Earnings call transcript: Orion Oyj B Q4 2024 sees strong sales growth

Orion Oyj B reported significant financial growth in Q4 2024, with net sales increasing by 35.3% compared to the same period last year. The company’s stock responded positively, rising 6.39% to approach its 52-week high of $55.67. The market’s upbeat reaction was bolstered by the blockbuster success of Nubeka and strategic expansions in AI capabilities. According to InvestingPro, the company has maintained impressive revenue growth of 22.89% over the last twelve months, with a market capitalization now reaching $8.13 billion.

Key Takeaways

• Orion’s Q4 2024 net sales grew by 35.3% year-over-year.
• Nubeka exceeded 1 billion EUR in sales, achieving blockbuster status.
• The stock price surged by 6.39%, nearing its 52-week high.

Company Performance

Orion Oyj B demonstrated robust performance in Q4 2024, driven by a 35.3% increase in net sales compared to Q4 2023. The company’s full-year sales for 2024 grew by nearly 30%, indicating strong momentum across its product lines. Key drivers included the success of Nubeka and a 15.4% growth in the Easyhaler portfolio. InvestingPro data reveals the company maintains a healthy gross profit margin of 59.89% and has achieved an impressive return on equity of 38%.

Financial Highlights

• Revenue: Not specified, but significant growth reported.
• Operating profit: Increased by 33% from 2023 to 2024.
• Underlying business growth: 22% year-over-year.

Market Reaction

The stock price of Orion Oyj B rose by 6.39% following the earnings announcement, reflecting investor optimism. The increase places the stock near its 52-week high, suggesting confidence in the company’s strategic direction and financial health. InvestingPro analysis indicates the stock is currently fairly valued, with a P/E ratio of 23.09. The company has maintained dividend payments for 18 consecutive years, currently offering a 3.12% yield. For deeper insights into Orion’s valuation and 10+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.

Outlook & Guidance

For 2025, Orion projects net sales between 1,550 and 1,650 million SEK and operating profit between 350 and 450 million SEK. Key factors influencing this guidance include continued growth of Nubeka, R&D timing, and currency fluctuations.

Executive Commentary

CEO Lisa Hurome highlighted Nubeka’s success, stating, "Nubeka became a blockbuster during 2024, exceeding EUR 1,000,000,000 of sales." She also emphasized the importance of AI, saying, "Artificial intelligence is very important to Orion. It’s a tool we can do innovations with."

Risks and Challenges

• Potential U.S. import duties could impact future profitability.
• Increased R&D expenditure may pressure short-term financials.
• Currency fluctuations pose a risk to future earnings.

Q&A

During the earnings call, analysts inquired about potential U.S. import duties and their mitigation strategies. The company also addressed increased R&D expenditures for ODM105 and ODM212 programs, providing insights into future product development.

Overall, Orion Oyj B’s strong financial performance and strategic initiatives have driven positive investor sentiment, reflected in the stock’s recent gains.

Full transcript - Orion Oyj B (ORNBV) Q4 2024:

Tuka Herbonen, Head of Investor Relations, Orion: Good afternoon, ladies and gentlemen, and welcome to Orion’s earnings conference call and webcast for the fiscal year 2024. My name is Tuka Herbonen, and I’m the Head of Investor Relations here at Orion. As usual, in a few moments, our CEO, Lisa Hurome, will go through the results, after which you will have the opportunity to ask questions from Lisa and also from our CFO, Rene Lindell. We will be first taking questions from the teleconference lines, after which then we will turn to the questions you can post us through the webcast app. Kindly state your name and the organization you are representing before asking your question.

And just before letting Lisa take over, just a brief reminder about the disclaimer and forward looking statements. But with this, it’s my pleasure to hand over to Lisa.

Lisa Hurome, CEO, Orion: Thank you, Tuka. And good afternoon on my behalf as well, and welcome to Oreon twenty twenty four webcast. 2024 was a busy year for Oreon. In the beginning of the year, we refined our strategy and financial targets. During the year, we have both have activities with our current partners and some new partners.

