Continued strong sales development with the US and Asia in the lead
SUMMARY OF THE PERIOD
SECOND QUARTER: APRIL 1ST - JUNE 30TH 2019
FIRST 6-MONTHS: JANUARY 1ST - JUNE 30TH 2019
SIGNIFICANT EVENTS DURING THE SECOND QUARTER
DNCA - Invest Beyond Global Leaders and Invest Norden Europe, which is an international institution, becomes a new major shareholder of Swedencare AB (publ).
SIGNIFICANT EVENTS AFTER THE SECOND QUARTER
There are no significant events after the end of the second quarter to report.
WORDS FROM THE CEO
Solid development during Q2 - continued good growth and despite increased investments, a good margin
The second quarter net sales of 30,4 MSEK represents an increase of 18% compared to Q2 2018. The result developed even better and we showed an EBITDA of 9,2 MSEK, an increase of 29% compared to 2018. The EBITDA margin was 30.1%, just above our 30% profit target.
Most markets showed continued good development in the aftermath of a very strong Q1. North America continues to deliver, this time with a 54% increase in sales, despite the fact that it was not until June we were able to deliver the first batch of the now US-made Dental Bites. Having noted the sale of Dental Bites for the first time this year, I look forward to being able to meet the demand of the product in the US market and to be able to report it in future reports. Furthermore, it was first in June that we caught up with our back orders for Dental Bones for which the demand has been very high. We have made investments to be able to double the production of Dental Bones, something we expect to achieve during early autumn. We have also expanded our sales force with a very experienced person in Paul St. Germain responsible for the northeastern US and eastern Canada. Paul joined us in May and has already delivered.
The UK was good but not quite as good as the strong Q1 which was somewhat affected by the fact that some of our customers ordered unusually much considering the risk of a hard Brexit. Despite moving Spain into a separate company, Southern Europe is increasing its turnover and this to a considerably higher profit margin. France, Portugal and Greece are the countries mainly moving forward. Among other things, a Dental Bones campaign was conducted in Greece that sold out in one month to compare with the plan that it would last for three months.
Spain will be a much better market for us in the future, with the establishment of our own subsidiary. We have not signed up regional distributors covering the whole country and we have already been able to deliver small orders to some. However, it was only on July 1st as we got back all the sales rights in Spain, hence Q2 mostly consisted of establishing contacts, logistics and marketing. During Q2, the start up of our own sales company in Spain affected the result by approx. 660 KSEK, but now we are well prepared to start showing black figures in the second half. Our production facility in Ireland takes over more and more of our ProDen PlaqueOff® production and in order to switch up, we have carried out a GMP inspection and hope to obtain an approval during the year. We also work to get our factory approved for Chinese exports, which in that case would open up many business opportunities for our product family NutriScience. It is an extensive process, but both we and our partner in China are working hard to get an approval.
Regarding the rest of the world, it was mainly Asia that was strong in the quarter, while Russia and the Czech Republic increased a lot percentage wise. China, which had a very strong Q2, increased its purchases from us somewhat while their sales increased by over 80%. This means that during the second half of the year we will see higher deliveries from us as our partner has now optimized their inventory. Shipments to Korea and Japan increased by over 70% in Q2 and it will be interesting to follow up the introduction of our cat version of ProDen PlaqueOff® powder in Japan which will be launched in Q3.
Last year, we had major deliveries to Australia during the first half of the year, while the completed first half of 2019 has proceeded according to plan without follow-up orders. Our relaunch continues to do well, something I saw myself in May when visiting our Australian partners. During the second half of the year, we look forward to new orders to deliver, while our partner is working to expand the product range from us.
I am extremely pleased with the development of the first half of 2019 and I feel confident that the second half will mean a continued strong development as we have a very positive momentum in our most important markets and many new business projects that will have a positive impact on us. For myself spring has also been busy with many investor relations. Our high growth and our good results have attracted the interest of many new, mainly international stakeholders. We therefore see that our international sales network now also gets a counterpart in an increasingly international ownership.
In meetings with analysts and shareholders, we are often asked how we look at supplementing organic growth with acquisitions. Of course, if we make an acquisition, this will be communicated in the usual order, but I can confirm that we are still actively working on our acquisition strategy. During the autumn, the Board intends to communicate the company's new financial goals and in the process to establish these, a review of potential acquisitions which would contribute positively to our product offering, our market presence and to the company's growth and earnings development will be completed.
I hope you all have a great summer, I myself look forward to a few weeks off before it is time to go to the US for SuperZoo in mid-August where we will launch our new Mini Dental Bones - one of many exciting business development projects this fall and winter!
Håkan Lagerberg, CEO
Malmö July 26th 2019
The complete half year report is attached to this press release and is available at www.swedencare.se
This information was distributed by Cision http://www.cisionwire.se/