BioGaia profits fall in H1

BioGaia profits fall in H1

Company president says extended partnership with Nestlé is of major strategic importance and will create additional resources for development of consumer products under the BioGaia brand.

1 January – 30 June 2012

  • Net sales reached SEK 510.0 million (159.5). This figure includes license revenue of SEK 356.0 million from Nestlé that is regarded as non-recurring revenue but is to a certain extent attributable to sales in 2012. Excluding license revenue from Nestlé, net sales amounted to SEK 154.0 million (159.5), a decrease of SEK 5.5 million (3 percent).
  • Net sales of finished consumer products amounted to SEK 121.8 million (111.5), an increase of SEK 10.3 million (9 percent). Net sales of component products totaled SEK 387.3 million (47.3). Excluding license revenue from Nestlé, net sales of component products fell by 34 percent.
  • Operating profit was SEK 401.5 million (57.3), an improvement of SEK 344.2 million. Excluding license revenue from Nestlé, operating profit was SEK 45.5 million (57.3), a decrease of SEK 11.8 million (21 percent).
  • Profit after tax was SEK 299.9 million (42.2). Excluding license revenue, profit after tax was SEK 37.5 (42.2) million, a decrease of SEK 4.7 million (11 percent).
  • Earnings per share totaled SEK 17.27 (SEK 2.38). Excluding license revenue, earnings per share amounted to SEK 2.08.
  • The period’s total cash flow was SEK 243.1 million (-20.2). Cash flow includes payments from Nestlé amounting to SEK 356.0 million, investments in TwoPac of SEK 16.8 million (6.4), tax payments of SEK 41.3 million (24.5) and dividends of SEK 103.6 million (34.5). Cash and cash equivalents at 30 June 2012 totaled SEK 414.5 million (126.6).

Second quarter 2012

  • Net sales reached SEK 75.7 million (89.6), a decrease of SEK 13.9 million (16 percent).
  • Net sales of finished consumer products amounted to SEK 67.1 million (57.9), an improvement of SEK 9.2 million (16 percent). Net sales of component products totalled SEK 8.3 million (31.4), a decrease of SEK 23.1 million (74 percent).
  • Operating profit was SEK 19.4 million (33.9), a decrease of SEK 14.5 million (43 percent).
  • Profit after tax was SEK 16.7 million (23.7), a decrease of SEK 7.0 million (30 percent).

Key events in the second quarter of 2012

  • Agreement for the sale of drops and tablets in Taiwan.
  • BioGaia initiates investigative study in type 2 diabetics.
  • Agreement for oral health products in the Czech Republic, the Benelux and South Africa.
  • Agreement with Nestlé’s Gerber division for the sale of drops in the USA.

President´s comments
“Earlier this year, as previously mentioned, we signed several agreements with Nestlé through which they have among other things obtained exclusive rights to use Lactobacillus reuteri in infant formula throughout the term of patent in order to guarantee their access to our component product in this area. One effect of this is that our reported sales of component products have decreased, although this has been offset by license revenue from Nestlé. Within the framework of these agreements, we have also initiated a distribution collaboration with Nestlé for some of our existing finished consumer products and a close partnership in development of new products related to Nestlé’s business.

The extended partnership with Nestlé is of major strategic importance for BioGaia and will also create additional resources for development of our own consumer products under the BioGaia brand. This has resulted in the already announced launch of our drops in the fourth quarter through Gerber (100 percent owned by Nestlé), which is one of the absolutely strongest players in the infant nutrition area in the USA. The product will be sold with prominent exposure of BioGaia’s brand. In view of Gerber’s position in the US market and the size of its investment, we anticipate substantial growth in our US sales next year and a significant increase in awareness of the BioGaia brand.

Our finished product sales have been affected by our termination of certain existing distribution agreements and the change to new distributors. In spite of this, sales of BioGaia’s finished consumer products rose by 9 percent in the first half of the year and 16 percent in the second quarter compared to the corresponding periods of 2011”, says Peter Rothschild president, BioGaia.

 

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