9% in Q3. What level of equity ratio would be too low, resulting in financial or business problems to Oriola or meaning less dividends than Oriola has paid in the past two years?
I would say that we are a growing company with a good cash flow. The equity ratio we follow very closely. Also, we know that we have a lot of adjusting items and we have had impairments that have affected the equity ratio. We do not see that we currently have any problems with the equity ratio. I think that it's partly understood that we have a heavy burden from the ERP project currently, so that has an effect on that. We know that after the project also it will be a totally different game at that time.
Thank you. You ended with the ERP, so let's continue on that. We have a question: when does the ongoing ERP project have a positive impact in EBITDA?
The project will be. The main part of the project is planned to 2025, 2026, 2027, and we will see gains directly after that. During 2027, 2028, we will start to see gains from the project.
Good, thank you. There is a question relating to distribution segment. So this goes to Katarina. Will the new customer agreements in the distribution segment affect profitability before the expected pickup in invoicing during H2 2026?
What we have is that we have implemented customers during this year, and of course that will affect the first part of the next year since we don't have the year-to-year comparison on these ones yet. With that said, yes, it will be positive.
Good. A question on the Wholesale segment. How do you see the profitability of the wholesale segment developing in the near term?
Of course we're not guiding on the quarter part here, [Ron], but like I said here before that we need to see that the Wholesale segment is continuing to grow, but we also then need to get more profit on that segment. It's good now when we see that it's like starting to be on the same level as last year. Of course it should also continue to grow to also meet the expectations that we have in the strategy.
Thank you. Could you give some color on the adjusted costs related to the feasibility study of logistics operations?
As we have said before, we are looking at this topic and of course there's usually a cost related to something that you do and that work is ongoing.
And we will communicate more when we are ready to communicate.
Good, thank you. There is a question relating to the vaccines. How meaningful was the impact of timing of vaccines for earnings in Q3? Maybe top line and then bottom line comments?
I don't have a total number of that one right now, sorry about that. What we can see is that we have delivered more during quarter three, but we still have the substantial part in quarter four. Normally, most of the vaccine is delivered in quarter four and also then the costs. That's what we mean, that it's coming a little bit earlier, but the substantial part is still in quarter four.
Good, thank you. These were all the questions we have at the moment in chat relating to Oriola. If we wait another few minutes, if there are more, let's take in between a question relating to, sorry, Kronans Apotek. Valuation of JV in balance sheet is EUR 306 million in Q3. Valuation is based on technical IFRS equity calculation. Does Oriola see any risks downwards in the valuation or does Oriola see more possibilities upwards in this valuation?
We don't really guide on that, but we do impairments every year and all the time when there is a big change on something. We have a close eye on that also. There is no further comment on that while we evaluate that.
Good. Okay, I think this was all from the chat. I would like to thank everyone who has joined us today. Our next webcast will take place on February 25th when we publish the 2025 full year results. Until then, if you have any questions, please don't hesitate to contact us. We wish you all a good rest of the week.
Thank you.
Thank you.