COVID-19 no longer driver for Probi growth, Q3 report indicates
22 Oct 2021 --- Probi’s net sales decreased by 18% to SEK 159 million (US$18.5 million) in Q3, despite strong underlying consumer demand, the Swedish-based probiotics company has announced.
After the strongest Q3 in Probi’s history last year, which was driven by COVID-19 demands, net sales for the same period in 2021 decreased by 17%, adjusted for currency exchanges.
The decrease comes despite “significant activity” among customers with new product launches, such as lines with Perrigo and Oriflame. The EBITDA margin was 27% in Q3 and 26% for the first nine months of the year.
“The third quarter last year was the strongest in Probi’s history partly explained by COVID-19 related demand in the Americas and customer-related non-recurring revenues. However, Q3 2021 did not meet our expectations” Tom Rönnlund, CEO of Probi, says.
COVID-19 was a driver for sales in 2020 though the same pattern was not reflected in Q3 2021.
Weak quarters for Probi
The company’s Q2 was also not in line with Probi’s expectations, attributed to changes to customers’ product portfolios and e-commerce. Financial hindrances in the Americas also impacted on the company’s sales.
“This year we have experienced a couple of weaker quarters, which are largely explained by individual customer events. Probi's product portfolio and business model are strong and I have great confidence that we will return to growth in the coming quarters,” Rönnlund highlights.
Yesterday, fellow Sweden-based probiotic company BioGaia reported that immunity products ahead of the winter season had been driving its own Q3 growth.
Americas going strong
The third quarter of 2020 had been affected by a positive non-recurring item in connection with a product update with one of Probi’s largest customers, Rönnlund notes, without delving into specifics.
When the figures are adjusted for this item as well as negative currency impact, “net sales for the Americas region were on par with the previous year for the first nine months of the year,” he adds.
Nonetheless, the Americas region delivered the strongest quarter so far this year, according to the company.
“We experience that growth is not quite as strong as in 2020 when we saw some COVID-19 related demand, but we continue to view our growth potential in the region positively,” Rönnlund notes.
Probi’s “weaker” results have been attributed to individual customer events.
COVID-19 was a driver for sales in 2020 though the same pattern was not reflected in Q3 2021.
New launches key to sales
The third quarter maintained a significant level of activity at the customer level, with Probi citing the launch of a product containing Lp299v by health and lifestyle company Goop, as an example.
“Maybe not Probi’s largest customer, but it is a good example of the strength of our brand,” Rönnlund says.
The EMEA region saw a 20% increase during Q3 compared to the previous year, largely driven by new launches, which saw the company grow 14% during the first nine months.
Net sales for the APAC region were on a par with the same quarter last year, according to Rönnlund.
“We expect some of the customers that were added during the year to give us a positive finish to the year. Our earlier communicated collaboration with Sinopharm Foreign Trade is also progressing well and they are evaluating further product launches in the future in collaboration with Probi,” he adds.
Production for the future
Earlier this year, Probi acquired 13% in Blis Technologies, a New Zealand probiotics company, with a US$6 million investment.
Intensive work has already begun on the technological transfer so production can begin, while R&D has also been set in motion.
Additionally, training and knowledge transfers have begun, with Rönnlund noting this will complement and grow Probi’s portfolio.
Edited by Andria Kades
