Orthex

We expect revenue to have grown slightly, driven by the Nordics, but the raw material price spike is now hitting earnings in full.

17:09

The current decade has been anything but easy for Orthex. Inflation, interest rates, and rising raw material and energy prices have all thrown a wrench in Orthex's gears.

Although Orthex's valuation appears moderate based on normalized earnings, prolonged inflationary pressures on plastic raw materials have weakened the short-term outlook and the stock's expected return within a 12-month period.

Orthex's Q2 figures were operationally slightly stronger than our expectations, although one-off costs related to strategic projects weighed on the reported result, bringing it below our estimate. During the review period, the revitalized sales in the Nordic countries and resilient gross margins demonstrated the company's ability to pass increased production costs into its prices.

With the increase in oil prices following the conflict in Iran, we estimate that Q2 has been a balancing act between growth and profitability for the company.