Probi battles decreased sales in Americas, while EMEA hits strongest growth to date
02 Feb 2022 --- Probi’s net sales fell 8% to SEK 170 million (US$18.5 million) in Q4 2021, largely attributed to challenges in the Americas region during the year.
However, in its 2021 year-end report, the Sweden-based probiotic company says it is optimistic for the EMEA region, which delivered its strongest year to date with a 17% growth. The APAC region has also been spotlighted for opportunities.
“We did not entirely meet our long-term financial profitability target during the year, but given the lower sales volumes, an EBITDA margin of 28% is satisfactory. We ended the year with an improved EBITDA margin of 32% in Q4, which can largely be explained by a favorable product mix and increased volumes in our own manufacturing facilities,” says Tom Rönnlund, CEO.
“Overall, 2021 was a good but also a challenging year,” he adds.
The Americas remain the most significant region for net sales, despite headwinds.
“Temporary turbulence”
The decrease of SEK 14.8 million (US$1.6 million) in Q4 is explained by lower sales in the Americas, which declined by SEK 26.4 million (US$ 2.9 million), or 17%.
According to Rönnlund, the Americas region had a challenging year compared to a strong 2020, which was affected by positive demand driven by COVID-19. Probi lost orders from two major customers, which accounted for around SEK 50 million (US$5.4 million) of the deficit, compared to 2020 over the year.
“Despite hopes of regaining ground here later in the year, the two customers will probably not return soon,” he explains.
“We believe that the turbulence we have seen in the region in 2021 is temporary, and the development going forward will be more stable.”
APAC opportunities
APAC net sales increased by SEK 4.9 million (US$500,000), corresponding to 77% in Q4. The region achieved year-on-year growth of 6%, the company notes.
“The region continues to be a priority market for Probi, and we see good opportunities for continued growth through new customers in 2021 and a strong pipeline of potential new customers,” notes Rönnlund.
Comparative figures for the second half of 2020 were weak due to stock accumulation during the first half of 2020, he notes. The partnership with Sinopharm Foreign Trade, announced in March last year, is described as “developing well.”
Optimistic for EMEA
The EMEA region net sales increased by SEK 6.7 million (US$700,000) or 28%. The year was also described as ending strongly with a growth of 27% in Q4, driven by product launches
“During the year, we built up important key customers and signed agreements with new customers, which we expect will develop strongly in the long term. We are therefore optimistic about future developments in the region,” Rönnlund highlights.
The pan-European launch with Perrigo contributed to strong growth in EMEA, the company notes, while the partnership with Oriflame was spotlighted for its importance.
The company says it is optimistic about future developments.
Investment drivers
Rönnlund notes the investment in the Lund laboratory in Sweden last year – with plans to move in during the first half of 2022 – is important for improving the company’s research capacity and competitiveness.
“This is an important investment for us that strengthens our ability in preclinical research and will lead to greater opportunities for product development.”
Probi’s manufacturing facilities in the US have been upgraded and production is being streamlined, he adds.
“During the latter half of 2021, we have experienced some supply chain issues, but we expect this to stabilize in 2022. Greater production capacity is expected to have a positive effect on our margins in the future.”
“We do not know what the world has to offer in 2022, but with a number of exciting partnerships underway, greater production capacity and a completely new laboratory on the starting blocks, I feel very confident about the future. We stand by our financial targets and together with all our fantastic employees, I am convinced that we will achieve them,” Rönnlund highlights.
Probi’s acquisition of shares in New Zealand company Blis Technologies is linked to a long-term strategic partnership, previously noted for its potential.
By Andria Kades
