BioGaia AB: Interim Management Statement January – March 2024
FIRST QUARTER 2024
(For balance sheet items, figures in parentheses refer to year-end 2023 figures. For income statement and cash flow items, they refer to the same period last year).
Net sales amounted to SEK 369.8 million (365.8), an increase of SEK 4.0 million, or 1% (excluding foreign exchange effects, 2%).
Net sales in the Pediatrics segment amounted to SEK 292.3 million (306.0), a decrease of 4% (excluding foreign exchange effects a decrease of 4%).
Net sales in the Adult Health segment amounted to SEK 74.8 million (56.6), an increase of 32% (excluding foreign exchange effects an increase of 33%).
Operating expenses amounted to SEK 122.6 million (114.5), an increase of SEK 8.1 million (7%). Operating expenses, excluding items affecting comparability, increased by 5% to SEK 117.6 million (112.1).
Operating profit decreased by 3% to SEK 143.2 million (148.0), which corresponds to an operating margin of 39% (40%).
Adjusted operating profit decreased by 1% to SEK 148.2 million (150.4), which corresponds to an adjusted operating margin of 40% (41%).
Profit after tax amounted to SEK 121.8 million (115.9), an increase of 5%.
Earnings per share amounted to SEK 1.21 (1.15) before dilution and SEK 1.21 (1.15) after dilution[1].
Cash flow amounted to SEK 40.9 million (93.7).
Cash and cash equivalents amounted to SEK 1,591.4 million (1,544.2).
Key events after the end of the first quarter
No key events that are not mentioned in this interim management statement took place after the end of the first quarter.
[1] Key ratio defined according to IFRS. For definitions of other key ratios, see page 17.
CEO’S COMMENTS
Embarking on a dynamic year ahead
After a strong record year for 2023, the first quarter shows overall good results with a strong Operating Margin of 39% and Net Sales of SEK 369.8 (365.8) a Sales Growth of 1% (2% excluding foreign exchange effects) impacted by some one-time events related to the 4th quarter last year including prelaunch inventory build-up in Brazil and impact of Nestle’s Gerber stopping the sales of their Gerber/BioGaia co-branded product.
Our region Asia Pacific continued its positive performance and sales increased in EMEA by 13%. Sales declined in Latin America and declined slightly in North America for reasons mentioned above.
The Pediatric segment decreased by 4% compared to the previous year. The Adult segment is growing by 32% compared to the previous year, and our products Gastrus, Prodentis, and Protectis tablets stand out with strong performances.
Thriving activity in our market areas
EMEA increased sales by 13% driven by the UK, France, Spain, and Eastern Europe. In the UK, we launched BioGaia Protectis Baby Drops 5ml into the UK’s biggest Pharmacy chain, Boots both in-store and online. In addition, we are now in over 1,000 independent pharmacies in the UK. We have launched a successful Continuous Professional Development learning module for healthcare professionals which has led to an increased motivation to recommend our product by 38% among midwives, pharmacists, and general practitioners within the UK.
Sales in the APAC region, driven by China, Indonesia, and Japan, grew by 6% during the quarter. In China, our digital marketing efforts continue to be successful, particularly sales through live streams on diverse marketplaces and social platforms such as JD, Tmall, and TikTok. Meanwhile, in Japan, our primary focus lies within the dental consumer market, where we see that our omnichannel strategy is developing successfully.
In the Americas, we had several product launches during the quarter. In the USA, we launched a new product, Nurture & Grow, which is a triple-benefit, once-daily probiotic, that eases digestive discomfort, provides immune support, and promotes healthy gums & teeth. In 2023, we did a pilot launch in the USA of our first probiotic skin health product, Aldermis which is a skin ointment for infants and children to treat dry and sensitive skin. Due to successful results in the USA, we decided to launch Aldermis in Canada this quarter. In Canada, our most recent direct market, sales are accelerating rapidly. With the launch of Aldermis, Canada broadened its product assortment towards consumers. In addition, Canada relaunched Prodentis with mint flavor for adults and introduced Prodentis apple flavor for kids. So far, these products are available on two e-commerce channels, Amazon and Well.ca. To support the launches of Prodentis, Canada partnered with multiple dental associations and key opinion leaders, developed an accredited educational program, and launched a series of virtual clinic learning sessions. In the USA, we had a slight decrease in sales in the quarter as mentioned mainly due to Gerber’s decision to discontinue the sale of their co-branded Gerber/BioGaia products in the 4th quarter last year to concentrate solely on their own products. Meanwhile, we have continued strong growth (38%) on Amazon in the USA.
In Latin America, we had a decline in sales in Brazil as mentioned due to prelaunch stocking in the 4th quarter. At the same time, Chile, where we have Abbott as our partner, stands out with good results. We were delighted to convene with our Latin America partners during a regionally organized workshop in the quarter. Additionally, we conducted a speaker training session with healthcare professionals, focusing particularly on new evidence of additional product benefits for Gastrus.
A solidified strategic framework
Going into 2024, we have further solidified our strategic framework and focus on the three strategic pillars for the company: Grow the core, Expansion through direct markets, and Breakthrough innovation.
The first strategic pillar: Grow the core means focusing on our existing strong product portfolio within gut health, immune health, and oral health with further strengthened marketing and commercial excellence, launching new products and line extensions, and through our omnichannel approach. Our second strategic pillar: Expansion through direct markets, means that we want to continue to grow our existing direct business model that we have successfully introduced in the USA, Canada, UK, Finland, and Japan, and continue to expand our direct distribution model to consumers. This strategy has been very successful to date and gives us more flexibility when it comes to product launches, marketing our products, and collecting and analyzing insights and consumer behaviors. Our third strategic pillar: Breakthrough innovation, is critical for our future long-term growth and creation of new market opportunities. As a probiotics company at the forefront of microbiome research, it is essential that we keep innovating and launching new products, for additional indications and health areas beyond our core.
I am confident that this solidified strategic framework will continue to guide us to take actions and decisions to create value, allocate resources toward achieving our goals, and sustain long-term success in a competitive landscape.
As we navigate the ever-evolving landscape of health and wellness, I remain confident in our collective ability to drive meaningful impact and sustained growth. We will continue to make evidence-based targeted investments in marketing, sales, and innovation with the intention of continuing the growth of our pediatric and adult products.
Theresa Agnew
President and CEO, BioGaia
May 7, 2024
You find the complete report with tables in the attached PDF or on https://www.biogaiagroup.com/investors/financial-reports/
Teleconference:
Investors, analysts, and the media are invited to take part in a teleconference on the interim management statement to be held today, 7 May 2024, at 09:30 a.m. CEST with CEO Theresa Agnew and CFO Alexander Kotsinas. More information about the teleconference is available here: https://financialhearings.com/event/49309.
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Contacts:
Alexander Kotsinas, CFO
Email: alexander.kotsinas@biogaia.com
Phone: +46 735 00 11 11
Mikaela Idermark Stern, Corporate Communications
Email: mikaela.idermark.stern@biogaia.com
Phone: +46 730 95 61 50
About BioGaia
BioGaia is an innovative Swedish healthcare company that develops, markets, and sells probiotic products with documented health benefits. The products are sold through local distribution partners or via own distribution in over 100 markets. The class B share of the Parent Company BioGaia AB is quoted on the Mid Cap segment of Nasdaq Stockholm. biogaiagroup.com
This disclosure contains information that BioGaia is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person set out above, at 08:00 a.m. CEST on May 7, 2024.
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