Probi AB

STO:PROB

Earnings Call Transcript 2020-Q2

[Operator]

Hello and welcome to Probi AB Q2 Report 2020. [Operator Instructions] Today, I'm pleased to present CEO, Tom Rönnlund; and CFO, Henrik Lundkvist. Please go ahead with your meeting.

[Tom Rönnlund, Chief Executive Officer]

Thank you. Thank you, and good morning for those who are participating in today's presentation of Probi AB's second quarter results for 2020. Can you turn to the next page, please? Please familiarize yourself with our safe harbor statement as well. And please turn to Page #3. So in today's agenda, we will cover an overview of our second quarter results and some key developments. We will have our CFO, Henrik Lundkvist, who's here with me today, to go through a financial review. And then we will finish the session with some comments regarding outlook and our updated financial targets, and after that also open up for question and answers. Please turn to the next page, which is #4. Probi went into Q2 with a decent momentum in the quarter and, well, by the end of the first quarter as well as the start of the second quarter. Of course, we, as all businesses around the world and societies, were affected by the COVID-19 pandemic. Fortunately, even though it has been a struggle sometimes and a tough task for our team, we have been able to stay operational and delivered a solid Q2 result in the light of the outside world challenges at the same time. On Probi, the impact financially of the COVID-19 pandemic has been overall neutral with probably some extra sales demand coming from COVID-related effects, but on the cost side, quite marginal impact on our business. In the quarter, we have seen a continued strong underlying demand for probiotics, not only through the initial, to some extent, stocking, both in consumers as well as with our customers of probiotic products; what we see is that it seems to be translating into a continued strong demand for our products. We delivered sales in this quarter in line with the second quarter last year, which in itself was a strong quarter. So we are pleased with the sales delivered in Probi for the quarter. We also strengthened our EBITDA margin, where lower gross profit, on the other hand, was offset by reduced operational expenses in the quarter. So we landed on an EBITDA margin of 20 -- sorry, 32%. In the quarter, we've also signed an exciting agreement with a leading personal health care company, a multinational, who are planning a launch based on Probi premium concept probiotics across a number of European markets starting in 2021 and onwards. We're working very diligently together with the customer in order to prepare the launches for the years to come. We're also very proud that our -- one of our company's founders, Prof. Bengt Jeppsson, who is still working with us as a senior adviser, was awarded the NutraChampion award in this year, which -- in recognition of his important and lasting contribution to our industry through being one of the pioneers in working and finding the strains that laid the foundation for our company. So we congratulate our Prof. Bengt Jeppsson on that. Later on in the presentation as well, we have in management, together with the Board, worked through our strategic focus areas, as earlier communicated. And in relation to that, we will also today share with you our new and updated financial targets for the future. Please turn to Page #5. If we stay for a minute on the topic of COVID-19 pandemic, as mentioned, it has had a limited impact on our operations and our business in the second quarter. What we do notice though is an increased demand for immune-supporting products and where Probi is well positioned with our well-documented Defendum concept. And this demand seems to not be only temporarily occurring but also something that we hope to be able to build on moving forward as well. We also see a quite strong demand in the U.S. market, which has developed well in the period. And here, we believe that it has to do with a heightened focus on personal health care and the way you can yourself manage your health by actually also taking probiotics as a part of an overall healthy lifestyle focused at maintaining good levels of immune support and other health-related areas as well. While in the EMEA and APAC regions the very strict, or in certain cases at least, very strict societal lockdowns have resulted in a bit of stock-building with some of our customers as they have had challenges in reaching the end consumer as well as their customers in physician practices and in pharmacies in this period, where many societies have been having very strict regulations with regards to personal movement, et cetera. So we have a strong demand in the second quarter from EMEA and APAC. But we do expect that to soften a bit as our customers are working through the inventory that they have not been able to offload in this quarter. We are also very happy that we have been able to maintain full operational status at our manufacturing facilities. And even though we have had from time to time challenges with suspected cases and self-isolation at our sites, leading to slightly reduced manpower on site, this has now stabilized, and we are in full capacity, running our operations in our facilities in the U.S. We do have some costs related that we attribute to COVID-19-related effects, such as, in some instances, slightly more expensive raw materials, transport and also increased overtime costs at our manufacturing facilities. But all in all, these -- the impact of these are quite small for our company in a bigger picture. Please move to Slide #6. So for the first half of the year, we are satisfied and proud of the results delivered so far. We have historically worked with 2 main financial targets, which is outperforming the market growth and maintaining an EBITDA margin exceeding 20%. And for this period, for the first 6 months of 2020, we have delivered on this. So our growth into this year so far is 6% for our entire organization or