In July, we converted our collaboration agreement with MSD to a global license to MSD. With Bayer (OTC:BAYRY), we got positive readout from Phase III of ARANO trial. And while I’m on NUBEKA, let’s not forget that NUBEKA became a blockbuster during 2024, exceeding EUR 1,000,000,000 of sales. To another partner, Alligator Bioscience, there we amended our agreement so that we got the full rights to our bispecific antibodies. Then regarding pain, we also signed an agreement with ABILITA to develop antibodies against or towards the NAV 1.8 ion channel.

We made agreements with Glycos and Invenra to develop new cancer drugs. And we made an agreement to license our digital platform for neurology and pain to neural for them to develop further. Artificial intelligence is very important to Orion. It’s a tool. We can do innovations.

We can speed up things along our value chain. We have made a deal with a company called Aetia, a US based company, to speed up our research for cancer drugs. They are a well known company. They have digital twins and a load of data from patients all around the world that we can now use for our studies. And one big thing that we achieved actually early this year, we are also concluding activities and milestones from early this 2025, is that we did the go live for our new ERP system.

That’s not the small thing. I think everybody who works in the industry or any industry knows that new ERP implementations can be tricky. But I am happy to report that this project that lasted several years has come to a very happy conclusion and everything is working well. Our drugs from the day one, our drugs were reaching the pharmacies in all countries. Money was going to from Orion and to Orion and all our operations have been working.

So very well done. I’ll take this opportunity to thank the whole Oreon team who worked with this program. Then on the social side, we were able to validate our near term emission targets by science based target initiative. And on the social side, we started collaboration with Save the Children to protect the most vulnerable ones in this world, both in Finland and outside Finland. There have been several changes in management in my executive team.

Rene Lindell was appointed CFO in 2024 and started May 1, and he will join me here later today. Julia MacKerey started last February as a Senior Vice President for People and Culture. And the newest appointment is Mr. Mikko Kempeinen, who’s been appointed as General Counsel and Secretary to the Board of Directors as of January year. And I welcome, of course, all of you and especially Mikko as the latest addition to my group warmly to join this group.

Now let’s look at the Q4. Q4 was very strong regarding sales on all fronts. We do know that Nubeka clearly drives the growth, but I am happy to tell that all our divisions developed positively. So net sales in Q4 compared to the Q4 in 2023 grew 35.3%. Operating profit was at the same level.

And here we, of course, need to remember that when we compare Q4 twenty twenty four to ’twenty three, in ’twenty four ’twenty three, we received EUR 30,700,000.0 when we transferred our pension fund to a private company. So that, of course, has an effect on this comparison. And let’s remember that we also did two write downs, one for the ODM-one 11, one program with €17,500,000 and the other one when we terminated our collaboration with Marinos, and that write down was €23,500,000 So this is the comparison period and these write downs clearly had an effect on our operating profit during the last quarter, but sales developed very well and cash flow was strong. Almost the same applies except for the operating profit for the full year. During the 2024, our sales grew almost 30% compared to the full year 2023.

Again, the common drivers, Nubeka, Easyhaler and all our divisions. And of course, NOK130 million of milestones, the other one being Nubeka sales milestone and the other one that we received from MS there when we converted the agreement. And again, these milestones had a big effect on operating profit, so we were able to take the write downs of SEK 41,000,000 and also the increase of cost both on R and D and sales and marketing. And cash flow looks very strong and grew from the previous year. What I’m extremely happy is that even though milestones are an important part, an integral part of our business as we do license our product rights and we do collaborations.

And I think last year proved that with the 130,000,000 milestones, the underlying business is growing in a healthy way. Almost 22% of growth of underlying business from 2023 and thirty three percent from growth of operating profit from 23% to 24%. We’ve also seen during 2024 and already in 2023 that our yearly cycle or financial year is very back end loaded, mainly due to the Nubeka royalties. The royalties are cumulative on a yearly basis. So we start on a lower royalty rate, which then increases during the year as certain sales certain cumulative sales triggers have been reached.

And of course, as the Nubeka sales per se grows all at the same time, it’s really back end loaded. And last year, of course, the milestones were also received in Q3, which made it even more back end loaded. Our net sales bridge, nice blue colors on almost all of our main products and divisions with an exception to Entekapone, where volumes do increase but prices decrease. And the usual suspects of SIMDACS and Dexter here in the column one, which are still sliding down due to generic competition. And on the operating profit, it’s good to note the biggest factors, milestones of royalties of SEK 147,100,000.0 and then milestones of approximately SEK 100,000,000.

