Q3 2020: Strong growth with good profitability
Significant events during the third quarter
- Net sales increased by 38% (43% adjusted for currency changes) to SEK 195 m (142). Positive one-off effect of around SEK 15 m from an American customer's product update program.
- The EBITDA margin was 32% (32%).
- New vice president R&D recruited starting September.
- New research study with Lund University published showing a link between probiotics and reduced side-effects from stress.
Significant events after the end of the period
- Acquisition of shares in Vital Nutrients Holdings and entering into strategic partnership. Total amount of USD 6 m with an ownership slightly below 10%.
We’re on a growth journey
We delivered the strongest quarter in our history with sales growth of 38% compared with last year. Growth was mainly driven by Americas, which had a strong quarter. The EBITDA margin for the group in the third quarter was 32%, which is on a par with last year, and for the nine-month period we had an EBITDA margin of 28%.
Demand for our products continues to be strong in Americas and the negative effects of COVID-19 have been limited. The strong growth in the region of 50% over the quarter is partly explained by the product update that one of our major customers is carrying out, but the majority of our growth comes from increased demand from both existing and new customers. We continue to view our growth opportunities in Americas positively, but at the same time note that variations between quarters can occur depending on how customer orders fall.
Developments in EMEA and APAC have been weaker, with the regions being negatively affected by the stock building up that took place during the previous quarter, driven by the COVID-19 pandemic. Although we judge that these are temporary fluctuations, we are not satisfied with the performance. We have taken measures, especially in our organization in Asia, and see continued strong growth potential in the region.
Our investment program in the manufacturing facilities in the US is developing according to plan. With these investments made, we will have a stronger production capacity next year and at the same time be able to reduce production costs, which is expected to lead to a positive effect on the gross margin.
Exploring new product areas continues and in August we were able to publish a research study, together with Lund University, which shows a link between probiotics and reduced side effects of acute psychosocial stress. This is potentially a very exciting area where we see attractive opportunities in the future.
I am pleased to now have a complete management team at Probi following our latest recruitment of Peter Dybdahl Hede as the new Vice President R&D. Peter took up his position in September and has extensive experience in R&D from the biotech and pharmaceutical industries.
On the 20th October we announced our acquisition of shares in Vital Nutrients Holdings. The acquisition is part of a strategic partnership with great potential to get leverage on our operations within the companies in the Vital Nutrients Holdings.
Our employees have shown an amazing ability to handle this exceptional time. Although we have all had to challenge ourselves and find new, creative solutions, we have not lost focus. The level of activity at Probi is high in all areas and with the deal with Vital Nutrients Holdings we show our commitment to reach our growth target.
Invitation to teleconference
Probi's interim report for Q3 2020 was published on October 21, 2020 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 reached on telephone number +46 (0)8 50 55 83 68. The presentation is available at www.probi.com and www.financialhearings.com
Tom Rönnlund, CEO, Tel: +46 (0)46 286 89 40, Email: firstname.lastname@example.org
Henrik Lundkvist, CFO, Tel: +46 (0)46 286 89 41, Email: 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 CEO and CFO, on October 21, 2020 at 08:00 CET. This a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.