Zinzino AB (publ)

Good afternoon and welcome to this live video interview with Sensino following the Q1 2026 report released this morning. My name is Niklas Elmhammer from CarSquare Equity Research and we're very excited to be joined today by CEO Dag Bergen Pettersen and If you have any questions, please don't hesitate to use the chat function and submit your questions, and we will try to answer as many as possible. But now, without further ado, welcome Dag. Great to have you with us today.

Thank you for having me. It's always a pleasure to be here with you. Do you have a sound problem in the studio?

Sorry about that. So, Doug, very welcome. Great to have you with us today.

Thank you. Thank you. And thank you for having me. It's always a pleasure, as I said, so it's always good to be here with you.

So you released your Q1 report this morning. strong growth more than 20 percent and even more significant increase in the margins and profits so how would you describe the development in q1 is it according to expectations

Yeah, it's a little bit above our kind of expectations, I would say. The profit margins are a little bit higher than it used to be like in the quarter one. Quarter one is probably the most difficult kind of start of the year. Quarter four is the best one traditionally. So very pleased to see that we are growing and at the same time having good profits. It's very good. We are investing a lot. So we need some some of that profit to to invest more. We invested quite heavily in inventory and new markets and new technology and products in general. So and we are acquiring some companies. So so all of that is is fantastic for us. And margins are one thing, but the growth continues growth super important for us. So in

all in all it's a it's a really really good quarter for us yeah great and you have expanded in north america during 25 and 26. could you elaborate a little bit on this market what trends you see here you're right in the report that that was indeed organic growth

Well, we both have organic growth and we also have some from the acquisitions. I still think today we have a little bit of, it's more on the organic side and on the acquisition sides, but it's a little bit depending on how you're calculating things. US, we started in the US like 10, 11 years ago with kind of a dream to, we know that that is one of the most important and largest markets. in general for what we are selling. And it had taken us some years to get up to speed. Last year, as you were mentioning, we were acquiring Three companies in the U.S. and this year we've acquired one in Mexico and one in the U.S. So, of course, that is a big part of what we have done is to acquire acquisitions in the U.S. And we do believe that it's going to be head to head the most important market this year together with Germany. and that region and it's a long-term strategy process to run different markets and we try to run it the same way with scale advantages and where we are more or less having the operations very centralized here in Europe, where we are putting together logistics, of course, in a small matter, and then customer care, but sales more or less out in the global world of the different markets. So excited to see that the US is now have a good run rate and a good revenue. So I have strong beliefs in that market, but also in Mexico and we've launched Peru and in June, we will open up Colombia as a market as well. So we are on our way to really expand and grow our business.

If I'm reading the leaves right, I see the underlying growth with a bit of a slowdown in North America in the quarter. Is this correct?

No, I don't see it as a slowdown, but I'm not comparing quarter four with quarter one. I'm comparing quarter one with quarter one last year a little bit more. So I see it a little bit different. And I see the underlying growth figures from customers and partners and intake of that. So I see a good growth in North America, but it's a lot of work. It's a lot of... more work to do and and there is the potential is is we haven't even started i would say in in growing and remember if you look at the markets close to ourselves in the nordic scandinavia and the nordics we we have a much higher intake if you look at compare that to the population than in the other markets so so we we have a lot of work to do to really take out the the potential and the market potential

So more questions about the U.S. or your acquisitions. How is the integration with It Works going? And do you think they will be able to do above 45 million US dollar sales this year?

