HIGH GROWTH, IMPROVED GROSS MARGIN AND STRATEGIC INVESTMENTS, INTERIM REPORT, Q2 2022

“It is very rewarding to summarize an eventful first half of 2022, with 13 completed acquisitions and pro forma sales of SEK 2,994 million. In total, we reached a turnover increase of SEK 586 million, which means an organic growth of 24% for all the group's acquired companies. The companies we owned throughout the full period 2021 had an organic growth of 50%. We have strengthened the gross margin for the third quarter in a row and at the same time implemented several strategic investments in order to continue to grow the business internationally, with new products in additional channels and markets. Moreover, we have established a scalable platform to increase profitability and the long-term growth of the group. Despite all the challenges of a volatile world situation, we are better equipped than ever to take on the opportunities that our position in health and sustainability offers.” -  Simon Petrén, CEO Humble Group AB.

FINANCIAL INFORMATION:

SECOND QUARTER

• Net sales amounted to 981 MSEK (166).
• Adjusted EBITDA amounted to 94 MSEK (23).
• EBITA amounted to 70 MSEK (0).
• Adjusted EBITA amounted to 82 MSEK (15).
• Adjusted EBITA per share amounted to 0,28 SEK (0,13).
• Earnings per share amounted to -0,76 SEK (-0,36).
• Cash flow from operating activities before change in net working capital amounted to 74 MSEK (-0).

PROFORMA SECOND QUARTER*

• Net sales amounted to 1 547 MSEK (1 262).
• Adjusted EBITDA amounted to 138 MSEK (133).
• EBITA amounted to 104 MSEK (82).
• Adjusted EBITA amounted to 125 MSEK (121).
• Adjusted EBITA per share amounted to 0,42 SEK (0.41).

SIGNIFICANT EVENTS:

DURING THE SECOND QUARTER

• Humble completes several acquisitions such as Go Superfoods Ltd, MedicaNatumin AB and LEV Group, amongst others.
• Humble carries out a directed new share issue of approximately 33 million shares, raising proceeds of MSEK 530.
• Humble successfully issues subsequent bonds of MSEK 250.

AFTER THE QUARTER

• Humble completes acquisitions of Amber House, Body Science, Privab Nässjö and Privab Stockholm.
• Humble holds an additional general meeting, Ola Cronholm is appointed as a new board member and replaces Thomas Petrén.
• Humble has successfully issued subsequent bonds of MSEK 50.

CEO COMMENTS THE REPORT 

”INTERNATIONAL EXPANSION AND CONTINUED DEMAND
It is very rewarding to summarize an eventful first half of 2022, with 13 completed acquisitions and pro forma sales of SEK 2,994 million. In total, we reached a turnover increase of SEK 586 million, which means an organic growth of 24% for all the group's acquired companies. The companies we owned throughout the full period 2021 had an organic growth of 50%. We have strengthened the gross margin for the third quarter in a row and at the same time implemented several strategic investments in order to continue to grow the business internationally, with new products in additional channels and markets. Moreover, we have established a scalable platform to increase profitability and the long-term growth of the group. Despite all the challenges of a volatile world situation, we are better equipped than ever to take on the opportunities that our position in health and sustainability offers.

The second quarter has been intense and characterized by expansion, where sales increased to a total of SEK 981 million, an increase of 490% compared to the second quarter of 2021. The organic growth during the second quarter amounted to 44% for the wholly owned companies. Proforma we have maintained the group's high growth, where sales during the second quarter amounted to SEK 1,547 million, an increase of SEK 286 million and organic growth of 23%. The high growth is reflected in the cash flow for the period, as we have continued to invest in inventory and assets in order to deliver on the high demand we have from our customers. Profitability has followed the increase in sales, with a proforma EBITA that during the second quarter amounted to SEK 104 million, an increase of SEK 21 million corresponding to 26%. Despite a troubled global environment with the horrific Ukraine conflict, rising inflation, price uncertainty and limited availability in supply chains, our companies have continued to deliver and we have strengthened the gross margin to 35% in the second quarter. We have also carried out several major strategic investments in subsidiaries, which entail costs for the second quarter of a total of SEK 22 million. Such costs have negatively affected the EBITA margin by -2.3% for the quarter, which can be found in increased other external expenses and personnel expenses. The investments include several areas such as greatly expanded sales force, preparation for IFRS and switching to regulated market, internationalization, established an innovation centre, built up a central organization for raw material purchasing, carried out two factory changes, developed IT systems and analysis support as well as established an Amazon platform for brands at group level. The completed investments are important in the long term to further accelerate our growth and gives us the opportunity to strengthen the margins in the future, where we can scale the business with the existing organization without any major increase in overhead costs. The first half of the year has meant a record high sales increase of SEK 100 million in the companies that were owned throughout the period 2021, which means an organic growth of 50%. Profitability was strengthened and pro forma EBITA amounted to SEK 222 million, an improvement of SEK 57 million corresponding to an increase of 35%.

