Probiotic push: Probi looks to double annual sales within 7 years

17 Jul 2020 --- Probiotics player Probi has released its financial results for Q2, highlighting net sales amounted to SEK 180 million (US$19.9 million) during this quarter on par with the previous year. Notably, the company states the overall effect of the COVID-19 pandemic on its business operations was “neutral,” which coincided with heightened demand for probiotics and immune health boosting products. With this financial forecast, Probi says it is set to double its annual sales within five to seven years.

Probi’s CEO Tom Rönnlund tells NutritionInsight that the coronavirus did not cause his company to doubt its “good business momentum” throughout the past three pandemic-stricken months. “We’re seeing solid demand from most of our markets throughout the quarter despite the ongoing pandemic. Immune supporting products is an area that has received extra attention from us and we are positive about the prospects, ” he says.

The company reports an EBITDA of SEK 58.1 million (US$6.4 million), up from Q2 of 2019 when it was SEK 56.5 million (US$6.2 million). Notably, Probi’s net sales were SEK 337.8 million (US$37.3 million) in Q1 2020.

In April, Probi had already stated that the global probiotics market is pegged for growth as consumer interest in immunity is on the rise in light of the COVID-19 outbreak. “We see clear trends driving the interest in and use of probiotics. A continued greater focus on personal health, increased life expectancy and new areas of application for probiotics are some examples,” Probi states in the Q2 report.

“We have had minor disturbances caused by transport challenges in light of the pandemic, but in general, nothing major,” Rönnlund details.Sales in the EMEA and APAC regions, which had relatively extensive restrictions as a result of COVID-19, temporarily increased as Probi’s customers ensured access to products. However, this also led to stock building up with some of its customers. “We have had minor disturbances caused by transport challenges in light of the pandemic, but in general, nothing major,” Rönnlund details.

Moreover, the pandemic had both Probi and its customers shift gears toward a bolstered online sales presence, especially in the US market. “We are seeing an increased demand of customers who are e-commerce-focused in this period. They’ve had a good development and that’s been ordered from us in a strong fashion.”

These second-quarter results build upon Probi’s “stable performance and profitability” reported in its Q4 financial results of 2019. This had followed a “weak” third quarter Probi had struggled with last year. 

New financial targets
The Board of Directors decided on new business targets that reflect the company’s ambition and confidence in continued growth and profitability. Probi’s target is to have doubled its annual sales within five to seven years through a combination of organic growth and strategic acquisitions. 

In addition, Probi’s target for annual organic sales growth is to exceed 7 percent and the EBITDA margin to be at or above 29 percent on an annual basis. The company is encouraged by its “solid financial position” that it will provide “good conditions” for the active investigation of strategic acquisitions to strengthen its existing business geographically.

Furthermore, Rönnlund forecasts Probi will continue its business momentum through upcoming partnerships with new and existing customers in terms of upgrades of product ranges and new product launches. “With the situation right now, the timing of these projects and [their] fruition can make it difficult to pin down exactly, but with our new focus and efforts, we are really looking forward to seeing their results,” he foretells.

In March, Probi entered a strategic joint venture with the US-based health and wellness company Viva5 Group that focuses on researching and co-developing products in probiotic-related market segments. Moreover, Probi signed a pan-European partner agreement with a “major consumer healthcare company” for the launch of a concept based on Probi’s premium products in 15 countries in Europe from 2021 onward.

Probi will release its interim Q3 report in late October and its year-end report for 2020 in early February 2021.

By Anni Schleicher