HKScan continues profit improvement

For the first quarter of the 2021 fiscal year, Nordic meat company HKScan has registered a further improvement in its profitability following sales growth in its retail brands.

(Courtesy HKScan)
(Courtesy HKScan)

For the first quarter of the 2021 fiscal year, Nordic meat company HKScan has registered a further improvement in its profitability following sales growth in its retail brands, while the company's investment in a poultry processing facility in Finland have now been completed.

Commenting on the results of HKScan for the January-March period of 2021, CEO Tero Hemmilä said the firm has achieved year-on-year improvements in comparable Earnings Before Interest and Taxes (EBIT) for the 10th consecutive quarter. This amounted to EUR2.8 million (US$3.4 million) over the whole period, making this the best quarterly result in six years.

According to Hemmilä, the result is all the more remarkable because the comparative period in 2020 was prior to the coronavirus (COVID-19) pandemic. However, COVID-19 continued to impact the business during the review period as restrictions continued on the food service sector. There were signs of this effect levelling off by the end of the review, and the CEO noted a clear improvement in sales of the firm’s branded products through retail channels.

Overall, HKScan’s quarterly sales were down marginally at EUR427.5 million. At EUR179.8 million, total sales to the home market of Finland were down 1.1%, while those in Sweden were 5.5% higher at EUR161.8 million. In the company’s other regions, sales declined. For Denmark and the Baltic states, net sales amounted to EUR45.4 million and EUR40.5 million, respectively.

For the review period, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was EUR14.7 million, an improvement from EUR12.7 million in the first quarter of 2020. HKScan also achieved an increase of EUR10.6 million in cash flow from its operating activities — from a negative figure of EUR7.3 million to EUR3.3 million for the latest quarter. Reported losses for the quarter — both for the period and before taxes — were lower for the review period than the comparable period last year, in absolute terms and as a percentage of net sales.

Recent business developments at HKScan

Among the key developments over the last quarter highlighted by Hemmilä was the completion of upgrading plans at its poultry processing plant at Rauma in Finland. The investment of EUR6 million is expected to improve raw material yield, productivity, and operational efficiency. The company’s Kariniemen brand products from the facility now account for almost half of the poultry meat products sold in Finland.

In February, HKScan sold the land and buildings of its Vantaa property. This reduced the firm’s overall loans, while a leasing agreement allows it to continue and develop its operations at the site for the next 20 years.

By renewing a significant portion of bonds maturing in 2022 with a new bond that will mature in 2025, the company has extended its market-based bond financing.

Hemmilä restated HKScan’s strategic target to grow into a versatile food company, which creates strong shareholder value with responsibility at its core. He reported that the third year of the firm’s Turnaround program is continuing as planned.

Earlier this year, HKScan announced it had set the goal of carbon neutrality of its own industrial production by the end of 2025. By the end of 2040, it aims for carbon neutrality throughout the food chain from farms to consumers.

In 2020, all electricity used at the firm’s production units in Estonia and Latvia came from renewable sources.

More on HKScan

Based in Finland, HKScan is among the largest poultry producers in Europe, according to the WATT Poultry Top Companies database.

Annual slaughterings are around 93 million birds, according to this source. As one of the leading food companies in the Nordic countries and Baltic states, HKScan produces, sells and markets pork and beef, poultry products, processed meats, and convenience foods. The group exports to around 50 countries.

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