CONTINUED GROWTH AND IMPROVED OPERATING MARGIN, THIRD QUARTER 2023

“I usually say that the third week of August is a bit of a New Year for entrepreneurs, where you start fresh after the holidays and are fully focused on launching all the initiatives that need to be put in place to achieve success during the important autumn months. Seasonally, our companies are weighted towards the third and above all the fourth quarter, with holidays such as All Saints' Day and Christmas. It is therefore particularly gratifying to be able to establish that the second half of the year has started well with continued strong momentum, where organic growth amounted to 12% and net sales increased by 34 % to MSEK 1,811 (1,347) compared to the same period in 2022. Operating profit has followed the turnover increase well, where adjusted EBITA amounted to MSEK 158 (130). A high focus on efficiency in the supply chain has shown result and we are starting to see some margin improvement compared to the first half of 2023, where the adjusted EBITA margin increased from 7.9 % to 8.7 % for the third quarter. With an operating cash flow after changes in working capital of MSEK 175 (-14) and with the new capital structure that came into place during August, we see good opportunities to organically continue to strengthen the balance sheet in order to eventually start acquiring companies again, albeit at a slower pace than before.” - Simon Petrén, CEO Humble Group AB.

FINANCIAL INFORMATION:

THIRD QUARTER

• Net sales amounted to MSEK 1,811 (1,347). 
• Adjusted EBITDA amounted to MSEK 188 (153).
• Adjusted EBITA amounted to MSEK 158 (130).
• Adjusted EBIT amounted to MSEK 111 (95).
• EBITDA amounted to MSEK 161 (232).
• EBITA amounted to MSEK 132 (209).
• EBIT amounted to MSEK 85 (173).
• Cash flow from operating activities amounted to MSEK 175 (-14).
• Earnings per share before and after dilution amounted to SEK -0.20 (0.21).
• Adjusted EBIT per share amounted to SEK 0.25 (0.31).

NINE MONTHS

• Net sales amounted to MSEK 5,114 (3,194). 
• Adjusted EBITDA amounted to MSEK 503 (371).
• Adjusted EBITA amounted to MSEK 420 (310).
• Adjusted EBIT amounted to MSEK 281 (205).
• EBITDA amounted to MSEK 475 (361).
• EBITA amounted to MSEK 391 (300).
• EBIT amounted to MSEK 252 (195).
• Cash flow from operating activities amounted to MSEK 802 (7). Adjusted for tax deferrals of MSEK 260, the cash flow from operating activities was MSEK 542.
• Earnings per share before and after dilution amounted to SEK -0.27 (-0.07).
• Adjusted EBIT per share amounted to SEK 0.79 (0.77).

SIGNIFICANT EVENTS:

DURING THE THIRD QUARTER

• Humble Group enters into a letter of intent regarding the sale of real estates.
• Humble Group fulfilled the refinancing of existing bonds and credit facility by taking up new bank facilities. Its outstanding senior secured bonds 2021/2024 and senior secured bonds 2021/2025 was redeemed on August 22, 2023.

AFTER THE QUARTER

• No significant events have occurred after the third quarter.

CEO COMMENT FROM THE REPORT 

”CONTINUED GROWTH AND IMPROVED OPERATING MARGIN

I usually say that the third week of August is a bit of a New Year for entrepreneurs, where you start fresh after the holidays and are fully focused on launching all the initiatives that need to be put in place to achieve success during the important autumn months. Seasonally, our companies are weighted towards the third and above all the fourth quarter, with holidays such as All Saints' Day and Christmas. It is therefore particularly gratifying to be able to establish that the second half of the year has started well with continued strong momentum, where organic growth amounted to 12% and net sales increased by 34 % to MSEK 1,811 (1,347) compared to the same period in 2022. Operating profit has followed the turnover increase well, where adjusted EBITA amounted to MSEK 158 (130). A high focus on efficiency in the supply chain has shown result and we are starting to see some margin improvement compared to the first half of 2023, where the adjusted EBITA margin increased from 7.9 % to 8.7 % for the third quarter. With an operating cash flow after changes in working capital of MSEK 175 (-14) and with the new capital structure that came into place during August, we see good opportunities to organically continue to strengthen the balance sheet in order to eventually start acquiring companies again, albeit at a slower pace than before.

