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HKScan Sees Sales Rise

2 March 2012, at 8:29am

FINLAND - Finnish meat processor HKScan’s net sales rose to €2,491.3 million compared to €2,113.9 million in the previous year - a rise of 17.9 per cent.

EBIT came in at €39.6 million, which was down from € 48.0 million in 2010.

The company said that the protracted challenges in the pork business began to ease towards the end of the year, and the situation is stabilising, especially in the market area of Finland.

HKScan added that ther have been no significant changes in market position in any of the Group’s market areas during the year. The market position continued to strengthen in Finland, however.

Net financial expenses were minus €30.9 million compared to minus €13.8 million in 2010. The rise compared with the previous year was considerable with higher loan margins the main reason.

The company is confident that EBIT for 2012 will be better than last year.

The Group’s net sales grew in the last quarter of the year by 9.1 per cent and totalled €649.8 million compared to €595.7 million in 2010.

EBIT came in at €17.6 million compared to €15.7 million, up by 12.1 per cent.

In Finland, net sales were €217.6 million compared to € 198.2 million and EBIT was €7.2 million compared to € 4.7 million. Measured by profitability, the quarter was one of the best in recent years.

In Sweden, net sales were €275.6 million compared to €275.0 million and EBIT was €7.4 million compared to €8.0 million the previous year.

The comapny said the movement in net sales was a result of, among other things, a quieter Christmas season than expected.

In Denmark, net sales came to €54.3 million compared to € 21.8 million and EBIT was minus €1.3 million. The business development programme also continued to erode performance in the last quarter. The Danish company was consolidated into the HKScan Group on 29 November 2010.

In the Baltics, net sales grew to €44.9 million compared to €42.0 million and EBIT stood at €2.8 million compared to €1.8 million. Development of the business continued to be strong, the company reported.

In Poland, business progressed as planned. Net sales came to €73.9 million compared to €72.6 million and EBIT was €3.5 million compared to €3.0 million.

HKScan CEO Matti Perkonoja said: “HKScan’s EBIT in the last quarter of 2011 recovered after the poor trend at the beginning of the year. The quarter went as expected, and in terms of performance, was the year’s best.

"HKScan’s market position is strong in all the company’s market areas and there have not been any significant changes in it.

"In Finland, sales price increases implemented at the end of the year and cuts in costs, for their part, returned the profitability of the business to a better level. The transition to more controlled contract production in the pork chain is proceeding as planned. The most important launch in 2011 in Finland was Rapeseed pork, which turned out to be commercially very successful.

"HKScan is launching similar pork meat on the Swedish market in 2012 under the name Svensk Rapsgris.

"In Sweden, the market continued to be challenging throughout the year. Swedish meat raw materials are in short supply and producer prices are high. Meat imports to Sweden have increased significantly, which is largely based on the favourable exchange rate situation for importers.

"In Denmark, considerable effort was devoted in 2011 to the new structuring of the business. In accordance with its strategy, Rose Poultry is developing fresh produce for its domestic markets, especially for Sweden.

"In the Baltics and Poland, strong development of the business continued both in the last quarter and throughout the whole year.

"The Group's financial costs have increased substantially. A key near-term goal is to strengthen cash flow and with this to reduce interest-bearing liabilities."

Mr Perkonoja added: "Meat consumption has increased in all the Group’s market areas. Consumers want high-quality and responsibly produced food. The Group is a responsible player in the meat sector whose starting point in product development and production is excellent taste and high quality.

"The basis is an efficient and transparent production chain. In 2011, a corporate responsibility scheme was implemented by the HKScan Group in the subsidiaries in Finland, Sweden and the Baltics. In Denmark, Rose Poultry A/S joined the scheme during the year.

"The problems in the global economy have only a minimal impact on consumer demand for HKScan’s products, as the Group’s comprehensive product portfolio offers options for the diverse needs of different consumers groups.

"The prevailing trend in which the consumer market is becoming fragmented into smaller consumer groups is continuing to grow. Successful operators in the industry are those who understand and exploit the change more readily. A key success factor for the future is to develop the offering under the strong brands of the HKScan Group to meet consumer expectations. The taste and quality of food, sustainable production methods and the positive experience engendered by good food are highlighted."