Net sales for the quarter amounted to MSEK 22.9 (20.5), an increase of 11.7% (currency-adjusted growth 21%) compared to the same period last year. Operating profit before tax was MSEK 2.4 (2.0), an improvement over 2019. Cash flow was positive MSEK 0.5 (1.8) during the period.
Net sales increased by 11.7% compared to the previous year. A stronger krona in relation to the USD has negatively affected growth in SEK. Corresponding growth in USD was 21%, indicating a very strong quarter compared to the same quarter last year which, until now, was the best in company history. Gross margin remained stable at 70.4% (69.9), slightly above the prior-year level. All-time high quarterly sales with a good profit margin, combined with solid cost control, created the conditions for reporting a positive operating profit of MSEK 2.4 (2.0) for the quarter. For the first time in five years, we also reported a positive accumulated EBITDA of MSEK 1.5 (-4.5). For the third quarter in a row, the company generated a positive cash flow. All key figures clearly show that the company continues to improve its financial position.
All key figures clearly show that the company continues to improve its financial position.
ViralOff® now accounts for an ever-growing share of total sales, representing 34.7% of the quarterly revenue. The company’s other business area based on an antibacterial function declined 19.8%, mainly due to a general downturn in the Sport and Outdoor of between 30-50% globally for 2020. While US brands are hit most overall in the industry, Polygiene is worst affected in Europe. One of our major partners experienced revenue losses of 59% the third quarter alone over last year, as well as decreased revenue of MSEK -5.3 since the coronavirus outbreak in March. While regrettable, this represents a temporary decline due to global pandemic. As we enter the fourth quarter, there are signs of recovery as many sports companies report strong third-quarter figures, which bodes well for a resumption of production. There is also clear upward trend as September sales alone eclipsed previous quarter sales! With the fourth quarter off to a promising start, I am almost sure to be able to present another record quarter in the next interim report.
New partnerships shows the breadth of ViralOff
Interest in ViralOff has not abated since its launch in April and continues to result in exciting new partnership agreements. It is especially rewarding that these agreements represent wide-ranging product lines, a testament to the breadth and strength of ViralOff within various areas of use. These include everything from textile floors with Welspun, functional shoe soles with well-known Dr. Scholls® to the giant YKK with great global potential and a fantastic agreement with Takisada-Nagoya in Japan. Even after the end of the quarter, interesting partners have been announced, including a collaboration with HSP Hanse Shopping, a German wholesale cleaning products supplier.
Of the 70 agreements signed in the past six months, about 30 of them resulted from single orders first placed by the companies. Volumes vary depending on partner requirements; however, it is critical to be able to support our partners throughout the various phases of the go-to-market process: application, testing, communication and launch. Adding value to our partner brands is the strength of Polygiene. It is what differentiates Polygiene from competitors. I expect that all signed agreements are in place and that our deliveries will occur during the first half of 2021.
New management team in place
On September 1, Andreas Holm was appointed Chief Commercial Officer, a new position created to provide a central driving force to structure commercial activities in the regions. That same month, the company's new Chief Technology Officer, Dane Momcilovic, joined the team. Like Andreas, Dane will work centrally to develop processes around the company’s technological issues. Daniel Röme, former interim CTO, will focus solely on innovation and product development. An important part of the scalability in the future lies in being able to grow efficiently without adding resources at the same rate.
Due to personal reasons Mats Georgson has decided to step down as the company's operational Chief Marketing Officer, and we thank him for his valuable efforts. He will return to his role as an external brand consultant for Polygiene, which he held for many years before taking on the role of CMO. Andreas will serve as interim CMO during the recruitment process.
The keen interest in Polygiene has also had an impact on the stock market, both in Sweden but above all globally. This is reflected in an influx of new shareholders, bringing the shareholder base to more than 3,100, a nearly fourfold increase compared to the previous year. During the quarter, we welcomed Lloyd Fonds AG, an investment and asset management company based in Germany, as one of our 10 majority owners.
No doubt ours is an exciting industry. Interest in antimicrobial treatments is increasing as the pandemic continues to spread around the world. Due to Polygiene’s strong brand profile and its reach beyond textiles, inquiries have started to pour in from other industries, which means that we must be creative and open to new partnerships that may lead to alternative structural transactions. The company continuously reviews the possibility of potential partnerships and acquisitions to create increased shareholder value.
Polygiene has achieved a successful turnaround during what has been a very challenging time and tough year for many industries. Once the global pandemic took hold, we quickly focused all our resources on launching a new product to meet global demand. Our legacy from Perstorp, combined with timing and a world-class team, made it possible to quickly create a global brand for our new anti-viral technology, ViralOff. With a strong vision of extending the life of textiles, which is just in time, we will have an even stronger exchange in the future when our other business areas recover. It is with pride that I now see that we are going from strength to strength and, with 70 newly signed partnership agreements, the future can only be even stronger for Polygiene.