Translation: Original published in Finnish on 08/19/2025 at 09:19 am EEST

Source: Inderes & Bloomberg (consensus)

Orthex will publish its Q2 report on Thursday at 9:00 am EEST. We expect modest sales growth in the Nordics, but the weakness of individual larger customers in export markets is expected to have pressured group-level revenue into a decline, as in Q1. Our attention will be particularly drawn to the development of sales in export markets and any potential comments on the progress of the company's ongoing strategy work or communication. We will review the interim report on Thursday in our earnings live (in Finnish) starting at 8.55 am EEST.

Cautious signs of recovery in the demand environment 

Based on retail sales indicators, Orthex's business environment has shown cautious signs of recovery in Sweden, but overall, the demand environment has remained sluggish. We expect Q2 revenue to decline by 2% to 20.5 MEUR. We expect invoiced sales in the Nordic countries to have grown by 1%, but weakened revenue from export markets to have pushed group-level revenue into a decline. In export markets, growth faces significant headwinds, as we expect Orthex to have restricted its sales, as it did in Q1, to some distributors struggling with financial difficulties. In our view, Orthex's European distribution network, more so than in the Nordics, consists of partners like department stores that perform weaker in a soft demand environment, and the impact of this was emphasized in Q1. 

Declining revenue weighs on profitability in our forecasts

Q2 is invariably Orthex's weakest quarter in terms of profitability due to a typically lower-margin sales mix and production preparing for the summer maintenance shutdown. During the quarter, Orthex's raw material prices have, in our view, decreased slightly year-on-year, as a result of which we have raised our Q2 comparable EBIT estimate to 1.4 MEUR in connection with the earnings preview (was 1.3 MEUR). However, in our forecasts, the decline in revenue weighs on profitability year-on-year. 

We expect revenue to return to growth by the end of the year, but full-year growth will be negative 

Orthex has not provided guidance during its time as a public company, and we do not expect it to provide guidance in connection with the report either. We expect the company's revenue to decline by 1% this year to 88.7 MEUR due to weakened invoiced sales in export markets. Our comparable EBIT forecast is set at 9.8%. For the current year, both will fall quite clearly short of the company's targeted 5% revenue growth and 18% EBITA margin. We consider the company's growth target achievable over the cycle, but achieving the EBITA margin appears distant based on the company's historical profitability. The company's management has mentioned ongoing strategy work, in connection with which we consider an update to the financial targets possible. We do not expect the company to provide visibility into the strategy work in connection with the Q2 report, but comments on its progress and potential future communication will be of particular interest on the earnings day.