Welcome to BioGaia Q2 conference call for 2023. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. I will hand the conference over to CEO Isabelle Ducellier. Please go ahead. Thank you and good morning, everybody, for this interim management statement, Q2 2023. As an executive summary, just to point out the outline, the main results in terms of sales. With SEK 315 million for Q2, we can show a growth of 9%, 2% being organic, the rest, currency effects. Driven by a strong growth in Americas, a slight decrease in Europe and relative growth in APAC, I will come back to that later. Regarding the EBIT, it's a bit under the last year at -6 at SEK 95 million, but we maintain a EBIT margin of 30%. Starting with the key events, I would like to emphasize on the third press release we published on the 5th of July, informing the market about a very interesting clinical study we've been running with Örebro University here in Sweden. The purpose was to see if while you are vaccinated, if you are as well on our mainstream Protectis with vitamin D, that might have an impact on the production of antibodies. The results were extremely interesting, and you could even say that Protectis plus vitamin D has a kind of vaccine booster effect. If you have been vaccinated against COVID, you are better protected than someone, and you're on probiotics, you are better protected than someone just on vaccination. That was a very interesting study that we published. Regarding the launches, I just would like to emphasize on Egypt Minapharm, because we've signed a contract with Egypt for two years now, but it's a very complex market in term of regulation, so it took us about two years to get the drops registered officially. We have a extremely good partner with Minapharm. They are really good in pharma and very interested by the drops for babies. Nice demography, a big market in that part of the region, nice economy. We are kind of interested by looking at Egypt in the coming years. About Paraguay, a small market though, but still with Abbott, our main distributor in Latin America, and here it's really to complete the success story on Gastrus. We've been really focusing on Gastrus in that part of the region with Abbott, with the gastroenterology association there, the fact that we have a chief scientific officer from Uruguay, I have to admit, helped a bit as well to get a better coverage. Moving to sales per segment. As I mentioned in the executive summary, we have an increase for the quarter of 9%, which is an organic growth of 2%, you might say, only. Looking at the H1, so the six first months of the year, we are able to demonstrate an increase by 19%, out of that, 11% were organic. That's what we were expecting. We knew that Q1 was extremely strong, with some one-up effect of order ending there. They should have been in Q2. That's in line with what we thought. What we didn't expect, though, is this plus 53% increase on adult for the quarter, indeed from a lower volume, but still SEK 83 million. It's due to two products, the first one being the Protectis tablets for adult. Mainly thanks to the fact that with our distributor in South Africa, has been acquired by a bigger one called Austell, and we've been relaunching the Protectis tablet there with Austell. They have a big sales force, and they accepted, for the first time of our history, to have their brand co-branding with BioGaia. Here we do think that the impact of having their brand, Reuterina, which is well known, sold everywhere in every pharmacy, plus the international impact of BioGaia branding, is generating a good impact. The second reason for the Protectis tablet increase is in Hong Kong, here it's mainly post-COVID release restriction impact. What is extremely interesting to notice as well for the adult is Prodentis. As you might know, I'm a very strong believer in oral health. Our main market is Japan, in Japan, we're really working hard on from having 100% of our business in dental clinic, we wanted to transform this product into a consumer product as well. We have had now a couple of influencers that picked up on Prodentis. Female, young female influencers, recommending their friends to take Prodentis where dating out, that has had an impact on our sales on Amazon at a very high level. The influencer here, I mean, they have like 19 million followers for one, 8 million for another. We could see immediately after a very peak of sales on Amazon. I'm very happy about the result of Prodentis in Japan, and even more happy with the impact in the U.S. Here, we really last year decided to focus on oral health with our own distributing company, BioGaia USA. We've decided to attend a lot of dental congresses all around the country, plus activating a very big campaign with influencers and helping the sales on Amazon. This double, I mean, medical plus consumer marketing approach, pay back in the U.S. as well on Prodentis. Very happy about that. Moving to the sales per region. Indeed, EMEA has decreased with 1%. We had a fantastic year last year with in Europe. We had end of the year at +52%. That was mainly because of the COVID release here as well. The stock were empty. The