Group-wide statutory negotiations are set to begin at Finland-based meat processor HKScan, as the business aims to sharpen its focus in home and export markets to improve falling profitability.
A new operating model will be in place as soon as possible during the first half of 2017.
Comparable earnings before interest and taxes (EBIT) fell from €21.5m in 2015 to €13.2m for 2016.
Falling ‘behind’ in Sweden
“The results are unsatisfactory,” Jari Latvanen, HKScan’s president and CEO, told this site.
“We would rather focus on the future and now it’s about how do we make sure we’re fit for the future… The key issue is Sweden, where we are clearly behind, and that is a key reason why we are reorganising the business.”
In a prepared statement, Latvanen added that the business would undertake “multiple simultaneous measures to correct the negative trend” to improve group-wide operational efficiency.
Group net sales: €1.87bn
The planned audit of HKScan’s operating model will be led by Latvanen. It will see jobs cut, although no more than 150. The number of cuts will not be announced until June 2017, but the jobs at risk are white collar office workers, rather than production personnel.
The firm’s full-year results, published on 8 February, put in context struggles the business as faced in key markets, including Sweden.
“HKScan’s full-year performance in 2016 was weak,” said Latvanen, commenting on both fourth-quarter and full-year trading results.
“The group’s smallest market, the Baltics, was the only area that was ultimately able to improve its comparable operating profit from the previous year, despite the severe internal turbulence it faced at the end of the year.
“Sweden was a particular disappointment, having lost market share and falling clearly behind its previous year’s result. Finland recorded slight growth in net sales for the whole year, and its operating profit improved year-on-year both in the third and the fourth quarter.”
HKScan reported net sales of €1.87bn for 2016, falling from €1.9bn in 2015.
Chief financial officer, Tuomo Valkonen also told this site in 2016 that the business would analyse its cost structure in 2017. As personnel is the second-biggest cost in this department, job cuts were expected.