Q1 2020: A solid start to the year

Significant events during the first quarter

• Net sales rose by 14% (11% adjusted for currency changes) to SEK 158 m (SEK 138 m).
• The EBITDA margin was 19% (20%) and was negatively affected by a less favorable product mix but also increased costs in connection with a temporary disruption in production.
• Joint venture with Viva5 Corporation in new market niches.
• Expanded cooperation with major American customer.
• Three new members added to the management team in HR, Sales and Marketing, and R&D. 

CEO’s comments

A solid start to 2020

The year has started off well for Probi with a 14% growth rate compared to last year despite the global Covid-19 crisis. Our EBITDA margin fell to 19%, which is explained by a less favorable product mix in the quarter and one-off costs, partly due to a temporary disruption in production.
During the quarter, we saw a clear increase in interest in our immune products in all markets with early and extended orders, which is probably an effect of the Covid-19 pandemic.
We have expanded our collaboration with one of our largest customers in the Americas region in connection with a major update of the customer's product range. This means a broader delivery commitment for Probi and will have a positive effect on volumes in the future but may result in increased variation in sales and gross margin between the quarters during 2020. 
In our strategic work to develop business in new niche markets, we have started a long-term collaboration with the US health food company Viva5 Corporation. Our jointly-owned company VivaPro will develop scientifically validated probiotic products in an attractive and consumer-friendly format in areas that are outside Probi's current core business. The collaboration is not expected to generate any significant revenue in 2020.
Production at our facilities in the US continues with only minor disruptions in the supply chain at present, despite the Covid-19 crisis. We have taken extensive safety measures to ensure production and minimize the risk of contagion. We have also ensured delivery capacity through subcontractors in the event that additional restrictions in the areas where we operate could affect our own production. The ongoing upgrade of the Redmond manufacturing unit is proceeding according to plan with only slight delays.
We have started strategic work to review our financial goals. The intention is to present these goals along with the quarterly report for Q2.
During the quarter we also welcomed three new members to our management team.
In these turbulent and troubling times, we are happy to see increased interest in our products and that our order book looks good for the near future. At the same time, it is too early to determine how persistent demand will be. Large orders at present may be signs of stocking at consumer level and we expect revenue to vary between quarters during the year. Assuming that the Covid-19 crisis is not further aggravated and that our employees are not affected, I can still dare to say that 2020 as a whole looks bright for Probi.

Tom Rönnlund, CEO

Invitation to teleconference

Date: April 24. 2020
Time: 10:00 a.m. (CET)
Phone: +46 (0)8 50 55 83 50
Participants from Probi: 
Tom Rönnlund, CEO
Henrik Lundkvist, CFO

The presentation is available at www.probi.com and www.financialhearings.com

Contact
Tom Rönnlund, CEO: Phone: +46 (0)46 286 89 40, E-mail: trd@probi.com

Henrik Lundkvist, CFO: Phone: +46 (0)46 286 89 41, E-mail: henrik.lundkvist@probi.com

This information is information that Probi AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on April 24, 2020 at 08:00 CET. This a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.