“Significant further inflation” in the cost of many of the firm’s inputs will reduce profitability in the third quarter. This is according to the latest statement by Otto Drakenberg, interim managing director and CEO of Scandi Standard.
Earnings Before Interest and Taxes (EBIT) for the period is expected to be around 30 million Swedish krona (SEK; US$3.4 million), the company is currently forecasting.
Adding to the challenges facing Scandi Standard previously reported are price pressure on its export markets, which has been resistant to the company’s attempts at price adjustments. Furthermore, Scandi Standard has experienced production issues in Sweden, and the coronavirus (COVID-19) pandemic has led to continuing staff shortages in its affiliate in the Republic of Ireland.
Also adversely impacting EBIT for the quarter is an SEK13-million final purchase price payment that relates to the firm’s operation in Finland.
At the end of August, the Finnish subsidiary agreed this final payment with the sellers of Huttulan Kukko. Scandi Standard acquired the business, which produces premium chicken products, in 2015.
Planned reduction in bird intake
From the fourth quarter of this fiscal year, Scandi Standard will reduce the number of birds it processes in Sweden and the Irish Republic by 8-10%, according to the latest statement.
According to Drakenberg, this will facilitate operational improvements, as well as reducing the company’s overall exposure to the present inflationary situation.
This move follows investigations — still on-going — following what the firm describes as “deviations in production and quality processes across all markets” reported previously.
Supporting the group’s future growth
While these changes will impact Scandi Standard’s results in the short term, Drakenberg stressed that they will contribute to sustainable and profitable growth in the longer term.
He said that the company’s position overall is solid, and that the action plan and improvement program will add to its strength in the future.
The firm’s third-quarter results are scheduled for publication next month.
In June of this year, Scandi Standard’s board of directors appointed Otto Drakenberg as the company’s interim managing director and CEO.
More on Scandi Standard
With annual slaughtering's estimated at 200 million birds, Scandi Standard is among the leading poultry producers in Europe, according to WATTPoultry.com’s Top Poultry Companies database.
Scandi Standard is a leading producer of chilled, frozen and ready-to-eat chicken products in the Nordic region and Ireland. Its Norwegian subsidiary also produces and sells eggs. The group’s brands include Danpo, Den Stolte Hane, Kronfågel, Manor Farm, and Naapurin Maalaiskana. The company’s customers are found in the retail, food-service and food industry sectors, and its products are exported to more than 40 countries.
According to the firm’s own web site, Scandi Standard generates annual sales of around SEK10 billion with a total workforce of around 3,000.
