A STRONG FINISH TO A TRANSFORMATIVE YEAR, FOURTH QUARTER 2023

“Humble Group continues to grow and we take market shares through increased distribution, more products and new collaborations in international markets. With an operational cash flow of SEK 285 million (246), we see the result from the continued focus to optimize the flow of goods. Thanks to the improved capital structure and lowered interest costs, we begin to form a picture of how we will be able to generate a positive free cash flow going forward that can be used for value-creating activities, something I have personally had as a milestone since the foundation of the Group. Net sales of SEK 1,936 million (1,606) represent a stable increase from the previous year and organic growth amounted to 18%. The profitability measured in adjusted EBITA of SEK 162 million (155) is in line with our expectation and the margin is somewhat pressured by our increased market efforts and the integration processes that we started during the autumn. We are not afraid to take short-term costs for long-term value creation. Investments in an additional two or third shifts in several of our factories are costly, but at the same time something that means that we will get a higher capacity utilization of the machine park and enable increased growth going forward. The work to improve the gross margin is moving in the right direction and continues to be a focus for all our operations, but there is a long way to go before we reach previous levels.” - Simon Petrén, CEO Humble Group AB.

FINANCIAL INFORMATION:

FOURTH QUARTER

• Net sales amounted to MSEK 1,936 (1,606). 
• EBITDA amounted to MSEK 184 (143).
• EBITA amounted to MSEK 156 (119).
• EBIT amounted to MSEK 66 (62).
• Adjusted EBITDA amounted to MSEK 190 (179).
• Adjusted EBITA amounted to MSEK 162 (155).
• Adjusted EBIT amounted to MSEK 72 (98).
• Cash flow from operating activities amounted to MSEK 285 (246).
• Profit and loss after tax amounted to MSEK -11 (-18).
• Earnings per share before and after dilution amounted to SEK -0.02 (-0.06).
• Adjusted EBIT per share amounted to SEK 0.16 (0.33).

TWELVE MONTHS

• Net sales amounted to MSEK 7,050 (4,800).
• EBITDA amounted to MSEK 659 (504).
• EBITA amounted to MSEK 547 (419).
• EBIT amounted to MSEK 318 (257).
• Adjusted EBITDA amounted to MSEK 696 (551).
• Adjusted EBITA amounted to MSEK 584 (466).
• Adjusted EBIT amounted to MSEK 355 (304).
• Cash flow from operating activities amounted to MSEK 1,088 (255). Adjusted for tax deferrals of MSEK 260, the cash flow from operating activities was MSEK 828.
• Profit and loss after tax amounted to MSEK -106 (-36).
• Earnings per share before and after dilution amounted to SEK -0.28 (-0.13).
• Adjusted EBIT per share amounted to SEK 0.94 (1.07).

SIGNIFICANT EVENTS:

DURING THE FOURTH QUARTER

• Humble Group enters into agreements regarding sale of properties. First part of the sale is completed in December and is structured as a sale and leaseback transaction.
• Humble Group enters into a binding agreement regarding sale of all shares in Bayn Production AB.

AFTER THE QUARTER

• Humble Group completes the sale of all shares in Bayn Production AB as part of the Groups long-term strategy to streamline the operations.

CEO COMMENT FROM THE REPORT 

”A STRONG FINISH TO A TRANSFORMATIVE YEAR
Humble Group continues to grow and we take market shares through increased distribution, more products and new collaborations in international markets. With an operational cash flow of SEK 285 million (246), we see the result from the continued focus to optimize the flow of goods. Thanks to the improved capital structure and lowered interest costs, we begin to form a picture of how we will be able to generate a positive free cash flow going forward that can be used for value-creating activities, something I have personally had as a milestone since the foundation of the Group. Net sales of SEK 1,936 million (1,606) represent a stable increase from the previous year and organic growth amounted to 18%. The profitability measured in adjusted EBITA of SEK 162 million (155) is in line with our expectation and the margin is somewhat pressured by our increased market efforts and the integration processes that we started during the autumn. We are not afraid to take short-term costs for long-term value creation. Investments in an additional two or third shifts in several of our factories are costly, but at the same time something that means that we will get a higher capacity utilization of the machine park and enable increased growth going forward. The work to improve the gross margin is moving in the right direction and continues to be a focus for all our operations, but there is a long way to go before we reach previous levels.

During the autumn, we started to launch a selective consolidation strategy, where certain smaller operations are integrated into larger platforms. I am satisfied with the progress we have made in the consolidation process, as many as six companies have become part of a larger machinery and we see good conditions to utilize economies of scale and streamline the value chain. By becoming a larger player in each sub-segment, we gain competitiveness towards the trade and enable several classic synergy effects such as e.g. increased distribution, joint purchasing and pricing, for a more efficient supply chain. An excellent example of this is the Group's latest joint project of the operating companies Solent Group (offline retail) and Go Superfoods (online retail, Amazon), where we complement the respective sales structure effectively and will roll out each product portfolio to more channels and customers.

