Following the final divestment of its overseas operations, HKFoods reports improved sales and profitability for the first nine months of the year as it focuses on its Finland meat business.
Together with a comprehensive product range, HKFoods attributes the continued growth in its sales and profitability over the last three months to commercial management and on-going strong consumer demand in the Finnish market. Furthermore, the company gained market share as it increased sales to the food-service sector.
For the latest quarter (July-September of 2024), the company reports an 8.8% year-on-year increase in sales at EUR251.6 million (US$271.2million).
Operating profit — expressed as Earning Before Interest and Taxes (EBIT) — was up 63% to EUR11.6 million. Despite higher labor costs than in the comparable period, the company reports that profitability growth was driven by the achievement of cost savings, as well as greater production efficiency.
On retail sales over the reporting period, HKFoods has recorded strong development. It also highlights that targets set for its poultry cutting plant in Rauma have been surpassed.
For the group’s Business Unit Finland, comparable EBIT increased from EUR7.6 million for the three months in 2023 to EUR13.2 million for the latest quarter.
HKFoods — operating as HKScan until September 2024 — has undergone significant restructuring over the past two years, gradually divesting its operations in other Nordic countries.
Growth of sales, profit for year-to-date
Compared with the same period of 2023, net sales by HKFoods were 7.6% higher at EUR735.0 million for the nine-months to the end of September.
Strong demand in Finland boosted sales through both retail and food service channels there, the firm reports. As a result, its exports were lower than in the comparable period, but these are less profitable than sales in its home market.
Despite higher costs, the group reports a 43% year-on-year increase in EBIT at EUR15.9 million. At EUR17.4 million, comparable EBIT from continuing operations was up by EUR8.8 million from the first nine months of 2023.
These developments were driven mainly by positive developments for its poultry and ready meal products, HKFoods reports. In contrast, profitability for red meat — particularly beef — is described in the report as “challenging.”
Overall, the company reports comparable EBIT for its Business Unit Finland at EUR23.2 million. For the same nine-month period of last year, this metric was reported at EUR14.2 million.
Recent business developments at HKFoods
The group has been carrying out an assessment of its operations over the past two years, according to CEO Juha Ruohola in the latest quarterly report, with the aim to increase financial flexibility.
Completed in August of 2023, sale of the Baltic business strengthened the company’s overall profitability and balance sheet, he said, and sale of its Swedish business was closed in March of this year.
The final step in the group’s restructuring was completed at the end of last month, when its Danish subsidiary Rose Poultry A/S was sold to Plukon Group of The Netherlands.
As a result of these divestments, Ruohola reports that the HKFoods’ balance sheet is stronger, allowing company loans to be repaid.
With the major restructuring now complete, he said the company will focus on the implementation of its long-term strategy. This will target competitiveness of its core business, and profitability of its operations.
At the end of October, the company announced the departure of EVP of Business Unit Finland and executive team member, Jari Leija.
Also departing from HKFoods at the end of last month was Michael Juhl Jørgensen, interim EVP of HKFoods’ Business Unit Denmark, and member of the group executive team. He is continuing to work with the Danish company’s new owner.
HKFoods set to export poultry meat to China
By the end of this year, the company will be exporting poultry meat to China.
This development follows authorization by the Chinese authorities for chicken products from HKFood’s processing plant in Rauma. The products exported to China are mainly chicken feet (paws) and wings
“The launch of poultry meat exports to China is a great and highly anticipated step for the whole industry,” said HKFoods’ CEO, Juha Ruohola.
HKFoods is already authorized to export Finnish pig meat to China.
More on HKFoods
With workforce of close to 3,000, the company produces the brands HK, Kariniemen, and Via in Finland, according to the firm’s web site.
A publicly listed company, HKFoods reported net sales from continuing operations totaling EUR933 million for the last full financial year.
