April-June 2023 

  • HKScan’s net sales from continuing operations increased by 3.8 per cent to EUR 473.8 (456.3) million. Sales prices were higher than in the comparison period, leading to an increase in net sales, while sales volumes remained at the comparison period’s level.
  • The Group’s EBIT from continuing operations totalled EUR 8.4 (3.1) million. 
  • The Group’s comparable EBIT from continuing operations was EUR 8.3 (3.3) million. Production costs continued to rise. The cost increase was covered by sales price increases. Consumer demand improved slightly after a weak start to the year. Profitability improved as a result of increased production efficiency and cost savings.
  • The comparable EBIT of the Business Unit Finland was EUR 4.9 (1.4) million.
  • The comparable EBIT of the Business Unit Sweden was EUR 4.1 (4.9) million.
  • The comparable EBIT of the Business Unit Denmark was EUR 1.1 (0.3) million.
  • Cash flow from operating activities was EUR 19.8 (22.4) million. Cash flow was down from the comparison period due to increased financial expenses. 

January-June 2023

  • HKScan’s net sales from continuing operations increased by 9.3 per cent to EUR 931.4 (852.2) million. In the review period, sales prices were significantly higher than in the comparison period, as higher costs due to strong inflation had been passed on to sales prices in 2022.
  • The Group’s EBIT from continuing operations totalled EUR 8.4 (-1.3) million. 
  • The Group’s comparable EBIT from continuing operations was EUR 6.5 (-0.7) million. The high cost level caused by exceptional inflation continued in January-June. Sales price increases implemented in 2022 covered the cost increase. Profitability improved as a result of increased production efficiency and cost savings. 
  • The comparable EBIT of the Business Unit Finland was EUR 5.0 (0.2) million. 
  • The comparable EBIT of the Business Unit Sweden was EUR 3.9 (5.1) million.
  • The comparable EBIT of the Business Unit Denmark was EUR 2.3 (0.8) million.
  • Cash flow from operating activities was EUR 14.1 (-12.0) million. Cash flow improved from the comparison period due to significantly slower growth in working capital. 
  • Interest-bearing net debt was EUR 357.9 (346.3) million and net gearing 137.0 (107.4) per cent.

The figures in parentheses refer to the same period in the previous year, unless otherwise mentioned. The figures are unaudited.

As of 1 January 2023, HKScan has changed accounting policy for spare parts inventory retrospectively. This change has an impact on the inventory value, equity and deferred tax liabilities on the balance sheet and key figures (Return on capital employed and Net gearing). Quarterly and full-year financial information for 2022 has been restated accordingly. Additional information about the impact is disclosed in the accounting policies. 

Outlook for 2023

HKScan's guidance for 2023 remains unchanged.

In 2023, HKScan expects the Group’s comparable EBIT from continuing operations to improve compared to 2022. The full-year performance will be significantly affected by inflation and the development of consumer purchasing power in the company’s home markets. On the other hand, in the beginning of 2023, energy and logistics costs are on a more moderate level than in the peak of 2022.

KEY FIGURES, NET SALES, CONTINUING OPERATIONS

(EUR million) 4-6/2023 4-6/2022 1-6/2023 1-6/2022 2022
Net sales 473.8 456.3 931.4 852.2 1 833.8
    Finland 232.7 213.4 449.3 396.0 868.3
    Sweden 182.0 185.4 361.6 349.4 745.1
    Denmark 59.1 57.4 120.5 106.8 220.4

KEY FIGURES, EBIT, CONTINUING OPERATIONS

(EUR million) 4-6/2023 4-6/2022 1-6/2023 1-6/2022 2022
EBIT, Continuing operations 8.4 3.1 8.4 -1.3 10.1
 - % of net sales 1.8 0.7 0.9 -0.2 0.5
Comparable EBIT, continuing 8.3 3.3 6.5 -0.7 9.7
    - % of net sales 1.7 0.7 0.7 -0.1 0.5
    Comparable EBIT, Finland 4.9 1.4 5.0 0.2 3.4
    - % of net sales 2.1 0.7 1.1 0.1 0.4
    Comparable EBIT, Sweden 4.1 4.9 3.9 5.1 16.6
    - % of net sales 2.2 2.6 1.1 1.4 2.2
    Comparable EBIT, Denmark 1.1 0.3 2.3 0.8 1.4
    - % of net sales 1.9 0.5 1.9 0.7 0.6

KEY FIGURES, OTHER

(EUR million) 4-6/2023 4-6/2022 1-6/2023 1-6/2022 2022
EBITDA, continuing operations 20.0 15.0 31.9 22.8 55.8
Profit before taxes, continuing operations 1.4 2.7 -4.8 -3.5 -0.9
 - % of net sales 0.3 0.6 -0.5 -0.4 0.0
Profit for the period, continuing operations -0.6 1.4 -6.9 -5.0 -4.9
 - % of net sales -0.1 0.3 -0.7 -0.6 -0.3
EPS, EUR, continuing operations -0.02 0.00 -0.09 -0.07 -0.11
Comparable EPS, EUR, continuing operations -0.02 0.00 -0.11 -0.06 -0.11
Cash flow from operating activities, incl. discontinued operations 19.8 22.4 14.1 -12.0 18.9
Cash flow after investing activities, incl. discontinued operations 10.9 15.2 -1.9 -23.3 -21.9
Return on capital employed (ROCE) before taxes, %, incl. discontinued operations -2.0 0.0 -6.4
Interest-bearing net debt 357.9 346.3 347.2
Net gearing % 137.0 107.4 121.6

HKScan’s CEO Juha Ruohola

HKScan’s net sales from continuing operations increased by 3.8 per cent to EUR 473.8 (456.3) million in the second quarter. The Group’s April-June EBIT from continuing operations totalled EUR 8.4 (3.1) million and comparable EBIT was EUR 8.3 (3.3) million. Comparable EBIT improved in Finland and Denmark in particular but was below the comparison period in Sweden. 