And then the biggest downside is here, the write downs of SEK 41,000,000. I think this slide of Innovative Medicines division describes even better the backend loaded year, financial year, because this only shows the innovative medicines. Of course, this goes from the beginning of the and I’m talking about the right handed picture of the column picture. It starts from 2023. But even if you look at 2023 and then you look at the 2024, it’s so very clear how the royalties increase towards the end of the year with both the percentage and the absolute amount of sales increasing together with the product sales that we produce as we produce the product to Bayer.

And on the other picture, you can clearly see how milestones have especially high impact on innovative medicines result. Branded products performed very, very well. 10% of growth in branded market is a good achievement. Easy Halo was clear driver in this portfolio with 15.4% growth. And in Easy Halo portfolio, it’s the budesonide formaterol combination product with 22 growth that drives that product portfolio of six products.

And as I mentioned, Entacapone is suffering on the price decreases around the world even though the volumes are growing. And Divina series, mainly Divigel, which is an estrogen gel product for HRT, grew 15%, a very good result. And generics and consumer health with the growth of 2.1% was also an excellent development. Generic business growth in Europe, say, from 2% to 5% depending on the country, but on average, so we are clearly where we should be. And let’s remember that in this portfolio, we have SIMDEX and DEXTOR.

And in ’twenty three, there were also gains from some divestment of brands in Russia. So the comparative period is very challenging and still we were able to create growth here. And if I deduct SIMDEX and Dexter from this equation, the generic peer portfolio grew almost 6%. And here also, last year, we saw a very accelerated growth towards the end of the year, mainly due to the some legislative tax changes in Finland regarding drugs. So there were some busy months towards the end of the year in the pharmacies in Finland.

And all key markets performed very well. Animal health bounced back. 2023 was very difficult year for animal health, but it has clearly bounced back. Our partner Zoetis (NYSE:ZTS) is back on track and filling their stocks, and we are delivering. And also all our own regions are performing well.

The only division that’s showing a slight decline is Fermion. But let’s remember, this is only external sales and that fluctuates quite a lot depending on when we have deliveries to our business to business customers. And there has also been some capacity constraints due to internal manufacturing of internal APIs. Top 10 slide clearly shows the same story. Maybe in addition to the previous ones, I could add the number nine and ten, which is Fareston and Trexan, the old timers, old but very good treatments, which we mainly sell to partners all over the world.

So these might fluctuate from plus to minus with rather big numbers, even from one quarter to another one, depending on when we have deliveries to our partners. It’s good to also note that the balance between divisions has it has not changed dramatically, but there is clearly a change going forward so that Innovative Medicines is now 34% of our revenue. If I remember correctly, last year at this time, it was around 20%. So clearly, Orion is becoming more and more innovative company. And the generics are also 34% and brandy products 19 of the whole revenue.

Our clinical pipeline has the two Nubeqa studies or darolutamide studies, Aranote and ARASTEP. These are Phase III studies. Aranote being in the registration phase and two Phase III studies for opevesostat, Omaha one and Omaha 2A and SUPEDES also with opevesostat. It’s a Phase two study that continue is a continuation from the previous Phase two study, which we used to go and start the Phase III studies that I mentioned. On cancer therapy area, we have ODM-two twelve, which is a TID inhibitor and target is solid tumors.

It’s in Phase I. And we are currently expanding the Phase I study to do more extensive dose valuation based on the FDA’s recent new guidances from the end of the last year. So we will continue the Phase one study for a while to be according those guidances or work according those guidances. And then Tasipimidin ODM105, which is targeted to insomnia, to treat insomnia. Also there, we are recruiting more patients and transferring from a kind of a classical Phase IIa, which are usually very small studies where you just show and try to see the proof of concept for your theory.

So now we are expanding the patient population to a normal Phase two study. And the reports of the Board of Directors, financial statements, sustainability statement, corporate governance statement and remuneration report for 2024 will be published at latest in week 11. And now to the outlook for 2025. Outlook for net sales ranges from SEK 1,550,000,000.00 to SEK 1,650,000,000.00 and outlook for operating profit ranges from SEK $350,000,000 to SEK $450,000,000. The basis for this outlook is, of course, growth of Nubeka.

