Q2 2021: Probi enters new strategic partnerships

Significant events during the second quarter

• Net sales decreased by 12% (-3% adjusted for currency changes) to SEK 158 m (180) in Q2 and decreased by 3% (+8% adjusted for currency changes) to SEK 329 m (338) in H1.
• EBITDA margin was 25% (32%) in Q2 and 26% (26%) in H1.
• New partnership with Oriflame and launch of product based on Probi Digestis®.
• New long-term research collaboration focusing on vaginal health with the Estonian company Tervisetehnoloogiate Arenduskeskus AS.
• The number of shares and voting rights has been reduced by cancellation of the 250,000 company’s treasury shares in accordance with the decision of the Annual General Meeting on May 7, 2021. The number of shares and votes in Probi amounts to 11,394,125.

Events after the end of the quarter

• Investment of around NZD 9 m (about SEK 56 m) in newly issued shares in New Zealand's Blis Technologies, corresponding to an ownership of 13%, in connection with a long-term strategic partnership.

CEO Comments

Another piece of the puzzle in place for a stronger Probi

After a strong start to the year, the second quarter was not in line with our expectations. Currency-adjusted growth was -3% and nominal net sales decreased by 12% over the quarter. The EBITDA margin was 25%, which was lower than the unusually strong Q2 figure last year. It was mainly lower sales volumes that are behind Q2’s lower EBITDA margin.

The Americas region explains a large part of the performance during the quarter. Net sales decreased by 17% (-5% adjusted for currency effects) and was mainly attributable to a few of our larger customers where sales have not occurred. This was due to delayed orders, but also to changes in customers' product portfolios. Developments with our largest customer in the region were positive after the upgrade of their product range last year and we see the potential for further growth with them in the future.

The positive trend continued in the EMEA region, which equaled its record level from Q1 and saw growth of 7% despite a strong quarter last year. The roll-out of Perrigo is going according to plan and contributed significantly to the performance in the region. We have also started an exciting collaboration with Oriflame on a joint product that will be launched in their Wellness category. During Q2, we also signed an agreement with a new customer in Italy for Probi Ferrosorb® and its potential looks promising.

In the APAC region, the trend is moving in the right direction. The stock accumulation at the customer level last year means that the comparative figures were tough in this quarter, but seen over the past three years, it was one of our strongest quarters in the region. It is particularly pleasing that we have signed a three-year agreement with a large Korean customer, which is expected to contribute with net sales of around SEK 10 m during the current year.

We continue to have considerable ambition to grow both organically and through acquisitions. After the end of the quarter, we made an investment in the New Zealand company Blis Technologies. The investment is part of a long-term strategic partnership and an important piece of the puzzle to grow in new health areas and increase profitability through greater capacity utilization of our production resources. Through Blis, we have access to a portfolio of clinically documented bacterial strains within the ear, nose and throat health, which are areas that are relatively uncharted for Probi. In addition to the commercial agreement, we will collaborate within R&D to evaluate new attractive products. Blis is listed on the New Zealand stock exchange NZX and we will be an active owner, including through board representation.

We are fully focused on achieving our long-term financial targets and will intensify our work with customers during the second half of the year as our sales teams are expected to be able to start traveling again. At the same time, many of the important agreements and strategic collaborations we have had in place during the first half of the year will not see visible results until 2022.

After a challenging year marked by the pandemic, we are beginning to see a return to normalization on several levels. We can meet our customers and consumers and can again shop at pharmacies and stores. The underlying demand for our products remains strong and we will of course benefit from this.

Tom Rönnlund
CEO

Invitation to teleconference

Probi's interim report for Q2 2021 was published on July 16, 2021 at 8.00 am. On the same day at 10.00, a teleconference will be held with Tom Rönnlund, CEO and Henrik Lundkvist, CFO, who will present the report. The conference call can be accessed on +46 (0)8 50 55 83 53 (PIN: 39394326#). The presentation is available at www.probi.com and www.financialhearings.com

Contact

Tom Rönnlund, CEO, Tele: +46 (0)46 286 89 40, E-mail: trd@probi.com
Henrik Lundkvist, CFO, Tele: +46 (0)46 286 89 41, E-mail: henrik.lundkvist@probi.com

This information is information that Probi AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the CEO and CFO, on July 16, 2021 at 08:00 CET. This is a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.

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