distributor have been ordering massively. The demand was there, but I mean, we have a bit of stock at the end of the year, and mainly in France and Italy, and that shows now in Q1, Q2, where the demand is okay. Even in Italy, we see the sell-out being by far higher than last year. The fact that they order so much in last year shows in the 2023 figures. If we look at APAC, here, I don't think we should focus very much on the quarter. It's only 3% increase, if you look at H1, it's + 33%. I've been really focusing on APAC since I started traveling extensively, I mean, what I see, I can tell you, APAC is just the beginning, so the 3% doesn't reflect the reality. We have very strong economy, like in Korea, very open to probiotics, fantastic new distributor. We have our Chinese partner, extremely agile online as well, with high potential still to grow. Even in just in term of demography, Europe is not doing any more babies. I mean, Vietnam are still doing a lot, three children per woman. In Indonesia, I mean, the population is increasing very fast as well. That will help us a lot to develop ourselves in APAC. Americas, we are so happy to have forward integrated Everidis in our figures, because what they do is amazing. Very strong sales, again on Amazon, very strong sale on iHerb, very happy about the U.S. Canada, we created our own company, as you know, in January 2023. We have a fantastic team coming from Ferring, our ex-distributor, they know the business perfectly, and they are over-delivering on a very ambitious plan already. Canada being under BioGaia brand name is, and I mean, our own responsibility, was a very good decision. For Mexico, it's an Abbott country, here the market is just working very well. Abbott Mexico is a major player in pharma, that shows as well. They just came last week to visit Eslöv in the south of Sweden. Moving to the growth margin per segment, pretty stable, slightly better than last year. I mean, we have to take into consideration the cost increase that is happening at all levels. We've passed two price increases, one last year, with full implementation in January this year, and we have done a new one, which will have full impact as from August this year. When it will be needed, we will continue with the price increase, and therefore, we've been able to manage to maintain a very high growth margin. Moving to the financial, Alex, I will pass you the word. Alex? Yes. Mm. Hello. Sorry for that. To summarize the second quarter, as we heard, we had sales of SEK 350 million versus SEK 288 million one year ago, which was a growth of 9%. If we look at our EBIT, we had an EBIT of SEK 95 million versus SEK 101 million one year ago, which is 6% lower compared to one year ago. A margin of 30% compared to 35% a year ago, and earnings per share of SEK 0.8 versus SEK 0.78 one year ago. If we move on to the sales, then, as we heard previously, we had a growth of 9%, which is then SEK 27 million, of which SEK 20 million or 7% was currency and organic growth, at 2%, which then, as we have heard, it's, of course, lower than what we normally have. If we then look at the year-to-date figures, we will see that the organic growth is 11%. Moving on to operating expenses. Our operating expenses increased with 26%. There are several explanations to this. If we start with the sales costs, sales costs increased, basically as an effect of the increased sales and increased marketing activities that we are performing. For example, we have a subsidiary in the U.S., and as they increase their sales, and grow, the cost there will grow. Looking then at R&D, you see that this line item also increased, and the main reason is increased costs for clinical studies. For example, one year ago, the clinical studies that we performed were at a much lower level, which was then due to the effects of coming out or still being in COVID last year. It is a natural increase in spending in R&D, and it's also a higher cost in this quarter compared to the previous quarter. We tried to explain that in the previous quarter, that we saw exceptionally low costs earlier. We're coming back to more normalized levels of spending in R&D, but we will continue to see a bit lumpiness, of course, due to clinical studies and so on. Admin costs increased due to some one-off costs that we still have for terminating our Lund office as we are moving into Eslöv, where we have a manufacturing facilities and consolidating. We have the line called Other OpEx, which was SEK 8.5 million versus SEK 14.2 million one year ago. This was a negative cost positive effect on the P&L, so to speak, and that positive effect is lower this year compared to one year ago. We then move over to the P&L, this is basically just a summary of what we have said previously. Sales at SEK 350 million versus SEK 288 million. An EBIT of SEK 95 million versus SEK 101 million one year ago. A margin of 30% versus 35%. Looking also year to date, we have total revenues of SEK 681 million. An EBIT of SEK 243 million. An EBIT margin of 36% on both adjusted and non-adjusted basis, which is obviously above our financial target. Year to date, a very strong profit. We move on to the cash