Q3 2021: Regional dynamics affecting the quarter

Significant events during the third quarter

• Net sales decreased by 18% (-17% adjusted for currency changes) to SEK 159 m (195) in Q3 and decreased by 8% (-1% adjusted for currency changes) to SEK 488 m (532) for the first nine months of the year. The comparative period was positively affected by non-recurring income of around SEK 15 m.
• The EBITDA margin was 27% (32%) in Q3 and 26% (28%) for the first nine months of the year.
• Work started with Blis Technologies for the start of production and collaboration in the sales organization and R&D.
• First tolerance study of two different bacterial strains on newborn babies carried out with good results.
• Significant activity among customers with new product launches.
   

CEO Comments

Significant customer activity and stable foundation for growth

We saw strong underlying customer activity even though Q3 did not meet our expectations. The third quarter last year was the strongest in Probi's history partly explained by Covid-19 related demand in Americas and customer-related non-recurring revenues. Against this strong comparison quarter, the currency-adjusted net sales decreased by 17%, which is mainly related to the outcome in Americas. The EBITDA margin was 27% for the quarter, which was slightly lower than our long-term financial target.

The Americas region delivered the strongest quarter so far this year. We did not match the very strong third quarter of last year, which was affected by a positive non-recurring item in connection with a product update with one of our largest customers. Adjusted for this non-recurring item and negative currency impact, net sales for the Americas region were on a par with the previous year for the first nine months of the year.

We experience that growth in Americas in 2021 is not quite as strong as in 2020 when we saw some Covid-related demand, but we continue to view our growth potential in the region positively. During Q3, we saw a significant level of activity at the customer level and we are working intensively to return to growth. An example is a product launch with Lp299v^® of the reputable lifestyle and health company Goop. Maybe not Probi's largest customer, but it is a good example of the strength of our brand.

The performance in the EMEA region continues to be strong and we increased sales by 20% during the quarter compared with the previous year, largely driven by new launches. During the first nine months of the year we achieved growth of 14%. During Q3, we also signed an exciting collaboration agreement with a large European food and health care company.

Net sales for the APAC region were on a par with the same quarter last year. We expect some of the customers that were added during the year, to give us a positive finish to the year. Our earlier communicated collaboration with Sinopharm Foreign Trade is also progressing well and they are evaluating further product launches in the future in collaboration with Probi.

In accordance with our strategy for acquisition and partnerships, the acquisition of 13% in Blis Technologies was completed at the beginning of the quarter. We have now started intensive work on the technological transfer for the start of production. Training and knowledge transfer within the sales organization and R&D have also begun. We have seen great interest with this collaboration and have had active dialogue with many customers. We are extremely positive about developing this business and being able to complement and grow our portfolio.

It is clear that society is returning to a more normal state of affairs. Several important trade fairs have re-emerged and once again we have the opportunity to meet customers and partners physically in both Europe and the US. We welcome this development and are convinced that it will benefit our business.

We have this year experienced a couple of weaker quarters, which are largely explained by individual customer events. Probi's product portfolio and business model are strong and I have great confidence that we will return to growth in the coming quarters. During the year, we entered into a number of very important agreements with key global customers, which we expect to receive returns on next year. Our long-term financial goals remain the same and I feel confident that we will deliver.

Tom Rönnlund
CEO
 

Invitation to teleconference
Probi's interim report for Q3 2021 will be published on October 22, 2021 at 8.00 a.m. 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 59. 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. The information was submitted for publication, through the agency of the CEO and CFO, on October 22, 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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