As a result of sales price increases, HKScan’s January-June net sales from continuing operations increased by 9.3 per cent to EUR 931.4 (852.2) million. Net sales increased in all the company’s home markets during the first half of the year. The Group’s EBIT from continuing operations improved from the comparison period to EUR 8.4 (-1.3) million, and the comparable EBIT was EUR 6.5 (-0.7) million. 

Inflation continued to rise in January-June, despite the stabilisation of energy prices. The costs of raw materials, services and other production inputs have risen sharply over the last year and a half. Cost levels were also pushed up by the spring 2023 wage settlements in all of HKScan’s home markets. In addition, the rise in market interest rates has continued, bringing additional costs not only to the entire value chain but also to consumers. Although consumer demand improved slightly after a weak start to the year, the situation has affected consumer demand for HKScan's products and the sales mix. The change in consumer demand had a negative impact on EBIT, especially in Sweden. 

HKScan’s measures to improve cost efficiency and save costs have continued throughout the first half of the year and have improved the EBIT in the review period. We expect annual cost savings from our previously reported investments and other development measures to total approximately EUR 12.6 million when completed during 2023 and 2024. 

While the trend in the EBIT improvement is on the right track, the profitability of HKScan's continuing operations is not satisfactory, and improving profitability remains our key priority. The aim is to continue to minimise negative impacts on the company's profit development and to ensure it remains on target through tight cost management, production efficiency improvements, optimisation of the product portfolio in response to changes in consumer demand and commercial activities.

To increase financial flexibility, HKScan constantly assesses the position of each business within the Group. An important step in improving HKScan's profitability and strengthening its balance sheet is the progress of the divestment process of the Baltic business following the approval of the Estonian Competition Authority at the end of July 2023 for AS Maag Grupp to acquire HKScan's Baltic businesses. HKScan and AS Maag Grupp, the acquirer of the businesses, intend to close the transaction in the third quarter of 2023. In connection with the transaction, the buyer has committed to certain post-closing obligations. The Latvian Competition Authority already approved the transaction unconditionally in February. 

In the first half of 2023, HKScan has advanced its responsibility programme and Zero Carbon climate plan in its businesses. For the third year in a row, HKScan’s climate work was recognised in the Financial Times' European Climate Leaders list. The company works determinedly to improve safety at work, with a particular focus on promoting a proactive safety culture and continuous safety improvement. In the review period, HKScan continued, among other things, to prepare for the ISO 45001 occupational health and safety standard. The aim is to have all the company’s production units ISO 45001 certified by the end of 2025.

Key events in April-June 2023

Investing in profitability and adding value

Following change negotiations conducted in March-April, HKScan decided to implement a EUR 4.6 million development investment in its Rauma unit to improve profitability and competitiveness. The investment-related reorganisation of operations and adjustment of staffing levels will result in the reduction of up to 35 jobs in the Rauma poultry cutting department and changes to more than 200 jobs. With the investment and related development measures, HKScan aims to achieve total annual savings of around EUR 3 million in Finland, which are expected to be realised after the completion of the investment in the second half of 2024 at the latest.

In addition, HKScan continued to make investments to improve profitability and increase added value in several of its production units in Finland, Sweden and Denmark. 

Events after the reporting period

Inside information 24 July 2023: Estonian Competition Authority approves AS Maag Grupp’s acquisition of HKScan's Baltic businesses

The Estonian Competition Authority has approved the arrangement announced in December 2022 whereby HKScan will sell its businesses in the Baltics. HKScan and AS Maag Grupp, the acquirer of the businesses, intend to close the transaction in the third quarter of 2023. The purchaser has undertaken certain post-closing obligations in connection with the transaction. The Latvian Competition Authority already approved the transaction unconditionally in February.

On 13 December 2022, HKScan announced that it had signed an agreement to sell its Baltic businesses to Estonian AS Maag Grupp. With the transaction, HKScan's ownership of its Baltic businesses will end. The businesses and personnel of HKScan’s Baltic subsidiaries will be transferred to the new owner at the closing of the transaction.

Turku, 9 August 2023

HKScan Corporation
Board of Directors

Webcast

In connection with its Half Year Financial Report, HKScan will hold a webcast in Finnish for analysts, institutional investors and media on 9 August 2023 at 10 am EET. You can follow the Finnish webcast at https://hkscan.videosync.fi/q2-2023 and the recording will be available at www.hkscan.com later during the same day. HKScan’s CEO Juha Ruohola and CFO Jyrki Paappa will present the Half Year Financial Report.

To arrange investor calls, please contact executive assistant Suvi Oksava, tel. +358 44 554 4231 or suvi.oksava@hkscan.com.

Financial reports

HKScan will publish the Interim Report for January-September 2023 on Wednesday 8 November 2023, at about 8:30 EET.

For further information

Juha Ruohola, CEO, tel. +358 400 647 160
Jyrki Paappa, CFO, tel. +358 50 556 6512
HKScan Media Service Desk tel. +358 10 570 5700 or email communications@hkscan.com

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