flow. We see that we have a cash flow from operating activities that increased with 20% to SEK 205 million versus SEK 87 million one year ago. This is due to increased interest income on our cash and improved positive changes in working capital. Then for the quarter, the total cash flow for the quarter was - SEK 216 versus SEK 225 one year ago. There's obviously the result. Obviously, the reason for this lower or negative cash flow is that we have a negative cash flow from in the financing activities, where we have the dividends that we paid out in the quarter. With that, I can move on to the balance sheet. I will not go through this. This is just for reference. With this, I hand over to Isabelle for concluding remarks. Thank you, Alex. As a conclusion, we have a Q2 at +19% in sales, and after a Q1 at +20%. We end up with a first half at a very satisfactory +19%. Indeed, EMEA has slowed down, after an exceptional year, 2022, but America is really strong at +35%, and APAC for the H1, at +33%. Basically, I think this result support the continuation of our strategy that we initiated in 2019 to build a global probiotic brand for the family. Pediatrics, which has increased by 18% for H1 and adult, +21% in H1, through an omnichannel route to market, which was kind of new for us. We were coming from a route to market, mainly towards pharmacy and now the digital global online player, the ePharmacy, are really starting to play a key roles, mainly in the market where we collaborate with Amazon. Now we work on Amazon in the U.S., of course, in the Canada. We've have a very nice development in Germany, in Japan, in Sweden. It's very low, but I think the problem is not really us in Sweden on Amazon, it's a bit more Amazon in Sweden. Very satisfactory development on this omnichannel strategy. We basically change a bit of way of working. We never compromise our science. That's something which is extremely important for us. We've been much more consumer centric in our approach to listen to the consumer, base our decision on consumer insight, in order to come up with the product and the campaign they are looking for. On top of that, here as well, from having a 100% almost partner route to market approach, we've as well established ourselves in six markets. The U.S., U.K., Canada, Japan, Finland and Sweden. These six markets are overperforming compared to the rest, and we have a better control. We can roll out our old portfolio. If not, partner have a tendency to sell what is easy to sell, namely the drops, but they are a bit more reluctant to start to really work hard and launch the rest of our portfolio. Like the U.S., I mean, we say now it's key. You have to launch your oral health. We focus on that, and it delivers. That's my last report as a CEO of BioGaia. I would like to take that opportunity to thank you for listening to me every quarter. Thank you for the trust in the company. I had five fantastic year. I'm very happy about what we've been doing with all the, what I call the BioGaians, working there, and I'm now open for questions. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Mattias Häggblom, from Handelsbanken. Please go ahead. Good morning. Thanks so much for taking my questions. Mattias here from Handelsbanken. Firstly, with regards to the strength in Adult Health, growth shown in all three regions, and you spoke of some of the dynamics behind the strength, including some of the campaigns and change of some distributor dynamics. I'm curious if it's possible to tease out any large one-off orders for Adult Health, or let's say, of more non-recurring nature, vis-a-vis growth that is more durable, to help us understand the strength of this quarter for Adult Health. Secondly, Alex spoke to the sharp uptick in R&D costs during Q2 after a slow Q1. I'm still curious to help us think about the R&D costs for the coming quarters. Alex said something about fluctuations expected going forward. Any color there would be helpful. Thanks so much. Good morning, Mattias. Thank you for your questions. Regarding the adult, I will not comment again on Prodentis. I think Prodentis is really a key driver, of course, for the future. If you look at oral health in probiotic is starting. We were the first one, but even Probi now with their investment in Blis, is looking at it. We are the best clinically proven strain in oral health. Consumer are starting to understand that indeed, you can work on your oral hygiene with probiotics and the general improvement of your health, thanks to having a good oral hygiene. Not very well known, so it's a matter of education, but we have the answer. The day the consumer really pick up on that it works, I think we are very well positioned with Prodentis. It's not a one-off effect, it's something that is to stay. On top of that, now, we had only the adult Prodentis. Now we have the Prodentis for the pregnant women, we have Prodentis for kids. Well, we will have as well, a Prodentis for baby when they are teething. Here the full offer for the whole family. That's the one, the first thing. Regarding then the second one, which I think is a long term, and despite a very slow start of this