HKScan: New poultry plant expenses hurt bottom line

European meat and poultry company HKScan reported disappointing financial results for the third quarter of 2018, which were partially impacted by expenses related to the ramping up of its new poultry processing facility in the Rauma district of Lakari, Finland.

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HKScan's poultry plant in Rauma, Finland. (HKScan)
HKScan's poultry plant in Rauma, Finland. (HKScan)

European meat and poultry company HKScan reported disappointing financial results for the third quarter of 2018, which were partially impacted by expenses related to the ramping up of its new poultry processing facility in the Rauma district of Lakari, Finland.

HKScan’s earnings before interest and taxes (EBIT) were reported to be at a loss of EUR10.1 million (US$11.5), a substantial change from the EBIT loss of EUR0.8 million (US$9.1 million) for the third quarter of 2017.

The financial picture was partially due to a decline in net sales. For the most recent quarter, which concluded at the end of September, net sales were EUR416.2 million (US$475.5 million), down from the EUR452.4 million (US$516.8 million) reported during the third quarter of 2017.

But the costs of starting up a new poultry processing plant also played a factor. The new plant was inaugurated on August 18, 2017. Valued at over EUR80 million (US$91.4 million), the new unit is the largest investment in HKScan’s history.

However, Jari Latvanen, president and CEO of HKScan, said he believes the new facility will soon become profitable for the Finland-based company.

“Our third quarter and January-September results were clearly disappointing,” Latvanen stated in a press release. “During the third quarter, we succeeded in improving further our delivery capability from the Rauma poultry unit, but the ramp-up related challenges still burdened our result.

“We continue to improve 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.

The company’s CEO also expressed optimism, saying HKScan sees “some positive signs of value growth in sales both in Sweden and the Baltics.”

HKScan, according to the Poultry International Top Poultry Companies rankings, is Europe’s 15th largest poultry company and the largest one in Finland, having slaughtered 150 million broiler chickens in 2017. HKScan is active in 10 countries, exports to 50 countries, according to the WATTAgNet Top Poultry Companies Database.

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