For the past quarter, HKScan achieved “stable” overall sales and profitability, according to the group’s CEO, Tero Hemmilä.
Mixed results for the July-September quarter
Total net sales reached EUR446.8 million (US$514.8 million) for the three months, HKScan reports. An increase of 1.9%, this compares with just over EUR438 million in the same period of 2020.
While Finland remains the group’s leading market with net sales of EUR188.9 million, this figure was down slightly year-on-year. Sales for the quarter in Sweden increased from around EUR162 million to EUR170.8 million, and the value of Danish sales rose to EUR44.0 million from EUR42.0 million. For the Baltic region, HKScan’s sales declined from EUR44.1 million for the third quarter of 2020 to EUR43.2 million for the latest three-month period just ended.
Expressed as Earnings Before Interest and Taxes (EBIT), HK Scan reported a marginal reduction of EUR7.6 million for the July-September period. As a percentage of net sales, EBIT was the same as one year ago at 1.7%.
At EUR6.9 million and EUR3.1 million, respectively, HK Scan’s businesses in Sweden and Finland reported improvements year-on-year. In contrast, EBIT for Denmark was around EUR100,000, and the figure was a loss of EUR900,000 for the Baltic region.
According to Hemmilä, HKScan’s turnaround program has delivered cumulative improvements in profitability of almost EUR66 million. Started in 2019, this program involved a major restructuring of the group’s operations.
However, profitability was hit for all its operations by high energy prices. In addition, price pressure from imported meats was among the factors contributing to the challenges for its Baltic operations. Meanwhile, avian flu in Denmark curtailed the ability of the business there to export outside the European Union.
Describing the profitability developments in Denmark and the Baltics as “unsatisfactory,” Hemmilä said that HKScan has taken measures to improve the situation in those operations.
High costs, trade issues hit HKScan’s profitability in 2021
For the January-September period of 2021, overall net sales at HKScan were reported to be 1.2% higher year-on-year at more than EUR1.323 billion.
By this measure, only Sweden of the group’s markets registered an increase in net sales to EUR503.6 million. At EUR562.5 million, sales by the Finnish business were down slightly, while lower sales were recorded for Denmark and the Baltics at EUR131.6 million and EUR125.8 million, respectively.
Early 2020 was characterized by the first impacts of the coronavirus (COVID-19) pandemic.
For the first nine months of last year, HKScan’s overall reported EBIT was just EUR3.8 million. For the comparable period of 2021, the group has achieved an EBIT of EUR10.2 million.
On this measure, the group’s Swedish business has increased its market EBIT from EUR11.7 million to EUR14.2 million. The Finnish business has turned around an EBIT loss last year of EUR4.3 million into a positive figure of EUR3.3 million for the first three quarters of this year.
For the company’s operations in Denmark and the Baltic region, the developments have been in the reverse direction as they reported negative EBIT figures of EUR1.0 million and EUR700,000, respectively, for January-September of 2021.
As for the latest quarter, disappointing performance in the Baltic region was attributed by HKScan to significant increases in feed and energy costs, combined with price pressure arising from an oversupply of pork in Europe.
To some extent, the Danish operation was able to mitigate the restriction of its poultry meat exports by shifting sales towards more products of high value.
Coronavirus remains a threat
Highlighting that COVID vaccination covered has strengthened, Hemmilä said that the situation in the Baltic region and in Poland remains “difficult.” Despite the challenges, he added that all HKScan’s facilities and its supply chain have so far operated without any significant disruptions.
However, he warned that the pandemic threat is not yet passed, and that the company will remain alert for the need to re-impose preventative measures.
Based in Finland, HKScan is among the largest poultry producers in Europe, according to the WATTPoultry Top Poultry 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.
In August of 2021, HKScan announced it has opened a new logistics center in the Baltic region, which aimed to improve customer deliveries in the region.
Around the same time. the firm announced the appointment of a new executive vice president for its Baltics business unit.
