For the second quarter (Q2) of 2020, Sweden-based Scandi Standard delivered “strong results,” according to CEO and managing director Leif Bergvall Hansen.
While net sales for the period were 1% lower year-on-year at 2.448 billion Swedish krona (SEK; US$282.2 million), adjusted operating income (Earnings Before Interest and Taxes; EBIT) was up by 7% at SEK122 million. As a result, EBIT margin was at 5.0%, which is a five-year record for the company for this parameter.
Hansen attributed the flat development in net sales to previous price adjustments. These were revised downwards at the end of last year as a consequence of lower feed prices.
COVID impacts on Scandi Standard’s business
As reported by other food companies, the coronavirus (COVID-19) pandemic brought about marked changes in its overall business. For example, reduced sales to food-service were offset by a spike into the retail channel.
This particular development helped to improve margins, according to Hansen. However, it also led to the temporary closure of some production lines dedicated to the food-service sector during April and May. Included in the results for the second quarter is a post of SEK17 million for the cost of COVID-related non-comparable items.
Half-year results: profitability improved
For the half-year, Scandi Standard has reported a negligible change in net sales at SEK4.926 billion. However, adjusted operating income is up by 6% at SEK239 million year-on-year. Margins for the first 6 months of the year are also running ahead of those for the same period of 2019.
Commenting on the company’s latest results, Hansen highlighted the growth potential for chicken products. As well as appreciating the taste and versatility of the meat, consumers see it as both healthy and “climate-smart,” he said. As a result, Scandi Standard has achieved annual organic growth of more than 8% over the past five years. This is well above the level of growth in the markets where the company is active.
Variation in performance between product categories, business locations
With net sales for the first half of 2020 at SEK2.777 billion, Ready-to-cook (RTC)-chilled is the most important product category for Scandi Standard. This represented a 5% increase year-on year.
Achieving the greatest improvements from the previous year were the Ingredients (+15%) and RTC-Exports (+14%) categories, with net sales of SEK207 million, and SEK303 million, respectively. Meanwhile, at SEK493 million, SEK879 million, and SEK267 million, respectively, net sales were lower for RTC-Frozen, Ready-to-eat, and Other product categories. These showed year-on-year reductions of 5%, 8%, and 24%, respectively.
Expressed in SEK, Denmark led Scandi Standard’s net sales for the first half of 2020 with a figure of SEK1.581 billion. This was a reduction of 6% year-on-year. For the Swedish business, sales were up by 1% at SEK1.419 billion, while the Irish subsidiary improved sales by 7% to SEK1.069 billion. In Finland, a 15% increase took net sales for the period to SEK278 million. For Norway, net sales were down slightly to SEK813 million.
When net sales are expressed in local currencies, improvements of 14% were recorded in Finland, 8% in Norway, and 6% in Ireland, while a 7% reduction was registered in Denmark.
More on Scandi Standard
Based in Sweden, Scandi Standard is the leading poultry meat producer in the Nordic region, according to the firm’s 2019 annual report. It was founded in 2013 by the merger of Kronfågel (Sweden) and Danpo (Denmark), and the acquisition of Den Stolte Hane (Norway). In 2015, the group acquired Finland’s Naapurin Maalaiskana, followed by Manor Farm of the Irish Republic two year later.
In 2019, total net sales were SEK9.891 billion, achieving organic growth of 12% over the year. Sales had grown particularly strongly year-on-year in the Ready-to-eat sector. The firm exports to more than 40 countries.
According to the WATT AgNet Top Poultry Companies database, annual slaughterings of around 116 million birds put Scandi Standard in 29th position in the rankings of the largest poultry meat companies in Europe. As well as broilers, it produces turkeys, ducks and table eggs (in Norway).
