Probi bounces back from “weak” Q3, reports stable performance and profitability for Q4 2019

11 Feb 2020 --- Probi, a probiotic solutions company for the functional foods and healthcare industry, has released its fourth-quarter results to which the company reports stable performance and profitability. The Q4 results are a welcome recovery from a “weak” third-quarter and managed to balance out the entire year’s performance rates. For Q4, the company reported a 2 percent rise in net sales, while net sales for the entire year rose by 4 percent. Moreover, two supply agreements and the publication of research backing the company’s flagship ingredient managed to further boost performance. 

“It was a challenge that we did not achieve our long-term objective of growing faster than the global probiotic supplement market in 2019, which is estimated to have been around 7 percent. The year was mostly challenging in the US, due to slower market growth as well as in the Asia-Pacific region, where the result of regulatory measures temporarily caused a slowdown in the Chinese market,” Tom Rönnlund, Probi CEO tells NutritionInsight.

“Our performance in EMEA was strong and we had a growth of 13 percent in 2019, which is higher than the market growth for the region. With increased commercial resources and a number of key new customers expanding their business with Probi, we are planning to get back into growth mode moving forward,” Rönnlund adds.

He also notes that the challenges were overcome by focusing on working with customers to drive demand for scientifically validated probiotic concepts. 

The company's stable results on both growth and profitability are boosting its vision for future growth, especially in the APAC region.The Americas region returned to growth and EMEA stabilized, while APAC had a tough fourth quarter, the report notes. During the quarter, Probi took a significant step into the Italian market together with a local pharmaceutical company with a strong market position. It also signed exclusive supply agreements with two of its largest customers in the US market. In addition, along with customers in India, Probi secured a major contract, which provides good conditions for further growth in the APAC region. 

“At the same time, we have secured a number of important agreements with existing and new customers which gives us the confidence of an increased growth next year. Our profitability was further strengthened during the year,” Rönnlund adds. 

According to the company and in line with its expectations: 

• Profitability improved and the EBITDA margin was 29 percent for full-year 2019 (27 percent adjusted for IFRS 16), compared with 26 percent in the preceding year.
• Two exclusive supply agreements were signed with major customers in the US. 
• The Lancet Rheumatology published findings from the company’s clinical trial showing a connection between reduced osteoporosis and probiotic intake.

“During the second half of the year we initiated an upgrade program of the manufacturing unit in Redmond in the US. The upgrade program aims to further improve the efficiency and quality of production, which is central for strengthening our competitiveness. By modernizing and upgrading the unit, we are expecting to see positive effects on the gross margin and a stronger capacity to grow both in the US and internationally. The investment program will continue throughout 2020, but the full impact will not be seen until 2021,” notes Rönnlund. 

Backed by science
Probi’s new product concepts – Probi Osteo for reduced osteoporosis, and Probi FerroSorb for pregnant women – received a positive response during the year, backed up by scientific evidence. In the case of Probi Osteo, the company is particularly pleased that the clinical trial behind the product was published in a prestigious scientific journal such as The Lancet Rheumatology.

Despite a challenging year with organic sales in line with the year-on-year period, Rönnlund says he feels confident that Probi will show increased growth in 2020. 

“We have a clear focus on broadening our premium segment sales to new customers and markets, a highly respected product portfolio, strengthened production capacity and a fantastic team with unique expertise in probiotics. That gives us a strong foundation to drive growth and profitability. I am looking forward to an exciting 2020 in which we, as a team, will continue to work towards our vision,” he concludes.

By Kristiana Lalou