July 27, 2011

Finland's HKScan lowers 2011 earnings forecast

Finnish meat processor HKScan Group has cut its forecast for 2011 earnings before interest and taxes (EBIT) over rising prices of raw materials and other production inputs.

The company said Tuesday (Jul 26) that it now expects full-year EBIT to be lower than in 2010. It said that its earnings development in the early part of the year has been "weaker than anticipated".

The ongoing difficult conditions in the international pork market and the rising input costs are eroding business profitability in all markets, especially in Finland, the company said.

It also said that over-production of pork elsewhere in Europe has led to increased pressure in HKScan markets to import meat, with pork profitability further weakened by lower prices in export markets.

It plans to increase prices to improve profitability and it will also "take steps to accomplish an orderly adjustment of pork production volumes in Finland". It said that efficiency programmes in Finland and Sweden provide the foundation for more "positive development in the group's competitiveness and profitability".