New Nordic Healthbrands : Three Month Report Q1 January – March 2023

N E W N O R D I C H E A L T H B R A N D S A B ( P U B L ) T H R E E M O N T H R E P O R T

J A N U A R Y - M A R C H 2 0 2 3

	Q1 2023	Q1 2022	FULL YEAR 2022
Net sales, kSEK	126 262	123 336	487 501
Change in SEK, percent	2.4	-3.5	-5.3
Change in local currencies, %	-4.5	-8.6	-11.3
Gross profit, kSEK	79 538	82 907	318 500
Gross margin, %	63.0	67.2	65.3
EBITDA kSEK	2 605	2 038	-3 104
EBITDA, %	2.1	1.7	-0.6
Operating profit, kSEK	2 235	1 759	-4 748
Operating margin, %	1.8	1.4	-1.0
Profit for the period, kSEK	585	980	-2 823
Earnings per share EBITDA, SEK	0.42	0.33	-0.5
Earnings per share * after tax, SEK	0.09	0.16	-0.46

* There are no dilutive effects

C O M M E N T S B Y C E O K A R L K R I S T I A N B E R G M A N J E N S E N

The times are still marked by the tough market climate and the cautious buying behavior of our customers. Therefore, the year began with caution in marketing and our total costs. With our efforts, we achieved a revenue increase of 2 percent in Swedish kronor, but revenue in local currencies decreased by almost 5 percent.

The gross profit margin is affected by sharp price increases from our manufacturers and suppliers. In addition to the price increases we have already made ourselves for our customers, we have announced further price increases in the coming quarters to increase our gross profit margin. Furthermore, we will look at the possibility of changing the relationships between suppliers and manufacturers to benefit the gross profit margin. During the quarter, our cost prices are further influenced negatively by high indirect costs.

Thanks to a targeted efforts, our inventory has now decreased by almost 25 million compared to the end of the first quarter of 2022 and it is now at a reasonable level.

In the coming period, we will focus on increasing our gross margin and our result while, in the challenging market climate, we will work to create growth again through increased effective marketing efforts. We will also focus on strengthening our investments in the US. In addition, we will introduce new exciting nutritional supplements and skin care products, which are planned in collaboration with our main retailers.

As usual, the staff has continued to make a formidable contribution and our organization is focused on continued development of the company. I am confident that our initiatives will bear fruit and look forward to growth in revenue and earnings in 2023.

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Net sales

Net sales amounted to SEK 126,262,000 (SEK 123,336,000), which is an increase of 2.4%. During the quarter, currency had a negative impact on the change in net sales by 4.5% and is primarily attributable to the kroner's continued weak development against the majority of currencies in the geographical areas where New Nordic operates. No structural effects in the form of a change in group composition have affected the period.

The underlying demand for our products is generally good, although we see a continued decline, mainly driven by continued high inflation as well as general uncertainty in the economy and the global situation. We also see that our consumers generally tend to buy smaller packaging sizes than before, which we believe is an effect of the deteriorating economic situation that many consumers have suffered in the last 12-15 months.

The product mix is an important part of both net sales and gross profit, where we have seen an increase in demand for products with both a lower selling price and a lower gross margin, which affects both key figures negatively. In addition, a certain increase in promotional discounts has contributed to a lower net turnover.

Net sales - geographical distribution

Net sales in the Nordics amounted to SEK 42,133,000 (SEK 37,358,000), which is an increase of 13%. Net sales in Europe amounted to SEK 47,725,000 (SEK 43,476,000), which is an increase of 10%. Net sales in North America amounted to SEK 33,186,000 (SEK 36,602,000), which is a decrease of 9%. Net sales in the rest of the world amounted to SEK 3,218 thousand (SEK 5,900 thousand), which is a decrease of 45%. The rest of the world is the group's smallest and youngest business area, which is reflected in sales.

The distribution continues to be that we have three relatively even geographical areas where Europe continues to be the largest market and the rest of the world continues to be the smallest market even during the first quarter of 2023. Historically, the Nordic region has been the largest geographical market, but as we have in recent years established new operations primarily in Europe, outside the Nordics, that market has established itself as the largest in terms of sales.