product, is Gastrus. You know the company forever, Mattias, and we've been talking about Gastrus forever as well. It never really took off, now I think, because we are running different clinical studies that we do hope are going to be published under 2023, even, on new indication, much more broader than the one we have been focusing on, which was H. pylori. Here, I really do think Gastrus, you can count on Gastrus as well for the long term. Basically, we decided a long time ago to do clinical study about H. pylori. H. pylori is not super big in Europe. It's very big in other parts of the region, still a niche indication. Now we are really targeting larger indication, impacting a lot of the population in the world. I will have, say, my answer, Gastrus, Prodentis, it's not a short-term, long-term, for BioGaia. For the R&D, I mean, you know that we have our drops with the patent expiring in 2026, 2027. It's not a secret for nobody. I got the question all the time. Here we have to be ready with something by then. Obviously, we are starting all our clinical study in that areas, and depending on when we are able to recruit and when we open a new center, then it has an impact on the R&D spending. That's the fluctuation you were mentioning. Nothing extraordinary. We will maintain our R&D on not net sales spending, but being... I mean, there is a lot of activity coming from there, which is in our plan. It's planned for a long time ago, and it's going to be able to support us to come up with another product or something, before the patent is out. Just a quick follow-up. Any startup costs due to clinical trials starting in the second quarter that we should not think will recur in the third quarter, although the cost level will be higher, or sort of this is the new level? I mean, not really. I mean, when we know exactly the clinical study we want to start, and we start, we take the cost and periodize the cost, so we don't take the cost upfront. It will be the 13% kind of R&D on turnover for the year. Alex, I don't know if you want to comment on that, if there is something I've forgotten. No, I think that's a good explanation. I mean, basically, we will not guide on, you know, how much R&D as a percentage of sales we will have in the future. We are committed, of course, to have, an EBIT margin of 34%. What I'm trying to say is that what I actually said about lumpiness is that, I mean, our R&D costs have been exceptionally low for the last couple of quarters, and now they are ramping up. Like you probably suspect, I mean, our cost was then a bit higher now, and maybe it will be on average going forward. I will not really give a guidance on the exact levels. We have startup costs for certain studies now. You know, those costs will probably come down in the next quarter. On the other hand, in some other quarter, there could be some new study, et cetera. It will be a bit varying between the quarters. There were some, like Isabelle said, also some startup costs. Cost will maybe come down going forward. Perfect. That's very helpful. Best wishes to Isabelle on your future challenges. Thanks so much. Thank you, Mattias. The next question comes from Kristofer Liljeberg, from Carnegie Investment Bank. Please go ahead. Yeah, thank you. I have some quarters, but first, thank you, Isabelle, for these years, and good luck going forward. First question, coming back to Mattias, asked about one of effects here in the quarter for Adult Health, and you mentioned a lot of products that will drive growth for the long term. I need to ask you again, given the changes in South Africa, you mentioned this influencer campaign in Japan. Wasn't it so that there was some, you know, extraordinary events here in the quarter that supported growth, and that we should see a or not negative, but the lower level of Adult Health sales in the third quarter and fourth quarter? For South Africa, I think there's been a very big event to relaunch the drops. I kind of some, a bit agree with your question, that it might not be as strong if you look at the full year perspective. The distributor is far, by far stronger. They have a broader sales force, they are very eager and super ambitious. I think South Africa is doing anyway better than with the old distributor, but perhaps not at the pace we have seen during these six first months, where they invested in the brand, launching the new packaging with BioGaia on it, and relaunching the whole company. Perhaps it will slow down slightly. For Japan, I mean, I don't think so. Prodentis is already well established, so you have this dentist support from the community. The only thing we had to start, and it's just the start, is to make it known to the consumer, not the one going to the dental clinic, but just the one going to the drugstore and wanted to buy something. Oral health in Asia is huge. You look at even, now, I look at some other category in oral health, like toothbrush and so on, it's happening there. All the growth is coming from Asia. With Prodentis and if we are really able to double play it, both in medical and in consumer, it's not a short-term issue. I don't see Japan is higher this month because of this