SECOND QUARTER 2024
(For balance sheet items, figures in parentheses refer to year-end 2023 figures. For income statement and cash flow items, they refer to the same period last year).
Net sales amounted to SEK 384.1 million (315.2), an increase of SEK 68.9 million, or 22% (excluding foreign exchange effects, 21%).
Net sales in the Pediatrics segment amounted to SEK 304.8 million (231.7), an increase of 32% (excluding foreign exchange effects an increase of 30%).
Net sales in the Adult Health segment amounted to SEK 78.2 million (83.0), a decrease of 6% (excluding foreign exchange effects, a decrease of 7%).
Operating expenses amounted to SEK 148.7 million (131.4), an increase of SEK 17.3 million (13%). Operating expenses, excluding items affecting comparability, increased by 14% to SEK 151.4 million (132.7).
Operating profit increased by 42% to SEK 135.4 million (95.0), which corresponds to an operating margin of 35% (30%).
Adjusted operating profit increased by 41% to SEK 132.6 million (93.8), which corresponds to an adjusted operating margin of 35% (30%).
Items affecting comparability in the quarter primarily include the reversal of an accrual for litigation fees in connection with the termination of the distribution agreement in Italy.
Profit after tax amounted to SEK 111.0 million (80.5), an increase of 38%.
Earnings per share amounted to SEK 1.10 (0.80) before and after dilution[1].
Cash flow amounted to SEK -582.2 million (-215.7). Cash flow includes dividends of SEK 696.8 million (292.8).
Cash and cash equivalents at 30 June 2024 amounted to SEK 1,007.7 million (1,544.2).
Key events in the second quarter of 2024
On 5 June, BioGaia announced that it is establishing its own distribution in Australia and New Zealand through two newly formed subsidiaries based in Sydney, Australia.
FIRST HALF 2024
(Figures in parentheses refer to the corresponding period last year, unless otherwise specified).
Net sales amounted to SEK 753.9 million (681.0), an increase of SEK 72.9 million, or 11% (excluding foreign exchange effects, 11%).
Net sales in the Pediatrics segment amounted to SEK 597.1 million (537.7), an increase of 11% (excluding foreign exchange effects, 11%).
Net sales in the Adult Health segment amounted to SEK 153.0 million (139.6), an increase of 10% (excluding foreign exchange effects, an increase of 10%).
Operating expenses amounted to SEK 271.3 million (245.9), an increase of SEK 25.4 million (10%). Operating expenses, excluding items affecting comparability, increased by 10% to SEK 269.1 million (244.8).
Operating profit increased by 15% to SEK 278.6 million (243.0), which corresponds to an operating margin of 37% (36%).
Adjusted operating profit increased by 15% to SEK 280.8 million (244.2), which corresponds to an adjusted operating margin of 37% (36%).
Items affecting comparability primarily include litigation fees in connection with the termination of the distribution agreement in Italy.
Profit after tax amounted to SEK 232.9 million (196.5), an increase of 19%.
Earnings per share amounted to SEK 2.31 (1.95) before and after dilution[1].
Cash flow amounted to SEK -541.4 million (-122.0). Cash flow includes dividends of SEK 696.8 million (292.8).
Key events after the end of the second quarter of 2024
On July 19, BioGaia announced that it signed a long-term agreement establishing a direct relationship with Recordati for the exclusive distribution of probiotics in the Italian market.
[1] Key ratio defined according to IFRS. For definitions of other key ratios, see page 17.
CEO'S COMMENTS
Double-digit growth and two additional direct markets
The overall good results continued in the second quarter of 2024 thanks to thriving activity in our market areas, especially in APAC. We had a strong operating margin of 35% and net sales of SEK 384 million (315), a double-digit sales growth of 22% (21% excluding foreign exchange effects). For the First Half, we had an operating margin of 37% (36%) and net sales of SEK 754 million (681), a growth of 11% (11% excluding foreign exchange effects).
For the second quarter, the Pediatric segment increased by 32% compared to the previous year driven especially by Asia Pacific and the Adult segment declined by 6% compared to the previous year, due to order variability in Protectis tablets. For the First Half, the Adult segment grew by 10%. Our products Protectis drops and Protectis chewables for pediatrics stand out with strong performances in the second quarter.
We successfully established a new subsidiary in Australia and New Zealand in the second quarter. Soon, we will deliver our branded BioGaia Protectis drops products to the pharmacy and grocery store channels in the Australian market and will launch our local e-commerce platforms. This establishment has been both exciting and educational, allowing us to leverage synergies and learnings from earlier direct market expansions. Unlike in several other direct markets where our products are classified as food supplements, in Australia, they are classified as complementary medicines, which entails higher regulatory requirements. I am confident that our clinically proven probiotics will receive a positive response from local healthcare professionals and consumers. In the future, we will aim to launch more of our BioGaia branded probiotic products in the pharmacy channel in both Australia and New Zealand.
