Hi, this is Teresa Agnew, CEO of BioGaia, and I'm here with Alexander Kutsinas, and we are here to present our Q2 results for 2026. So some of the highlights of the quarter, our growth excluding currency effects was 12% versus a year ago, and our EBIT margin is 30% with an adjusted EBIT margin of 33% for the quarter. Overall, our net sales reached 441 million SEC, as I said, with growth excluding currency effects of 12%. Specifically in the regions, in Europe, Middle East, Africa, our sales increased by 21% excluding currency effects. In the Americas, increased by 16% excluding currency effects, while Asia-Pacific decreased by 6% excluding currency effects due to order variability. Our operating profit in the quarter was 132 million SEC, which is an increase of 22%, and our EBIT margin was 30% versus the 27% last year for Q2. Our adjusted EBIT margin was 33% for the quarter. Overall, our net sales year to date reached 813 million SEC, which is growth excluding currency effects of 13%. our bio guy company strategy remains the same our first strategic pillar is grow the core the core being our core health areas of the business of which gut health which includes colic oral health and immune health are our biggest priorities our second strategic pillar is what we call expansion through direct markets where we look at particular markets to take from a distributor partnership to a subsidiary or a direct market. We currently have 12 direct markets. And our third strategic pillar is breakthrough innovation. This is market creation opportunities for probiotics where people don't routinely use probiotics today. The foundations of our company are people and culture, investing for profitable growth, using digital as an enabler, both in how we go to market through our omni-channel approach, as well as digitizing our business internally, driven by science, which has been a foundation for over 30 years, and sustainable solutions, highlighting the importance of sustainability to our business. So how are we delivering on our strategy? In terms of Grow the Core, in the quarter we drove growth for both the pediatric and adult segments. We are investing in our marketing and selling activities to grow strong growth in our direct markets. We are continuing to roll out our new products. We had originally launched BioGaia Gastrospear Action in October of 2024. We continue to roll that out this year. We also launched last year BioGaia Prodentis Fresh Breath. We're continuing to roll that out to more markets this year. And we just recently in May launched our next generation patented probiotic drops called BioGaia Protectus Plus. BioGaia Protectus Plus will be available in addition to our original Protectus drops. And in terms of expansion through direct markets, we continued our launch in Germany and Austria in Q2 that originally launched in January of this year. One of our largest direct markets, the U.S., had record sales in Q2, and we've seen strong performance in France in Q2. In terms of our breakthrough innovation, skin health is one of our exciting new areas, and we expanded our portfolio in the quarter with two additional new products and updated our design across the full range. So some of the launches that we had in the quarter, as I mentioned, we launched BioGaia Protectus Plus. We launched that in the UK, Ireland, as well as in Sweden. We launched our Pharax drops in a number of markets. And as I said, we launched our two new skincare products. So a face and body lotion and a balm to milk body wash, both microbiome friendly and organic containing ingredients. And those launches happened in the US and China. Some of the key events for the quarter. On April 28th, we published some new scientific findings on one of our patented technologies. It's called Longevity Guard. It is a desiccant technology that goes into our drops products and our probiotic ointment that improves the stability and shelf life of our probiotics so that they live throughout the shelf life. May 7th, we announced our launch of BioGya Protectus Plus, which is, as I mentioned, a proprietary patented combination of our strain DSM 17938, as well as BGR 46. Also on May 7th, at our annual general meeting, we elected a new board member to our board of directors, Amy Byrick. And then on June 18th, we announced the new product launches that I mentioned the lotion and wash for the bio guys skincare portfolio our growth as I said for q2 was 12% organic growth as you look at it from a pediatric and adult segment standpoint pediatrics grew 9% organic growth and adult segment grew 23% organic growth and a little bit more on the segments. If you look at the quarter, as I said, excluding currency effects, pediatrics grew 9%, adult health 23%. But if you look at the total for the year to date, pediatrics grew 11% organic growth and adult grew 21%. In terms of pediatrics for the quarter, sales mainly increased in France, U.S. and Brazil. In terms of adult health, sales increased in our Protectus tablets and sales also increased in Asia Pacific, mainly in Indonesia and Japan. So overall, our pediatric segment for the quarter is 75% of our sales and year-to-date is 74% of our sales. now by region as i said previously europe middle east africa increased by 21 percent excluding currency effects mainly in france and poland these were strong markets for us in addition other strong markets in emea were germany as well as uk in asia pacific our sales decreased by six percent excluding currency effects it was lower in our sales in the pediatric segment while the adult health segment did increase. And as I said previously, the sales were lower mainly in China and South Korea. This was due to quarterly variations for individual orders, so order variability. And in the Americas, which includes Latin America as well as North America, our sales increased by 16% excluding currency effects.
