HKScan, a Finland-based meat and poultry company, reported a disappointing first quarter of fiscal year 2016, with a loss of EUR4.3 million(US$4.9 million) before taxes and interest, further declining from a loss of EUR0.8 million during the same quarter during fiscal year 2015.

The company’s net sales for the quarter were EUR439.1 million, a drop from EUR466 million recorded one year ago.

The company’s poor performance is largely attributable to tough European markets in both pork and beef.

“Financially, the quarter was behind the corresponding quarter in 2015,” said Aki Laiho, HKScan’s deputy CEO. “Sales decreased and EBIT margin was unsatisfactory. The most significant factors affecting the financial result were fierce price competition and oversupply of pork in Finland, as well as shortage of beef in Sweden, leading to high procurement prices and lower sales volumes. During the first quarter, we benefitted from the sales and efficiency measures in the domestic markets in Denmark and Baltics. Our cost cutting programs in all group companies could not fully compensate for the fall in EBIT margin.”

Laiho added that the company is taking forward steps in its strategy execution by investing in a poultry plant in Finland and a bacon plant in Poland, as well as its entry into the Hong Kong market.