“We begin 2024 with stable growth in the group, where net sales amounted to SEK 1,838 million (1,592), a total increase of 15 percent, of which 11 percent constitute organic growth. Considering that we had a negative calendar effect of approximately -4 percent as a result of the early Easter, we feel satisfied with the development in the various segments. The work to strengthen the profitability has begun to yield results and the adjusted EBITA margin strengthened from 6 percent to 7 percent, where adjusted EBITA increased by 25 percent to SEK 128 million (102). The cash flow from operating activities developed well and amounted to SEK 127 million (102). The change in working capital negatively affected the free cash flow, as a result of strategic investments in inventory before price increases and rising cocoa prices at some of the distribution companies. The gross margin has continued to develop in the right direction and amounted to 31 percent (30). The relative increase was greater, as we did not fully consolidate all the Privab companies during the comparison period, which have a lower gross margin than the rest of the group. Humble has a good momentum and we have a positive view of the development going forward, with a focus on continued expansion and growth.” – Simon Petrén, CEO Humble Group AB.

FINANCIAL INFORMATION:

FIRST QUARTER

• Net sales amounted to MSEK 1,838 (1,592), an increase with 15% compared to the corresponding period last year. The organic growth for the period was 11%.
• EBITA amounted to MSEK 133 (130).
• EBIT amounted to MSEK 86 (85).
• Adjusted EBITA amounted to MSEK 128 (102), an increase with 25% compared to the corresponding period last year.
• Cash flow from operating activities amounted to MSEK 60 (183).
• Profit and loss after tax amounted to MSEK 23 (-3).
• Earnings per share before and after dilution amounted to SEK 0.05 (-0.01).

SIGNIFICANT EVENTS:

DURING THE FIRST QUARTER

• Humble Group completes the sale of all shares in Bayn Production AB as part of the Groups long-term strategy to streamline the operations. 
• Humble Group creates a joint company together with the creators of “Babblarna”, a well-known brand for families in Sweden.

AFTER THE QUARTER

• Humble Group completes the second part of the sale of properties, which is structured as a sale and leaseback transaction.  
• Humble Group summons to the annual general meeting to be held on May 22, 2024.
• The election committee has proposed re-election of the existing board members as well as election of Noel Abdayem as a new board member, who is also an existing member of the senior executive team.

CEO COMMENT FROM THE REPORT 

”STRONG DEMAND AND IMPROVED PROFITABILITY
We begin 2024 with stable growth in the group, where net sales amounted to SEK 1,838 million (1,592), a total increase of 15 percent, of which 11 percent constitute organic growth. Considering that we had a negative calendar effect of approximately -4 percent as a result of the early Easter, we feel satisfied with the development in the various segments. The work to strengthen the profitability has begun to yield results and the adjusted EBITA margin strengthened from 6 percent to 7 percent, where adjusted EBITA increased by 25 percent to SEK 128 million (102). The cash flow from operating activities developed well and amounted to SEK 127 million (102). The change in working capital negatively affected the free cash flow, as a result of strategic investments in inventory before price increases and rising cocoa prices at some of the distribution companies. The gross margin has continued to develop in the right direction and amounted to 31 percent (30). The relative increase was greater, as we did not fully consolidate all the Privab companies during the comparison period, which have a lower gross margin than the rest of the group. Humble has a good momentum and we have a positive view of the development going forward, with a focus on continued expansion and growth.

Operations
We have a consistent positive development in our business areas and our team is doing an outstanding job of positioning the group for increased growth going forward. Strategic initiatives aimed at expanding market presence and improving product offerings continues to develop and we are excited for the autumn, when we will begin to see the impact of scale-up in the factories as well as the results of the larger product launches that will be rolling out.

Within Future Snacking, we have continued to expand internationally, with a strong response from new chains and customers. Our international launch of sugar-reduced sweets has performed better than expected and we are continuously mapping the possibilities for faster expansion. As a result of strong demand, we have had some challenges in producing products at the required pace. It is one of our highest priorities internally to address and we are doing everything we can to ensure a continuous supply of goods. True Gum affected the segment negatively by SEK -18 million, due to high comparative figures from last year, which was exceptionally strong. With several promising product launches and an improved recipe for our chewing gum, we look forward to these initiatives reaching the market.

