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HKScan Shows Weak Result Despite Strong Balance Sheet

15 August 2014

FINLAND - Finnish meat processor HKScan saw net sales reach €967.1 million for the first half of the year compared to €1,038.4 million for the same period last year.

Sales were €501.7 million in the second quarter compared to €531.3 million.

Reported EBIT for January–June was € 41.1 compared to a loss of €6.1 million last year.

However, EBIT excluding non-recurring income and expenses showed a loss of €8.2 million compared to a loss of €3 million for the same period last year.

For the second quarter, reported EBIT was €58.5 million compared to €400,000 last year and EBIT excluding non-recurring income and expenses showed a loss of €1.1 million compared ti a profit of €400,000 last year.

Pre-tax Profit was € 41.1 million for the first six months compared to a loss the previous year of €6.4 million in January-June. For the second quarter pre-tax profits were €57.4 million compared to €300,000 in 2013.

The sale of shares in Saturn Nordic Holding AB, owner of 100 per cent of the shares in Sokolów S.A., was completed on June 10. The transaction generated operating income amounting to € 77.6 million in capital gain, cash flow of € 8.3 million as dividends and € 178.7 million as sales price after the transaction costs

The revised outlook for 2014 sees HKScan expecting its comparable operating profit (EBIT) margin to be 0.5–1.0 per cent.

The last quarter is anticipated to be the strongest.

In 2013, the corresponding comparable operating profit (EBIT) margin was 0.5 per cent.

Hannu Kottonen, HKScan’s CEO, (pictured) said: “In the second quarter we continued to face even stronger headwind than in the first quarter of the year.

“The weak market situation, particularly in the retail sector, has led to tough sales price competition and a further decline in sales volumes in all market areas.

“The impact of low market demand has been further exacerbated by pork export limitations to Russia.

“As a result, net sales and EBIT performance again remained below expectations in the second quarter, with both net sales and comparable EBIT decreasing from the previous year.

“The best-performing market area was the Baltics. Despite the difficult market circumstances good headway was made with inventory management.

“One of the quarter’s most significant achievements was the sale of the stake in the Sokolów joint venture. The divestment generated substantial capital gain and a good financial result for the reported period. As the deal enabled HKScan to pay off its syndicated term loans, the Group’s capital structure is now in strong shape for future business development.

“Despite the tough business environment, the production restructuring project in Sweden and the whole profit development programme for 2014 proceeded as planned.

“Good progress is also being made in Group-wide brand strategy development as well as in technology and operations footprint enhancement.

“The strategic review completed in June highlighted the need to fine-tune the strategic must-win battles and to increase our focus on profitable growth in the coming years.”

TheMeatSite News Desk



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