HKScan focuses on improving profitability

Following the publication of quarterly results that include positive earnings, Scandinavia-based meat company HKScan has announced a new 4-point strategic plan aimed at improving profitability.

In the latest phase of its turnaround program, HKScan Group will focus on improving the company’s profitability for 2019-2021. (HKScan)
In the latest phase of its turnaround program, HKScan Group will focus on improving the company’s profitability for 2019-2021. (HKScan)

In the latest phase of its turnaround program, HKScan Group will focus on improving the company’s profitability for the period 2019-2021. The board of directors has recently approved this plan, which lays the foundation for the Scandinavian company’s future growth.

The firm’s future vision is one of a versatile food company in its home markets. To strengthen its market position, HKScan aims to develop markets together with its customers, and its business and brands will incorporate defined sustainability goals.

Driving future growth will be a strong and innovative poultry product portfolio, as well as meals and meal components, according to the firm’s CEO Tero Hemmilä.

“Active development work together with our customers enables stronger presence in consumers’ food moments in evolving sales channels and especially in the growing food service channel,” he said.

In terms of export markets, the firm will target Asia.

Future strategic priorities

The firm’s long-term aim of delivering EBIT of 4% of net sales remains a fiscal target.

In terms of business strategy, HKScan aims to grow by developing sales channels and products favored by consumers, including digital solutions.

To achieve performance excellence, the firm aims to develop its processes and personnel competence to strengthen consumer and customer experience, productivity, cost efficiency, and profitability.

Sustainable operation is to become a foundation for future business. Together with its partners, HKScan aims to build a sustainable agri-food ecosystem that enhances both profitability and its environmental footprint across the value chain.

Within its contract farming community, the company says it will make its primary production more competitive, as well as ensuring the availability of key raw materials.

In October, HKScan announced its aim to improve profitability of its business in Finland, which may impact the number of employees, and their payment terms.

Quarterly net sales up 5.6%, EBIT turns positive

After a period of negative earnings before interest and taxes (EBIT), HKScan has reported a positive EBIT for the 3 months ended 30 September 2019. Overall earnings figures were up in all the areas where the firm operates — Sweden, Finland, Denmark, and the Baltic States — and net sales were higher in all areas except Sweden.

HKScan reports net sales of EUR439.4 million (US$484 million) for the 3rd quarter ended September 30. This represents an improvement of almost 5.6% year-on-year, while EBIT improved from a negative EUR9.8 million to positive EUR4.5 million. Sales in the Swedish business slipped slightly to EUR161.4 million, but the other locations achieved sales growth, particularly in the largest market, Finland, where net sales were EUR190.2 million (+10.6% year-on-year).

For the first 9 months of 2019, sales by the group were almost EUR1.281 billion — up from EUR1.261 billion for the same period last year. As for the 3rd quarter, only the Swedish business reported lower net sales this year. However, like Finland and the Baltic States — comparable EBIT in Sweden was positive for the quarter. Although improving year-on-year, this figure remained negative for HKScan’s Danish business in the last quarter.

Founded more than 100 years ago, HKScan Corporation is a publicly listed meat and food company. It operates across the value chain from farm to consumer.

With net sales EUR1.7 billion and 7,200 employees in 2018, its product portfolio included poultry, pork, beef, and lamb products as well as deli meats and ready meals. Among the firm’s consumer brands are HK, Kariniemen, Via, Scan, Pärsons, Rakvere, Tallegg, and Rose.

Less than one year ago, and following significant businesses challenges, HKScan announced Tero Hemmilä as its new CEO. At the same time, Reijo Kiskola was elected chairman by the board of directors. Further changes to the management team were announced in April of this year.

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