In Quality Nutrition, we have similar challenges to those in the Future Snacking segment. Demand for bars, powders and the upcoming energy drink production is sky high. All the extra capacity that will be available during the year is already pre-booked by external customers and our own brands. Now it’s about maximizing the production flow in the factories. The success within the BodyScience brand is particularly noticeable, which is expanding strongly and has quickly taken a market-leading position in Australia. We also recently launched a Swedish innovation in the form of a soft bar, where we have already started manufacturing the products in the group’s new bar factory by exporting our recipe knowledge to Australia. The product also won the prize for protein bar of the year 2024 by Nutrition Warehouse in April and the chains appreciate the new innovation on the market.

For the Sustainable Care segment, Solent is a locomotive. It is the group’s largest company that increased net sales by 14 percent and strengthened profitability by 34 percent. We see a return to growth at several of the premium brands and have a clear trend shift in the form of organic growth and improved margins at the subsidiaries that previously had a tough time. With completed investments and strengthened management, I am convinced that we have laid the foundations for a recovery to previous levels.

The distribution segment shows satisfactory growth, but the result is still dragged down by costs related to the integration processes. We are approaching the final phase of consolidating the Privab companies and have now directed our focus to improving the gross margin, through joint purchases and a more efficient pricing strategy. Given that we sell a lot of chocolate confectionery products where we import in USD and EUR, we have had an inventory tie-up that constitutes a significantly higher percentage of the sales increase than normal. With high inventory turnover and seasonally larger quarters ahead, our assessment is that there are good conditions to free up the tied-up capital and thus get down to a lower working capital level relative to turnover.

Results
The quarter marked a significant improvement in our profitability, which is a testament to the strength of our business model. We have not yet received the full benefit of the investments and consequent cost increases that scaling up in the factories has entailed. It is an effect that will be showcased when the extended shift runs are in full use. We have increased our marketing investments, which are thoughtful strategic decisions aimed at promoting growth in the coming years. With the strong product reception from the market that we have, it is important that we continue to invest for long-term returns.

The gross margin has strengthened compared to the comparison period, despite a negative consolidation effect of the Privab companies. It remains a high-priority area for the group and there are many improvement measures that remain to be implemented. We still have some accounting technical costs from the IFRS transition that drag down the net financial result, but still generated a profit after tax of SEK 23 million during the first quarter. As these items gradually roll out, our assessment is that we are facing a strong improvement of the KPI going forward.

Outlook
There is great optimism in the group. We are starting to get through the tough time that the margin pressure of the last two years entailed and we have an operational focus on ensuring the effective implementation of all the strategic initiatives that are underway. The second quarter has started strongly and if we manage to get the increased capacity in the factories and roll out the major product launches that are in the pipeline, we are in for an exciting autumn.

The process with changing trading market is proceeding according to plan and we are now well into the process, where it should not be too long before we make the step up to the main market. With the new capital structure in place, amortization of debt and lower interest costs, we see that our room for action to invest in continued growth is increasing. Of course, it is important to be vigilant on future challenges that may arise in a troubled environment, but with the degree of maturity we established during last year’s consolidation period, we are better equipped than ever to take on the gigantic market that is out there.”

The report is attached and can also be downloaded in its entirety on the company’s website here.

For more information, please contact:
Simon Petrén, CEO, Humble Group AB
Phone: +468 61 32 888
Email: simon.petren@humblegroup.se

This information is such that Humble Group is required to publish in accordance with EU Market Abuse Regulation 596/2014. The information in this press release has been published by the above contact person, at the time specified by Humble Group’s news distributor Cision at the time of publication of this press release.

About Humble
Humble Group is a Swedish FMCG group, which delivers next-generation consumer products that are better for people and the planet. Humble’s business consists of the business segments Future Snacking, Quality Nutrition, Sustainable Care and Nordic Distribution, which have a profile within health and sustainability. The company strives to drive organic and structural growth through acquisitions and by utilizing synergies between the business entities. For more information visit http://www.humblegroup.se

Humble is listed on Nasdaq Stockholm, First North Growth Market, under the ticker HUMBLE. FN Sweden AB is Humble’s certified adviser.

Forward-looking statements
This press release contains forward-looking statements that reflect Humble’s intentions, beliefs, or current expectations about and targets for Humble’s future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which Humble operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Humble believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Humble does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this press release or any obligation to update or revise the statements in this press release to reflect subsequent events. Readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither Humble nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq Stockholm’s rule book for issuers.