Probi reported a weaker Q1, with -16% organic growth and EBITDA 27% below our expectations. As in its past three quarters, it was Americas that were weaker, declining 18% organically. The company highlighted unfavourable order patterns from customers, but to us it is also a sign of a generally weaker US market. EMEA and APAC reported solid sales, with the latter benefitting from new launches by Sinopharm, which has more launches planned for Q2 and H2. The EBITDA margin declined to 24.7% (-2.8pp), mainly an effect of lower volumes driving a decline in the gross margin to 43% (-2.4% y-o-y), while opex was in line with expectations.
Turning point in Americas ahead
The Americas region has been a disappointment in recent quarters, but management expects it to stabilise from Q2 onwards and highlighted a solid order book. Management expects Americas revenues to be at the same levels as last year (organically), while EMEA and APAC should grow in line with its target (7% org.). The upcoming Q2 will also be the first quarter where the y-o-y comparison will not be hindered by the lost contracts in Q2’21, indicating that Q1 could mark the operational low point. The company has now completed technology transfer of the first BLIS strain, which it expects will contribute with revenues from H2 onwards.
EBIT estimates down 24%
We lower our expectations for the US, now assuming -2% organic growth in FY’22e, with growth returning in FY’23e. We are also slightly more cautious on EMEA, where we expect less contribution from the Oriflame partnership following the Russian invasion of Ukraine. With costs largely unchanged, this drives cuts of 4% and 24% to ‘22e sales and EBIT. We now see flat organic growth in Q2, with growth returning to 9-6% in H2. The share is trading at 20x ‘22e EV/EBITA on our revised estimates, 31% lower than ...
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