Q2 2022: Solid quarter with exchange rate fueled growth

Important events during the second quarter

• Net sales increased by 10% (-1% adjusted for currency effects) to SEK 175 m (158) in Q2 and amounted to SEK 329 m (329) for H1, which was on a par with previous year (-9% adjusted for currency effects).
• The EBITDA margin was 26% (25) in Q2 and 26% (26) in H1.
• Stable performance in all regions, strongest quarter since 2020 in APAC.
• Increased investments in sales activities and build-up of sales organization in region Americas.
• New skincare product based on by-product from production process, contributes to reduced environmental costs and environmental impact.

CEO Comments

We continue to invest in future growth

Growth in Q2 amounted to 10% driven by favorable exchange rates. Adjusted for currency effects, our sales were approximately on a par with the previous year. As Probi reported negative sales growth for several quarters, this is an important step on our way back to showing growth as a company.

Our EBITDA margin was 26%, which was slightly lower than our financial target. During this year, we have actively invested in developing our product pipeline and expanded our sales organization in the Americas region, which together with a significantly higher level of activity in customer interaction in all markets has driven costs. Our product portfolio and future launches have good market potential and we will continue to invest in our future during the year.

Sales in region Americas was up by 14% compared to previous year, largely driven by currency effects. Adjusted for currencies the region had sales approximately in line the previous year. During the first half of the year the US market saw a lower growth rate compared to Europe and APAC. The market is expected to be flat for the full year compared to 2021. At the same time, it is currently difficult to comment on market growth in the autumn given the current macroeconomic dynamics and what possible consequences it may have on consumer behavior.

In the EMEA region, sales were on a par with the previous year, but adjusted for milestone-related revenue in 2021, the growth in the quarter was 10%. During Q2, many of our customers in the region saw positive demand increases, largely driven by more normal market conditions following the easing of Covid restrictions.

The APAC region had its strongest quarter since Q2 2020, which was significantly affected by stockpiling in connection with the pandemic. Sinopharm's rollout is underway, and the third ClinBac™ concept, Probi Ferrosorb®, will be launched during the autumn. Covid-related restrictions in China has eased somewhat, and our team is again able to meet with customers and partners for additional demand creation.

We are nearing the end of our upgrading of the manufacturing facility in Redmond. It is an important part of our strategy to significantly increase our own production capacity of scientifically documented bacterial strains and also to reduce our vulnerability in the production chain.

During the quarter, we delivered the first batches of SymFerment®, which is an exciting product development in collaboration with Symrise AG. It is based on a by-product from our production process and is part of a skincare product that Symrise launched in April. By reusing materials from our regular fermentation process, we both reduce the environmental impact and costs while creating a new revenue stream. This clearly illustrates how we are working broadly on several fronts in product development.

We are currently experiencing a positive post-pandemic development in EMEA and APAC, but these regions are still relatively small compared to our US market. The growth is currently lower in region Americas, which has an impact on our short-term growth rate.

With a competitive product portfolio and with our upgraded manufacturing facility together with a strong balance sheet, we have a good position for achieving future growth. 2022 will not be a strong year of growth for us, but I see exciting things on the horizon and feel very confident that we will return to growth in 2023.

Tom Rönnlund
CEO
 

Invitation to teleconference
Probi's interim report for Q2 2022 is published on July 15, 2022, at 8.00. On the same day at 10.00, a telephone conference 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 51 63 86 with PIN code 5621393 #. 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 15, 2022 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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