Q4 2019: Stable performance and increased profitability

Significant events in the fourth quarter

• Net sales rose 2% during the quarter to MSEK 166 (unchanged incl. adjustments for currency effects), which was in line with the company’s expectations. Full-year net sales increased 4% to MSEK 626 (MSEK 605 incl. adjustments for currency effects).
• Profitability improved and the EBITDA margin was 29% for full-year 2019 (27% adjusted for IFRS 16), compared with 26% in the preceding year.
• Two exclusive supply agreements were signed with major customers in the US.
• The Lancet Rheumatology published findings from the company’s clinical trial showing a connection between reduced osteoporosis and probiotic intake (Probi^® Osteo).
• The Board proposes that the 2020 Annual General Meeting approves a dividend of SEK 1.00 (0.00) per share corresponding to MSEK 11.6 (0) for 2019.

CEO comments

Positive trend ends the year
2019 ended with a clear recovery following a weak third quarter. While the Americas region returned to growth and EMEA stabilised, APAC had a tough fourth quarter. During the quarter, we took a major step into Italy together with a local pharmaceutical company with a strong market position. We also signed important exclusive supply agreements with our two largest customers in the US market. Together with one of our customers in India, we secured a major contract, which provides good conditions for further growth in the APAC region.

For full-year 2019, net sales rose 4% to MSEK 626. Adjusted for currency effects, growth remained largely unchanged compared with 2018. As previously communicated, this is not in line with our long-term target to grow faster than the market and is mainly due to a challenging market in the US. At the same time, we have secured a number of important agreements with existing and new customers which gives us confidence of an increased growth next year. Our profitability was further strengthened during the year, and our EBITDA margin was 29%.

During the second half of the year we initiated an upgrade program of the manufacturing unit in Redmond in the US. The upgrade program aims to further improve the efficiency and quality of production which is central for strengthening our competitiveness. By modernising and upgrading the unit, we are expecting to see positive effects on the gross margin and a stronger capacity to grow both in the US and internationally. The investment programme will continue throughout 2020, but the full impact will not be seen until 2021.

Products with a scientific basis
Our new product concepts – Probi^® Osteo for reduced osteoporosis, and Probi FerroSorb^® for pregnant women – received a positive response in our markets during the year, backed up by solid scientific evidence. In the case with Probi^® Osteo, we are particularly proud that the clinical trial behind the product was published in one of the most prestigious scientific journals, The Lancet Rheumatology. That proves the strength of how Probi works with research and development.

Despite a challenging year with organic sales in line with the year-on-year period, I still feel confident that we will show increased growth in 2020. We have a clear focus on broadening our premium segment sales to new customers and markets, a highly respected product portfolio, strengthened production capacity and a fantastic team with unique expertise in probiotics. That gives us a strong foundation to drive growth and profitability. I am looking forward to an exciting 2020 in which we, as a team, will continue to work towards our vision: Probi – First in Probiotics.

Tom Rönnlund, CEO

Invitation to teleconference
Date: February 11, 2020
Time: 10:00 a.m.
Phone: +46 (0)8 50 55 83 65
Participants from Probi:
Tom Rönnlund, CEO
Henrik Lundkvist, CFO
The presentation is available at www.probi.com and www.financialhearings.com

Contact
Tom Rönnlund, CEO: Phone: +46 (0)46 286 89 40, E-mail: trd@probi.com
Henrik Lundkvist, CFO: Phone: +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 contact person set out above, on 11 February 2020 at 8:00 a.m. CET. This a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.