That’s the most single and significant variable in our net sales range. And here you can see in this slide how we estimate actually the underlying net sales and how the ranges are estimated to develop. And when we think that what are the factors that would have the biggest effect on our operating profit and how that will eventually develop, of course, Nubeqa is one of the biggest items. Another one is timing of R and D costs. Some programs do go faster, some goes maybe slower.

So we never know at this time of the year how the R and D cost will actually eventually be towards the end of the year. And now, maybe this is after many years that we need to mention even the currency. So here, the U. S. Dollar might have also a significant effect on the operating profit.

And we don’t include any major milestones in our outlook for 2025. And save the date, we will host Capital Markets Day on May 22 in Helsinki. We will share more light and elaborate our businesses and their future, also our R and D. But this is not bound to any specific event within the company. It’s really more to share information with our investors and markets.

And here you can find all the other upcoming events and dates for those. I thank you for your attention at this point and we welcome the questions to me and Renee will join me here on the stage. And Tuka, of course.

Tuka Herbonen, Head of Investor Relations, Orion: Thank you, Lisa. Now we could immediately hand over to the operator to see whether there are any questions on the teleconference lines. So please go ahead, operator.

Conference Operator: If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Victor Sundberg from Nordea. Please go ahead.

Victor Sundberg, Analyst, Nordea: Hi. Thanks for taking my questions. So I have a few. So maybe to start off, your range in guidance is a bit wider versus last year in terms of millions of euros. So just wondered why is that and what factors do you think are important to consider whether you would end up in the higher part of guidance or that could lead you to ending up in the lower end of guidance?

I think I’ll start with that question. Thanks.

Rene Lindell, CFO, Orion: Yes. So if you look at the net sales guidance last year, we had a total range of 70,000,000 and this year is 100,000,000. So there is an increase in the range. And as was said in Lisa’s presentation, the largest single factor, of course, is Nubeka. And if you look at the year to year growth already this year was quite significant.

And as it’s taking a larger share of the also of the company net sales, it’s only natural that actually our guidance range will reflect that. So that’s the explanation for the net sales. On the EBIT side, it’s also been noted that last year, yes, we had a narrower range. But here again, Nubeka is a quite high margin product. So whatever happens in the net sales range will fall with a high percentage also to the EBIT side.

And also, it has to be noted that R and D expenditure is a bit hard to predict on a yearly basis, even though we know every project’s cost and how they’re going unfold over several years, the timing does have a big impact, and that can have also impact on the EBIT on the year, as we also saw last year. So that’s why the EBIT range is of a similar size because of these factors.

Victor Sundberg, Analyst, Nordea: Okay. And I just wondered here on Nubeka milestone payment. Of course, in 2025, we have no milestone payment for Nubeka. But I have noticed that in some service for buyers global Nubeka sales, they’re quite close to EUR 2,000,000,000, if that would be a trigger for such a payout. Could you please comment if that’s completely ruled out or whether that’s modeled to be very early in 2026 and if that could end up in the end of twenty twenty five, etcetera?

Lisa Hurome, CEO, Orion: Well, we have not enclosed what would be the trigger for that 180,000,000 milestone. And we don’t have any such information that would give us a possibility to state that we would receive that EUR 180,000,000 this year.

Victor Sundberg, Analyst, Nordea: Okay. Thank you. And just a final question. In terms of product sales, could that be a bigger part of Nubeka figures once our note is fully approved just initially as buyer might expect an initial higher demand for that product when it’s launched? Or how should you think about that?

Lisa Hurome, CEO, Orion: I think a very good question. We actually saw already when the Aranaut results came out that there was a hike in usage of Nubeqa and our deliveries. So it’s difficult to estimate what will be the final effect when the marketing authorization is there. However, that is the group that Aranod is addressing and the usage that Aranod is allowing when the marketing authorization is there is not that big that it would change the picture just by that study. And I think it has already gradually started to my understanding.

Victor Sundberg, Analyst, Nordea: Okay. Thank you very much. I’ll jump back in the queue. Thank you.

Conference Operator: The next question comes from Sami Sarkomies from Danske Bank (CSE:DANSKE). Please go ahead.

Sami Sarkomies, Analyst, Danske Bank: Hi. I have several questions. We’ll take this one by one. Firstly, starting from potential import duties to The U. S, a couple of questions related to this.

