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on February 9, 2017

HKScan aims for turnaround in 2017

Meat and poultry company’s operating model is under review

Following a recent profit warning, Nordic meat and poultry company, HKScan has published its results for the fourth-quarter and the 2016 year. The firm’s president and CEO, Jari Latvanen, described the company’s performance in 2016 as “weak.”

Aiming to return the company in 2017 to its previous level of operating profit, Latvanen announced that HKScan’s operating model is under review, and that a number of changes had been made to the management team.

Operations to be reorganized

As part of a review of HKScan’s operating model, the group plans to embark on a partial reorganization. Involving negotiation across the company, the goals are a closer focus on consumers and customers, improved efficiency and transparency in the value chain, and improved productivity in internal processes.

The changes, aimed at improving profitability and competitiveness and achieving growth in home and export markets, are scheduled for the first half of this year. Headcount reduction is estimated at no more than 150.

New Leadership Team

As of February 8, 2017, HKScan’s Group Leadership Team comprises the following members reporting to Latvanen, who is also chairman of the Leadership Team:

  • Sofia Hyléen Toresson, Executive Vice President (EVP) Market Area Sweden (from May 2017)
  • Göran Holm, EVP for HKScan’s Consumer Business in Scandinavia (until June 2017)
  • Jyrki Karlsson, EVP for Market Area Finland
  • Svend Schou Borch, EVP Market Area Denmark
  • Anne Mere, EVP Market Area Baltics
  • Jukka Nikkinen, EVP Market Area International & Biotech
  • Heli Arantola, EVP Categories and Concepts (from May 2017)
  • Aki Laiho, EVP Operations; continues as deputy of the President and CEO
  • Anu Mankki, EVP Human Resources
  • Tuomo Valkonen, Chief Financial Officer
  • Markku Suvanto, EVP Legal.

2016 performance “weak”

In its financial statement for the year January-December 2016, HKScan describes the results as “unsatisfactory,” and supports the need to make the latest organizational and leadership changes.

Among the key results are a reduction of 2.3 percent in net sales for the year to just under EUR1.873 billion (US$2.000 billion). At EUR9.7 million (US$10.4 million), Earnings Before Interest and Taxes (EBIT) was slightly higher for 2016 than the previous year, but the same measure as a percentage of sales was down to 0.7 percent from 1.1 percent in 2015.

“HKScan’s full-year performance in 2016 was weak,” commented Latvanen. He added the only market to improve its operating profit from the previous year was the Baltic States, and that lost market share in Sweden “was a particular disappointment.”

In all operating areas, animal raw material sourcing was challenging throughout the year, said Latvanen. He highlighted the firm’s new poultry production plant investment in Rauma, Finland, and bacon plant investment in Swinoujscie, Poland, as positive developments.

In December 2016, changes were made to HKScan’s management team in the Baltic region following an internal investigation that revealed unethical behavior.

A leading Nordic meat food company, HKScan produces, sells and markets pork, beef, poultry and lamb products, processed meats and convenience foods for the retail, food service, industrial and export sectors. Its home markets are Finland, Sweden, Denmark and the Baltic States, and it exports to some 50 countries.

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