one-off influencer. It's just the beginning of an adventure on Amazon. Then we will have to do the same thing on Rakuten, because Rakuten is a very interesting marketplace in Japan. That will be the next step, because the team is too small to be able to handle the two marketplaces simultaneously, but that will be the plan for expansion. In terms of Adult Health, I have to admit, I was a bit surprised myself. If you remember, you asked me what do you think about the crisis, inflation on consumer demand? I answer, well, on the drops, I don't see any problem. If you have a colicky baby, you have a lot of resiliency in term of demands because the mother will continue to buy the product, it might affect the adult, because it's not something you must have. It didn't happen, and that's because we've been supporting a different place of the world, different type of product, so we've been able to sustain, the volume are still small. I mean, we are still a 80% drops company, and we still want to develop the adult more. We have to continue our effort on adult, and it's a effort. It's not selling by itself. The drops are easy to sell. The adult require investment, require consumer insight, and require the support from the gastroenterology, I mean, community, and these one are a bit more difficult to convince than pediatrician. It's interesting what you're saying about Prodentis, and I agree, it's an interesting product. But also the two countries where that product seems to be successful. Of course, Japan, where I guess it has been the biggest product for many years now, and now what's happening in the US, that's two markets where you sell directly. Do you see any distributor market where Prodentis is doing fine or? Yeah. You look at Korea. I mean, as I mentioned, APAC is strong for oral health. Korea is really big. Korea is big for probiotic in cosmetic and in oral health. Here we have a distributor called Denomics. They represent as well TePe, the Swedish toothbrush, so they are really focusing on brands from Europe. South Korea for oral health and for Prodentis is going... It's something you could look at in the future as well. I mean, obviously, it's easier for us to say to the company, to our own company, now you have to focus on Prodentis. Our normal distributor, they say, "Oh, we don't have the route to market. We don't know how to talk to dentists. Very often now we are opening a new line of distributor. We have our normal distributor for the drops and the product, I mean, even for adult, for Gastroenterology, and we try to open up a new network of distributor, more specialized in oral health. You will have South Korea, and the second one I will recommend you to look at is Mexico, where we have here as well, a super committed oral health distributor called Drisi, high ambition. Step by step, we are, I mean, opening a new oral health distribution network. Thank you. That's a very good explanation. The other question I had after this slower growth in the second quarter, as you were really good at highlighting when you reported Q1. Could you say anything how we should think about growth now for the remainder of the year? I guess at least in the third quarter, the year-over-year comparison remains pretty tough for you. At the same time, it seems Adult Health then is doing better than what you feared for this year. How should we see growth coming quarters? Yeah. I mean, when we started in 2002, I say, well, I'm strong in Europe. I think it's going to be a bit more complicated in Asia because of COVID restriction, Americas is going to be fine, and that's what happened. For 2023, I said, "Ooh, now we have a release of COVID restriction in Asia, APAC is going to be strong. It's happening. It's going to happen in Q3. It's going to happen in Q4. I'm not at all worried." U.S., I mean, here, I mean, we are just doing fine, the market is getting much more competitive, we see some Swedish competitor, I mean, struggling very in the U.S., we are not. I think the difference is that we've been betting on building brands. We've decided not to be an ingredients provider, we are strong and we can continue to build, and the consumer recognizes. I don't see any reason why, even if the U.S. market is plateauing, slightly decreasing, I don't see any impact on us because the brand name is so well the reputation of the brand name is so high, I think we will still be strong. Having said that, Europe going to be tough because we are going from year at +62, the comparable are very ambitious, I don't see any reason why it's going to change in Q3 and Q4 for the main trends per region. For the group, should we expect this type of or more flattish growth in the third quarter before picking up in Q4? Do you think that's a realistic assumption? Yeah, you know that we don't give lines for the coming quarters. I would more think on the year basis and repeat what I said before, same type of. It's a phasing issue. It might be Q4, end of the day, trends are there, remains to say on the long term. Okay. Yeah, that's fair. A final question for me. You talked about R&D costs before. I think you also mentioned that you want to or that you have