If we assume these duties, would you be able to mitigate them somehow? Would you anticipate impacts to your competitive position in The U. S? And do you see a scenario in which a buyer would call the product to The U. S.

Upfront in order to mitigate potential import duties?

Lisa Hurome, CEO, Orion: Well, this is a very, how would I put it, actual question because we saw we see all the time in the newspapers and TV a lot of talks about these tariffs and all that. However, as I know it and as much as I follow The U. S. Market and we meet with our partners, they seem to be and everybody seems to be quite calm at the moment. There is a lot of turbulence under the surface, but nothing has yet happened.

Nobody knows how these tariffs would be applied, which type of products and whether they would be applied to pharmaceutical, the finished goods, APIs, how this would all span out eventually. But right now, as much as I know, there is no panic. Then, of course, it’s another question if I think the initial idea there is that companies would transfer their manufacturing to U. S. Transferring manufacturing in pharmaceutical industry is not easy.

It will take several years to transfer any products manufactured to a different site, not to mention to a different continent with all the regulatory requirements. So if that I think they or whoever thinks about this has to take this into account. Then you ask whether Bayer would mitigate the risk by ordering or preponing their orders in the face of such situation. Of course, that’s one possibility for any company who’s sourcing from Europe or outside U. S, but we don’t have any knowledge about any such activities.

And then again, if such tariffs would be implemented, if I look at Orion as a European company having manufacturing, both API manufacturing and pharmaceutical manufacturing in Europe, it could actually be an also an opportunity for us if there would be higher tariffs to China. So you always have to think about that. If there is something that’s happening on this front, it might actually offer a possibility on other front, business possibility.

Sami Sarkomies, Analyst, Danske Bank: Okay. Thanks for the color. Then moving on to R and D. You’re guiding for higher R and D expenditure this year. Can you be a bit more specific on which programs are likely to cause the increase in R and D expenditure?

Lisa Hurome, CEO, Orion: Well, the ODM105 and ODM212, as I explained, we are expanding both programs during the next year. Of course, those two will be significant contributors to the costs. And we have mentioned earlier that in our research date, we have biologicals, and those are actually much more they are more expensive to develop in the early stage because you need to develop your GMP level product, your pharmaceutical product already before your Phase I. So we also have programs, biologics programs ongoing where we are investing in R and D. And those also raise the cost.

And then there is the whole research and discovery portfolio, which we are also investing more.

Sami Sarkomies, Analyst, Danske Bank: Okay. Thanks. Then the next question would be on the VAT change that you mentioned. How materially did it impact your sales in Q4? And should we expect that it will then sort of or Q1 will suffer to similar magnitude?

Lisa Hurome, CEO, Orion: Well, actually, the impact was quite significant. I think it was the last month, actually December. I think people kind of realized that now you have to go to pharmacy and take your prescriptions out to get it with the lower VAT. Of course, there might be a possibility that it is reflected to Q1. But as prescription drugs are reimbursed in Finland for a three month period, except for the very expensive cancer drugs which are reimbursed for one month, then it would not have any effect.

And even for the cheaper ones for a three month period, people will have to go and get them by the end of Q1. So we think that actually it will be balanced out during the Q1. But of course, we don’t know it. But if you if we use this logic, it should balance out.

Sami Sarkomies, Analyst, Danske Bank: Okay. And then finally on your CapEx needs for the coming years, what investments do you still need to make thinking of production capacity for Nubeka and ODM-two 08?

Lisa Hurome, CEO, Orion: Well, our CapEx, we have started all the investments CapEx investments for the Nubeka already, mainly in Fermion in Hanko. So those are all ongoing. Of course, they take some part of our CapEx but not the majority. So we are investing all the time to new Easyhaler capacity, both packaging, manufacturing line and for other parts of the company and manufacturing. So I think our CapEx and now I ask and turn to Rene.

I think it’s on a quite normal how would I say, normal level that it has been earlier now that we got ERP program is finalized.

Rene Lindell, CFO, Orion: Yes. I think when you consider Nubeka and 02/2008, those don’t do not trigger any significant CapEx needs for the coming years. So a lot of those investments are ongoing and as part of our, I would say, normal CapEx levels.