for our -- all our regions combined, with slightly different dynamics in the respective regions. In Americas, as mentioned before, we do have a strong underlying demand for probiotics, partly driven by COVID-19. We also see a very strong growth in the e-commerce channel, where Probi is well positioned with significant customers in this field, and we are very used to working with these kind of retailers or these kind of companies active in that sales channel. And they have, of course, during the pandemic as well, experienced quite a strong demand increase, which we've been able to meet. Individually, in the Americas, the sales growth in the second quarter was not great. We shrunk by 5%. But that is also explained by effects related to one of our large customers in the U.S. who are currently updating their product range, which leads to some volatility in sales patterns in the U.S. market. We expect this to resume more normal conditions in the quarters to come, and therefore we should be able to get back to growth also in the Americas. EMEA for the period, even though it reads here minus 2%, we have also here in our underlying customer base a good growth in the second quarter. Individually, we grew by 10%. And some of the explanation here for the decrease for the first 6 months is related to reclassification or, sorry, transfer of some revenues into another region. And in the APAC region as well, we've had a strong start to the year. The compares for 2019 are not our strongest year. But we are seeing effects of our increased team in the region as well as a number of opportunities coming our way as well as the size of the individual opportunities. So we continue to be very optimistic about the future for Probi in the APAC region, provided that we, today, in sales terms, have a quite small presence. But it will take time for us to build up that market into its full potential. But it definitely still is an area of focus for our company. Regarding profitability, we had a weak start in the first quarter, partly related to some disturbances in our manufacturing facilities, which caused a temporary halt to production for a short period of time, which impacted us. We have regained some of that in the second quarter. And we're also -- as we have communicated before, we had a bit of volatility in these areas as we are helping one of our large customers to transition their portfolio into an updated range of products. We assume that this is about to stabilize for the remainder of the year. And therefore, we should be able to improve moving forward. At the same time, as already mentioned, we also had some slightly lower or lower operational expenses compared to what was expected, partly impacted, of course, by a reduced activity level in certain outreach activities. We have redirected our marketing efforts to other channels to continue to work with current and prospective customers, of course. But the fact that a number of various market events were canceled due to the pandemic as well as reduced travel, that has saved some operational expenses for us. Please turn to the next page, Page #7. As already commented, we had sales of about the same level as last year of SEK 180 million in the quarter. The second quarter in 2019 was a particularly strong one for us. So it's a strong compare. We -- if we adjust for currency, we had a slight decrease. At the same time, last year, we recorded a onetime royalty payment in connection with a discontinued collaboration, which actually puts us on par from a sales perspective. So we are satisfied with the sales numbers for the second quarter. And we see a continued strong underlying demand in Americas, which we aim at capitalizing on as we move forward. In the quarter, as mentioned, we did have a slightly unfavorable product mix as well as temporarily higher production costs as a result of the ongoing upgrade program we are performing at our facility in the U.S. And this had a negative impact on our gross margin whilst we then compensated for that on reduced operational expenses in the quarter. As mentioned before as well, we will have certain levels of volatility in sales revenues in individual quarters moving forward, partly related to COVID-19 effects but also as an effect of our customers' update of their product range. But from a long-term perspective, these things should have a beneficial effect on Probi. And we are looking forward to completing that project together with the customer to come back to normal ordering patterns. If we then turn to Page #8. If we have a look at the regional performance in the quarter, we have already commented on the U.S. as actually a strong region, and we see a strong demand there, which is not evident in the numbers presented here. But as mentioned, this is partly due to the ongoing update of the product range with one of our larger customers as well as we also recorded a onetime royalty payment last year as well in the same quarter. On the EMEA side, as you can see in the quarter, we grew by 10%, which to some extent probably related to COVID-19-related effects with our customers bolstering their stock, which not in all cases have been translated into sales, and they're behind on their side. So it might be that we see a bit of softened performance for the fall, even though that we're very optimistic for EMEA growth in the future with new customers added through the spring as well as added resources to the team plus also interesting customers' prospects for next year. If we turn to the APAC region, strong performance there, from low levels admittedly. But we are seeing that our investment in the team over there is starting to pay off with more and more sizable opportunities for the future in -- for business for Probi. The gross profit was reduced in percentage terms for the quarter, very much driven by very high activity on regulatory and quality activities to support new product launches in the region. So with that, I'll hand over the word to Henrik for the financial review section.

