HKScan reports another challenging quarter
Company reports falling sales in Sweden and Finland
Nordic meat and poultry company HKScan Corporation has experienced further challenges in the second quarter of its fiscal year, according to its president and CEO, Jari Latvanen.
He attributed the reduced performance to falling sales in the firm’s main markets, Sweden and Finland, and to on-going costs in the construction of a new poultry processing plant.
Citing the expected continuation in these factors, HKScan has recently revised its outlook for the full 2017 reporting year, estimating that operating profit (Earnings Before Interest and Tax; EBIT) will be below the previous year’s level of EUR13.2 million (US$15.4 million).
For the second quarter, net sales were EUR459.6 million (US$535.1 million), down 4.8 percent from the same period in 2016. EBIT for the quarter slipped from a profit of EUR1.7 million (US$2 million) last year to a loss of EUR10.5 million (US$12.2 million) for the second quarter of 2017.
Comparing the half-year figures, the decline in sales was less marked at 4.5 percent, as the group achieved sales of EUR880.3 million (US$1.02 billion) for 2017. EBIT loss increased from EUR2.6 million (US$3 million) in 2016 to EUR17.3 million (US$20.1 million) this year.
While EBIT improved for HKScan’s Danish business and was unchanged for the Baltic countries, the measure deteriorated in Sweden and Finland because of a shortage of beef. Unusually cool weather also delayed the start of the barbecue season, which is a strong period for the firm’s sales of sausages and other meats.
Work on a new poultry processing plant in Rauma, Finland, is reported to be progressing on schedule. Due for completion at the end of this year, testing of the production line is currently on-going.
Following the revelation of management issues in part of HKScan’s business last year, Latvanen reports that a new organization is now in place, a Group Leadership Team has been appointed, and the firm’s operating model has been renewed.
“During the spring, we have also been evaluating our strategic market presence and the cornerstones of our future success,” he said. “We have made good progress in this area and are now finalizing the definition of our renewed strategic direction. We will communicate the strategy during the third quarter, and start a firm implementation of it during the fall.”
From its bases in Finland, Sweden, Denmark and the Baltic countries, HKScan produces, sells and markets quality pork, beef, poultry and lamb products, processed meats and convenience foods. It also exports to almost 50 more countries.