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Boule Diagnostics AB (publ) Interim report January–June 2020

Continued business development in the shadow of COVID-19

Quarter April–June 2020

  • Net sales amounted to SEK 90.6 million (119.7), down 24.3 percent. Adjusted for the change in exchange rates, this corresponds to a decrease of 25.8 percent.
  • Number of instruments sold in the quarter was 564 (1,100), a decrease of 48.7 percent.
  • Cash flow from operating activities amounted to SEK 17.6 million (15.6).
  • Operating profit was SEK -3.0 million (5.9) which corresponds to an operating margin of -3.3 percent (5.0).
  • Net profit including the biosurfit write-off amounted to SEK -43.0 million (0.3).
  • Earnings per share before and after dilution amounted to SEK -2.21 (0.01).

Interim period January–June 2020

  • Net sales amounted to SEK 209.0 million (238.4), down 12.3 percent. Adjusted for the change in exchange rates, this corresponds to a decrease of 14.5 percent.
  • Number of instruments sold in the period was 1,476 (2,259), a decrease of 34.7 percent.
  • Cash flow from operating activities amounted to SEK 32.2 million (10.3).
  • Operating profit was SEK 12.3 million (22.6) which corresponds to an operating margin of 5.9 percent (9.5).
  • Net profit amounted to SEK -35.6 million (10.1).
  • Earnings per share before and after dilution amounted to SEK -1.83 (0.52).

Significant events during the quarter
Proposed dividend withdrawn

The Board of Boule Diagnostics AB decided to withdraw the previously communicated dividend proposal. The Board’s decision was made in light of the increased uncertainty of the market outlook following the global spread of COVID-19.

New CEO

On May 11, Jesper Söderqvist assumed the position of CEO and Group President.

Write-off of the asset shares in associates

Earlier in the spring, The Board of Boule decided to divest the company’s position in biosurfit. Discussions have been held with the associate’s other owners and new investors to find a new owner structure. As these discussions have not yet yielded a closed deal and the Board of Boule assesses that there is a risk to the going concern of biosurfit, Boule has decided to write-off the entire shareholding which will have a negative non-cash effect on profit of SEK 36.6 million.

Significant events after the period
No significant events have occurred since the end of the interim period.

Comments from CEO Jesper Söderqvist
Strong cash flow, but business impacted by COVID-19

Many countries have closed down, which has radically reduced the number of regular medical visits, with the result of fewer blood samples taken and consequently our sales of consumables reduced. New sales of instruments have also been occasionally halted as healthcare providers have concentrated on treating COVID-19 patients.

Net sales in the second quarter dropped by 24 percent compared to the previous year. The gross margin is 2.6 percent lower than last year, due to negative production variances following low capacity utilization. Our running costs are on a par with 2019, as we saved approximately SEK 6 million in sales and marketing expenses in the quarter, while the costs related to our prioritized future investments have increased. The operating loss is SEK 3 million.

Operating cash flow is almost SEK 18 million in the quarter. We have focused on securing good liquidity, thus the Board decided to withdraw the share dividend.

Long-term stable liquidity to finance internal projects was also one of the reasons for not follow through on the investment in the associated company biosurfit. Boule writes off the book value of its holding in biosurfit, which has a non-cash effect on earnings of SEK 36.6 million in the quarter. It is unfortunate that the investment in biosurfit did not deliver the outcome we desired, but it does not affect Boule's business in the near future.

Adaptation of the operations in a turbulent period

All conferences, tradeshows and physical meetings with customers have been replaced by digital customer meetings. For example, we have arranged seminars, including the subject of how Boule’s blood diagnostics can be used as an aid to diagnose and follow up on COVID-19 patients. We will further expand our digital marketing and training activities as it is an effective and cost-efficient way to reach customers globally. The production organization has handled disturbances in the supply chain well. Our biggest challenge has instead been deliveries to customers in markets that have been closed. We have used government support in both Sweden and the US, including short-term furloughs in production to reduce costs and strengthen liquidity. Some investments have been postponed, but long-term strategic investments in product development, regulatory compliance, local production in Russia and increased digitalization have continued according to plan. Significant progress was made in all these areas during the quarter. We are ready to meet increased demand when the markets recover as we have maintained full capability and delivery capacity.

The market outlook is gradually improving

Both sales and order intake were significantly higher at the end of the second quarter compared with the beginning as many countries reopened, indicating a recovery and a gradual increase in demand. However, there is still uncertainty as many countries have seen a recurring spread of infection and closed certain regions again. In the longer term, we see a continued stable growth in demand for blood diagnostics in all parts of the world.

Digital collaboration at its best

I started as CEO on May 11, amid the ongoing pandemic that has affected Boule and society in all its parts globally. To act as new CEO of an international company without the opportunity to travel, with temporarily declining sales globally and an uncertainty about how the markets will develop in the coming months is a special experience. When I now look back on my first time, the business has operated surprisingly well despite the difficulties that reduced travel and teleworking have brought, even though I am not at all happy with not showing profit.

I have talked to our most important distributors and customers in all parts of the world, as there have been both time and acceptance to book digital meetings. In the first weeks, I had more than twenty conversations with distributors and customers from which I got a good view of Boule from our customers' perspectives. What impressed me the most are the good relationships we have with our sales channels. Common to all is that they see Boule as a quality supplier whose instruments work perfectly even after both five and ten years of daily operations.

Increased focus on quality and efficiency

We must ensure and constantly improve the quality of both instruments, consumables and services. There is a sense of responsibility in the organization to solve problems if they arise. The passion and willingness to do the right thing is something that I see as a great asset when we look ahead towards new challenges and opportunities. In the last two years, we have strengthened both processes and the quality organization. During this year, we will improve the delivery quality by increasing the work on continuous improvements, simplifying processes and strengthening the cross-functional collaboration.

Investing for the future

Boule has an attractive business model with a large and growing installed base that generates stable sales of consumables with a good margin. The product portfolio has been expanded over the past two years and we have strengthened the commercial organization. Beyond COVID-19, many opportunities open for increased profitability and growth for Boule. We make investments in a new product platform to ensure our long-term competitiveness. Boule is in an exciting and promising development phase.”

THE INTERIM REPORT FOR JANUARY–JUNE 2020 IN ITS ENTERITY IS FOUND BELOW.

For further information, please contact:
Jesper Söderqvist, CEO and Group President, Boule Diagnostics AB, phone. +46 (0)70-689 05 90
Christina Rubenhag, CFO, Boule Diagnostics AB, phone. +46 (0)70-546 72 22

About Boule Diagnostics AB (publ)
Boule Diagnostics AB is a global diagnostics company that develops, manufactures and markets instruments and consumable products for blood diagnostics. The company serves hospitals, clinics, laboratories and companies within blood diagnostics, in both human and veterinary hematology. The company operates via subsidiaries in Sweden, the USA, Mexico and Russia. The company products are sold globally primarily through distributors, supported by Boule’s own local sales and support personnel. The Boule shares are listed on Nasdaq Stockholm since 2011. www.boule.com

This information is information that Boule Diagnostics AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above at 08:00 CET on July 17, 2020.