• Low volume sales hit profitability
• Growth expected to be back in 2023
• Share trading at NTM EV/EBITA of 13x

Q4 hit by US snowstorms and one-off items

Probi reported a weak quarter again, with -27% organic growth and EBITDA of 10.9%, 68% below our expectations. This is partly explained by delayed deliveries caused by snowstorms in the US and one-offs (personnel-related, i.e., change of CEOs, and business development costs). In the US, sales were SEK 108.1m (vs. 127.8m in Q4'21) due to the snowstorms paralysing part of the country, halting deliveries amounting to SEK 18m (goods already delivered in the first week of January). In the EMEA region, sales were SEK 21.6m (vs. 30.9m in Q4'21), caused by the Swedish distributor reducing stock of Probi's products, as Probi will take over distribution from April '23. On the positive side, APAC market growth continues to outpace its peer regions with sales coming at SEK 14.3m, 26.5% higher vs. SEK 11.3m in Q4'21.

Better expectations for 2023

2022 was a turbulent year for Probi. While the outlook for '23 is on the cautious side, we see some promising drivers including 1) three potential new key accounts in the US (one of them already placing orders), two of them in the Clinbac segment (i.e., higher margins), 2) the launch of a new product category (spores), which could start commercialisation in Q2'23e, and 3) the roll-out of the four Sinopharm products. Probi has also completed the pilot study on Gut-Brain; product launch is expected in '23.

Sales estimates for '23e down 10%

We cut our estimates for 2023, now assuming sales growth of 5% for the FY (12% previously), mainly driven by the good prospects in the APAC region. In the EMEA region, we expect a low sales in Q1'23, with growth back from Q2'23e, driven by the taking over of the distribution of its own brand in Sweden. The share is trading at an NTM EV/EBITA of 13x, 38% below peer BioGaia (NTM annualised 3-year average of 24x).