Q2 2020: Probi raises long-term financial targets
Significant events during the second quarter
- The Board has decided on new financial targets and dividend policy
- Net sales amounted to SEK 180 m (SEK 176 m adjusted for currency changes), on par with the previous year. The EBITDA margin was 32% (31%) and the overall effect of Covid-19 was neutral.
- Bengt Jeppsson received the NutraChampion award in the Nutra Ingredients Awards
Good business momentum in Q2
We continued to be strong during the second quarter and matched a strong comparative quarter last year when we also had a one-off income of SEK 4 m. Growth for the first half of the year was 6%. The EBITDA margin increased during the second quarter following a weaker start to the year and amounted to 32.3%.
The effects on Probi from Covid-19 have, overall, been limited in terms of both revenue and costs. The underlying demand for probiotics has increased in the US over the period, which can be partly explained by a greater interest in personal health in connection with Covid-19. We have seen an increase in demand from customers with a significant presence in the e-commerce sector, especially in the US. Thanks to our flexibility and experience, we have been able to quickly respond to this customer shift towards e-commerce. The product update carried out with one of our major customers in the US will have a positive contribution to our sales in the third quarter. At the same time, we expect this product line update to potentially cause some sales volatility in individual quarters to come.
In EMEA and APAC, which had relatively extensive restrictions as a result of Covid-19, sales have temporarily increased since customers ensured access to products, which has led to stock building up with some of our customers.
We are raising our ambitions
During the first half of 2020 the Board and management have completed a strategic review of the company's financial goals. We see clear trends driving the interest in, and use of, probiotics. A continued greater focus on personal health, increased life expectancy and new areas of application for probiotics are some examples. Probi is well-positioned to be a world leader in the probiotics market, especially in the premium segment where we have a solid research base. Probi's strong financial position gives us the opportunity to actively evaluate acquisitions that can strengthen and complement our existing product areas and geographical presence. We are raising our ambitions for growth, both organically and through acquisitions, but we will not lose focus on profitability and will also increase our EBITDA target. At the same time, the Board has decided on a new dividend policy.
It is with pride that I would also like to congratulate Bengt Jeppsson, one of Probi's founders, for the NutraChampion award in the Nutra Ingredients Awards. Bengt is a source of inspiration and very important in Probi's development into the top-quality probiotic company it is today.
The Covid-19 crisis is far from over, something also reflected in our different regions. At the same time, I can see that the interest in our products remains strong and that we do not currently see any indications that this will decline. I am therefore looking forward with confidence and humility to a continued good business momentum over the remainder of 2020.
Tom Rönnlund, CEO
Invitation to teleconference
Date: July 17, 2020
Time: 10:00 a.m. (CET)
Phone: +46 (0)8 50 55 83 59
Participants from Probi:
Tom Rönnlund, CEO
Henrik Lundkvist, CFO
The presentation is available at www.probi.com and www.financialhearings.com
Tom Rönnlund, CEO: Phone: +46 (0)46 286 89 40, E-mail: firstname.lastname@example.org
Henrik Lundkvist, CFO: Phone: +46 (0)46 286 89 41, E-mail: email@example.com
This information is information that Probi 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 July 17, 2020 at 08:00 CET. This a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.