Investments in innovation and the future
We have continued to carry out planned acquisitions and established a central organization that works to develop the group's profitability on a daily basis and to support our entrepreneurs in their business development. Our strategy is to prioritize profitable growth and we now own a larger part of the value chain in several product categories. Investments in scalable support systems, labs, more efficient machines in production and strengthened sales capacity are important pieces of the puzzle that gives Humble expanded manufacturing capacity and enables a higher level of innovation and technology.

Price increases to strengthen the margin going forward
In terms of profitability, the second quarter has meant a slightly lower EBITA margin than the first quarter. The major underlying factors are all the investments that have been carried out, but also that we have had some delays in the price transfer of increased input prices, which have been driven by the high inflation and a challenging commodity market. The market has also seen continuous high levels in terms of shipping costs. However, we now have indications of a positive development for our group in the coming months. The two factory moves that have been carried out ensure significantly lower costs for production and logistics in the coming year, and we have secured fundamental price increases throughout to the retailer level, which we expect to be able to see the effect of from September onwards. We have a continuous monitoring of the product margins and work with efficiencies to strengthen the group's profitability in the long term and towards the financial goal of minimum 12% EBITA.

Synergies and geographic expansion
With our central team continuously working with the group's synergies and streamlining the value chain, we can prove with data that our synergy platform is very effective in increasing net sales and that the subsidiaries have developed stronger under Humble's umbrella than before. We have recently acquired Body Science, a leading Australian sports nutrition and health food brand. The acquisition is our first in Asia, which means many expansion opportunities and we have already started the process of integrating and identifying which Humble brands are suitable for each market and channel. I am pleased to announce that we have already progressed in the work with listings and that our Nordic products can soon be bought on the other side of the globe. During the first six months, we have a developed the distribution with several export initiatives, where we internationalize several brands and products in the portfolio in some of the world's largest markets. Focus markets for the expansion are USA, China, UK and Germany, where we with the group's platform have good opportunities to be listed with the world's leading retail chains.
 
An exciting autumn
Our companies show continued growth during the start of Q3 and the work to realize identified synergies between subsidiaries continues. The M&A team is in discussions with several strategic acquisitions, where we hope to move forward and continue our journey. The ongoing IFRS conversion is going according to plan and we will be ready for a list change in 2023. With the wonderful energy that exists within the group, it feels like our possibilities are endless, which is of course very inspiring for the future! In conclusion, I am very much looking forward to what autumn has to offer.

Download the report in full here

*The Proforma figures presented in this interim report represent how the consolidated result for Humble Group would have looked like if all communicated acquisitions to the date of this report had been consolidated from January 1, 2022.

For more information, please contact:
Simon Petrén, CEO, Humble Group AB
Phone: +46 70 999 94 55
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 food-tech and FMCG-group, supplying the next generation of products that are good for people and the planet. Humble targets the segments of foodtech, eco, sustainability and vegan to drive high organic growth, acquisitions and utilize synergies in the different operation entities: Brands, Distribution, Manufacturing and Ingredients and R&D. Humble’s technology solutions, refined through scientific research and extensive market experience, facilitate new formulations and recipes that improve the taste and texture of the next generation of sugar-reduced, sustainable and vegan products. For more information visit www.humblegroup.se

Humble is listed on Nasdaq Stockholm, First North Growth Market, under the ticker HUMBLE.
FNCA 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.