Probi sees bright future ahead as probiotics company plans health expansion
07 Apr 2022 --- Profits for Sweden-based probiotic company Probi reached SEK83.1 million (US$8.8 million) in 2021, as the company marked its second-best ever year in terms of sales. The US, the firm’s largest region, was marked as having a weaker year, while performance in the APAC market recovered after a pandemic-affected 2020.
Net sales reached SEK658.2 million (US$69.4 million), falling 8.2% in 2021, corresponding to a decline of 3% when adjusted for currency effects.
“Our strategy of being a leader in research and innovation remains unchanged. Our largest area will continue to be gastric and immune health, but we are exploring other areas as well, on our own and through partnerships. One such area is women’s health,” says Tom Rönnlund, CEO, Probi.
Commenting on the company’s annual and sustainability 2021 report, he adds: “2021 was a year with many bright spots but also certain challenges. Despite a challenging external environment, we had our second best year ever in terms of sales.”
Regional impact
The EMEA region had a record year and rose by 17%, while the APAC rose by 7% in 2021. Nonetheless, Probi’s future ambitions for APAC markets are bigger, particularly in light of the completion of the Sinopharm Foreign Trade partnership deal in 2021, Rönnlund notes. The collaboration involves three of Probi’s clinically validated bacterial strains in the Chinese market.
The EBITDA margin improved slightly to 27.7% compared to the previous year, partly due to a strong final quarter with a high gross margin of 48.6%, according to Henrik Lundkvist, CFO. Improvement in the margin is closely linked to an increase in self-produced volumes.
The company’s target is to double the company’s annual sales within five to seven years through a combination of organic growth and strategic acquisitions.“Overall, we are not satisfied with the performance of our American operations, even though the year featured both successes and setbacks. Our largest customer performed well and we also added new, attractive customers, who will be important for our continued growth,” comments Rönnlund.
“At the same time, we lost a couple of major customer orders during the year, which contributed strongly to a weak outcome in the region for the full year.”
Commenting on global effects on operations, the company notes: “our exposure to Russia and Ukraine is limited and we currently judge that the effects at both supplier and customer levels are small. We realize that this may change, but at the time of writing, we nevertheless think conditions look bright for continuing on our journey towards growth in 2022.”
Growth on the horizon
Probi’s growth goal is to double sales within five to seven years, it outlines.
“With one of the market’s most extensive portfolios of probiotic products, it has the right conditions for continuing to increase its market presence in key markets. Strategic partnerships and acquisitions will complement organic growth.”
The company aims to continue investing in significant resources to increase its presence in important emerging markets.
The target is for annual organic sales growth to exceed 7%. In 2021, organic growth was -8%.“Growth is generated through both new customers and in-depth collaboration with existing ones. In 2021, a number of new collaborations were started with customers who are expected to contribute to Probi’s growth in Asia and Europe.”
Matching demand with potential
Demand for probiotics is high, and with many “exciting areas” of R&D, the company report underscores.
Though Rönnlund does not delve into extensive details on Probi’s plans to explore other health areas, he notes the company’s collaboration with Estonian Tervisetehnoloogiate Arenduskeskus AS (Competence Center on Health Technologies) as a key move tapping into the women’s health market.
“The collaboration gives us access to a library of bacterial strains, and we aim to be able to develop clinically validated probiotic strains for vaginal health,” he adds.
The major upgrade of Probi’s manufacturing facility in Redmond, US, which began in late 2019, was in principle completed during the year, Rönnlund says.
“Though there is still some fine-tuning to be done to further streamline production, the upgrade has yielded significant efficiency gains. At the end of the year, we were able to increase production capacity, which contributed to a clear improvement in profitability. The upgrade has also meant important [environmentally] sustainable gains with lower resource consumption, especially water.”
By Andria Kades