This is due to higher sales in both the pediatric and the adult health segment and sales increased mainly in the us canada and argentina i will now turn it over to alex to go through the financials in more detail thank you teresa so to summarize as we heard teresa mentioned we had a sales growth of nine percent from 405 million to 441 million sec in the quarter our gross profit also increased with nine percent and our operating profit increased with 22 percent and we had a margin of 30 percent in the quarter compared to 27 percent one year ago if we look at the sales as we heard we had a growth of nine percent and we had a negative currency effect of three percent and thus growth excluding currency effect of 12 percent in the quarter our gross margin in the quarter was 73 percent which was at the same level as last year we had one percentage point higher margin in the pediatric segment and one percent lower in the adult segment that variation is mainly due to mix effects there are some movements between different products and geographic markets that explains the variation and then if we look year to date we have a margin of 72 percent versus 73 percent one year ago with a slightly lower margin in the adult health segment if we look at our operating expenses our total operating expenses were 189 million versus 186 so two percent higher versus one year ago our sales and marketing expenses increased due to higher expenses for sales marketing activities mainly in our subsidiaries for example in france and germany which are new markets where we were spending less one year ago. The sales and marketing expenses also include a one-time expense of 11.3 million sec. Our R&D costs decrease mainly due to lower costs for clinical studies. It's a normal variation between the quarters and we have a positive effect in the other OPEGs due to some exchange gains on receivables of 7 million SEC. And therefore, we have an OPEX of 189 million versus 186, 2% higher. And on an adjusted basis, our OPEX was 177 million versus 186, which is then 4% lower compared to one year ago. And then if we summarize and look at our profit and loss statement, again we see an increase in sales of nine percent an increase of opex at the lower extent of two percent and therefore our ebit then increases with 22 percent and on an adjusted basis our ebit increases with 32 percent and we then have a margin of 30 percent in the quarter and on an adjusted basis on margin is 33 percent and profit earnings per share of 1.02 versus 0.87 an increase of 17 percent in the quarter if we look at our cash flow cash flow from operating activities amounted to 51 million the decrease in cash flow for operating activities compared to the same period last year is mainly due to negative change in working capital. It is also I would say a normal variation between the quarters whereby we have some higher receivables, a bit higher inventory and lower payables and on all three giving a negative effect then in the change in working capital. And the cash flow from financing activities amounted to minus 466 million uh that then includes the additional purchase payment purchase payment that we did for nutraceuticals our u.s company of 59.5 million which we paid at the first of april in this quarter and we also had dividends in the quarter of 405 million and then the net effect then is the cash flow for the period of minus 428 versus minor 624 in the same quarter last year and we have a cash at the end of the period of 446 million sec. So with that I hand over to Teresa for some concluding remarks.
So in summary as we said our second quarter showed growth excluding currency effects of 12 percent. Both our segments grew for the quarter so a pediatric segment growing 9% excluding currency effects, and adult segment growing 23% excluding currency effects, and the increases were primarily driven by our Protectus Drops, our Predentus, and our Gastris Pure Action products. Europe, Middle East, Africa is regaining momentum, as you saw, in key markets following a period that we had of transition from when we went from partner distribution to direct market operations in France and Germany and Austria. So our sales overall increased by 21%, excluding the currency effects. France, as I said, was established as a direct market in April of 2025, Germany in January of 2026. Both contributed to the strong performance in Europe, Middle East, Africa. For Asia Pacific, our sales decreased by 6%, excluding currency effects. This was mainly due to the lower sales in the pediatric segment. The adult health segment increased, as I mentioned previously, but the sales decreased mainly in China and South Korea and our partners in those markets, and that was due to quarterly variations in the individual orders. The Americas delivered strong performance with a 16% growth, excluding currency effects. Both Canada and the U.S. had robust growth in sales of our adult products, specifically Prodentis and Gastris Pure Action, as well as double-digit growth in sales of our Protectus drops. Our operating margin for the quarter was 30%. Our adjusted operating margin was 33%. So overall, our year-to-date adjusted operating margin is 30% compared to 27% last year. We are announcing that we will host a Capital Markets Day in London in December of this year with more information to come on that and we remain of course focused on driving our growth by leveraging our strong scientific foundation that we have built over many years. We are expanding our presence in key markets by continuing to launch new products in these markets and of course investing in increasing our brand visibility and our brand recommendations through health care professionals. So we will open it up now for any questions that you may have.
Operator
If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Christopher Lillieberg from DNB Carnegie. Please go ahead.
