Release Date: July 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Probi AB (OSTO:PROB, Financial) reported a 25% increase in net sales for Q2 2024 compared to the same quarter last year.
- The EBITDA margin for Q2 2024 was 19%, a significant improvement from the previous year's 9%.
- The company launched its first-ever China Innovation Day, generating considerable interest among customers in China.
- Probi AB (OSTO:PROB) entered a partnership with Bower to incentivize recycling of consumer packaging in the Nordic markets.
- The Probi Sensia product received further validation through a fourth study focused on gut-brain health in older adults.
Negative Points
- APAC sales were adversely impacted by reduced cross-border business sales into China.
- The gross profit margin in America was affected by added resources in operations, impacting overall profitability.
- Despite positive initial results, the optimization and manufacturing improvements are not expected to show notable impact until the end of 2024 at the earliest.
- The company is still in a transition period, working on implementing essential changes and improvements for long-term strength.
- Sales in Q1 2024 were relatively weak, affecting the overall performance for the first half of the year.
Q & A Highlights
Q: You're making efforts to improve internal processes and production alongside the commercial incentives. Could you please expand on this? What type of improvements do you expect? And can we expect the margin improvement at the end of the year?
A: Our optimization and manufacturing involve several projects to improve our ways of working and process optimizations. We are making steady progress, and our data shows positive results. However, we do not expect a notable impact until the end of the year at the earliest, so it may not be visible in 2024. - Anita Johansen, Interim CEO
Q: This year's goal is to stay largely in line with 2023. Could you explain what "in line" means? Is it in terms of sales, margin, or EBIT?
A: The term "in line" specifically refers to the EBITDA margin. We see a lot of quarter-to-quarter variation, but with the 19% reported in Q2, we are at 17% year-to-date, which is in line with the full year last year. For sales, we had a weak Q1 but an excellent Q2, and H1 sales are up 4.8%, which is good considering market dynamics. - Per Lindblad, CFO
Q: Regarding the strength in EMEA, you mentioned easy comps and strength in B2C. How much of the growth is attributable to B2C, and are other parts of EMEA also moving in the right direction?
A: Our B2C business is doing well and growing compared to previous years. The insourcing of the business last year is performing well, allowing us to invest more in marketing and strengthen the B2C business. We are also expanding into Denmark and are excited about this market. - Per Lindblad, CFO
Q: You mentioned added resources in the US impacting margins and expecting payoffs in 2025 and beyond. Could you elaborate on the expected ramp-up from 2025 onwards?
A: We have a target to achieve an EBITDA at or above 25% by 2028. This year is a transition year, so we do not expect specific growth versus last year. Gradually, we expect an increase in EBITDA from 2025 and beyond. - Anita Johansen, Interim CEO
Q: Can you provide more details on the financial targets and strategic focus for the coming years?
A: We aim to maintain our strategic focus while implementing essential changes and improvements during the ongoing transition. Our organizational capabilities and ways of working have improved, and our commercial activity is high, resulting in a positively trending customer project pipeline. Production optimizations are progressing according to plan, and initial data shows positive results. - Anita Johansen, Interim CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
