Q3 2023: New strategic focus and improved sales trend

Important events during the third quarter

•  Net sales increased by 8% (6% adjusted for currency effects) to SEK 156 m (145).
• The EBITDA margin amounted to 18% (25) or 20% adjusted for items affecting comparability.
• New strategic focus areas and financial targets.
• New clinical study in metabolic health shows clear benefits with Probi's bacterial strains, which opens up a new health area.
• Third clinical trial of HEAL9™ published, strengthens evidence of improved cognitive performance.

Important events after the end of the period

• Launch of Probi^® Sensia, a new concept in mental health based on HEAL9™.
• Per Lindblad will take over as new CFO on November 1, after Henrik Lundkvist announced his resignation in July.

CEO Comments

Strong confidence with new business plan and new financial targets

The overall sales development in Q3 improved with a growth of 8% (6% adjusted for currency effects) while the EBITDA margin was 18%. All regions showed growth compared to the previous year. For the nine-month period, net sales were on par with last year. Profitability was affected by one-off effects linked to e.g. the remediation program in manufacturing and recruitment costs for strategic positions. Adjusted for this, profitability was 20% for the period. Our previous assessment of the full year results remains for both sales and profitability.

By region, EMEA reported growth in the quarter driven by a positive performance of the BTC business in the Swedish market. APAC also performed well, with growth primarily coming from the Chinese market. The development in the Americas was stable, which is positive considering that we have experienced some caution in the American market for some time.

After intensive work on evaluating our strategy, we can now present an updated strategy “Probi Reinforced” and new financial targets. We aim to achieve sustainable and profitable growth by striving for excellence in four key strategic focus areas.

The first strategic focus is Commercial Execution & Customer Centricity. By improving our customers’ experience and extending our internal customer understanding, we will work to expand our global base of key account customers, grow our position on our science-based products, and focus on Tier 1 markets.

The second focus is Pioneering Science & Innovation. We will continue being first in probiotics by ensuring a continuous rate of market-relevant innovations, enhanced speed to market, and by expanding our range of clinically documented offerings.

The third focus, Providing Differentiated Quality Solutions, refers to the competitive edge of delivering products through the entire value chain, from concentrated probiotic ingredients to finished consumer product. We will focus on long-term improvement of the gross margins by optimizing our internal manufacturing processes and through supply chain effectiveness.

The fourth focus, and a foundation for successful implementation of the strategy is People with a Shared Purpose and Passion for Probiotics. We are aiming for a healthy, thriving organization driven by our shared goal to provide probiotics for healthier lives and a healthier planet.

We have set ambitious new financial targets and aim to achieve a CAGR of 6% over the next five years and gradually increase the profitability to, or over, 25% EBITDA by 2028. By region we estimate that APAC will have the highest percentage growth, followed by EMEA. The growth is expected to come from new products and innovations and from current, as well as new customers.

We have noticed a certain stabilization in the market and increased interest from customers. Meanwhile, we have more work to do to optimize our manufacturing and gain efficiencies. Our sales cycles are long as well, and the process from a new concept launch to revenue can take months and sometimes years. Therefore, 2024 will be a transitional year with modest expectations on increased growth and profitability.

I have spent a lot of time meeting our organization and our customers in recent months, and I am today more convinced than ever that Probi is a credible and committed partner that offers exceptional products providing significant and relevant benefits to many people. Clarity in our purpose, strategy and direction will help us come back to growth and we will continue to be First in Probiotics.

Anita Johansen
CEO

Invitation to teleconference

Probi's interim report for Q3 2023 was published on October 24, 2023, at 8:00 a.m. On the same day at 10:00 a.m., a teleconference is held with Anita Johansen, CEO and Henrik Lundkvist, CFO, who will present the report. The telephone conference can be accessed via the link https://conference.financialhearings.com/teleconference/?id=5001162. The presentation is available at www.probi.com and www.financialhearings.com.

Contact

Anita Johansen, CEO, Tel: +46 (0)46 286 89 48, E-mail: anita.johansen@probi.com
Henrik Lundkvist, CFO, Tel: +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. The information was submitted for publication, through the agency of the CEO and CFO, on October 24, 2023 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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