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HK Scan Looks to Modest Recovery

07 November 2013

FINLAND - Finnish meat processor HK Scan saw a slight drop in sales and profits over the first nine months of the year.

However in the third quarter of the year there was a modest recovery in sales although margins were still lagging behind.

Net sales were € 1 838.0 million in January–September compared to €1 840.7 million for the same period last year, and in the third quarter of the year they were €623.5 million compared to €612.2 million in the third quarter of 2012.

In January–September, reported EBIT was € 15.3 million compared to €21.2 million, and the EBIT margin was 0.8 per cent compared to 1.1 per cent the previous year.

Comparable EBIT excluding non-recurring items for the period was € 18.8 million compared to €21.2 million, and the corresponding EBIT margin was 1.0 per cent compared to 1.1 per cent.

For the third quarter, reported EBIT was € 10.5 million compared to €15.4 million, and the EBIT margin was 1.7 per cent compared to 2.5 per cent the previous year.

Comparable EBIT excluding non-recurring items for the quarter was € 11.0 million compared to €15.4 million in 2012, and the corresponding EBIT margin was 1.8 per cent compared to 2.5 per cent last year.

Profit before taxes was € 1.1 million compared to a loss of €1.2 million in January–September in 2012, and € 5.9 million compared to €7.3 million in the third quarter of 2012.

Hannu Kottonen, HKScan’s CEO, said: “ Demand in both consumer and away-from-home businesses remained at a lower level compared to the previous year. Price competition was tough.

“In general, consumers’ purchasing behaviour has shifted towards lower priced-products. The increase in animal purchasing prices has stopped or turned towards a decrease as grain and feed costs have declined.

“Net sales for the third quarter increased compared to the same period in the previous year. Even though the Group EBIT decreased during the quarter compared to 2012, the market area Baltics recovered and showed improvement. Of the other market areas, Sweden also continued to improve, though from a low level, and Poland kept up its good performance.

“The good development in Sweden, Poland and the Baltics could not compensate for the negative impact of declined sales margins in Finland and Denmark. In addition, the margins were also hit due to extraordinary actions taken to decrease excess frozen stock in other market areas except Poland and the Baltics. However, despite the poor margin development, the Group’s profit before taxes was ahead of the previous year as net financial expenses kept decreasing.”

–He added: “Another positive development was the development programme launched in 2012, which has met the targets for reducing the annualised costs by more than € 20 million and a significant reduction in capital employed. The improvements will reach their full effect from the beginning of 2014.

“At the end of September, a new development programme was launched. The new programme will run until the end of 2014 and it targets an annual cost reduction exceeding € 20 million and a reduction of over € 50 million in net debt. The main objectives are building a unified Group, materialising Group synergies further, and building demand-driven management of operations.

“The Group was further strengthened by founding a Group Marketing function to enhance long-term group-level brand management and offering development. Product innovation exchange between the home markets is to be increased further.”

 

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