The investment will significantly improve raw material yield, productivity and operational reliability and ensure the capacity required for strongly growing demand, the company stated in a press release. The investment will be implemented in stages at the end of 2020.
HKScan CEO Tero Hemmilä said: “We will renew the whole first part of the poultry unit’s production process in Rauma since the slaughter line introduced in 2017 does not meet the standards required by the group’s current management. With the investment, the processing capacity of the slaughter line will increase by some 20 per cent and raw material yield by some 10 per cent. The investment will also ensure a significant reduction in the consumption of utilities, such as water and district heating. Demand for poultry products continues to increase and the investment enables us to better meet this strong demand in the coming years.”
With the investment, the current slaughter line will be dismantled. For this reason, HKScan will record a EUR6.9 million (US$7.63 million) write-down of the residual value of the current line balance sheet. The write-down has no impact on cash flow.
To ensure the stabilized service level during 2019, the new slaughter line will be installed in stages at the end of 2020. The investment is expected to improve operational reliability and productivity of the Rauma unit and significantly increase production capacity from the current levels. Demand and sales of HKScan’s poultry products in Finland have grown faster and stronger than expected. This investment will enable business growth more assuredly in the years to come. Demand and sales of Kariniemen poultry products, in particular, are expected to grow faster than the market.
HKScan’s strong profit improvement in its poultry business in Finland has been one of the key drivers of the group’s profit improvement in 2019. In the second half of 2019, HKScan returned to its market leader position in poultry category in Finland due to significantly improved service level.