Interim report H1 2022

January – June

· Revenues amounted to MSEK 1 965.3 (1 460.9), corresponding to an increase of +35% for the period.
· The organic growth1 during the period was +6%. The currency impact was +3% while the acquisitions of the Sylphar Group and E45® brand portfolio from Reckitt generated growth of +26%.
· EBIT (Operating Profit) amounted to MSEK 3.8 (159.1), corresponding to a decline of 98%.
· EBITDA1 amounted to MSEK 394.6 (440.4) corresponding to a decline of 10%. Adjusted for non-recurring transactional cost of 92.0 MSEK directly related to the acquisitions of new business combinations the EBITDA1 would be MSEK 486.6 equal to an increase of 10%.
· The gross margin, defined as gross profit divided by revenues, was 56.6% (58.6%) for the period. The margin was affected negatively by mix effects from the acquisitions.
· Cash flow from operating activities amounted to MSEK 146.2 (172.1). Adjusted for non-recurring transactional costs mentioned above, the Cash flow from operating activities would be MSEK 238.2.
· Earnings per share was SEK -0.56 (0.14), before and after dilution.

1 Alternative Performance Measures (APM), see notes for further information.

Comments by CEO Christoffer Lorenzen

Karo continues to grow at a fast pace and to develop as a business and organization. In the first half of 2022 we executed according to the objectives for the year laid out in the 2021 Annual Report. Specifically, we have integrated acquired businesses, expanded our geographic footprint, and accelerated investments into people, (digital) competencies and brand activation. We have also lifted the organic growth rate from Karo’s existing businesses.

The first half of 2022 saw revenue growth of 35% vs. the year prior, driven by the additions of the acquired businesses, Sylphar and the E45 brand. About 15% of sales are now generated by our so-called digital-first portfolio of brands. The organic growth came in at 6% in difficult consumer markets.

Through H1, Karo has continued to demonstrate resilience and robustness in a rapidly changing and volatile business environment: Karo’s delivery performance (service level) is sustained at levels above 98% despite supply chain disruptions, which have adversely impacted many international businesses. Simultaneously, Karo’s gross margins have, when adjusting for the mix effect from recent acquisitions, increased compared to the year prior. This reflects that we have successfully absorbed and responded to cost increases from our suppliers related to raw materials and energy cost increases by increasing our outbound price points. The decrease in reported gross margin is the result of the acquisitions, which have increased logistics costs, specifically approx. MSEK 100 in costs related to Amazon’s logistics services, FBA (fulfilment by Amazon). 

H1 saw high levels of activity related to M&A transactions and our corporate finance agenda, which resulted in non-recurring, one-off costs that were not related to ordinary course of business of just below MSEK 100. These costs distort the reported financials related to our core metrics, EBITDA and cash flow. When normalizing for them, our adjusted EBITDA grew 10%. 

Highlights from H1 include:
· The Sylphar business acquisition closed on January 13. The Sylphar business has been integrated and a new organization put in place that leverages Sylphar’s entrepreneurial strengths within digital marketing and digital commerce to drive organic growth across the entire Karo portfolio of brands.
· E45 transaction closed on April 1. Take-over of the brand from Reckitt is running according to plan with first commercial markets going live on July 1 (including Spain and South Africa).
· Fully subscribed rights issue of MEUR 250 completed securing financing of Karo’s recent acquisitions; change of listing venue to Nasdaq First North completed on March 23.
· ESG targets released in connection with the 2021 Annual Report, setting a clear and ambitious agenda for Karo’s continued development at the forefront of the important sustainability agenda.
· Direct commercial organization established in Spain, expanding Karo’s footprint to one more EU M5 market.
· Continued development of Karo’s commercial organization with a step-up in A&P investments and investments into digital commerce and digital assets.
· The Karo organization remains highly engaged with eNPS scores increasing to 60 in June ’22 (compared to 52 in June ’21).
· As a response to the war in Ukraine, Karo donated pain killers (1.6m doses of paracetamol and ibuprofen) and hand sanitizers (Decubal Hand Wash and DAX Alcogel) to serve specific needs at Ukrainian hospitals and emergency units. The donations are a result of collaboration with global aid NGOs and the Swedish authorities and serve as a testament of the relevance of Karo’s brand portfolio in serving important healthcare needs.

With the above moves we are a step closer to delivering on our promise of creating a highly efficient, leading European platform in everyday healthcare!

Christoffer Lorenzen

Significant events after period end
Nothing to report.

Financial calendar
Year-end report 2022           Feb 22, 2023

The Annual Report 2021 was released April 12, 2022 and the Annual General Meeting was held May 31, 2022.


Christoffer Lorenzen, CEO
+46 73-501 76 20 

Jon Johnsson, CFO
+46 73-507 88 61

About Karo Pharma
Karo Pharma offers “Smart choices for everyday healthcare”. We own and commercialize reliable original brands within prescription drugs and over-the-counter consumer products. Our products are available in over 90 countries with the core in Europe and the Nordics region. The headquarter of Karo Pharma is in Stockholm and the company is listed on Nasdaq First North Growth Market.

This information is information that Karo Pharma AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on July 21, 2022, at 08.00 CET.