Oriola-KD warns as the company's Russian operations disappoint once again

Oriola-KD’s (OMXH: OKDAV, OMXH: OKDBV) problems in Russia continue. The pharmaceutical retail and wholesale company with operations in Finland, Sweden and Russia revises its 2011 guidance and takes an impairnment charge of 33 million for intangible assets of the Russian Stary Lekar brand. The company says that pricing power of Stary Lekar has declined.

Oriola-KD now expects net sales to increase over 10% for 2011 and operating profit excluding one-off items and impairment charges to exceed 20 million Euro. Previously the company was saying operating profit excluding one-off items will be clearly better than in 2010. 20 million Euro excluding one-off items would be lower than 22.5 million Euro result in 2010 and in a worrying trend down even more markedly from 52.6 million in 2009. With the large impairment charge, the entire year may go into red numbers.

At the end of last year the company warned that operating loss for Pharmaceutical Wholesale Russia significantly decreases Oriola-KDs operating profit in 2010. Like then, Oriola-KD still believes in a big turnaround long-term in Russia but clearly the onus is clearly on the company to actually show something tangible before investors will buy into this mantra again. Oriola-KD’s more liquid B-share shed 16% today.