Brian, Analyst, Jefferies: Yes.

Conference Operator: The next question comes from Brian from Jefferies Please go ahead.

Brian, Analyst, Jefferies: Hey, it’s Brian from Jefferies. Thanks. Just one question on new back up. I was just hoping you can help us understand the extent to which that big new back up tick in 4Q is driven by I guess, step up in the royalties for 4Q is at around 23%. And then just kind of what royalty rate we should be expecting for this year?

Thank you.

Rene Lindell, CFO, Orion: I think we haven’t disclosed the details of the royalty rates. But of course, as you saw also in the slides that there’s two effects when we look at quarter quarter development. You have both the growth in volumes of Nubeka, but then you have also the tiered royalty that grows during the year. And of course, for us, it reaches the highest in the last quarter. So those are driving that and that’s why you see this big spike.

So we want to draw the attention that this is also what we expect going forward to be the dynamics.

Brian, Analyst, Jefferies: Got it. So it’s still approximately 20% for the full year? Is that still this?

Rene Lindell, CFO, Orion: I mean, we haven’t disclosed that levels of details.

Brian, Analyst, Jefferies: Okay. Got it. Thank you.

Conference Operator: The next question comes from Iris Timon from Carnegie. Please go ahead.

Iris Timon, Analyst, Carnegie: Hi. Thanks for taking also my questions. I have a couple of questions and if I’ll also take these one by one. So firstly, could you just provide an update on your expected pipeline is both for the next twelve to twenty four months?

Lisa Hurome, CEO, Orion: Okay. For the next twelve and twenty four months, I think, was the question. Well, now that we I think this year is very much preparing, as we explained, our ODM212 and ODM105 Phase I and Phase II so that we have enough data and patients to move to next steps. So that would include twenty four months that during 2026, we would be able to start Phase two for ODM212 and Phase three for ODM105. And hopefully, of course, now that I am talking about only the clinical programs, of course, we expect to see new projects in our clinical pipeline at latest in 2026.

Iris Timon, Analyst, Carnegie: Okay. And yes, related to your early stage pipeline, so basically how many projects are there? What kind of projects? And I think you had a target to bring almost every year one or two projects to the clinical pipeline. So are you not expecting to bring any projects this year to your clean up pipeline?

Lisa Hurome, CEO, Orion: Well, I’ll answer first for the first question. We have not disclosed our research or discovery pipeline. I can tell you that it’s we have tens and tens of projects. They are very well focused in oncology and pain, all the projects. We have both small molecules and biologics, as I already mentioned.

We have biologics and that’s of course a new area for us and we already see that it shapes up a bit, you know, how the development program goes on, that you already do your GMP work for your final product, you know, before you go to phase one. Then a very fair enough question of why are we not telling that we are bringing new projects in clinical stage this year. Let’s, of course, remember now I’m talking about our internal pipeline. We are all the time also looking for projects through in licensing and partnering. That’s another source for our clinical pipeline.

So of course, we look for possible candidates from outside Orion as well.

Iris Timon, Analyst, Carnegie: Okay. That’s clear. And then finally, so basically regarding headwinds and tailwinds. So can you comment that do you expect more tailwinds or headwinds? And can you clarify what are those?

Lisa Hurome, CEO, Orion: Well, looking at this year, I think headwinds are there. I mean, I’m sorry, tailwinds are there. I’m thinking going ahead, you know, so tailwinds are definitely there with the Nubeka and increasing sales and both in euros and volumes and with the new, I don’t know, indication. I think all that is very good. We also see Easyhaler demand growing all the time in Europe and the generics.

Pricing seems to be kind of stagnating. We don’t see yet a significant increase of pricing, but we see that it’s the prices are not dropping as fast as they used to do. So I think that’s definitely good for our portfolio and our company, which has a big and significant generic business. Then I’m thinking about the headwinds. Well, I think in the form of risks, as Rene mentioned, the currency, the U.

S. Dollar is one. You never know to which direction the world goes these days. I think probably the geopolitics is the big question here, if I really think the headwinds that we know no one of us knows now whether there will be tariffs to on pharmaceuticals by U. S.