[Henrik Lundkvist, Chief Financial Officer]

Okay. Thanks, Tom. Good morning, everyone. I will now walk you through the financials section. Please move to Page #10. As earlier mentioned, our net sales were in line with last year. But Q2 last year was by far the strongest quarter, which means this was a tough compare. So we're very pleased with the sales performance in the quarter. Our EBITDA increased by 3%, up to SEK 58.1 million, mainly due to lower operating expenses compared to last year, which gave us an EBITDA margin of 32.3%, which is an increase of 1 percentage point compared to last year. EBIT was in principle in level with Q2 last year. Net income decreased by 9% due to unfavorable currency effects on our cash balances. And since there were no changes in the number of shares, the earnings per share also decreased by 9%. Now turning to Page 11. As just mentioned, net income for the second quarter decreased by 9% or SEK 3 million and ended at SEK 27 million. The gross margin in the quarter was lower than last year due to, as earlier mentioned, unfavorable product mix but also higher manufacturing costs in connection with the upgrade program carried out at our manufacturing site in the U.S. COVID-19 has also caused some minor cost increases in terms of overtime, increased material costs and transportation. The increase in manufacturing costs has been compensated by lower operational expenses. During the quarter, our costs related to sales and marketing has decreased compared to last year. Due to COVID-19, there has been limited travel -- limited to no travel and our planned exhibitions have been delayed or canceled. The financial result was negative as an effect of the revaluation of bank accounts denominated in foreign currencies. Now turning to Page 12. For the first half of the year, the gross operating cash flow amounted to SEK 91 million. We had a negative working capital effect due to the inventory buildup in connection with the launch of an updated product range for a U.S. -- large U.S. customer. We expect the inventory levels to go down a bit when we have improved our processes. But since we built our inventory for these customers, the inventory levels will be higher than our historical values by around, I would say, SEK 15 million to SEK 20 million. Our working capital has also temporarily affected -- it's also temporarily affected by large shipments that have been invoiced in June that will be collected during Q3. Tax payments were higher in the first half of the year compared to last year, and it's related to timing effects. CapEx is mainly related to upgrade program that we are performing in our manufacturing site in Redmond, U.S. of a total of SEK 14 million, but it's also connected to further investments in clinical trials and patents amounting to SEK 5 million. The cash flow from financing activities includes a dividend payment of SEK 11 million based on the decision at the AGM in May. The remaining items are related to payments for lease obligation and connected interest in accordance with IFRS 16. To summarize, our cash generation during the first half of the year is temporarily affected by an inventory buildup and large receivables from shipments made late in the quarter. And we expect a more normalized cash flow going forward. Now turning to Page #13. Our balance sheet continues to be in good shape. And as just mentioned, our inventory and trade receivables were at high levels at the end of the quarter, which made our cash balances to temporarily be at the lower level than the end of the last year. The rest of the balance sheet items have limited movements compared to year-end. To summarize, we continue to have a strong balance sheet with an equity of SEK 1.2 billion and an equity ratio of 90%, which means we have a strong base to move into the second half of the year. Now turning to Page 14 and handing over to Tom again.