Gross profit

Gross profit decreased by 4.1% to NOK 79,538,000 (NOK 82,907,000) in the quarter. The gross margin decreased to 63.0% (67.2%) in the quarter. Costs for merchandise are up by SEK 6,295,000 or 15.6% in the quarter, which in combination with only a sales increase of SEK 2,926,000 or 2.3% means that the gross profit and gross margin are down by 4.2% when compared to the corresponding previous quarter year.

On a positive note, inventory levels have continued to fall and the aim has been to find a balance between growth and profitability. The group's gross margin is an effect of the product mix and the market mix, which differ between the quarter and the year. This, in turn, is an effect of primarily new establishment of both products and markets where new markets and new products generally eat away at the gross margin.

Bad manufacturing overheads that started during the fourth quarter of 2022 have continued during Q1 2023 and will likely affect the gross margin negatively for a period before price increases and other initiatives have taken effect. In practice, this has meant a cost absorption that has not been reflected in the sales prices to the same extent.

Operating costs

Operating costs, excluding depreciation and cost of goods sold, decreased by 4.9% or SEK 3,936,000 to SEK 76,933,000 (-SEK 80,869,000) in the quarter. A continued maintenance and optimization of marketing

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activities and marketing costs is the single biggest contributor to the reduction. Personnel costs continued to increase slightly during the quarter and amounted to SEK -16,679k(-15,600k), which is an effect of the prevailing wage situation.

Operating profit (EBIT)

The operating result amounted to SEK 2,235,000 (SEK 1,759,000) and corresponds to an operating margin of 1.8% (1.4%) in the first quarter. This is an increase of SEK 476,000 or 27.0%.

Financial records

Financial items amount to SEK 834,000 (-196,000) and are a combination of exchange rate effects and interest costs. Net interest has contributed negatively by SEK -562k(-170k), which is an effect of an increased net debt mainly related to the increased degree of overdraft utilization.

Tax

Tax for the period amounted to SEK -816 thousand (SEK -583 thousand). The group's effective tax for the period was -58%(-37.3%), which is a combination of local tax rates, changes in deferred tax on loss carry- forwards and other temporary differences.

The period's result

The result for the period amounted to SEK 585,000 (SEK 980,000). Earnings per share amounted to kroner 0.09 (kroner 0.16) and there are no dilution effects.

Working capital

The group realized a net working capital of SEK 131,556 thousand (SEK 131,622 thousand), corresponding to 26.8% (25.8%) of net sales for the last twelve months. The inventory position has continued to decrease and comes in at SEK 95,424 thousand, which is positive from a capital commitment perspective. The stock position has improved to a satisfactory level.

Net debt/net cash

The group's net debt (+) increased to SEK 33,466 thousand (SEK 18,274 thousand). The increase is due to a higher utilization rate of the group's overdraft facility as a result of the increased need to tie up capital that has existed in recent quarters.

Liquid funds

Cash and cash equivalents increased to SEK 11,545,000 (SEK 10,188,000), mainly driven by cash flow from current operations and, in particular, working capital

Interest-bearing liabilities

Interest-bearing liabilities (short- and long-term) have increased to SEK 45,012 thousand (SEK 28,462 thou- sand), mainly driven by an increased overdraft as a result of an increased need to tie up capital.

Equity

Equity attributable to the parent company's shareholders decreased to SEK 113,470,000 (SEK 121,983,000). The equity ratio amounted to 47.3% (48.4%) and equity per share amounted to SEK 18.32 (SEK 19.69).

Cash flow

The cash flow for the period amounted to SEK 1,071,000 (-1,619,000 SEK), driven mainly by the cash flow from current operations.

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Cash flow from current operations

The cash flow from current operations amounted to SEK 6,795,000 (-3,358,000 SEK) compared to the previous year, it is mainly the change in working capital and especially the inventory that contributed positively.

Cash flow from investment activities

The cash flow from investment activities amounted to SEK -965 thousand (SEK -1,060 thousand) and the rate of investment in mainly tangible and intangible fixed assets remains low.

