The novel coronavirus (COVID-19) pandemic did not prevent HKScan from successfully continuing to implement its business strategy, according to the group’s CEO, Tero Hemmilä.
Business growth and improving profitability by HKScan continued during the latest quarter (April-June 2020), he said. At EUR440.9 million (US$504.1 million), the unaudited results just published point to net sales being up slightly year-on-year.
Significantly, the firm reversed a net loss (earnings before interest and taxes; EBIT) of EUR6.6 million one year ago to a positive figure of EUR100,000 for the review period. Comparable EBIT stood at EUR600,000, which represents an increase of EUR3.1 million over the past 12 months.
While the pandemic hit foodservice sales, HKScan reports a number of commercial successes, as well as strong growth in sales to the retail sectors in its home markets. With the Finnish market most hit by these changes, consumer purchases also tended to favor products of lower added value. By June, the group saw the beginning of a recovery in foodservice.
Home market performance, exports to China
Net sales for the review period stood at Finland (EUR191.6 million), Sweden (EUR162.0 million), Baltics (EUR44.5 million) and Denmark (EUR42.7 million). While the two smaller markets increased sales, small reductions were reported for Finland and Sweden.
For the April-June quarter, HKScan’s business units in Denmark, Sweden and Finland all recorded year-on-year improvements in comparable EBIT, reported Hemmilä.
While accepting that the pace of profit development for the Finnish business had slowed, he highlighted the continuing improvements derived from the firm’s poultry business. Earlier decisions to improve efficiency, reliability and raw material yield were paying off at the Rauma poultry meat processing plant. Despite pandemic-related interruptions in equipment deliveries to the site, investment work will start as scheduled this year, and continue into 2021.
In contrast, this measure deteriorated for the Baltic region, where the impacts of COVID-19 on the firm’s business were more keenly felt, and lower pork prices decreased the value of the biological assets, i.e. the livestock. Nevertheless, Hemmilä reported strong progress for this business unit, with successful commercial and operational measures.
Despite the impacts of COVID-19, HKScan reports its exports to China almost reached target, and were well up year-on-year. Some of the firm’s meat sales were diverted to alternative markets. As European meat prices are affected by those in Asia, falling prices have been reported across Europe since the pandemic started, according to Hemmilä.
Half-year results: improved sales, profit
At EUR869.8 million, HKScan’s net sales for the January-June 2020 period is 3.4% higher year-on-year. As a result, EBIT improved by EUR17.4 million over the same period to EUR-3.8 million.
Hemmilä attributed the company’s positive profit improvement on commercial and operational improvements, as well as cost control in all business units.
Looking ahead for the full-year results for 2020, HKScan expects the group’s comparable EBIT to show an improvement over the previous 12-month period.
One month ago, the appointment of Lars Appelqvist as executive vice president for the HKScan’s Sweden business unit was announced.
More on HKScan
Founded more than 100 years ago, HKScan now has approximately 7,000 employees, nearly 20 production units, and thousands of farms producing meat for its range of products. The firm sees itself as having a key role in the food supply and food security in its home markets — Finland, Denmark, Sweden and the Baltic States — as well as exports.
HKScan produces, sells, and markets high-quality, responsibly produced pork, beef, poultry and lamb products, including ready meals and cold cuts. Its brands include HK, Scan, Rakvere, Kariniemen, Rose, and Tallegg.
