BioGaia AB (publ)

Hi, this is Teresa Agnew, CEO of BioGaia. We're here to present our Q4 results. As an overall executive summary for the quarter, our sales were 365 million SEC, which is growth of 23% and excluding currency effects, that's growth of 24%. Sales in Europe, Middle East, Africa increased by 24%, in Asia Pacific by 10%, and in the Americas by 32% for the quarter. Our EBIT was 103 million SEC, which is growth of 28%, and our margin of 28% for the quarter. If you look at the total year, the total year for 2024, we had sales of approximately 1.4 billion SEC, which is growth of 10%. We had an EBIT margin of 30%, adjusted EBIT margin of 34%, which is without the metabogen impairment loss. And if you look at the regions for the total of 2024, Europe, Middle East, Africa grew 3%, Asia Pacific grew 20%, and the Americas grew 10%. Some of the key events in the quarter, the board has proposed an ordinary dividend of 1.95 SEC with a total dividend of 6.90 per share. This is corresponding to 698 million SEC. On November 4th, we made an announcement of a new shareholder, Anatom Holding, which is a Switzerland based investment firm, and they acquired shares following the exit of the EQT public value fund. On December 5th, we announced the launch of a new product, very exciting, Biogia Gastris Pure Action. This is our first clean ingredient capsule. It's a double strength probiotic, which is FODMAP friendly, which is something that is recommended by gastroenterologists for people with irritable bowel syndrome. So this is a product designed to support consumers with sensitive stomachs and digestive issues. On January 16th, we announced that we terminated the distribution contract with our partner in France, and we will be taking that business direct later this year. And then on February 4th, we announced our results for the fourth quarter and that it would exceed the market expectations. Some of the launches that we had in the quarter, as you can see, in Mexico, we launched Prudentis Mint lozenges across many of our Central Eastern European markets. We launched our Biogia Pharax Drops, which is for immunity, so it was perfect timing for the cold flu season. We launched Biogia Gastris Pure Action, as I said, we launched that in one of our direct markets, Finland, and we also launched the 10 ml of our Biogia protective drops in the United Kingdom. In terms of sales, as I said, for the quarter sales increased 23%. Our pediatric business, the sales increased 23%, mainly due to increased sales of our drops and mainly in the Americas and EMEA, and sales increased significantly in Brazil, the US and the UK. Our adult segment sales increased by 20%, and that was mainly due to Prudentis as well as Gastris, and Prudentis sales increased in South Korea and the US, protected tablets decreased in Bulgaria and South Korea. So as you can see here then for the year, our pediatric business grew 8% for the year, and our adult health business grew 17% for the year. This actually makes our pediatric business now for the year around 77% of our total sales. When you look at it by region, our sales increased 24% in EMEA, and some of the markets with the highest growth were the UK, Belgium and Spain. Asia Pacific, our sales increased by 10%, and that was mainly in South Korea, Japan and also Vietnam. And in the Americas, our sales increased by 32%, and that was driven mainly by the US, by Brazil and Canada. And as you can see for the year, in the Europe, Middle East, Africa region, our sales grew 3% for the year. In Asia Pacific, our sales grew 20% for the year. And in the Americas, our sales grew 10% for the year. So if you look at the segments in terms of regions, the Americas for the total year of 2024 now represents 38% of our sales. EMEA represents 36% of our sales, and Asia Pacific represents 26% of our sales. So now I will turn it over to Alex, who will go through in more detail our financials.

Thank you, Theresa. So to summarize, quarter four, as we have heard, we had revenues of 365 million, which was a growth of 23% in the quarter. Our operating profit was 103 million, which was a growth of 28% versus the same quarter last year. And the margin was 28% versus 27.1 year ago. Earnings per share were 0.81 sec versus 0.67. And cash flow was 99 million in line with the same quarter last year. To move on to the sales, as we heard, we had a growth in the quarter of approximately 23%. And excluding currency, the growth was 1% point higher at 24%. And we therefore had a negative currency effect of 1% in the quarter. And also year to date, we had a growth of 10% in total with a negative currency effect of 1% and an organic growth of 11%. If we look at the gross margins for the quarter, our gross margin was 71%, which was lower than in the same quarter last year, where it was 76. However, if we look year to date, our gross margin was 72 versus 73 last year. So almost in line with last year. If we look at pediatrics, then we start with pediatrics for the quarter. We had a gross margin of 72 versus 78, which is lower. The main reason for the lower pediatrics margin is both some mixed effects and some inventory cost of goods related inventory right down in Pekaiya, USA. This is unfortunate and nothing we expect to happen going forward. But there was an inventory right down, which affected the margin negatively. And again, in combination with a mix effect in geographies also and in adult health, the gross margin at 67% was fairly stable compared to the same quarter last year. And for the year to date, figure 63% versus 67 last year, somewhat lower. And that is also due to mix effects. To move on to the operating expenses, they grew with 7%. There were no adjustments in the quarter. Sales costs increased due to a larger proportion of direct sales in subsidiaries and some strategic investments in sales and marketing activities. In terms of our R&D costs, they grew with 18%, mainly due to increased clinical study costs in the quarter. And then we have some other OPEC's, which were a positive 12 million, that is positive currency effect. So all in all, total OPEC's grew with 7%. And year to date, our OPEC's grew with 20%. But if you adjust for mainly then the meta-protein right off, our total OPEC's increased with 9%, which is in line with sales or slightly below the increase in sales. Look at the profit and loss then to summarize. We had a sales growth of 23%, our OPEC's grew with 7%, and our EBIT then grew with 28% at 103 million. And the adjusted EBIT was the same in the quarter, which then led to a margin of 28% in the quarter versus 27% in the same quarter last year. And then year to date, we have an EBIT margin of 30% versus 34%, but on an adjusted basis, the margin was 34%, which was in line with the same quarter last year. Turning to the cash flow. Cash flow from operating activities decreased by 15% to 103. And this decrease was mainly due to some higher payment of taxes. We have the same taxes basically, but it's a periodization of taxes effect here. Then in terms of cash flow for the period, it was the same as last year, 99 versus 100 million last year. And the cash at the end of the period was 1.22 billion SEC versus 1.54 in the same quarter last year. So with that, I hand over to Theresa for some concluding remarks.

