Release Date: October 22, 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 an EBITDA margin of 20% for Q3, marking a 2-percentage-point improvement from the previous year.
- The company has successfully completed a SMETA 4-Pillar audit in its US operations, reinforcing its commitment to sustainable and ethical business practices.
- Probi AB (OSTO:PROB) launched a new consumer product, Probi® Sense, in the Nordics, which is expected to enhance market presence.
- The company has announced a research collaboration with global BHP Brain Trust and the FINGERS Brain Health Institute aimed at reducing dementia risk.
- Probi AB (OSTO:PROB) is seeing tangible improvements in its US operations, which are yielding positive results in production KPIs and gross profit.
Negative Points
- Net sales for Q3 were SEK144 million, with a reported growth decline of 8% compared to the previous year.
- Organic growth in Q3 was down 5% compared to the same quarter in 2023, largely due to a contracting US probiotic market.
- The APAC region experienced lower-than-expected sales, impacted by economic slowdown in China and tougher market conditions.
- The gross profit margin is down on a year-to-date basis, despite an improvement in Q3.
- Net income for Q3 was SEK4.0 million, down from SEK6.4 million in the same quarter last year, reflecting a decrease in sales volume.
Q & A Highlights
Q: Can you provide some clarification on the commercial efforts in the Nordic region and whether these efforts will start yielding results in Q4?
A: We have started rolling out new artwork for our products in Swedish pharmacies, beginning in early October. Due to this rollout, sales of the old artwork have been limited, but we expect to fill up the shelves in Q4. Additionally, with the introduction of Probi® Sense, we will intensify campaigns with our customers, expecting increased activity in the fourth quarter. – Anita Johansen, Interim CEO
Q: What is happening in the APAC market, particularly in China, and are there any mitigating activities to protect sales?
A: The APAC market, especially China, is facing macroeconomic challenges, affecting consumer spending and reducing demand for our ingredients. Our customers have more inventory than expected, leading to fewer orders. However, we have not lost any customers and continue to invest in the market, maintaining high engagement and interest in our products. – Anita Johansen, Interim CEO
Q: Can you comment on the current demand and future expectations for the US market?
A: The US market is experiencing a slowdown following a record year during the pandemic. However, Euromonitor projects a 2% to 3% value growth in the coming years. We continue to invest in the North American market, which remains significant for us. – Per Lindblad, CFO
Q: How has cost control impacted margins this quarter, and what can we expect in the future?
A: We have exercised prudent cost control, especially given sales challenges in APAC. While we manage expenses carefully, the main drivers of margin improvements are production efficiencies and timing in OPEX. We are confident these improvements are sustainable. – Per Lindblad, CFO
Q: What is the competitive landscape like, and how is Probi positioned?
A: The industry is seeing consolidation, with competitors focusing on internal alignments. Probi benefits from strong science and unique product launches, such as Probi® Sense for mental health and upcoming products in metabolic health. We feel well-positioned and not threatened by competition at this time. – Anita Johansen, Interim CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