Cash flow from financing activities

Cash flow from financing activities amounted to SEK -4,985 thousand (SEK 2,799 thousand). The change is mainly due to reduced overdrafts in the period when compared with the corresponding period of the previous year when the utilization rate of overdrafts increased.

Other information

New Nordic's operations create value for the company's customers and shareholders. In 2023 and beyond, the company will continue to develop herbal supplements and beauty products to address specific health and beauty needs. New Nordic will market these products to a growing number of consumers worldwide. Everything with care for people and nature. The products will be marketed under the characteristic New Nordic brand. A brand that reflects the Scandinavian cultural heritage, the Scandinavian values and the com- pany's passion for herbs and a healthy life.

Significant risks and uncertainties

There have been no significant changes in relation to what New Nordic stated in the submitted annual report for the year 2022 under Risks and risk management.

Staff

The number of employees, converted to full-time employees, at the end of the quarter amounted to 73 people (75).

Significant events during the reporting period

No material events that are not described in other parts of this report have occurred.

Significant events after the reporting period

No material events have occurred up to the time this report was released for publication.

General information

If nothing else is stated, all amounts are reported in thousands of kroner, SEK thousand. Information in parentheses () refers to the comparison period. Unless otherwise stated in this interim report, this refers to the group. The group's certified adviser is Mangold Fondkommission AB. Telephone [phone]

The report has not been reviewed by the company's auditor.

The parent company

New Nordic Healthbrands AB (publ), org. no. 556698-0453, is a registered limited liability company based in Malmö, Sweden. The share is listed on Nasdaq First North Growth Market, Stockholm.

During the first quarter of 2023, the parent company had a net turnover of SEK 38,812 thousand (SEK 44,364 thousand) and the profit for the period amounted to SEK -376 thousand (SEK -1,965 thousand).

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Risks and uncertainties

A number of factors can affect New Nordic's results and operations. Many of these can be managed through internal routines, while some others are more affected by external influences. There are risks and uncertainties associated with consumer trends, weather conditions, negative macroeconomic changes, geopolitical risks, sustainability and external factors in production countries, regulatory issues, trade interventions, foreign currency and tax, but also in connection with expansion into new markets, the launch of new products, changes in consumer behavior and how the brand is managed. There are also certain risks related to the group's reputation, known as "reputational risks".

For a more detailed description of risks and uncertainties, please refer to the Annual Report and Consolidated Financial Statements for 2021 under "Risk Factors".

Accounting principles

This report has been prepared in accordance with the Annual Accounts Act (1995: 1554) and BNFAR 2012: 1 Annual Report and Consolidated Accounts (K3). Information about the accounting principles in general is stated in the 2020 annual report.

Audit review

This report has not been audited by the company's auditor.

Certified Adviser

New Nordic Healtbrands AB's certified advisor is Mangold Fondkommission AB. Phone [phone].

Upcoming reports
Annual General Meeting in Malmö	April 27, 2023
Six Month Report 2023	July 31, 2023
Nine Month Report 2023	October 31, 2023
Full Year Report 2023	February 28, 2024
Annual Report 2023	March 27, 2024
Three Month Report 2024	April 30, 2024
Annual General Meeting in Malmö 2024	April 30, 2024

For further information contact:

Karl Kristian Bergman Jensen, CEO, [e-mail]

This report has not been reviewed by the company's auditors.

Malmö 27 April, 2023, New Nordic Healthbrands AB (publ)

Board of Directors

New Nordic Healthbrands AB · Hyllie Boulevard 34 · SE-215 32 Malmö · Sweden Phone: [phone]

The year-end report has not been reviewed by the company's auditor.

The Board of Directors and the CEO ensure that the interim report provides a true and fair view of the Group's ope- rations, position, and earnings. Jessica Tyreman, Board Member, Kirsten Ægidius, Board Member, Lennart Sjölund,

Board Member, Marinus Blåbjerg Sørensen, Chairman of the Board, Karl Kristian Bergman Jensen, CEO and board member.

The information in this press release is that which New Nordic Healthbrands AB (publ) is required to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 (CET) on 27 April 2023.

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