this 34% EBIT margin target, given the cost expansion here in the quarter, do you see an increased risk that the EBIT margin might be down 2023 versus 2022? I mean, we are committed, and our board is asking for 34% EBIT margin as a long-term financial target, and we're committed to land on this 34%. If we have higher costs then, I mean, at all level, then we might look at increasing the prices again. Hopefully, we have a stronger sales than increase than costs. At the end of the day, we will do what we have to do, meaning protecting the EBIT margin, and we will remain, and we are confident to be able to remain on the 34% level. Okay, thank you. You're welcome. The next question comes from Mattias Vadsten from SEB. Please go ahead. Hi there. My first question would be, you know, aggregated 11% organic growth in the first half. I think in Chr. Hansen's report ending May, they stated some recent improvements in North American consumption after a period of very soft growth. I guess, you know, as you, as you've said, China, Japan should rebound post-COVID. My question is really, do you feel you enter Q3 with even better demand than you had earlier in the year? You know, how is the trading sort of end of Q2 into Q3 versus what you had in the beginning of the year? That's the first one. I mean, we said when we started the year to the market, that we are looking for double-digit increase still in 2023, but not at the level of 2022. I think you have to always keep. I mean, that's still the guidelines, double-digit increase for the whole year, but more starting with a 1 than starting with a 4. I don't think it's going to change. We might have some 1-off with 1, I mean, order moving to the less Q4 versus Q3. As I said to Kristofer before, I think good guidelines with a double-digit increase for the rest of the year. Good. You had price increases, with full effect in January. Again, a new increase now with full effect in August, I think you said. Yeah. If you could, quantify that price increase and, you know, should we see even more than sort of mid-single digit price impact for the group in end of Q3 and in Q4? Because I guess, yeah, that this new price increase will take effect towards the end of the year. Or how should we look at it? I mean, we are monitoring our costs very close than what we were doing before. We see anyway that transport is going down, energy cost is going down. Even our main raw material, namely the oil, are slightly going down as well. Everything is a bit going back to normal with a bit of inflation, but not as we were facing at the end of 2022. I mean, we are going to look at the cost so that we don't lose any point in gross margin. Having said that, we run as well some price elasticity study to be sure that we are not losing our consumer. The mom, when it's a matter of a newborn, the price elasticity is pretty low. I mean, basically, it costs EUR 10, it costs EUR 15, it doesn't matter, they still buy it. For the adult, I think when you pass some price threshold, then the consumers tend to say: "Oh, my goodness, more than EUR 20, should I really?" We have to be careful. You don't want to lose sales by increasing the price too much. Sometime it's a matter of balancing, and that we check. And that's a good thing as well with having some online sales, because you can do the test online, pretty quickly, you see the impact directly. You don't have to run this big quantitative Ipsos survey that we were doing before to try to imagine the price impact, I mean, the sales impact coming from price increases. That we can see pretty quickly. We're going to be, I mean, very operational down to, okay, what is the consumer ready to pay? What is our cost? Do the best out of it. Okay, thank you. The last one, interesting here, that the collaboration with influencers in Japan helped sales, as it sounds. Just for interest, how much are you working with this in other markets? Do you see sort of an upside to work more with this going forward? I mean, either we like it or not, basically, all the network or influencer are. It's not the Japanese or an American effect, it's everywhere. It's really like finding the right one, which is relevant to your brand, and all our markets are doing it, our own market, but the distributing market as well. Even in Italy, they were so reluctant to move from a pure medical marketing to a more consumer marketing, type of, picked up their influencer work on young moms, posting, on Instagram and, the drops. It's a mega phenomenon. That's the way you do marketing. When you look at every FMCG company, the split of A&P was only TV before. I mean, it was like print before then TV. Now it's all about influencer on because that's where basically the attention of the young crowd. Okay, good. Since this is your last report, I would wish you good luck in future challenges. Thank you. Thank you, Mattias. There are no more questions at this time. I hand the conference back to the speakers for any closing comments. Thank you. My only closing comment is thank you for your trust, thank you for your interesting and sometimes challenging questions, and I see you around. Have a nice summer. Bye-bye.