BioGaia AB (publ)

Q2 net sales were SEK 441 million, versus SEK 405 million a year ago, up 9% reported and 12% excluding currency effects. Operating profit was SEK 132 million, up 22%, and EPS was SEK 1.02 versus SEK 0.87, up 17%. Gross profit increased 9%, gross margin was 73% versus 73% last year, EBIT margin was 30% versus 27%, and adjusted EBIT margin was 33%. Year-to-date net sales were SEK 813 million, up 13% excluding currency effects, and year-to-date adjusted EBIT margin was 30% versus 27% last year. For cash flow, operating cash flow was SEK 51 million, cash flow from financing activities was SEK -466 million, cash at period end was SEK 446 million, and the quarter included a SEK 59.5 million purchase payment for Nutraceutics plus SEK 405 million of dividends. Management did not give formal full-year revenue guidance, but said capital expenditure for the year could be around SEK 30 million to SEK 40 million, and reiterated it is committed to keeping total OpEx basically flat for the year.

Theresa Agnew framed the quarter as evidence that BioGaia’s strategy is working, with growth coming from both the core business and newer direct markets. She highlighted new product rollouts, including Protectis Plus, skincare products, and continued expansion in Germany, Austria, France, the U.S., and other direct markets. Her tone was constructive and confident, while acknowledging APAC order variability and slower-than-expected markets such as Turkey and Italy.

Alexander Kotsinas emphasized that the quarter’s 9% reported sales growth and 12% organic growth translated into improved profitability because operating expenses only rose 2% to SEK 189 million. He noted a one-time selling expense of SEK 11.3 million, adjusted OpEx of SEK 177 million versus SEK 186 million last year, and explained that gross margin held at 73% due mainly to normal mix changes rather than pricing actions. He also cited cash flow from operations of SEK 51 million, a SEK 59.5 million acquisition-related payment, SEK 405 million in dividends, and cash of SEK 446 million at quarter end; he added that CapEx will be higher as manufacturing capacity is expanded, with full-year investment potentially around SEK 30 million to SEK 40 million.

Analysts focused on higher investments, gross margin drivers, direct-market sales mix, China ordering, and whether selling expenses should grow slower than sales. Management said CapEx is rising because BioGaia is expanding manufacturing capacity, with spending expected to vary but potentially totaling SEK 30 million to SEK 40 million this year, while gross margin changes were described as mix-driven rather than price-driven. On China, management said the distributor is expected to increase orders in Q3 and larger orders in Q4, and that Q3 China sales should be up year over year. They also said direct markets represented 41% of sales in the quarter and 45% year to date, and that total OpEx is intended to stay basically flat for the year despite ramping direct-market spend.