[Tom Rönnlund, Chief Executive Officer]

Thank you, Henrik. Thank you. Okay. Let's turn to Page 15. Probi, we're active, as you well know, in a very exciting market segment. The global probiotic market, according to research done by Euromonitor late last year, is forecasted over the next 5-year period to grow with a compounded annual growth rate of approximately 4%. There are certain regional differences in that number. And we see many different drivers which are positive for our industry and for our company. With regards to the scientific progress in this area, there is a wealth of ongoing as well as completed and continued research into the relationship between our microbiota and the impact our microbiota has on various health areas. The growing body of evidence in many different areas in terms of how the microbiota plays into our overall health status will produce for the future as well new application areas for probiotics. Of course, the gut health and immune-supporting products, where Probi is strongly positioned, will continue to dominate the marketplace. So we see interesting opportunities also in other areas, such as in bone health, in nutrient absorption, in metabolic health and in women's health in general. We are actively working or already have deployed products in these fields, which we feel confident will help Probi to grow also moving forward. We also have global demographic changes that is supporting a growing marketplace for probiotics. We have a higher proportion of elderly people also with resources and means to buy products focused on personal health as well as higher living standards and interest in probiotics in new markets and new geographies. We noted before that the U.S. is the world's largest market when it comes to dietary supplements and personal health care. But there are other parts of the world who are quickly catching up, even in these troubling times during the COVID-19 pandemic. We also see strong growth in e-commerce. These products lend themselves very well to e-commerce sales. They're easy to ship. And it's also a great way of having a deeper dialogue with the consumer in terms of positioning your product and making sure that you can get through with the messages required for people to realize that all probiotics are not the same. Probi has invested a great amount of resources and time into building a scientifically validated portfolio of probiotic concepts that are second to none in the marketplace and which helps us in all our customer dialogues in making sure that we can be the preferred supplier to our customers. Please move to the next page, please, #16. If we look at the different regions and our expectations with regards to sort of the near future or the next few years, Americas, being the worldwide largest market, we do expect that a certain level of saturation in a way might occur over time. So we do not expect an explosive growth in the U.S. market. There is, of course, a caveat here with regards to the impact of the COVID-19 pandemic. We are seeing a stronger demand in the U.S. market, where we believe that parts of it has been driven by initial stocking, both at the retail as well as consumer level, but also an increased attention to personal health and what role probiotics can play in that. We also see some signs that increased compliance amongst consumers could also be one explaining factor here in driving that demand. But regardless, we believe that the U.S., Probi is strongly positioned in that market. And we believe that it still represents a growth opportunity for Probi faster than the market, especially provided that our premium segment of products still have a relatively small penetration into the U.S. market. We have, throughout the first half of this year, added a number of new customers, who are very excited to launch their products based on Probi's unique concepts. In the EMEA region, the -- as mentioned, we have seen a bit of a surge in purchases during the first half, but where we also have noticed effects where our customers, particularly those with a medical marketing approach, where they are visiting health care providers or pharmacies in their work to promote their product, have had challenges in reaching their target audiences through this period. It is yet a bit early to assess the exact effects of this. And therefore, our assessment is currently that the EMEA market will continue to have a low, stable growth moving forward. The APAC region, of course, initially strongly affected by the strict lockdowns in many geographies, we are seeing signs that that is definitely recovering back to a strong growth mode with consumers being excited about the health benefits that probiotics can provide. All these assessments, of course, they have the caveat of that we do not yet know exactly how the COVID-19 pandemic will develop over time. But so far into this year and from what we can see from our order books for the second half of the year, we are still positive towards our opportunities as a company, even in the light of this global pandemic. If we