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Q4 2020: Strong finish to a successful year

Significant events during the fourth quarter

• Net sales increased by 11% (20% adjusted for currency changes) to SEK 185 m (166).
• EBITDA margin was 25% (32%).
• Acquisition of shares and strategic partnership in Vital Nutrients Holdings. The acquisition amounted to USD 6 m and represents slightly less than 10% ownership.
• Publication of major study confirms using Probi Defendum® has a positive effect on common colds.

Significant events during full-year 2020

• Net sales increased by 15% (17% adjusted for currency changes) to SEK 717 m (626).
• The EBITDA margin was 27% (29%).
• In 2020, Covid-19 led to increased demand for probiotics in the Americas, while at the same time causing greater sales volatility in EMEA and APAC.
• The Board of Directors proposes that the 2021 Annual General Meeting establish a dividend of SEK 1.10 (1.00) per share corresponding to SEK 12.5 m (11.4) for the 2020 financial year.

CEO Comments

A strong 2020 gives us confidence

2020 was a strong year for Probi increasing our net sales by 15% to SEK 717 m with an EBITDA margin of 27% for the full year. During the first half of the year, we noticed a clear stock build-up among our customers in EMEA and APAC, which was a consequence of the restrictions that followed from Covid-19. These regions had a weaker second half of the year. The Americas region performed strongly during the year with 20% growth and we noted a greater interest in probiotics in the American market. We are proud to have expanded our commitment with both existing and new customers, which resulted in significant growth during the year. It has been a challenging year and the business has of course been affected by the pandemic, but overall the effects on the Group over the year as a whole were neutral.

We finished the year with a convincing final quarter and net sales of SEK 185 m (166), corresponding to a growth of 11%. This increase was driven entirely by the Americas region, which expanded by 21% during the quarter, while performance during the quarter in both EMEA and APAC was weak, declining by 19% and 24% respectively. These regions are still affected by restrictions leading to certain limitations on our direct customer canvassing and postponing our launch plans. However, we saw greater activity during the second half of the year and expect positive developments in these regions in the coming year.

During Q4, work began on a number of new studies in bone health, stress and female health. A new important study in digestive health was started on the Chinese market, which is Probi's first in the country under its own auspices. Overall, this has led to higher costs for R&D, which together with the product mix has contributed to the EBITDA margin falling to 25% in Q4 (32%).

The upgrade of the manufacturing site in the US, which took place throughout 2020, has now largely been completed. In the coming months, the focus will be on streamlining production and we expect to see the effects of these investments during the second half of 2021.

In October, we launched a clearer profile for our product portfolio. Within ClinBac^TM, we have collected our premium segment with our most scientifically validated bacterial strains, and LiveBac^(R) is the brand name for our range of safe bacterial strains as a complement to, or as individual ingredients in, our customers' products.

In 2020, we communicated new, more ambitious long-term growth and profitability targets. Despite challenges in the outside world, we are fully focused on our goals and expect to achieve these in 2021 and beyond. During the year, we increased our collaboration with one of our largest customers in the Americas, in connection with their product update, and signed an agreement with a large pan-European customer for distribution throughout Europe. Within APAC, we will regain growth with a new, strong management team that is now in place. With new collaborations, such as our joint venture with Viva5 and our strategic partnership with Vital Nutrients, we will develop our business to further sow the seeds for growth.

In summing up 2020, I can state that we are in an excellent position to maintain our growth through both existing and new customers and through more expanded collaborations and acquisitions. Together with all our skilled employees, I look forward to making Probi even stronger in 2021.

Tom Rönnlund

CEO

Invitation to teleconference

Probi's Year-end report for 2020 will be published on February 9, 2021 at 8.00 am. On the same day at 10.00, a teleconference will be held with Tom Rönnlund, CEO and Henrik Lundkvist, CFO, who will present the report. The conference call can be accessed on +46 (0)8 50 55 83 68. The presentation is available at www.probi.com and www.financialhearings.com

Contacts

Tom Rönnlund, CEO
Tel: +46 (0)46 286 89 40
Email: trd@probi.com

Henrik Lundkvist, CFO
Tel: +46 (0)46 286 89 41
Email: henrik.lundkvist@probi.com