Haypp Group Q1 2025 slides: Nicotine pouch volume surges 35%, gross margin hits 18%

Haypp Group AB (STO:HAYPP) presented its Q1 2025 financial results on May 6, showing strong growth in its nicotine pouch business and improved profitability. The company’s stock closed at 107 SEK on May 5, 2025, though it was down 2.73% ahead of the earnings presentation.

Quarterly Performance Highlights

Haypp Group reported a 5% increase in net sales for Q1 2025, but on a like-for-like (LFL) basis, excluding the impact of suspended sales to certain US states and product adjustments, sales grew by 22%. The company’s nicotine pouch segment was the standout performer, with LFL volume growing 35% (10% on a reported basis).

"During Q1 we normalized inventories, reducing working capital needs and reducing our leverage to the lowest level ever," the company noted in its presentation.

As shown in the following chart of nicotine pouch volume development, the company’s strategic shift toward nicotine pouches continues to gain momentum:

Gross margin showed significant improvement, reaching 18% in Q1 2025, continuing an upward trend from 12% in Q1 2023. This improvement was driven by a more favorable product mix following the discontinuation of US tobacco products and enhanced value from the company’s Media & Insight business.

The following chart illustrates the company’s gross margin progression over the past two years:

Profitability also improved substantially, with adjusted EBIT growing by 56% in the first quarter. The company attributed this to margin improvements and disciplined marketing and operational expenditures.

Segment Performance

Haypp Group’s performance varied across its three market segments:

Core Markets, which include established operations, saw net sales increase by 10% to SEK 692.8 million, with nicotine pouch volume growing by 23%. The EBITDA margin improved to 10.5% from 8.6% in Q1 2024.

The following table and chart show the financial performance of Core Markets:

Growth Markets experienced a reported 18% decrease in net sales to SEK 198.6 million, primarily due to suspended sales to certain US states. However, on a like-for-like basis, nicotine pouch volume grew by an impressive 68%. The EBITDA margin improved to 3.2% from 0.0% in the same period last year.

Emerging Markets, focused primarily on the vape segment, generated SEK 31.8 million in net sales for the quarter, up significantly from SEK 8.1 million in Q1 2024. However, this segment continues to operate at a loss with an EBITDA margin of -36.3%.

Strategic Initiatives

The company highlighted several strategic initiatives aimed at capitalizing on market opportunities, particularly in the US nicotine pouch market, which continues to show favorable dynamics.

"US market developments have been positive, with newly launched SKU’s volume growing by 74% versus Q4 ’24," the company stated in its presentation. The following chart illustrates this growth:

Haypp Group is also making progress on its infrastructure overhaul, which it describes as "critical for future success." The company is implementing improvements in search functionality, convenience, assortment, media, and pricing across its markets.

The following table shows the implementation status of the company’s infrastructure upgrades across different regions:

The company’s business model positions it as an integral part of the value chain between suppliers and consumers, with a focus on data-driven insights and e-commerce capabilities.

Forward-Looking Statements

Looking ahead, Haypp Group maintains that the long-term fundamentals remain robust for risk-reduced nicotine products. The company expects its operating model to deliver increasing value for both consumers and suppliers while continuing to grow gross margin.

For 2028, Haypp Group has set ambitious financial targets, including:

• Revenue growth of 18-25% CAGR
• Adjusted EBIT margin target of 5.5% (±150 basis points)
• Reinvestment of cash flows into continued expansion

The company also acknowledged potential challenges, including tightening legislation in some markets. In Norway, the Parliament has proposed cross-border online sales bans, while in the US, there are new requirements for Zyn MGO products. The UK is also implementing a ban on disposable nicotine vaping products.

Despite these regulatory challenges, Haypp Group remains focused on its strategy of continuously improving search, assortment, price, and convenience for consumers, which it believes will drive long-term success in the evolving nicotine products market.

Full presentation:

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