HKScan Corporation                  Stock Exchange Release           5.8.2015, 8:10 am

 

Feasibility studies related to HKScan’s strategic investment projects completed

HKScan is making progress in implementing its strategy for building profitable growth. Preliminary reviews of its strategic investment projects announced in October 2014 have now been completed. The HKScan Board of Directors supports Group management’s proposal to construct a wholly new production unit in western Finland. The planned unit would specialize in poultry products and would replace HKScan’s existing facility in Eura. The Group has revised its earlier plan to invest in expanding its production unit in Rakvere, Estonia. Instead of building a plant, the Group has decided to invest in improving the production efficiency of its current plants. It is also looking into contract manufacturing options and other alternative arrangements.
 

Proposal to build a new production unit in western Finland

HKScan’s Board supports management’s proposal to construct a wholly new production plant in western Finland. If materialized as planned, the project would be completed by the end of 2017. Valued at roughly EUR 80 million, it would be the largest single investment in HKScan’s recent history, comprising a 25 000 m2 plant, infrastructure, production machinery, equipment and other related systems. The location of the plant has not yet been decided. As announced earlier, HKScan is negotiating with the authorities of Eura, Forssa, Rauma and Säkylä. Production would continue uninterrupted at the existing Eura unit until the new plant was commissioned. The planned investment would entail a non-cash write-off of assets amounting to about EUR 11 million resulting from a potential termination of production at the existing plant.

HKScan’s management took the decision to recommend building an entirely new plant as a preferred alternative after comparing the costs and risks associated with modernizing and expanding the existing facility in Eura. By harnessing the latest production technology, the new plant would bring a significant increase in productivity and enable development of new value-added products. Moreover, work safety and occupational wellbeing would improve significantly. The investment would also have a tangible impact on future production tasks, required skills and the number of employees. The anticipated change would affect the production personnel of the current Eura plant.

Before taking a final decision on the investment project and its location, HKScan will conduct an investigation of its foreseeable impact on personnel and all permits required from the authorities for the potential investment project. The Group is also finalizing plans for the new facility and will continue assessing and comparing different location options. The plan is to complete the review process and secure all necessary permits as soon as possible during this autumn.

As part of the planned changes, HKScan Finland will initiate statutory negotiations with the production personnel of the Eura plant. The negotiations will begin on 10 August 2015. Possible impacts on personnel will be determined in the course of the negotiations.


Plans altered concerning Rakvere unit in Estonia

As the outcome of the feasibility studies, HKScan does not intend to expand its production facility at this stage in Rakvere, Estonia. Instead, the Group will focus on improving operational efficiency and increasing the capacity of its existing units. The Group is additionally looking into contract manufacturing options and other corresponding alternatives to own investments. With these actions HKScan will more efficiently speed up the commercialization of new innovations compared to an expansion investment. HKScan will revisit options for investments related to value-added products in due course.

HKScan Corporation

Hannu Kottonen
CEO

For further information:
Hannu Kottonen, CEO, HKScan Corporation
Aki Laiho, COO, HKScan Corporation
Samuli Eskola, Executive Vice President, Consumer Business, Finland and Baltics, HKScan Corporation
Kindly submit your call-back request to  Marja-Leena Dahlskog, SVP Communications, marja-leena.dahlskog(at)hkscan.com, p. +358 10 570 2142.

The investments will be presented in conjunction to the interim report information meeting for media and analysts held today, Wednesday 5 August 2015, starting at 10:00 Finnish time in Restaurant G.W. Sundmans’ auditorium (address: Eteläranta 16, Helsinki. Entrance via the inner court.). We kindly ask the participants to inform about their attendance by e-mail to HKScan Group Communications, Marja Siltala (marja.siltala(at)hkscan.com).

HKScan is the leading Nordic meat expert. We sell, market and produce high-quality, responsibly-produced pork, beef, poultry and lamb products, processed meats and convenience foods under strong brand names. Our customers are the retail, food service, industrial and export sectors, and our home markets comprise Finland, Sweden, Denmark and the Baltics. We export to close to 50 countries. HKScan's net sales total EUR 2.0 billion and we have some 7 700 employees, making us one of the Europe's leading meat companies.


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