We have made progress in the development of the commercial B2B platform within Future Snacking and Quality Nutrition, with Arena Nutrition and Arena Confectionery as the spearhead for Nordic manufacturing of high-quality products in health and sustainability. Here we see potential in working closely with our customers and our incubator, and then using the Nordic Distribution segment in an agile way to test innovations and products in the market.

During the year, we have created several exciting brand projects internally and my ambition is that we will be able to show some of them to the market already this spring. There is a constant effort to keep track of trends that arise in the FMCG world and it is clear that trade today does not have the right infrastructure required to be able to capitalize on fast-growing (and sometimes short-term) trends from e.g. TikTok and Instagram. Here, our intention is to be a dynamic player that can quickly act on an opportunity and offer the right product at the right time. In Humble we have a network of over 300 contract manufacturers and a large international distribution platform. This makes us an interesting partner for smaller entrepreneur-led companies that have found a "super product", but that do not have the resources, speed or knowledge to scale it to more than a few markets.

Humble's price-fighter and private-label business continues to gain ground and it is clear that many clients are satisfied with the concept we offer.  Our subsidiary Solent Group leads the way in this segment and we have many exciting opportunities ahead. However, we are still working to refine the strategy and capitalize more quickly on the different opportunities in new markets. I am convinced that we will have improvements in this area in the coming years and we have already started to see results of the cooperation in e.g. The Nordic countries.

The fourth quarter is seasonally the largest for the Group and we are expected to be able to deliver both a good result and stable cash flow. Considering how many areas we are adapting and changing in order to create long-term conditions for higher profitability and growth, it is therefore particularly gratifying that it has not taken too much focus from the core business and that we have maintained a good momentum in all segments. The macro trend for products with a health and sustainability angle is maintained strong, where e.g. sports nutrition in Sweden grew by 9% in 2023, which should provide us with a tailwind going forward. A strategic goal is to create the conditions and structure internally to be able to grow with both the trend and take market shares from existing players. Given that we today have a far higher demand from external customers for our products than our factories have the capacity to deliver, there is no doubt that there are many companies that see us as a future B2B-partner to ally with.

With the cost-intensive indebtedness at the start of the year following sharply increased market interest rates, cash flow has been the main target to improve in Humble during 2023. It is therefore pleasing to see the strong end to the year with increased operating cash flow in 2023 from SEK 255 million to SEK 1,088 million (SEK 828 million excluding tax deferral). The deployable cash flow has also been strengthened from SEK -99 million to SEK 486 million, largely driven by economies of scale, release of net working capital and the new capital structure. We still have many areas of improvement in net working capital management, but there is a significant difference in efficiency now compared to previous years. Finding a success formula for cash flow optimization in the Group is a powerful tool when we continue to create value among the new acquisitions that will become part of Humble in the future.

Overall, we enter into 2024 with optimism and full focus on what lies ahead. The macro climate continues to be turbulent and we closely monitor sensitive areas such as the turmoil with the shipping crisis in the Red Sea and increased cocoa prices. It’s exciting to be part of the development of the Group's growth initiatives, such as investments in everything from a new beverage line and bar producer in Australia, to technologies for new candy products and home-care that will roll out in stores. Those who have followed us for a while know that we have a penchant for innovation and it would be disappointing if we do not see several new successes in the Humble portfolio by the same period in 2025. In conclusion, I would like to take the opportunity to thank all shareholders and our fantastic employees, for your fighting spirit during a both tough and rewarding year. The company has taken great strides in terms of maturity and it is you who make the difference - together we continue the journey towards building the FMCG group of the future.”

The report is attached and can also be downloaded in its entirety on the company's website here.

For more information, please contact:
Simon Petrén, CEO, Humble Group AB
Phone: +468 61 32 888
Email: simon.petren@humblegroup.se

This information is such that Humble Group is required to publish in accordance with EU Market Abuse Regulation 596/2014. The information in this press release has been published by the above contact person, at the time specified by Humble Group's news distributor Cision at the time of publication of this press release.

About Humble
Humble Group is a Swedish FMCG group, which delivers next-generation consumer products that are better for people and the planet. Humble’s business consists of the business segments Future Snacking, Quality Nutrition, Sustainable Care and Nordic Distribution, which have a profile within health and sustainability. The company strives to drive organic and structural growth through acquisitions and by utilizing synergies between the business entities. For more information visit http://www.humblegroup.se

Humble is listed on Nasdaq Stockholm, First North Growth Market, under the ticker HUMBLE. FN Sweden AB is Humble’s certified adviser. Tel: 08-528 00 399 E-mail: info@fnca.se

Forward-looking statements
This press release contains forward-looking statements that reflect Humble’s intentions, beliefs, or current expectations about and targets for Humble’s future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which Humble operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Humble believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Humble does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this press release or any obligation to update or revise the statements in this press release to reflect subsequent events. Readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither Humble nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq Stockholm's rule book for issuers.