Based in Sweden, with operations across the Nordic countries and Ireland, poultry meat company Scandi Standard has reported a 13% increase in net sales. This is for the first quarter of 2022, which ended on March 30. Compared to the 2021 figure of 2.469 billion krona, net sales were reported at 2.793 billion Swedish krona (SEK; US$283 million) for the first three months of the current year.
Commenting on these figures, new CEO Jonas Tunestål attributed this growth mainly to price adjustments that were achieved to help mitigate increases in production costs. Positive changes in currency exchange rates were also a factor.
Calculated on constant exchange rates, growth was held back to 10%, while the number of poultry slaughtered by Scandi Standard was down by 3.6%.
At SEK136 million, profitability (expressed as Earnings Before Interest, Taxes, Depreciation and Amortization, EBITDA) was down 24% year-on-year. Over the same period, adjusted EBITDA margin fell by 2.4 percentage points to 4.9%. Meanwhile, operating income tumbled 58% compared to the same period of 2021 to SEK37 million.
Ready-to-cook (RTC) segment under continued pressure
This steep decline in earnings was attributed to the on-going challenges for the group’s RTC business. For the quarter, net sales for this segment grew by SEK108 million year-on-year. However, this resulted in a loss of SEK2 million for the period, which compared with a positive figure of SEK70 million in the first three months of 2021.
At SEK51 million for the latest quarter, the loss made by the firm’s Danish RTC operation was slightly worse than in the comparable period of last year.
According to Scandi Standard, this deterioration in the performance of this business is largely due to its former policy on broiler genetics. However, extensive changes to this strategy are expected to benefit this business in the second half of the year as consumer demand for slower growing birds strengthens through both retail and food service channels in Denmark.
On-going economic challenges
On the general economic outlook, Scandi Standard comments that Russia’s invasion of Ukraine is bringing ever greater uncertainty to European food security.
As for many other companies across the globe, the situation has brought escalating prices for a whole range of inputs from poultry feed and frying oil to packaging and transport.
These factors are likely to remain in play for at least the next three months.
Possibly due to a combination of the change in broiler genetics and measures put in place to control feed costs, Scandi Standard reports a 2% in feed conversion efficiency recorded for its poultry flocks for the last quarter at 1.50. This is expressed as kg feed per 1kg liveweight.
So far in 2022, the group reports that its export business has negatively impacted its overall earnings. However, it is more optimistic about future prospects for this business. It says a contraction in poultry meat output in Europe is putting upward pressure on prices. At the same time, demand from global food service business is on the rise.
More on Scandi Standard
With annual slaughterings of 205 million birds, Scandi Standard is among the top 15 poultry companies in Europe. This is according to WATTPoultry.com’s Top Poultry Companies survey.
According to the firm’s own web site, Scandi Standard is the leading producer of chicken-based food products in the Nordic region and Ireland. The company produces, markets and sells ready-to-eat, chilled and frozen products. Brands include Kronfågel, Danpo, Den Stolte Hane, Manor Farm and Naapurin Maalaiskana. Eggs are also produced and sold in Norway. The workforce is around 3,000.
In October last year, Scandi Standard’s board of directors appointed Tunestål as the company’s new managing director and CEO. At that time, he was Executive Vice President of Danish Crown, and CEO of that firm's Swedish business. Interim managing director and CEO Otto Drakenberg remained in post with Scandi Standard until Tunestål officially joined the company.
In early April of 2022, fire broke out at the company’s ready-to-eat (RTE) chicken plant in Farre, Denmark. There were no injuries, and damage was reported to be minimal.
Last year, Scandi Standard reported a 3% net increase in sales to SEK10.1 billion. This figure was achieved over the last fiscal year ended December 2021. Also over that period, adverse internal and external pressures particularly affected its RTC operations.
