First quarter report 2017
11 May 2017
- Net sales increased by 15 percent to MSEK 1,593.8 (1,386.3), and by 11 percent at constant exchange rates. All countries contributed to the increase.
- Adjusted operating income* declined to MSEK 59.3 (68.3), corresponding to a margin of 3.7 (4.9) percent. Adjusted operating income* increased in Norway but declined in Sweden, Denmark and Finland.
- The bird flu had a negative impact of approximately MSEK 18 on adjusted operating income* in the quarter, referring to Sweden and Denmark.
- Income for the period declined to MSEK 29.9 (42.4) and earnings per share were SEK 0.50 (0.71).
- Operating cash flow amounted to MSEK 5.0 (35.5), with a higher increase in inventories than last year. Net interest bearing debt was MSEK 1,520.8 (1,350.6).
| MSEK | Q1 2017 | Q1 2016 | Change | LTM | 2016 |
| Net sales | 1,593.8 | 1,386.3 | 15% | 6,174.9 | 5,967.4 |
| Adjusted EBITDA* | 112.8 | 115.0 | -2% | 449.4 | 451.6 |
| Depreciation and amortization | -53.5 | -47.6 | 12% | -207.2 | -201.3 |
| Adjusted operating income* | 59.3 | 68.3 | -13% | 242.6 | 251.6 |
| Non-comparable items | -1.2 | -1.1 | - | -13.5 | -13.4 |
| Operating income | 58.1 | 67.2 | -14% | 229.1 | 238.2 |
| Finance net | -19.0 | -13.2 | 44% | -77.1 | -71.3 |
| Income after finance net | 39.1 | 54.0 | -28% | 152.0 | 166.9 |
| Income tax expense | -9.2 | -11.6 | -21% | -33.1 | -35.5 |
| Income for the period | 29.9 | 42.4 | -29% | 118.9 | 131.4 |
| Adjusted EBITDA margin* | 7.1% | 8.3% | - | 7.3% | 7.6% |
| Adjusted operating margin* | 3.7% | 4.9% | - | 3.9% | 4.2% |
| Earnings per share, SEK | 0.50 | 0.71 | -29% | 2.00 | 2.21 |
| Adjusted return on capital employed* | 9.4% | 11.4% | - | 9.4% | 10.3% |
| Return on equity | 23.4% | 27.8% | - | 23.4% | 33.0% |
| Operating cash flow | 5.0 | 35.5 | -86% | 82.2 | 112.7 |
| Net interest-bearing debt | 1,520.8 | 1,350.6 | 13% | 1,520.8 | 1,515.4 |
* Adjusted for non-comparable items, see page 3.
CEO Statement
I am pleased to report net sales of MSEK 1,593.8, a growth of 15 percent compared to the first quarter last year. Sweden and Norway made the largest contributions and grew by 15 percent and 17 percent respectively, while Denmark grew by 6 percent. Net sales in Finland were in line with the fourth quarter 2016. The growth in net sales was driven by increased demand and improved market positions.
As in the fourth quarter 2016, the operating margin was adversely affected by the effects of bird flu but to a lesser extent. The price pressure in Denmark continued in both the local market and on exports. We were still able to report an adjusted operating income for the quarter of MSEK 59.3, which was a large improvement from MSEK 32.9 in the fourth quarter 2016.
Adjusted operating income in Sweden and Denmark was MSEK 35.2 and MSEK 22.1 respectively, compared to MSEK 43.6 and MSEK 28.7 respectively in the first quarter last year. The total negative impact of the bird flu in the quarter is estimated at MSEK 18. We have earlier communicated that the negative effect on operating income from the bird flu was estimated at MSEK 4-8 per month. Although Denmark has recently been cleared from bird flu and trade restrictions have been lifted, we expect prices to continue to be negatively impacted until trade patterns are normalized. The process of clearing Sweden from bird flu unfortunately experienced a set back by a recent new detection of the disease in a commercial flock outside of our supply chain. We therefore maintain the above-mentioned guidance regarding the impact of the bird flu on operating income.
The adverse development in Sweden and Denmark was partially compensated by Norway where adjusted operating income rose by 54 percent to MSEK 31.0, corresponding to a margin of 8.0 percent. The Norwegian organisation has done a good job in positioning the product portfolio with the three main retailers in Norway. The improvement in margin was driven by higher volumes and increased efficiency in production.
Finland generated an adjusted operating loss of MSEK 12.5, which was at the same level as the underlying operating loss in the fourth quarter last year. The switch in focus from ramping up production volumes to growing margins is expected to reduce losses in Finland in the coming quarters.
In the fourth quarter 2016 and in the beginning of 2017 we registered unusually high levels of campylobacter in our facility in Valla, Sweden. A number of actions have been taken throughout the value chain and we are now seeing normalized levels. We are proud of the high food safety standards in the Nordic region and will do our outmost to maintain these in the future. We will continuously work on reducing the incidence of campylobacter in our products.
We have initiated several activities to reduce working capital, which in combination with lower capital expenditure will have a positive effect on cash flow. We will continue to focus on improving margins as well as growing sales in the premium segments and within further processed products. I am convinced that the Group, despite the current challenges, has a strong platform to achieve profitable organic and structural growth in the European poultry market.
Leif Bergvall Hansen
Managing Director and CEO
Further information
For further information, please contact:
Leif Bergvall Hansen, Chief Executive Officer Tel: +45 22 10 05 44
Anders Hägg, Chief Financial Officer Tel: +46 72 402 34 90
Henrik Heiberg, Head of M&A, Financing & IR Tel: +47 917 47 724
Financial calendar
- Report for the second quarter 2017: 23 August 2017
- Report for Report for the third quarter 2017: 1 November 2017
This interim report comprises information which Scandi Standard is required to disclose under the Securities Markets Act and/or the Financial Instruments Trading Act. It was released for publication at 07:30 CET on 11 May 2017.
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