Medicanatumin: Feeling the COVID-19 turbulence - Introduce
Q2’20 vs. ABGSCe details
MedicaNatumin reported Q2 net sales of SEK 54.2m, which was 5.7% below our estimate and corresponds to 39% y-o-y growth. Growth was primarily driven by strength from Norway (now ~50% of group sales vs. 12% in 2019), following the transformative acquisition of Vitalkost and its sales of eco-products. With Norwegian sales primarily consisting of eco-foods, the gross margin of 46.7% declined 22pp y-o-y (-7pp vs. ABGSCe of 53.6%). Combined with a slightly higher opex base than we expected, adj. EBIT of SEK -0.4m was further below our estimate of SEK 3.4m. MedicaNatumin felt the effects from COVID-19 in Q2. For example, brand sales in Sweden declined 43% y-o-y due to its exposure to tourist intensive natural health stores. B2B and exports also felt the negative impact of shutdowns, with some launch delays and delivery challenges.
Positive sales channel developments going into H2’20
MedicaNatumin has emerged as a company with a broad mix of products and sales channels across growing end-markets. We are encouraged by the strong momentum in Norway and expect it to continue into H2’20, bolstered by the resolution of some launch delays and delivery challenges of some of the immune supporting products. We also note that the company expects to launch the high-margin skincare series Jabushe in October, through Amazon in Germany. Despite potential further turbulence in some of the physical sales channels in H2’20, due to COVID-19, MedicaNatumin keeps its growth agenda, continuously evaluating new potential markets, collaborations and acquisitions.
Est. revisions: lower net sales and EBIT for ‘20e-‘22e
We lower our ‘20e-‘22e sales estimates by 1-2% on the back of higher-than-expected COVID-19 disruptions. We also lower our EBIT estimates driven by the solid momentum in the lower margin Norwegian business. Nevertheless, MedicaNatumin seems well positioned to reach its goal of SEK 200m in sales by the end of 2020 (ABGSCe is SEK 240m in ‘20e).
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