STABLE DEVELOPMENT WITH A FOCUS ON INTEGRATION AND EFFICIENCY, SECOND QUARTER 2023

“We end an intensive first half of the year with a stable second quarter that is in line with our targets of continued growth, increased profitability and positive cash flow with a high conversion rate. We have strengthened the group's balance sheet with a directed new issue of SEK 875 million and in connection with this secured a new capital structure based on bank loans, which will fundamentally change our opportunities to grow organically and with significantly lower interest costs. It is no news that the consumer market is tough and it is therefore gratifying that we have a good momentum with continued strong demand for Humble's products and reached an all-time high both in terms of sales and profitability in June. Most of the operating companies have now been part of Humble for a longer time and have begun to find their place in the group, with increased collaborations and synergies as a result. During the second half of the year, we will accelerate the work with our platforms Future Snacking, Quality Nutrition, Sustainable Care and Nordic Distribution. It will primarily involve some consolidation and integration around the larger platform companies, where we see that there is an opportunity to speed up the development of smaller businesses and realize synergies in the form of rationalization, efficiency and higher productivity in our manufacturing units. We are facing an exciting autumn and have our two most important quarters ahead of us.” - Simon Petrén, CEO Humble Group AB.

FINANCIAL INFORMATION:

SECOND QUARTER

• Net sales amounted to MSEK 1 710 (974).
• EBITDA amounted to MSEK 158 (65).
• Adjusted EBITDA amounted to MSEK 170 (106).
• Adjusted EBITA amounted to MSEK 141 (86).
• Adjusted EBIT amounted to MSEK 95 (48).
• Adjusted EBIT per share amounted to SEK 0.30 (0.17).
• Cash flow from operating activities amounted to MSEK 445 (14). Adjusted for tax deferrals of MSEK 260, the cash flow from operating activities was MSEK 185.
• Earnings per share before and after dilution amounted to SEK 0.00 (-0.18).

SIX MONTHS

• Net sales amounted to MSEK 3 303 (1 847).
• EBITDA amounted to MSEK 313 (130).
• Adjusted EBITDA amounted to MSEK 316 (219).
• Adjusted EBITA amounted to MSEK 262 (182).
• Adjusted EBIT amounted to MSEK 171 (111).
• Adjusted EBIT per share amounted to SEK 0.55 (0.42).
• Cash flow from operating activities amounted to MSEK 627 (23). Adjusted for tax deferrals of MSEK 260, the cash flow from operating activities was MSEK 367.
• Earnings per share before and after dilution amounted to SEK -0.01 (-0.30).

SIGNIFICANT EVENTS:

DURING THE SECOND QUARTER

• The annual general meeting elected Pål Bruu and Sara Berger as new board members. Henrik Patek, Ola Cronholm and Dajana Mirborn were re-elected as board members and Dajana was elected as new Chairman of the Board.
• Humble Group intends to take up new bank facilities of MSEK 1 650 to refinance existing bonds and existing credit facility.
• Humble Group has carried out a direct new issue of 131.6 million shares and raised proceeds of MSEK 875.

AFTER THE QUARTER

• Humble Group enters into a letter of intent regarding the sale of real estates.

CEO COMMENT FROM THE REPORT 

”STABLE DEVELOPMENT WITH A FOCUS ON INTEGRATION AND EFFICIENCY

We end an intensive first half of the year with a stable second quarter that is in line with our targets of continued growth, increased profitability and positive cash flow with a high conversion rate. We have strengthened the group's balance sheet with a directed new issue of SEK 875 million and in connection with this secured a new capital structure based on bank loans, which will fundamentally change our opportunities to grow organically and with significantly lower interest costs. It is no news that the consumer market is tough and it is therefore gratifying that we have a good momentum with continued strong demand for Humble's products and reached an all-time high both in terms of sales and profitability in June. Most of the operating companies have now been part of Humble for a longer time and have begun to find their place in the group, with increased collaborations and synergies as a result. During the second half of the year, we will accelerate the work with our platforms Future Snacking, Quality Nutrition, Sustainable Care and Nordic Distribution. It will primarily involve some consolidation and integration around the larger platform companies, where we see that there is an opportunity to speed up the development of smaller businesses and realize synergies in the form of rationalization, efficiency and higher productivity in our manufacturing units. We are facing an exciting autumn and have our two most important quarters ahead of us.

Financial result
The second quarter accounted for a stable financial result with net sales amounting to SEK 1,710 million (974) and with continued organic growth of 13 percent and 15 percent pro forma. Profitability was strengthened to MSEK 170 adjusted EBITDA (106) and the positive cash flow that we have been working with since the autumn of last year has been maintained, where we, adjusted for non-recurring items from tax deferrals, generated an operational cash flow after change in working capital of MSEK 185 (14). The inventory increased slightly, but relatively we have reduced its size in relation to net sales by approximately 0.7 percentage points during the year, with further potential to improve. Our top priority is to continue to strengthen the gross margin and recover part of the loss since 2021, while streamlining the management of net working capital. It is gratifying that the second quarter is the first in over a year that we have turned to a positive development regarding proforma adjusted EBITDA, with the hope that it is the beginning of a longer recovery to previous levels of profitability. In order to improve the financial result going forward, we have started a group-wide pricing project with several identified improvement areas where we have the opportunity to calibrate our pricing model.

Operational focus
In addition to the financial activities, the internal work has been characterized by an operational focus towards certain consolidation and integration as well as broadening the group-wide functions within sales and purchasing. In the work to develop the segments, it is natural to consolidate certain subsidiaries around the operations where we have reached a sufficient size and identified strong teams and leadership, which will form the future building blocks of our growth platform. With a reduced pace of acquisitions, we have also integrated the M&A team under Marcus Stenkil's leadership as part of operations, which feels very good. Already in the first half of the year, we have seen the effects of being able to run group-wide initiatives more quickly and thus strengthen our competitiveness and adaptability. This is a critical function of how we grow the businesses and I firmly believe it is the key to extracting maximum value from our subsidiaries.

Market
The quarter started somewhat cautiously but that changed quickly and ended with a good month of May followed by an even better month of June with both sales and profitability records. We have recovered the gross margin with 0.36 percent compared to the previous quarter, adjusted for the consolidation effect of Privab. There is a long way to go towards our target of 35 percent, but we are convinced that the initiatives that have been established will get us there in a few years' time. I am often asked how Humble's products stand in an increasingly uncertain consumer market. In response to the question, I can share that the group's range of white label, private label, contract manufacturing and pricefighters in the low-price segment is standing strong and is expected to grow and develop positively even in a recession scenario. In addition, most of our premium brands are doing well, although some have suffered somewhat from customer price sensitivity. For example, brands such as True Gum and Body Science stand out positively, which had significant sales growth of 83 and 37 percent respectively during the first half year. So far, we have no indications of any dropping demand overall, but we are vigilant and follow the market closely. We work continuously to stay well prepared and ensure that Humble has a sustainable position that stands up well even in tougher times.

Outlook
I am very grateful for the trust we have from our major shareholders and the banks Nordea, SEB and SEK, which has enabled the new capital structure that we can now establish for the group. Together with the ongoing sale of the properties, we have taken the necessary measures to organically continue our growth journey, with a suitable financing structure which gives us the possibility to generate a healthy free cash flow going forward. The preparations for a list change are progressing well and we estimate to be ready for the review during the coming autumn.

It is still a challenging market to operate in and we are far from satisfied. However, I would like to point out that the strength of Humble's companies and the persistence we see, together with a gross profit recovery, will give us the right conditions to be able to deliver more value to all our shareholders over time.”

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.