Strong growth in Americas outshines softer EMEA/APAC

Acquires ~10% stake (USD 6m) in Vital Nutrients

We raise EBIT by 9%-6% ’20e-’22e

Q3: 43% organic growth driven by US strength and one-off
Facing easy comps, Probi delivered a record Q3 report with 38% y-o-y sales growth (+43% organic). However, sales were boosted by ~SEK 15m relating to a stock build-up in connection with a planned product update from a large US customer. Excluding this, organic sales grew 33% y-o-y (vs. ABGSCe +7% y-o-y). The strong sales growth was clearly driven by Americas (+50% y-o-y), which experienced good underlying demand aside from the one-off, with sales gains of premium products. Management are confident in the “pipeline” for the region and we note that it constituted 86% of Q3 group sales (usually ~75%). Both EMEA (-5% y-o-y) and APAC (-15% y-o-y) faced challenges, hit by a combination of stocking effects from Q2 and lockdowns hampering sales channels. While management is taking improvement measures in the regions, we do not expect strong near-term recoveries.

EBITDA +35% y-o-y for a margin of 31.6%
Supported by the strong sales growth in Americas, EBITDA came in at SEK 62m (+24% vs. ABGSCe SEK 50m) for a margin of 31.6% (-1.3pp vs. ABGSCe 32.9%). This is aligned with the firm’s financial target of =29% EBITDA margins. Probi also announced a USD 6m investment (~10% stake w. board representation) in US-based supplement company Vital Nutrients, forming a strategic partnership. Vital Nutrients includes three brands (>200 products), generating revenue of ~USD 40m. Vital Nutrients primarily sells via networks of healthcare practitioners and direct to consumers via e-commerce marketplaces. The strategic rationale builds on accelerating growth, securing long-term supply agreements as well as finding production and development synergies.

Raising sales and EBIT estimates to reflect US strength
On the back of a strong report and improved prospects for the US market, we raise our sales (6%) and EBIT (6-
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