Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Year-on-year volume growth of 37% on a like-for-like basis, indicating strong demand and market presence.
- Material increase in gross margin by nearly 4 percentage points to 17%, showcasing the effectiveness of Haypp Group AB (OSTO:HAYPP, Financial)'s operating model.
- Positive regulatory developments in the US, with the FDA issuing marketing granted orders for flavored nicotine pouches, enhancing the category's outlook.
- Successful automation of the Texas warehouse, improving consumer lead times and expected to deliver gross margin benefits.
- Record high adjusted EBIT in Q4 2024, driven by solid margin performance and strategic investments in media and insights.
Negative Points
- Challenges in sourcing Zyn products due to supply shortages, impacting sales in the US market.
- Low online channel share in the US at approximately 3%, compared to 30% in Scandinavia, indicating potential market penetration issues.
- Regulatory restrictions on digital advertising for authorized products, limiting marketing opportunities.
- Emerging segment investments led to increased losses, with SEK10.4 million impacting overall adjusted EBIT.
- Ongoing challenges with tobacco licensing in Sweden, with a potential impact on operations and regulatory compliance.
Q & A Highlights
Q: Can you explain the impact of the new MGO regulation on your US sales and when it started affecting them?
A: The MGO regulation came into effect in the latter part of the second week or early in the third week of January 2025. We were able to source some Zyn products and resumed sales at the beginning of January. However, to justify implementing age gating for Zyn sales, we need a sustained commitment on the volume of Zyn, which we currently do not have. We expect this to resolve in the near future, but it's hard to specify an exact date.
Q: What is the tone of discussions with PMI regarding online sales, and do you expect sales to resume before summer?
A: We have a strong relationship with PMI, being the largest retailer of Zyn in Europe. There are various dynamics in the US market, including growth within the category and supply issues. PMI expects to correct the supply-demand imbalance by the second half of 2025, but we anticipate resuming sales before then.
Q: Are your US volume growth forecasts for 2025 dependent on Zyn volumes returning by summer?
A: Excluding Zyn, we expect our volumes to continue growing at the current rate seen in Q4. When Zyn returns, we anticipate robust sales, but we cannot specify when that will happen.
Q: Do you expect a similar boost to profitability in 2025 from media and insight revenues as seen in 2024?
A: We have further developed our insights and media offerings, leading to increased demand. We expect a material uptake in 2025, and we will provide more guidance at our Capital Markets Day on April 3rd.
Q: With the emerging business showing good traction, do you expect short-term losses to increase from the SEK10 million seen in Q4?
A: We are pleased with the progress and return on investment in the emerging market space. We do not anticipate a significant increase in investment in 2025 unless a major opportunity arises.
Q: How might the media and insights business benefit from regulatory tailwinds, and what investments are planned to support growth?
A: The regulatory environment is increasingly restricting media space, enhancing the value of our platforms that guarantee adult-only communication. We are investing in infrastructure to refine consumer messaging, increasing the value of our media offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