Thank you. Good morning. Four questions, but they are short, I promise. So first, the higher investments compared with the first quarter last year, or yeah, the second quarter last year, if you could just comment on that. And I wonder about the gross margin improvement second quarter versus first quarter, if that's just mix effect or if it's something else. that third question is if you could give this figure of direct sales market proportion of total sales in the quarter or year to date and finally if you are willing to comment about when you expect the china distributor to start ordering again thank you um what was the fourth question when we when do you expect the distributor in china to start order again
okay um so the first two questions i'll have alex address so the investments in the quarter yeah that's mainly bigger production and we are ramping up our investment levels we are expanding our manufacturing capacity so we will see a higher capex level for this year and also next year and that is why you have a higher capex we've actually had an abnormally low capex for the last year or two uh because we have been preparing is this yeah is this the level we saw in the quarter is that you think a good representation for the reminder of of the year or uh it will vary a bit uh going a bit up and down but uh it's a bit difficult to say depends on the speed of that deployment of those investments but I think for this year we could have investments around 30 to 40 million sec in total okay thank you yeah and then for the gross margin yes as you guessed it's mainly due to normal or well variations between geography and products not really that we have changed any pricing or anything similar and then in terms of the direct market percentages so for the quarter our direct markets are 41 percent of our growth and then year to date is 45 percent and then in terms of the growth or do you mean of the growth
or of the action oh i'm sorry of the sales apologies of our sales so 41 percent for the quarter is direct markets 45 of our sales uh for the full for the year to date for direct markets and uh yeah so but i guess uh if you have a quarter and that leads us into the my final question so if a apac is picking up again i guess that number should go down or is this trend so strong that the direct sales proportion will still continue up this year would you say No, that number will go down because we had lower orders for China and South Korea in the first half of the year.
So we do expect, and that gets to your fourth question, that our China distributor will increase their orders in Q3 and then larger orders in Q4 as well.
Okay, so do you expect China third quarter sales to be up year over year?
Operator
The next question comes from Philip Wetterquist from SB1 Markets. Please go ahead.
Good morning, guys. I just have a couple of questions. The first one on the extraordinary sales costs. Can you elaborate a little bit more on what that relates to and did it impact cash flow here in the quarter? Well, in terms of the overall expense, it's a one-time expense. and this is confidential for competitive reasons so we don't share the specifics on that but it is a one-time selling expense and it did impact the cash flow in the quarter that's correct okay thank you and then my uh second question is still on the selling costs and excluding the extraordinary expense selling expenses grew three percent uh year over year uh below the 12 percent organic growth should we assume selling expenses to grow slower than sales from future onwards or like is this a good run rate for for
h2 or how should we think about selling expenses going forward uh it's a bit tricky to give an exact answer on that on one hand yes we are trying to contain our costs i mean last year we did have this global marketing campaign which we did for example which we're not doing this year so we will have a lower sales and marketing cost for that on the other hand we are ramping up our costs in the sales and marketing area in terms of for example direct operations in germany that we didn't do last year and also we're ramping up in france and some other direct markets so we don't really give you know an exact guidance on the the proportion of the marketing and sales spending but as we mentioned before, we're committed to try to keep our total OPEX basically flat for this
That was all for me, thank you. Thank you.
Operator
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Matthias Vadsten from SEB. Please go ahead.
Hi, thanks for taking my questions. I have two. So in EMEA now, when you look at the performance, would you say it's anything in that region that is not performing according to plan or is it really a good performance across the key markets in EMEA?
Yeah, so in terms of Europe, Middle East, Africa, there are a couple countries, I would say, not performing to plan. So Turkey is one where we have switched our distributor partner earlier this year. So that business is going to start ramping up in the second half and has been poor in the first half of this year and also the second half of last year. so turkey and i would also say italy is slower than expected in terms of orders from our partner so that has to do with some of the probiotics market in italy overall declining but we have high share and we're growing share in that market okay good that's a clear answer and then And the next one, the Protective Plus.
Can you talk about the launch plan in your key regions here going ahead and maybe the development of the instance versus the current Protective Drops product that you sell?
Yes, so we just launched in the UK in May, and we actually launched at a baby show with about 30,000 consumers and received very positive feedback on the new product. So the product so far has been launched in the UK, Ireland, and Sweden since our announcement on May 7th. And then we will be rolling it out over time in other markets. It all depends on the regulatory situations. Because this is a new strain, it does take an additional registration in a lot of our markets. So it will take time, such as in the U.S. You need to have gross certification for a new strain. So there are a number of things from a regulatory perspective that will cause the launch to be over many years coming.
Good. And in terms of, is this part of the production investments that you do now? Or let's say that if you could launch in the U.S., would that be doable with the production system that you have?
Yes. Yes, definitely. We have plenty of capacity. We actually had a new easy dropper line installed, which is actually the main U.S. SKU is an easy dropper format. So that was installed about two years ago. So we have plenty of capacity. And also we have capacity on our glass bottle line as well.
Very clear. Thank you very much.
Operator
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
So thank you for your questions, and we are happy to present our Q2 results, and we will be back again when we have Q3. Thank you.