Start with the last. Yes, I do believe we're going to extend that number. It's a lot of hard work implementing a new acquisition. It has gone has been a good transition everything is in our database now so everything is uh everything is within our tax system and our payment gateways so so it's it's fully integrated still a little bit early to say um what kind of level of of revenue this will give us over the next two or three years and it has been the largest transition that we've done so so we can see the complexity It's a little bit more work than what we normally would be adding to an acquisition. But I think the benefits of it over the next years would be tremendously good. But yeah, I'm not going to say that it hasn't been hard work because it has been hard work, but we've gained a lot. We have now employees from it works. part of the group helping us out a lot we have a lot of new distributors and customers and we have not only gained the revenue in us but also in france and in spain and here in europe as well so all in all it has been a super positive Super positive acquisition. And then we now have the third largest shareholder from the family that we were buying the company. So we are super excited to have that family as owners in Cincinnati as well.

So just one additional question on that front. I noticed that you believe you mentioned 45 million US dollars guidance. It's down compared to the previous guidance of 60.

Well, you were you were asking me do i believe we're gonna be above 45 and i just confirmed yeah i believe in that i'm not sure if it's gonna be 50 55 60 or 65 it's a little bit too early to say we are tracking it um Very often we do lose a little bit of momentum when we are acquiring companies. It takes a little bit time to re-engage the customers and re-engage the distributors as well. But what I can tell you is that we're working hard to gain a lot of benefits and we have now the last three four months worked really hard on that so i i am very positive on on the acquisitions that we have done both the one in mexico sankey And this one, it works. So I think we're going to gain a lot of benefits out of it. On the numbers side, we were hoping to get more than 60 million. And that is still my hope and the dreams. And I'm working hard on accomplishing that together with the team.

OK, thank you for the clarifying comments there. And now moving over to Central Europe, 40% growth, I believe. Much of that is organic. So how do you achieve this continued solid growth quarter after quarter?

I'm a little bit afraid to answer it a little bit boring with the same way as I did the last time. We are getting benefits and gaining from long-term work. So I'm not sure if we've done a lot of things differently. It's just that we've been... very stable in the way that we have been operating. We have a lot of good partners in the field who is helping us out. We have invested a lot in logistics and products and customer care, and all of the things surrounded by having an efficient organization. And we have a lot of good people working in that region. And that is the kind of the good thing is that we believe that we are still kind of on the front run to keep this growth ongoing. Germany and the region, Switzerland and Austria, about 100 million people. um they are interested in in wellness they they um and preventative health is something that i i believe that region uh understand and and also grasp so so so i i see many many years of of good growth and and lots of benefits in that market in that region in itself so continue to work on the basics and doing that and making sure that we are constantly developing and taking care of customers and distributors

And a little bit on that front as well in my next question. If I read your annual report, I mean, the number of distributors have increased to 40,000 about. That's sort of more than sort of doubling compared to the previous annual report. How do you see that? What are your success factors here?

it is a big part of the success. I'm not sure if that number is totally read correctly, but maybe over 12 months time, then we have a lot of people working part-time with Cincinnati and we've done four or five significant good acquisition the last 12 months, which has gained a lot of, I would say optimism, inside of Cincinnati. We are counting customers and really, really important for us to have a ratio between the customers and partners. So not only partners, distributors, but also customers. In general, I would say that when you are growing, it's extremely important to take care of your customers and also make sure that the underlying things that you are dealing with, meaning that you have an inventory, that you are shipping products, that you are exploring new products, that you are doing all of the basics correctly. And that is a hurdle in itself to maintain a certain level of I'm not sure if the word is correct, but we need to have a certain level of maintains to make sure that the customers and the partners feel safe and good. So it's important for us to have a lot of new partners, but it's even more important for us to have a lot of customers and to continue to grow long-term, not in the short-term picture.

Okay, thank you. And now, moving over to margins. I mean, that was a strong point in the report. Over 50%, well above your financial target, or the lower bottom of the financial target. I believe you previously said that one reason for a relative conservative target was your uncertainty regarding the impact from acquisitions. So are you more comfortable now with the acquisitions?

