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HKScan to Increase Efficiency in Sweden

21 August 2012, at 8:59am

SWEDEN - As part of the extensive development programme launched in the spring extending until the end of 2013, Finnish meat processor HKScan will further enhance the group's business in Sweden.

The plan now published aims to achieve an annual performance improvement of approximately €10 million. The changes are planned to be implemented by the middle of 2013.

The structure of the business in Sweden will be clarified and streamlined in line with the Group's new operating model. The plan is that the wholly-owned subsidiaries belonging to the subgroup in Sweden will be merged into a single business entity to be known as HKScan Sweden.

Scan and Pärsons, which have previously operated as business units, will continue as brands in HKScan’s business in Sweden.

The aim is to continue to further develop the brands and the product offering, as well as raising the added-value of the products.

The Scan brand is a market leader in the industry and one of the best-known consumer brands in Sweden. Pärsons brand is an industry leader in cold cuts.

In addition, HKScan will streamline the structure of production and revamp the organisation. When the plan is implemented HKScan’s commercial, production and logistics organisations and other operations supporting the business in Sweden will be merged.

Regarding the actions previously announced, the aim is to employ the plan in order to transfer the production of semi-finished products from Strövelstorp to the production facilities located in Halmstad and Kristianstad, Sweden. The plan, when implemented, will mean the discontinuation of production operations at the Strövelstorp plant.

Negotiations concerning the plan with the employee representatives have been started in Sweden by initiating employer-employee negotiations. The implementation of the plan will mean a workforce reduction of approximately 100 white-collar employees and 50 blue-collar employees. HKScan has in average 2,800 employees in Sweden.

Implementation of the changes will entail investments of approximately EUR 1 million during 2013 and write-downs of some EUR 0.5 million. In addition, a number of other non-recurring costs will be incurred. The amount of these will become clear later on.

Strategic review and implementation of the development programme in Sweden will continue.

Denis Mattsson, executive vice president of Sweden and Denmark and a member of HKScan’s Management Team, will retire at the end of 2012.

Recruitment of his successor has been started. During the latter part of the year Denis Mattsson will focus on strategic projects in the business in Sweden and on managing the repairs following the fire at the Vinderup plant in Denmark and on restarting operations there.

Magnus Lindholm has been appointed as director of operative activities in Sweden as of 1 September 2012. Mr Lindholm’s main responsibility will be implementation of the development programme in Sweden. He is transferring to the position from within the company.

The Finnish meat processor's net sales in January-June 2012 reached €1,250.4 million compared to €1,223.3 million for the corresponding period in 2011, growing by two per cent.

After eliminating changes in currency rates, growth stood at three per cent.

Group EBIT came to €4.9 million compared to €8.0 million in 2011 and the company said that EBIT decreased compared to the corresponding period in 2011 due to the negative EBIT of the business in Sweden.

The focus for the development programme is to improve profitability in the market area of Sweden.

Business in the market areas of Finland, the Baltics and Poland performed as planned and their EBIT improved.

The production break caused by a fire in early June at the Vinderup plant in Denmark interrupted positive business operations in April-May by disturbing and delaying the manufacturing of fresh products being developed according to company strategy.

According to its strategy, defined in the summer, the Group said it will particularly concentrate on delivering profitable performance.

HKScan has kept an unchanged outlook for 2012 to that given in the January-March interim report and due to the weak development of business in Sweden, there is a risk that the Group’s EBIT for 2012 will come out below the level of 2011.