March 5, 2012

 

HKScan experiences rising sales

Finnish meat processor, HKScan, had experienced net sales rising to EUR2,491.3 million (US$3.3 billion), an increase of 17.9%, compared with EUR2,113.9 million (US$2.8 billion) in the previous year.

 

The company said that the protracted challenges in the pork business began to ease towards the end of the year, and the situation is stabilising, especially in the market area of Finland.

 

HKScan added that there have been no significant changes in market position in any of the Group's market areas during the year. The market position continued to strengthen in Finland, however.

 

Net financial expenses were minus EUR30.9 million (US$41 million) compared to minus EUR13.8 million (US$18 million) in 2010. The rise compared with the previous year was considerable with higher loan margins the main reason.

 

The company is confident that EBIT for 2012 will be better than last year.

 

The Group's net sales grew in the last quarter of the year by 9.1% and totalled EUR649.8 million (US$858 million) compared to EUR595.7 million (US$787 million) in 2010.

 

EBIT came in at EUR17.6 million (US$23 million), as compared to EUR15.7 million (US$21 million), up by 12.1%.

 

In Finland, net sales were EUR217.6 million (US$287 million), as compared to EUR198.2 million (US$262 million) and EBIT was EUR7.2 million (US$10 million) compared to EUR4.7 million (US$6 million). Measured by profitability, the quarter was one of the best in recent years.

 

In Sweden, net sales were EUR275.6 million (US$364 million), compared to EUR275.0 million (US$364 million) and EBIT was EUR7.4 million (US$10 million), compared to EUR8.0 million (US$11 million) the previous year.

 

The company said the movement in net sales was a result of, among other things, a quieter Christmas season than expected.

 

In Denmark, net sales came to EUR54.3 million (US$72 million), compared to EUR21.8 million (US$29 million) and EBIT was minus EUR1.3 million (US$1.7 million).The business development programme also continued to erode performance in the last quarter. The Danish company was consolidated into the HKScan Group on November 2010.

 

In the Baltics, net sales grew to EUR44.9 million (US$59 million), compared to EUR42.0 million (US$55 million) and EBIT stood at EUR2.8 million (US$3.7 million), compared to EUR1.8 million (US$2.3 million). Development of the business continued to be strong, the company reported.

 

In Poland, business progressed as planned. Net sales came to EUR73.9 million (US$98 million), compared to EUR72.6 million (US$96 million) and EBIT was EUR3.5 million (US$5 million), compared to EUR3.0 million (US$4 million).

 

HKScan CEO, Matti Perkonoja, said: "HKScan's EBIT in the last quarter of 2011 recovered after the poor trend at the beginning of the year. The quarter went as expected, and in terms of performance, was the year's best.

 

"HKScan's market position is strong in all the company's market areas and there have not been any significant changes in it.

 

"In Finland, sales price increases implemented at the end of the year and cuts in costs, for their part, returned the profitability of the business to a better level. The transition to more controlled contract production in the pork chain is proceeding as planned. The most important launch in 2011 in Finland was Rapeseed pork, which turned out to be commercially very successful.

 

"HKScan is launching similar pork meat on the Swedish market in 2012 under the name Svensk Rapsgris.

 

"In Sweden, the market continued to be challenging throughout the year. Swedish meat raw materials are in short supply and producer prices are high. Meat imports to Sweden have increased significantly, which is largely based on the favourable exchange rate situation for importers.

 

"In Denmark, considerable effort was devoted in 2011 to the new structuring of the business. In accordance with its strategy, Rose Poultry is developing fresh produce for its domestic markets, especially for Sweden.

 

"In the Baltics and Poland, strong development of the business continued both in the last quarter and throughout the whole year.

 

"The Group's financial costs have increased substantially. A key near-term goal is to strengthen cash flow and with this to reduce interest-bearing liabilities."

 

Perkonoja added: "Meat consumption has increased in all the Group's market areas. Consumers want high-quality and responsibly produced food. The Group is a responsible player in the meat sector whose starting point in product development and production is excellent taste and high quality.

 

"The basis is an efficient and transparent production chain. In 2011, a corporate responsibility scheme was implemented by the HKScan Group in the subsidiaries in Finland, Sweden and the Baltics. In Denmark, Rose Poultry A/S joined the scheme during the year.

 

"The problems in the global economy have only a minimal impact on consumer demand for HKScan's products, as the Group's comprehensive product portfolio offers options for the diverse needs of different consumers groups.

 

"The prevailing trend in which the consumer market is becoming fragmented into smaller consumer groups is continuing to grow. Successful operators in the industry are those who understand and exploit the change more readily. A key success factor for the future is to develop the offering under the strong brands of the HKScan Group to meet consumer expectations. The taste and quality of food, sustainable production methods and the positive experience engendered by good food are highlighted."