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Hard-hit HKScan posts €20m loss

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Oscar Rousseau

By Oscar Rousseau+

19-Jul-2017

HKScan has already cut 160 jobs this year amid market pressure
HKScan has already cut 160 jobs this year amid market pressure

An earnings decline across HKScan’s biggest Scandinavian markets saw the struggling Finland-based meat processor post a €20.8m pre-tax loss in its half-year results.

HKScan, a prominent Nordic meat supplier, exporting to more than 50 countries, has been under intense economic pressure in the last 12 months due to falling sales and rising raw material costs.

Net sales dropped by over 4% year-on-year to €880.3m in its half-year results from 1 January to 30 June 2017.

Jari Latvanen, HKScan’s CEO, said the market was “again challenging” for the pork, beef and poultry processor.

HKScan’s six-month results – at a glance
  • Pre-tax loss of €20.8m
  • Group sales of €880.3m
  • Net debt of €177.3m

Raw materials ‘scarce’

Both the half-year and the second-quarter earnings before interest and taxes (EBIT) lagged behind last year,” said Latvanen, who added: “The main reason was the EBIT decline in our biggest markets, Sweden and Finland.

Beef raw material remained scarce in both Sweden and Finland, which influenced the second-quarter results. Finland successfully stabilised its pork meat balance further which, together with a good sales mix, improved pork margins. The cold weather in May and June delayed the barbecue season start on all home markets and hampered the sales of both barbecue sausages and meat.

Spending an extra €1m ramping up its new Rauma poultry slaughterhouse in Finland pushed HKScan’s results further into the red.

New strategy in the pipeline

Its third-biggest market, Denmark, saw slightly improved earnings thanks to lower costs, but net sales in the Baltics remained stagnant.

HKScan CEO Jari Latvanen

HKScan CEO Jari Latvanen

With financial results going against the business, HKScan announced in May that it would cut 160 office-based jobs.

During the spring, an audit of its presence in strategic Scandinavian and Eastern European markets was carried out as the firm’s hierarchy worked on a new strategy to lead the business toward economic prosperity. Progress was made on HKScan’s new strategic direction, which is due to be made public in the third quarter of 2017 and implemented toward the end of the year.

Despite a new strategy that is likely to revitalise the struggling business, HKScan still expects its full-year pre-tax profit to come in below the €13.2m raked in last year.

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