turn to the next page, please, Page #18. So last year, as a company, we arrived and focused our business strategy around 3 main themes. It's about growth, it's about leadership in innovation and research and development and about efficient manufacturing. If we comment on the growth section there, our ambition as a company is to grow continuously with maintained high profitability. We can do this through organic growth, both with existing and new customers as well as a wider uptake of our products in a number of geographies. We are already present in more than 40 markets. Our ambition is to take an even stronger position in several of these countries through a combination of our own resources and investments as well as strategic partnerships with other companies that -- where we have synergistic effects by combining our -- sorry, we're apparently on Page 17, not 18. Okay. Sorry for that. And in order to fuel our future growth as well, we're also evaluating potential acquisitions that have the opportunity to strengthen and broaden our business. We have a sound financial position as a company, allowing us to aggressively develop our business also through these kinds of activities. When it comes to leadership in innovation and research and development, our company, as mentioned before, is built on decades of high-quality research and development. This is one of our main competitive advantages. Curiosity and courage have enabled us as a company to deliver to the market groundbreaking innovations to consumers worldwide. This has always been a strong area for us. And we continue to invest here, making sure that we strengthen our competitiveness even further for a continued leadership in this field. When it comes to manufacturing in our facilities in the U.S., we have already mentioned the ongoing upgrade program, which should conclude towards the end of this year. And we're already seeing initial positive signs of that, even though that the work is not completed. It's a complex process as we are, at the same time, maintaining full operational status as a company whilst we are rebuilding parts of our factory and our manufacturing line in our fermentation facility. With this in place, we are one of the few fully vertically integrated, global business-to-business companies in our sector. This means flexible solutions for our customers. We can deliver anything from pure raw materials to finished consumer products and we control the value chain. This gives short lead times, opportunities to address rising market needs as well as having a very close and long-term relationship with our customers. Through these investments and improvements that we are making in our facilities, including additional automation as well as upgrade of equipment, we are looking at gradually improve our gross margin for higher profitability for our company moving forward. So please turn to the next page, which is 18. As mentioned, we have great opportunities to grow organically. But we also aim at bolstering that growth through various types of business development activities, like acquisitions and strategic partnerships. We're focusing these around 3 key themes. One is with regards to geographic expansion in enhancing our presence in markets or regions where we today have limited penetration. Another area is to broaden our portfolio to extend or complement our existing portfolio. This could be through products which is already on the market, but also early stage research opportunities or research collaborations, aiming at the next generation of probiotics or extended use or application of probiotics in various health areas. We're also evaluating opportunities for exploring new sales channel opportunities with a focus on e-commerce and the opportunities that could represent to Probi as well. Let's turn to the next page, please, which is #19. These strategic initiatives, combined with a strong underlying organic portfolio of products with growth opportunities, have led to that management, in collaboration with the Board of Directors, have reevaluated our long-term financial targets. Our ambition is to -- in our updated target, our ambition is to deliver an average annual organic growth rate above 7%. This, combined with business development activities, provides us with the ambition to double the size of our company over the longer term. From an EBITDA margin perspective, we are increasing our ambitions in this field compared to historic targets. And we are expecting to deliver an annual EBITDA on or above 29% on an ongoing basis. Also, we're also pleased to announce that the Board of Directors have decided on an updated dividend policy, where we aim at distributing dividends of between 10% to 30% of net income, provided, of course, that the company is in a stable financial condition at the time. Okay. If we could turn to the last page, please, and open up for questions and answers. Hello, operator, can we open up for question and answers?

[Operator]

[Operator Instructions] So right now, the first question from Mr. Rickard from ABG Sundal Collier.

