• Revenues amounted to MSEK 762.0 (721.2), corresponding to an increase of +6% for the period.
• The organic growth[1] during the fourth quarter was +9%. The currency impact in the quarter was 1% while the acquisitions adjusted for the divestments generated a net effect of -5%.
• EBIT (Operating Profit) amounted to MSEK -52.7 (-16.1), corresponding to a decrease of 228%.
• EBITDA[1] (Operating Profit after depreciation and amortization) amounted to MSEK 96.9 (114.7) corresponding to a decrease of 16%.
• The gross margin[1], defined as gross profit divided by revenues, was 57.0% (49.3%). The margin was affected positively by product mix in the quarter.
• Cash flow from operating activities amounted to MSEK 260.2 (104.8).
• Earnings per share was SEK -0.48 (-0.12), before and after dilution.

[* 1] Alternative Performance Measures (APM), see page 21 for further information.
Summary, January - December

• Revenues amounted to MSEK 2,961.4 (2,882.9), corresponding to an increase of 3% for the period.
• The organic growth[1] during the year was +3%. The currency impact was -0% while the acquisitions adjusted for the divestments generated a net effect of -0%.
• EBIT (Operating Profit) amounted to MSEK 205.9 (230.3), corresponding to a decrease of 11%.
• EBITDA[1 ](Operating Profit after depreciation and amortization) amounted to MSEK 771.8 (725.0) corresponding to growth of 6%.
• The gross margin[1], defined as gross profit divided by revenues, was 57.6% (55.3%) for the year. The margin was affected positively by the acquired product portfolios, the divested Hospital Supply business and by realized synergies in production and distribution of products.
• Cash flow from operating activities amounted to MSEK 532.6 (329.2).
• Earnings per share was SEK -0.08 (0.37), before and after dilution
• The Board of Directors proposes that no dividend is to be paid for 2021.

On the financial side, Karo saw continued positive sales momentum in Q4, following the positive development in Q3. The business grew by 9% organic growth, or 6% when adjusting for currency effect (1%) and the divestment of a portfolio of smaller Swedish brands on July 1 (-5%).

The gross margin improved to 57% (was 49% in the same period last year), positively impacted by a changed product mix from acquisitions/divestments as well as delivery of tech transfer project that reduce our costs of goods.

EBITDA declined by 16% in the quarter, which was driven by two key elements: First, a step-up in investments in A&P and our commercial organization to drive future organic growth, particularly in the digital arena, which is in line with the messages from previous financial announcements. Second, transaction fees and costs related to acquisitions of Sylphar and E45 that were announced in Q4.

The operational cash flow was strong in the quarter and grew 148% compared to the year prior. This illustrates that the negative earnings recorded in the period were driven by non-cash items, such as amortization of product rights that reflect Karo's M&A activities. It also illustrates that we have made substantial improvements on our net working capital management that positively impacted the quarter.
In terms of the long-term transformation plan, Karo announced two important acquisitions in Q4 that strengthen Karo's commercial footprint and capabilities and add to our scale:
 

- The Sylphar acquisition adds approx. MEUR 70 in sales and a list of strong brands to Karo. Most important are the digital-first brands, Nutravita, and Alpha Foods, as well as Remescar, which has been transforming from a brick & mortar to an omnichannel brand in recent years. With the acquisition we also add ~85 colleagues located in Ghent, Düsseldorf and London that infuse valuable competencies and know-how related to digital marketing, new product development and e-commerce to Karo.

- The E45 brand acquisition adds approx. MEUR 50 in sales as well as critical mass to our UK operations. It also strengthens our position as a leader within skin health in Northern Europe, particularly in problem skin where we also own brands such as Decubal and Locobase. E45 is a renowned brand, and we will strengthen our UK and skin care teams to drive the brand forward. We will also drive E45 on e-commerce channels, leveraging the capabilities of the Sylphar organization.
 

The priorities for 2022 are clear. We will be driving organic growth, integrating the acquired businesses and invest further into our brands, notably in the fields of digital and e-commerce. We shall also be optimizing our operations and looking for efficiencies across our business to free up investments and capacity that can fuel our growth. We are pleased to embark on this journey with a team of now 330 Karo'ites that constitute a diverse, resourceful, and highly engaged team.

Christoffer Lorenzen
CEO
 
Financial calendar

Annual Report 2021 Week 14, 2022
Interim report January-March* May, 2022
Annual General Meeting May 5, 2022
Interim report January-June Jul 20, 2022
Interim report January-September* Oct 25, 2022

*Subject to change pending change of listing from Nasdaq Stockholm to Nasdaq First North as announced in press release December 15, 2021.
  
Contact
Christoffer Lorenzen, CEO, +46 73-501 76 20, christoffer.lorenzen@karopharma.com
Jon Johnsson, CFO, +46 73-507 88 61, jon.johnsson@karopharma.com
About Karo Pharma
Karo Pharma offers "Smart choices for everyday healthcare". We own and commercialize reliable original brands within prescription drugs and over over-the-counter consumer products. Our products are available in over 60 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 Stockholm, Large Cap.
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 February 25, 2022, at 14.00 CET.