Many shareholders and analysts ask how our companies are doing in these times, when consumers suffer from high interest costs and are generally more frugal in their consumption. Having recently completed a road show among our companies, I can confirm that our biggest challenge going forward is not about customer demand, but rather about capacity. Confectionery generally does well in a recession and with a massively increased external focus on the defense industry, we have multiplied requests from international organizations to help supply supplements and bars. An example of this is our largest candy manufacturer, Grahns Konfektyr, which is constantly having to turn down requests for both regular and sugar-reduced candy. Several international brands and players are beginning to understand that it is Humble you should turn to if you want to produce a healthier candy. Another example is Bars Production, which has sold out the entire capacity for 2024, despite the fact that since the acquisition we have continuously invested in several production lines. It is a luxury problem, but at the same time something that we are working intensively on to ensure the conditions to be able to continue to grow at a higher rate going forward and take advantage of the opportunities that arise. Here we see the strength of being part of a larger group like Humble, where we have the capacity, resources and ambition required to invest in increased growth and support our entrepreneurs so they may act on the demand and new project opportunities that arise.

Humble is partially exposed to low-price and private label, with a modern exclusive co-branding to retail chains, which has proven to be well timed with the market. The group's largest company, Solent Group, is going strong and we plan to continue expanding their business model in both the Nordics and Germany, just as they have already successfully done in Australia and South Africa. Retail chains are increasingly moving towards working with this type of partner company, as it is an effective way to maintain an attractive portfolio mix of strong brands and own exclusive products that are sourced directly from the factory.

We have succeeded in maintaining the profitability margin through good cost control that has, among other things, consisted of reducing overlapping functions and using best practice via the larger and more mature units in the group. The group's degree of maturity for operational efficiency between the companies is still in its infancy and now that we have gotten to know the operations better, it is clear that there are many opportunities for optimization and efficiency to be taken advantage of going forward. I feel a bit disappointed that the gross margin has not recovered at the rate we would like. The work to restore the gross profit margin continues and in the longer term we shall get back to the levels that the companies had before covid when all the disruptions in the value chain occurred, which would mean a significant improvement in earnings given our turnover growth since then. During the third quarter, the gross margin was negatively affected by the optimization and relocation of inventory management in several of the companies, where we divested some unprofitable products and goods with a lower turnover rate. It has of course had a short-term negative effect on the result, but we believe that it will benefit the group's profitability and efficiency in the long term, while also freeing up working capital that we can instead allocate to new growth initiatives. In addition, the companies historically tied up approximately 10 - 15% of the net turnover increase in net working capital with new stock. Given the high turnover increase of SEK 300 million pro forma, the real effect combined with the working capital improvement is circa SEK 56 million in positive cash flow from inventory, which is strong. There is still a lot to do here, but it is moving in the right direction.

We are now entering the most intensive period of the year and we are fully focused on delivering goods to our customers while continuing to maintain high efficiency in the value chain without tying up too much capital. Many important group-wide functions have been put in place during the year and we are ready for the process of changing trading venue to regulated market, with the ambition of completing the switch in the coming year. In order to meet the higher requirements for, among other things, sustainability reporting and follow-up that the sustainability regulatory framework (CSRD) entails, we have invested more resources in the area. We also see potential to drive central initiatives similar to the sustainable innovations we launched during the year, in order to offer Humble's companies and customers the packaging solutions of the future and new ways of manufacturing products.

In summary, it feels very exciting and inspiring to see what the fourth quarter and the coming year has to offer. Humble has matured significantly and with the new capital structure in place, we are well positioned to continue delivering shareholder value and increase profitability per share in a sustainable and successful manner.”

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: [email protected]

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 food-tech and FMCG-group, supplying the next generation of products that are good for people and the planet. Humble targets the segments of foodtech, eco, sustainability and vegan to drive high organic growth, acquisitions and utilize synergies in the different operation entities: Brands, Distribution, Manufacturing and Ingredients and R&D. Humble’s technology solutions, refined through scientific research and extensive market experience, facilitate new formulations and recipes that improve the taste and texture of the next generation of sugar-reduced, sustainable and vegan products. For more information visit www.humblegroup.se

Humble is listed on Nasdaq Stockholm, First North Growth Market, under the ticker HUMBLE.
FNCA Sweden AB is Humble’s certified adviser. Tel: 08-528 00 399 E-mail: [email protected]

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.