Market uncertainty continues to impact poultry production for Sweden-based Scandi Standard. However, the company reports signs of a strong recovery in its third-quarter fiscal results.
For the July-September period, net sales were 18% higher at just over 3.20 billion krona (SEK; US$298.6 million).
Commenting on the results, the firm’s managing director and CEO, Jonas Tunestål, reported that Scandi Standard had been able largely to offset cost inflation by raising its prices. He also highlighted strong earnings growth for the ready-to-eat (RTE) sector.
As a result of these factors, profitability (as Earnings Before Interest and Taxes, EBIT) was SEK112 million — up from SEK30 million for the same quarter of 2021.
Looking ahead, rising costs of food and other essential are likely to increase consumers’ price sensitivity, according to Tunestål. However, poultry is in a competitive position for domestic spending compared with beef and pork. In its consolidated markets, Scandi Standard is in a good position to adapt quickly to changing market conditions. Furthermore, he said, the firm is taking action ahead of continued rises in its costs of energy, packaging, and logistics.
Strong growth in RTE segment
For the latest quarter, Scandi Standard reports net sales shared by the Ready-to-Cook (RTC) segment (71% of the total), RTE 25%, and Other at 4%. Compared with the same period last year, RTE increased its share of net sales by 36%, and RTC by 17%.
As well as its home market of Sweden, Scandi Standard has poultry operations in Denmark, Ireland, Norway, and Finland. These businesses contributed 27%, 31%, 19%, 15%, and 7%, respectively, to the group’s overall net sales. At 32%, the Finland operation achieved the biggest year-on-year increase, followed by Sweden (28%), Denmark (22%), Ireland (21%), and Norway (9%).
Posting a loss of SEK50 million for the Danish RTC segment, Tunestål reported that the situation there continues to be challenging. However, operational changes put in place in Denmark have resulted in positive earnings posted for the country overall in the quarter.
Building on the success of the RTE segment, the company is set to expand production capacity at its plant in Farre, Denmark.
This segment is to be a strategic focus area for profitability by Scandi Standard in the coming years.
Year-to-date performance
For the first nine months of 2022, Scandi Standard’s net sales were up 18% year-on-year at SEK9.05 billion. At constant exchange rates, this is equivalent to a 15% increase.
While EBIT slipped slightly to SEK191 million, EBIT margin was down to 2.1% from 2.5% at this point in 2021.
Focus on sustainability
Group-wide, feed efficiency improved by 1% year-on-year, falling from 1.52 for the January-September period last year, to 1.50 for this year.
According to Tunestål, sustainability indicators, antibiotic use, and foot pad scores for Scandi Standard poultry have changed little from the previous quarter, when there was a decline is scores compared with the previous year. While various measures have been put in place to improve the situation, the company says these may take time to be reflected in reports.
The group reports it has launched an initiative to increase transparency upstream with our suppliers, in the areas of animal welfare, climate and the environment.
More on Scandi Standard
In July of this year, Paulo Gaspar of Lusiaves Group was nominated to the Board of Directors of Scandi Standard. He also serves as chief of innovation and marketing at Lusiaves, which owns 10% of Scandi Standard. At an extraordinary general meeting in August, Gaspar was elected to the Board.
With annual slaughterings of more than 177 million birds, Scandi Standard is among the top poultry companies in Europe, according to WATTPoultry.com’s Top Poultry Companies survey.
As well as being Sweden’s largest poultry producer, Scandi Standard also has operations in Norway, Finland, Denmark and Ireland. It operates in both the broiler and egg sectors. Company brands include Danpo (in Denmark), Den Stolte Hane (Norway), Kronfågel (Sweden), Manor Farm (Republic of Ireland), and Naapurin Maalaiskana (Finland).
Recently, Scandi Standard announced the appointment of Kasper Lenbroch as the new CEO of Danpo. With effect from November 1, he will be Country Manager for Denmark and a member of Scandi Standard's Group Management. Lenbroch replaces Magnus Lagergren, who is taking on his former role as Group Business Development Director.