[Rickard Anderkrans, Analyst]

Congrats to a solid quarter. So my first question relates to underlying customer activity in the quarter. Would you say that it's fair to say that most of your customers has perhaps reduced its activities in terms of establishing new product lines and new potential collaboration avenues for Probi? And on the flip side, are you seeing -- if that is the case, are you seeing a pickup in that activity in the recent months perhaps? And could you comment on that dynamic? It would be interesting.

[Tom Rönnlund, Chief Executive Officer]

Yes. Thank you for the question, Rickard. And yes, you're partly right. Particularly in the early phases of the pandemic, there was a bit of a freeze, I would say, particularly on new launches. I mean existing products have performed well. But with regards to new launches, new market entrants, et cetera, there was a great degree of uncertainty, with some launches being pushed out in time, projects being frozen for a period of time. So we definitely noticed that. At the same time, we also had new customers actually came right on time, luckily for them and to some extent for us as well, they came out with new products in the exact right time to actually benefit from the increased demand. But what we're seeing right now, we are seeing good developments with majority of the customers who have -- who temporarily sort of slowed down, due to the uncertainties, their activity. So our teams are very busy, I would say still, even though that some projects might have been somewhat delayed. Looking forward, if we look at big launches, I would say in general they are still proceeding as planned.

[Rickard Anderkrans, Analyst]

Excellent. And just a question on sales channels and particularly e-commerce then. So could you add any flavor on the approximate mix of e-commerce and sales for your U.S. customers? And an additional question on e-commerce is regarding your strategy to broaden your e-commerce presence. Will that primarily be driven by your sort of your own initiatives? Or is it something that is being pushed together with your end clients? Just so we can understand the e-commerce dynamics and where we stand today in that sense as well.

[Tom Rönnlund, Chief Executive Officer]

We do not disclose exact figures in the mix of our sales for the sales channels. But in general, I would say that it's a strongly growing channel for us. We have been present in that channel for a long period of time. We know how to work with these customers. And when talking about online sales and e-commerce in this field, the U.S. is a far more advanced market compared to EMEA whilst in APAC as well, it's a very strongly growing channel. And -- but it is a significant field for us, even though that still the majority of our sales is going through customers who have a mix of sort of traditional retail or other types of sales channels, present and online as well. But it's a growing segment for us. We have added new and interesting customers throughout this year, some of them who have actually grown very considerably as well. When it comes to our own ambitions within e-commerce, from our perspective, we are not -- we are still a business-to-business company and aim at remaining so. But we see some opportunities to collaborate more closely with certain e-retailers or e-commerce-focused companies to actually jointly develop innovative concepts as well as opportunities for market growth in a closer relationship than just as a supplier.

[Operator]

The next question from Magnus Bernet from Direkt News.

[Magnus Bernet;Direkt News]

Questions about your new financial outlook. Are you supposed -- you are supposed to double your sales in 5 to 7 years. Will the growth be at a constant rate, then you would grow roughly 10% to 15% per year? Also, you were talking about the market outlook for China and Australia that will, you said, have the strongest growth ahead. Will Probi then have an increased presence in these regions? And do you have any plans that you could reveal for these regions in the short- to mid-term?

[Tom Rönnlund, Chief Executive Officer]

There were a couple of questions there, as I read it. But let me start there, Magnus. And so when it comes to doubling the size of our company, you're right that over a period like that, it warrants basically somewhere between 10% to 15% on an annual basis. We see, as we mentioned, to grow our organic business with somewhere above 7%. And in order to be able to double the size of our company in that time frame, we will also engage in business development activities to bolster our portfolio or add additional geographic presence to our company. So business development activities is a part of our ambition to double the size of our company. When it comes to the growth prospects in China as well as in Australia or for the APAC region, there are other interesting geographies there as well. But for sure, the Chinese market has experienced a strong growth already for a long period of time and Probi's presence there is relatively limited. We have resources on the ground in China. We're adding additional resources to the region at large in order to make ourselves stronger to capture that business opportunities that are there. In Australia, we're already quite well-established as a company. We have a number of good customers there with good development. And we have, over the past year or so as well, added a few customers where we believe we can grow together with them also in that region. We don't have any local presence in Australia. We're covering that from our sales office in Singapore.

