BioGaia AB Interim Management Statement – January – June 2022
SECOND QUARTER 2022
- Net sales amounted to SEK 288.1 million (203.1), an increase of SEK 85.0 million, or 42% (excluding foreign exchange effects, 33%) of which the acquisition of Nutraceutics accounted for an increase of SEK 13.6 million (7%). Organic growth was 26%.
- Net sales in the Paediatrics segment amounted to SEK 232.7 million (161.1), an increase of 44% (excluding foreign exchange effects, 34%).
- Net sales in the Adult Health segment amounted to SEK 54.2 million (40.9), an increase of 33% (excluding foreign exchange effects, 24%).
- Operating expenses amounted to SEK 104.6 million (81.6), an increase of SEK 23.0 million, (28%), of which the acquisition of Nutraceutics accounted for an increase of SEK 22.3 million (27%). Operating expenses included costs for evaluating acquisition candidates of SEK 0.3 million (0.0) and the reversal of previous impairment of right-of-use assets linked to a rental contract for premises of SEK -1.7 million (0.0). Excluding these items, operating expenses amounted to SEK 106.0 million (81.6), an increase of 30%.
- Operating profit increased by 46% to SEK 101.3 million (69.2), which corresponds to an operating margin of 35% (34%).
- Profit after tax amounted to SEK 78.5 million (54.7), an increase of 44%.
- Earnings per share amounted to SEK 0.78 (0.54) before and after dilution.2)
- Cash flow amounted to SEK -224.9 million (-16.2). Cash flow includes dividends of SEK 301.3 million (68.9).
- Cash and cash equivalents at 30 June 2022 amounted to SEK 1,356.3 million (1,468.9).
Key events in the second quarter of 2022
On 25 April, BioGaia announced that the company’s result for the first quarter exceeded market expectations.
On 6 May, BioGaia’s Annual General Meeting resolved on a split of the company’s shares whereupon each share, regardless of series, will be divided in to five new shares.
On 17 May, BioGaia announced that it will begin selling its products under its own management in Canada starting in 2023. On 31 May, BioGaia announced that the number of shares and votes in BioGaia had increased during May due to the share split resolved by BioGaia’s Annual General Meeting on 6 May 2022.
On 8 June, BioGaia announced that it had extended its collaboration with Grace International, giving the company exclusive rights to market and sell its probiotic drops for infants in South Korea.
FIRST HALF 2022
- Net sales amounted to SEK 571.9 million (405.1), an increase of SEK 166.8 million, or 41% (excluding foreign exchange effects, 32%) of which the acquisition of Nutraceutics accounted for an increase of SEK 29.4 million (7%). Organic growth was 25%.
- Net sales in the Paediatrics segment amounted to SEK 455.2 million (322.8), an increase of 41% (excluding foreign exchange effects, 32%).
- Net sales in the Adult Health segment amounted to SEK 115.0 million (79.6), an increase of 44% (excluding foreign exchange effects, 35%).
- Operating expenses amounted to SEK 211.6 million (162.6), an increase of SEK 49.0 million (30%), of which the acquisition of Nutraceutics accounted for an increase of SEK 43.3 million (27%).
- Operating expenses included costs of evaluation of acquisition candidates of SEK 1.1 million (2.5), restructuring costs (relating to personnel) of SEK 3.9 million (2.4) and the reversal of previous impairment of right-of-use assets linked to a rental contract for premises of SEK -1.7 million (5.1). Excluding these items, operating expenses amounted to SEK 208.3 million (152.6), an increase of 37%.
- Operating profit increased by 47% to SEK 196.6 million (133.5), which corresponds to an operating margin of 34% (33%).
- Profit after tax amounted to SEK 154.8 million (105.1), an increase of 47%.
- Earnings per share amounted to SEK 1.53 (1.04) before and after dilution.2)
- Cash flow amounted to SEK -139.1 million (1.1). Cash flow includes dividends of SEK 301.3 million (68.9).
Key events after the end of the second quarter
On 1 July, BioGaia announced that the company had launched BioGaia Pharax in the USA. BioGaia Pharax aims to strengthen the immune system and support children’s upper respiratory health.
On 14 July, BioGaia announced that results for the second quarter will exceed market expectations.
Following a very strong first quarter, I am pleased to present yet another very strong quarter with sales up +42% and an operating margin of 35% due to good cost control.
This successful quarter is a reflection of the recovery in Europe, EMEA grew +86%, where BioGaia has historically had its strongest base. In markets such as Italy or Spain, where our marketing is mainly to doctors and pharmacies, we have triple-digit sales growth. As travel increases and there is a return to a more normal life, the risk of disease is also increasing as is the need for probiotics together with antibiotics, which is driving consumers back to doctors and pharmacies. Our omnichannel strategy is yielding results both through our own e-commerce solutions such as in the UK and Sweden, where the proportion of subscribers is higher than expected, and through our pragmatic approach to market places. By complementing our listing on Amazon Sweden and UK, we are now listed on Amazon Germany together with our partner Infectopharm. This commercial hybrid solution offers the best of both worlds: leveraging our distributor expertise in medical marketing and our consumer expertise in digital sales.
In the Americas, which grew +21%, BioGaia USA has continued to impress with its expertise in medical and consumer marketing, which explains the success of the latest launch of Prodentis Kids that is recommended by paediatricians and dentists and is widely available with good reviews on market places. BioGaia USA’s sales fell slightly during the quarter, mainly due to strong comparative figures. During the second quarter of 2021, Nutraceutics’ (now BioGaia USA) sales were positively affected by campaigns. Together with BioGaia USA, we are organising the opening of BioGaia Canada in January 2023 to supplement coverage in North America. The rate of growth in Latin America remains in double digits driven by excellent work targetting HCP in Colombia, Peru and Chile, and that our launch in Argentina was more successful than expected.
Last, but by no means least, APAC, which reported growth of 16%, is meeting our expectations where almost all of our markets are performing well, particularly our omnichannel masters in region: South Korea and Indonesia. We can even see some signs of recovery in China with logistics that are working better and cities that are reopening after strict Covid-restrictions. Japan is still struggling with its dental clinics that were negatively affected by Covid-19 but is offsetting sales lost from dental clinics through e-commerce solutions and direct sales.
The macroeconomic situation (inflation, disruption in the logistics chain, pandemic and war) is forcing us to remain cautious as the impact on disposable income should not be ignored. However, we are convinced that consumers will continue to focus on their health and the probiotic category will demonstrate its resilience.
I am also pleased to receive continuing confirmation of the strong commitment to our revised strategy, internally and in our distribution channels, that combines science and brand marketing. We are striving hard to achieve our goal to become the best probiotic brand in the world.
President and CEO BioGaia
22 July 2022
Teleconference: Investors, analysts and the media are invited to take part in a teleconference on the interim report to be held today, 22 July 2022, at 9:30 a.m. CEST with CEO Isabelle Ducellier and CFO Alexander Kotsinas. More information about the teleconference is available here: https://financialhearings.com/event/43469
This disclosure contains information that BioGaia is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 22-07-2022 08:00 CET.