We don’t know how the euro and U. S. Dollar will develop, and we don’t know what’s going to happen. So I would actually think that that’s one of the biggest tailwinds that this how would I say, situation where we can’t really forecast very far what will happen. We can forecast with our products, but at the same time, I think everybody understands that there can be things that happen independently of us.

Tuka Herbonen, Head of Investor Relations, Orion: Operator, we have a couple of questions from online. Actually, one is from Brian, who already posed his question through the telecom line. So we have one question here. This comes from a private person called Jurgen Ishemayer, and he asks, will you be able to manage new Pekka demand growth without external partners, assuming further similar growth rates? So do we have enough capacity to

Lisa Hurome, CEO, Orion: Yes, we do have. With the growth rates that we have been assuming now and with that Bayer has forecasted, we are able to manufacture at Orion and at Fermion. We already mentioned with Rene that actually all the CapEx investment for NUBEX are already ongoing and have been ongoing for years at Fermion or in Fermion. So we are well prepared.

Tuka Herbonen, Head of Investor Relations, Orion: Thank you, Lisa. Oh, got a message that there should be one more question through the telecom line. So I will hand it back over to the operator.

Conference Operator: The next question comes from Ansi Rausi from SEB. Please go ahead.

Ansi Rausi, Analyst, SEB: Yes, thanks. One question from me, Ansi Rausi from SEB. Just to continue on your guidance and maybe wider than usual EBIT guidance range. So of course, I understand that there’s great uncertainty regarding R and D expenses, for example. But if we think about Nubeka and of course you issued multiple guidance upgrades during 2024.

So do you actually see some negative or let’s say headwinds in Nubeka’s sales? Or is it more like you have left wider upper end of the range to say when you try to estimate your 2025 Nubeka sales?

Rene Lindell, CFO, Orion: Yes, of course. I mean, there are we discussed already headwinds. And of course, there are things that could impact the EBIT. We discussed the FX. The USD euro does have an impact on its own even without volumes.

And naturally, when you have a big product like Nubeka and forecasts are can be wrong in the both ways. And of course, it’s forecasted to grow quite significantly, then we need to leave some room also for that growth might be less or then that our tablet sales might be a bit higher. And depending on the timing of that, our royalty end of the year could have a fluctuation just because of that even if the demand is there.

Ansi Rausi, Analyst, SEB: Okay. But nothing has changed with your guiding process, for example, or what kind of information you received from Bayer that they try to estimate 2025 sales?

Rene Lindell, CFO, Orion: No, I think we are all the time improving the process. And I think hopefully, we are even better this year. And I think we learn all the time more from the market. So on the contrary, I think it’s even hopefully, even better information now.

Ansi Rausi, Analyst, SEB: Yes. Okay, great. No more questions from me.

Tuka Herbonen, Head of Investor Relations, Orion: I guess there are no further questions on the telecom lines. We have still a couple of more coming online. This is coming from Graham Barry from Bank of America. The first one is probably for Rene. He asked, do we have a gross margin outlook for the year ex Newpecker royalties?

Rene Lindell, CFO, Orion: No. Our outlook is basically to what we stated in net sales and operating profit.

Tuka Herbonen, Head of Investor Relations, Orion: So no color on that how that might develop going further if you know? No. All right. And the second one is going back to U. S.

And tariffs. So tariff exposure, presumably mainly Newpecker manufacturing sales to Bayer, so our sales to U. S. Remind us where NUPEKA is manufactured and do you sell the product to a U. S.

Or European subsidiary of Bayer? So basically, Graham wants to know, does Orion have tariff exposure? Or are we sitting with Bayer with this issue?

Lisa Hurome, CEO, Orion: Well, that much I can say that the tablets are manufactured and the API is manufactured here in Finland at Orion and Fermion. I wouldn’t like to go into more detail of arrangements between Bayer and Orion, where the tablets are shipped also. So I think that’s a business confidentiality business confidential information.

Tuka Herbonen, Head of Investor Relations, Orion: All right. Thanks, Lisa. Now we have exhausted all the questions online and hopefully also through teleconference lines. So with this, I think we can conclude this event. Thank you all for your attention.

Good questions. And hope to see you in our Annual General Meeting, which is planned to be held in the April and then, of course, the next quarterly report and finally in May, the Capital Markets Day here in Helsinki. So thank you and bye for now.

Lisa Hurome, CEO, Orion: Thank you.

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