Legal outcome in Italy
In early July, following our earlier dispute, termination with and stopping sales to our distributor Noos, we won the resulting arbitration, and we have now been able to finalize a direct long-term contract with our previous subdistributor, Recordati as our new sole distribution partner in Italy. Recordati is a global pharmaceutical company listed on the Italian stock exchange and is also our trusted distribution partner in Spain and Portugal. This expanded collaboration will leverage Recordati's extensive distribution network and market expertise, significantly enhancing our presence in these markets.
Developments in our market areas during the second quarter
Sales increased by 7% in EMEA in the quarter, driven by Spain, Germany, and Eastern Europe. In our direct market, the UK, we increased sales through Amazon and continued strong sales through Boots pharmacies. Additionally, we launched Prodentis in the two largest wholesalers in the UK, marking the first product launch in our oral health category in the country. In Finland, sales through pharmacies continued to grow during the quarter and in Spain there has been strong growth also in the pharmacy channel.
In Asia Pacific, we maintained a strong performance in the quarter with sales increasing by 49%, primarily driven by China and South Korea. China has been actively launching our new packaging design. The design includes a uniform symbol for a global recognition of our products. Overall, China is building up inventory this quarter in preparation for several upcoming events, fairs, and congresses, targeting both medical professionals and consumers.
In the Americas, our sales increased by 22% in the quarter, and on Amazon we have continued to reach record levels in the US. Sales of our oral health products, especially Prodentis lozenges, are increasing. In Latin America, we see growth in the quarter for both Protectis drops and chewable tablets.
Cultivating synergies between probiotic strains
We continuously conduct preclinical research on both our current probiotic strains and new bacteria strains to understand their individual and combined effects. Recently, we published an article in the scientific journal Applied and Environmental Microbiology, examining how a new probiotic strain, Bifidobacterium longum subsp. longum BG-L47, could be an ideal partner for our strain L. reuteri DSM 17938. Building on these promising results, we will soon commence the clinical evaluation of the synergies between these two strains.
Continued emphasis on our BioGaia brand and direct businesses
During my tenure as CEO of BioGaia of nearly a year, I have had the opportunity to see the remarkable strength of our products, brand, and the dedicated team behind them but also the substantial market opportunities. Based on these insights, I am confident about our decision to ramp up investments to drive continued growth, starting in H2 2024, and building on our already strong foundation.
The investments follow our company strategy and will include: 1) targeted investments in consumer marketing to bolster awareness and brand recognition, 2) further expansion in established direct markets, such as the USA and Canada, while at the same time developing newer direct markets like Australia and New Zealand and 3) more investments in R&D to further differentiate our products from competitors. We will continue to prioritize markets with significant potential, including the US, the world's largest probiotics market, as well as Canada and Australia, both ranked in the top 15 globally.
These strategic investments are anticipated to deliver strong growth rates, above the market. Costs are projected at SEK 75-85 million in the second half of 2024, on top of normal operating costs. We will closely evaluate the investments' efficiency and impact to ensure alignment with our growth objective. We maintain committed to delivering on our long-term operating margin target of at least 34%.
Our commitment to our long-term objectives remains resolute, with a continued focus on enhancing shareholder value and reaching our vision to be the most trusted probiotic brand in the world.
Theresa Agnew
President and CEO, BioGaia
July 23, 2024
You find the complete report with tables in the attached PDF or on https://www.biogaiagroup.com/investors/reports-and-presentations/financial-reports
Teleconference:
Investors, analysts, and the media are invited to take part in a teleconference on the interim management statement to be held today, July 23, 2024, at 09:30 a.m. CEST with CEO Theresa Agnew and CFO Alexander Kotsinas. More information about the teleconference is available here: https://financialhearings.com/event/48495.
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Contacts:
Alexander Kotsinas, CFO
Email: alexander.kotsinas@biogaia.com
Phone: +46 735 00 11 11
Mikaela Idermark Stern, Corporate Communications
Email: mikaela.idermark.stern@biogaia.com
Phone: +46 730 95 61 50
About BioGaia
BioGaia is an innovative Swedish healthcare company that develops, markets, and sells probiotic products with documented health benefits. The products are sold through local distribution partners or via own distribution in over 100 markets. The class B share of the Parent Company BioGaia AB is quoted on the Mid Cap segment of Nasdaq Stockholm. biogaiagroup.com
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 set out above, at 08:00 a.m. CEST on July 23, 2024.
