HKScan reported net sales in the second quarter of 2018 of EUR433.5 million (US$503.4 million) – down from EUR459.6 million (US$533.4 million) in the same quarter a year before. For the first half of 2018, net sales were EUR844.5 million (US$980 million), down from EUR880.3 million (US$1.02 billion) in the same period the previous year.
The company has implemented a program aimed at improving profitability and saving EUR40 million per year during 2020 and beyond.
“Our second quarter and first half-year results were disappointing,” said Jari Latvanen, HKScan’s president and CEO. “The result was still burdened by the challenges related to the Rauma poultry unit ramp-up process in Finland. However, we succeeded in improving our poultry delivery capability. We terminated our operations at the Eura plant and consolidated the Finnish poultry volumes to Rauma during the second quarter. We continue to give our full attention to the performance of the unit in order to ensure improvement in the efficiency and financial performance of the Rauma plant. In the long run, the unit will substantially improve our efficiency and competitiveness, thus contributing to HKScan’s strategy implementation.”
HKScan said global meat consumption is projected to increase 1.6 per cent per year during the coming years. Consumption growth is estimated to be led by poultry. There are also several value-related consumption trends that support HKScan’s strategy implementation.
In 2018, HKScan expects its strategy implementation to start recording results in terms of value growth in sales and operational efficiency in production.
The company will emphasize the implementation of its From Farm to Fork strategy through the five focus areas, which are Focus on meat, Leadership in poultry, Continue growing meals business, Cooperate with our farming community and Drive efficiency and cost-competitiveness.
Strategic improvement measures
HKScan said it will take measures to increase operational efficiency to improve productivity and competitiveness. The efficiency improvement measures, started in the third quarter of 2017, are part of the implementation of HKScan’s strategy, which was renewed last year.
HKScan now specifies further the content, financial targets and schedule of its ongoing efficiency improvement program. The goal of the extensive program is to improve profitability, and its full impact will be EUR40 million in annual savings during the year 2020 and onwards. The program covers all group functions in the company’s home markets – Finland, Sweden, Denmark and the Baltics.
HKScan expects the most significant benefits of the program to stem from improved operational efficiency. Administrative costs will also be reduced further and group synergies utilized to a greater extent than before.
“We will continue to determinedly implement our strategy through agreed development projects,” Latvanen said. “The extensive efficiency improvement actions and cost savings will improve our competitiveness in all home markets. At the same time, we will continue to develop our consumer brands and product portfolio. Our goal is to respond to the expectations of consumers in our markets even better, as one team. Our strategy gives us the direction and good tools for this.
“We are in the early phase of our strategic transformation and turnaround process. It requires strong leadership as well as engagement and input of the entire HKScan team. We will cooperate with our personnel to find the best measures for improving our competitiveness and profitability and thereby safeguarding our position as a solid and sustainable employer also in the future,” Latvanen said.