[Operator]

The next question from Mr. Mattias Vadsten from SEB.

[Mattias Vadsten, Analyst]

And congrats to a quite solid quarter. Just to get some flavor on the margin target, your EBITDA margin was about 29% in 2019. So this basically implies that you will sort of struggle to lift margins if we look at 2019 as a base. Some flavor here would be very appreciated.

[Tom Rönnlund, Chief Executive Officer]

So I think -- I mean our ambition is to be at or above 29%. And you're right that it is what it was back in 2019. We also see needs in our organization to continue to invest in market presence as well as capabilities in our organization. And that is why we are not being more aggressive on that point from a medium-term perspective. Moving forward longer out in time, once we have equipped ourselves in appropriate way to capture the opportunities that we see in the market, that is something that potentially could be discussed again. But for this period, we also see the need for making investments in our organization to be able to grow our company.

[Mattias Vadsten, Analyst]

That's very clear. And then the comments you are doing on COVID-19's impact in EMEA and in APAC, how similar of an impact would you anticipate from this in coming quarters? I mean you already talked about it a bit but some flavor over what you already said. Perhaps, will it mainly impact Q3? Or do you also see impact for Q4 this year?

[Tom Rönnlund, Chief Executive Officer]

A bit difficult to assess at this moment in time. We will have an impact in Q3. At the same time, we are performing strongly in the U.S. at the same time. So I think all in all, we will definitely compensate for whatever shortfalls we have in that region. And it's not sort of -- the demand has not disappeared really. But we have a few customers who are, early on in the launch stages, performing extremely well, beating their own as well as our expectations in the new launches. And then when they lost the opportunity to actually continue to promote to more health care practitioners and to additional pharmacies, et cetera, that momentum dropped off. We do believe that as the societies return to a more normal state, and hopefully sooner rather than later, that the work will be resumed obviously and the momentum for those products will be reactivated. But therefore, it's a bit early right now to solidly say anything with regards to Q4. But I think that if we had growth expectations for the second half -- sorry, yes, for this year, I think that that is basically dropping off to be some kind of flattish development for the remainder of the year in those markets if we're a bit cautious with our forecast there, but at the same time being balanced of our ability to meet the market demands in the U.S., which, as a market, has behaved a little bit differently.

[Mattias Vadsten, Analyst]

Perfectly clear. And last one, to be honest, I lost you a bit on the expectancy for working capital for the full year. You did some comments there. I mean to what extent can we expect a reversal here, following the significant tie-up in H1?

[Henrik Lundkvist, Chief Financial Officer]

Okay. So if we look at the trade receivables, that was at a very high level end of this quarter. And that will of course be collected during the next quarter here. So that is on a bit higher level compared to a normal quarter end, I would say. And in terms of inventory, that was also on a high level. That will go down a bit. But we are carrying inventory for this customer, which means that it will be on a slightly higher -- or higher level compared to in the previous quarters here. So I would assume that it's somewhere between SEK 15 million to SEK 20 million additional inventory that we will carry at any time here.

[Mattias Vadsten, Analyst]

Very helpful. And then just to be clear here with the 4% referred to as the market growth rate here that you anticipate, is that the probiotic supplements market in total? Or is this sort of the market growth weighted by Probi's exposure, just to be clear?

[Henrik Lundkvist, Chief Financial Officer]

No. It's the global supplement growth -- well, expected global supplement probiotic market development.

[Operator]

[Operator Instructions] This now concludes our conference call. Thank you for all the attending. You may now disconnect your lines. Thank you.

[Tom Rönnlund, Chief Executive Officer]

Okay. Thank you very much. And please do not miss our quarterly report for the third quarter of 2020 on the 21st of October. Looking forward to speak to you all then again. Thank you.

[Henrik Lundkvist, Chief Financial Officer]

Thank you.