Orion Oyj Class A · OMXHEX:ORNAV
Orion Oyj Class A — Investor Day (May 2023)
13 slides from Orion Oyj Class A's investor day presentation, May 25, 2023
Slide 1: Views on capital allocation and value creation
Views on capital allocation and value creation Jari Karlson, Chief Financial Officer
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements which involve risks and uncertainty factors. These statements are not based on historical facts but relate to the Company’s future activities and performance. They include statements about future strategies and anticipated benefits of
Slide 3: Financial objectives
Financial objectives Growing net sales more rapidly than growth of the pharmaceuticals Keeping the equity ratio at market. Achievement of this objective least 50%. requires continuous investment in development of the product portfolio. Maintaining profitability at a good Distributing an annual divid
Slide 4: Capital allocation and value creation
Capital allocation and value creation In a long run profitable growth is needed for sustainable Orion is over 100 years Basic increase in market capitalisation and shareholder return old company assumptions – long-term Key strategic question: How to generate best return on Pharmaceutical R&D is appr
Slide 5: How to create shareholder value
How to create shareholder value Long-term value creation is ultimately dependent on company’s ability to grow profits Use retained earnings to pay dividends Share price increase or to make share buybacks • Value creation more based on historical • Credible long-term profit and cash flow profits and
Slide 6: Why growth is important
Why growth is important Without growth margins will gradually decrease even with good cost control due to price competition and inflation Profits & Larger scale of operations dividends -> Easier to carry fixed legacy costs -> Improved margins & ROCE Larger scale of operations Shareholder -> Improved
Slide 7: Other considerations
Other considerations 50% Development 1990-2022* 45% 40% 35% 30% Interest/discount rates and impact on total 25% shareholder return 20% 15% 10% 5% 0% 1999 2005 2018 1991 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019 2020 2
Slide 8: Capital allocation and value creation in Orion
Capital allocation and value creation in Orion 1.75 120% TSR ~11% p.a. since 19901 0.20 1.50 0.12 110% 0.06 1.25 0.10 100% Average P/E 21 for the past 10 years. Current P/E ~302 1.00 90% 0.75 80% Dividend payout ratio higher than in most pharma 0.50 70% companies 0.25 60% 1.00 0.95 1.00 1.20 1.30 1.
Slide 9: Views on Orion's future alternatives: General
Views on Orion’s future alternatives: General 1. Increase net profit and Shareholder value by dividends growing dividends Growing margins – especially due to 2a. Increase R&D and S&M spending Shareholder value by Nubeqa® higher future cash flows → develop more/faster and market cap new products Enjo
Slide 10: Timing challenge in R&D and commercialisation
Timing challenge in R&D and commercialisation Timing challenge (R&D and launch costs years • Already high payout ratio before sales) • Combination of gradual cannot be increased market expansion and clever • Long term post-Nubeqa® • Value creation requires also partnering likely needed value creatio
Slide 11: Views on Orion's future alternatives: M&A
Views on Orion’s future alternatives: M&A Funding currently available Upside potential New debt EUR 400-500 million Higher debt w/o share issue (while meeting the 50% equity ratio target) possible as profits grow R&D > M&A Risks Allows also Share issue 14,000,000 B shares more debt Additional R&D ≥
Slide 12: Key takeaways
Key takeaways 1. Profitable growth key to shareholder value increase 2. Capital allocation needs to support growth with right balance between short-term profitability and long-term returns 3. Selective M&As 4. Manage risks with partnering and right M&A strategy 5. Predictable and over time increasin
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