I am. I am more certain that we are doing the right kind of steps. Sometimes it's good to be conservative because then you're kind of watching the costs a little bit more extra and you stay a little bit grounded. and being humble. But there is a lot of investments. So even though the quarter was fabulous, we believe that we're going to have a good year. We get a lot of scale advantages, which is a little bit hard to forecast. although we also need to invest certain money in the organic growth and the growth in itself. So you can say in a very easy picture, you can say that we're feeding the organic growth with cash and campaigns and promotions, while we are feeding the... the acquisition growth with shares. And we find that to be a quite perfect match in a way to grow the business. And that's one of the benefits that we get out of that. But to do the forecast and how much things will cost and what kind of revenue you're gaining from especially the acquisitions is a little bit hard to calculate all of those costs. But we are really happy to see that we have We have moved this pretty nicely in this quarter. And I believe we can continue this kind of trend throughout the year without promising too much.

Yes, actually, I have a question regarding the growth of the margins from the viewers. You have a gross margin of 37%. It's the highest level since 2023, I believe. Is it sustainable and what impact do you see from the possibility of rising energy costs and freight costs?

Well, everyone is impacted by the circumstances in a global marketing economy or market economy. So, of course, it impacts us somewhere. And we have a factory, so we see the costs are increasing. We see the interest rate somewhere is also increasing. And then we are global. a buyer of products and inventory and all that. So everything impacts. I'm pretty sure that we will be above the levels that we promised, 20 percentage growth and 11 percentage ABTL, which is gonna be pretty, it's gonna be pretty hard not to beat those numbers. But of course, I don't wanna be too, I want to be staying humble and saying that this is what we promise and we would like to over-promise or over-deliver the promises. I think the hardest thing is to gain the growth. And that's what we put a lot of effort into. And it sounds a little bit strange because you were talking about profit margins. But the profit margins are driven by the growth. So there's a good parallel between what kind of growth we can achieve, what kind of scale advantages we can gain and where we are selling the goods as well has an impact. So I strongly believe that we're gonna continue our growth journey and then the margins will be following.

great one component of growth is of course acquisitions it's a focus area for you going also going forward what what are you looking for now in acquisitions is it new product areas or is it geographies

I would say that first we've been really focused on delivering on the acquisitions that we have done. So that has been the super focus for this quarter and the quarter that we are within now in quarter two. I would say gaining distribution power customers will be the main focus for new requisition, not products or ingredients. But although we did invest quite heavily last year and we are investing in an algae production as we speak. So that has been important for us, but that is going to give us long-term a lot of benefits. So for sure, those acquisitions, if we're doing any one next quarters, then it would be on distribution power and within existing markets, not necessarily in new markets. That's where we gain the most out of the acquisitions.

Okay, thank you and another question from the viewers. In the Q3 report you mentioned strong momentum with the recently launched gut test orders. So is it possible to comment now on the The outcome six months later, is it according to expectations?

Well, it's according to the expectations. I still think that the first concept, the balance oil, which is the leading concept still, that is leading things. And we knew from the other tests that we have launched and we are working a lot on the science around that. So we still have a lot of work to do. But I strongly believe that the gut test will be the second largest concept of tests that we have. um things um things went um slow down a little bit but it's it's very natural in beginning people are really curious and then you take the test and then you start to gain some benefits of it and then you get the next wave of momentum so so everything is according to to one of my expectations and the plan this is a long term product and tasks, so I didn't expect us to grow faster than what we did to begin with, but it's going to be significantly part of Syncyno over the next years for sure.

Okay, I think we have covered a lot of questions already. I don't know if you have any final remarks, Dag?

I don't think so. The only thing I would say is that it's always a pleasure to come here. We are positive about the quarter. We believe strongly that what we have said in the financial report will be continued with growth and good profits. So this year is going to be fantastic and we have a lot of focus now on 2027 even because

growth needs to continue over the next years so so that takes a lot of effort from from the team and myself okay thank you dog for uh coming in today and putting up with our questions thank you for having me okay and thanks everybody else for for tuning in and uh looking forward to see you soon again