So in summary, our net sales increased by 23%, which was 24% excluding the currency effects for the quarter. As we said, our direct markets have strong performance and they continue to show that performance. The US, Canada and Japan are among our top five markets. Europe, Middle East, Africa sales increased by 24%, mainly due to higher sales in the pediatric segment. And we saw larger increases in the United Kingdom, Belgium and Spain for the quarter. Asia Pacific continues solid growth with 12, I'm sorry, 10%, which was due to higher sales in both pediatrics and in adult segments. And the sales mainly increased in South Korea, Japan and Vietnam for the quarter. Whereas in the Americas, sales increased by 32% in the quarter, mainly due to increased sales in pediatrics and adult segments. And we saw larger growth in the US, Brazil and Canada for the quarter. As Alex said, our operating expenses grew by around 7%. Our EBIT growth was 28% with an overall EBIT margin of 28% for the quarter and 30% year to date, with the adjusted EBIT margin being at 34% for the year. Our dividends that are suggested are at 6.90 per share. And we will continue with the ramp up investments to drive continued growth where it makes sense, specifically in some of our direct businesses such as the US, the UK and Canada, Australia, where we are taking our business direct. And also as we go into and continue into this year in France, we will be increasing investments as we take that business direct as well. So we open it up to any questions that you may have.

The next question comes from Mathias Heggblom from Handelsbanken. Please go ahead.

Good morning. Thank you so much for taking my questions. I have two. And sorry if you touched upon some of this during your prepared remarks. I had some technical issues coming in online. So firstly for Theresa, if you could talk about the new comprehensive digital consumer campaign, perhaps help us understand what that entails and how we should expect effects from that in terms of translating into sales benefits. You know, is that already happening? Should it happen early 25 or how should we think about any benefit from that? And then secondly for Alex, on the gross margin, you called out write downs in the US as well as mix. So I was curious to better understand what was what. The gross margin for pediatrics, which is typically very strong in the fourth quarter, was maybe five, six percentage points lower than normal. So how much was mixed and how much was write down to explain this? Thanks so much.

OK, so first I'll take the first question. So, you know, we are consistently doing marketing in the digital space across our markets. So we do, you know, video, social media, influencer campaigns. But what we have done is we've created some new content last year that we can use globally. And so we've started some of additional media focus in some of our direct markets with our new content. So that has started this year. I won't share all the specifics just for confidentiality and competitive reasons. But, you know, it is a digital campaign targeting consumers with our brands. You know, we're starting to see some good sales in certain markets. So this is something that we've started. We continue to monitor it. We adjust spending. You know, we look at it week on week, month on month in terms of how it's growing our business. So, you know, this is something that we will continue to look at for the future and invest to drive brand awareness, but also to drive sales and conversion through our channels.

Good. And then when it comes to the gross margin, just try to answer that. I mean, we will not quantify how much was the write down or how much was the mix. But I mean, both. But the right time was quite substantial part of it. And again, it's sort of a one time effect. We don't foresee that this would happen again, unless it's very unfortunate. But it was a fairly substantial part was the actual write down in the US. And then there were some mix effects also affecting depending on, for example, in which countries we sell.

Two follow ups, please. So firstly, maybe for Theresa. So one of the things the outside world struggled to understand was the 75 to 85 million krona and additional optics that you highlighted in the mid year report for the second half. So how much of that did actually materialize and what did not and why? And then maybe the second one for Alex. Anything particularly we can understand from the right down? Is that just natural cause of business? Sometimes this happens and any addition color on the right down with Delphi.

Yes. So in terms of the of the OPEX. So in terms of our additional investments, as we had planned, those went forward as planned in our direct markets. Over the course of the years, we saw some of our sales and EMEA being lower. We controlled for some costs in spending in other areas. But also, you know, as you look at the back half, our R&D expenses were lower than anticipated in terms of some of the studies that we were spending on. And that has to do just with patient flow in terms of enrolling patients in studies. So some of that was lower than anticipated, I would say, from an R&D standpoint. And then we, of course, you know, controlled for some costs as we went through. We saw sales were declining in certain areas. But the other kinds of additional investments that we made in sales and marketing efforts, you know, continued as we wanted.

And just to add to that comment, actually, one part of the actual why the cost was lower, quite a large explanation as well, is that we had lower we had some positive effects effects that lowered the costs, so to speak. That's part of the explanation also. Then coming to the gross margin. Yes. Unfortunately, to go direct means that you will handle a larger part of the inventory and take some inventory risks. So it will be an increasing part of our business. However, this to this extent that we saw here, we do not foresee that this should happen again. I think we have changed how we work with that locally in the U.S. So, of course, you know, again, going direct will mean some increased level of these type of risks. But we we will try to mitigate this in the future.

Thank you so much.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. OK,

well, thank you very much for listening. And we appreciate it. And we will talk to you next quarter. Thank you.