Second quarter report 2016

24 August 2016

  • Net sales increased by 12 percent to MSEK 1,503.5 (1,341.3), and by 15 percent at constant exchange rates. The increase refers mainly to Norway and Sweden. Net sales for comparable units, i.e. excluding Finland and Sødams in Denmark, increased by 12 percent at constant exchange rates.
  • Adjusted operating income* declined by 4 percent to MSEK 74.3 (77.0), corresponding to a margin of 4.9 (5.7) percent. Adjusted operating income increased in Norway and Sweden, but declined in Denmark. Adjusted operating income for comparable units increased by 11 percent.
  • Income for the period amounted to MSEK 38.8 (45.7) and earnings per share were SEK 0.65 (0.76).
  • Adjusted operating cash flow* declined to MSEK 33.1 (136.0) due to higher capital expenditure, which was also more phased to the first half of the year than in 2015, and an increase in working capital compared to a significant decrease in 2015.
MSEK Q2 2016 Q2 2015 Change H1 2016 H1 2015 Change
Net sales 1,503.5 1,341.3 12% 2,889.9 2,650.9 9%
Operating income 74.3 72.8 2% 141.5 140.4 1%
Income for the period 38.8 45.7 -15% 81.1 87.3 -7%
EPS, SEK 0.65 0.76 -15% 1.36 1.45 -6%
Adjusted EBITDA* 123.4 123.8 -0% 238.5 237.8 0%
Adjusted operating income* 74.3 77.0 -4% 142.6 144.6 -1%
Adjusted operating margin* 4.9% 5.7% - 4.9% 5.5% -
Adjusted income for the period* 38.8 49.0 -21% 82.0 90.6 -10%
Adjusted EPS*, SEK 0.65 0.82 -21% 1.38 1.51 -9%
Adjusted operating cash flow* 33.1 136.0 -76% 69.8 236.3 -70%

*) Adjusted for non-comparable items in Q2 2016 of MSEK - (-4.2) in EBITDA and operating income and MSEK - (-3.3) in income for the period, and for H1 2016 of MSEK -1.1 (-4.2) in EBITDA and operating income and MSEK –0.9(-3.3) in income for the period. See page 3.

CEO Statement 

Net sales showed strong growth in the quarter with an increase of 15 percent at constant exchange rates, which was significantly above the growth in the market. The increase referred mainly to additional distribution in Norway in combination with a strong recovery of the Norwegian market, strong growth in Sweden in chilled products and a significant number of new listings in Finland.  

We successfully launched a number of new products in order to drive the category in line with our vision to inspire the Nordic consumers to eat chicken once more per week. These included for example tasty sausages, marinated barbeque products, inner filets on sticks and chicken bacon.

Despite the strong growth in net sales, the adjusted operating margin for the Group declined from last year. This was mainly due to a decline in income for the Danish operation as well as costs for ramping up production in Finland. Furthermore the operation in Finland was included for the full quarter this year compared to only one month in 2015. We also had additional costs in Sweden to meet the strong demand and to maintain service levels at the same time as the Valla facility was rebuilt for higher capacity. Adjusted operating income for comparable units increased from last year.

Adjusted operating cash flow declined as capital expenditure was higher than last year to secure capacity in Sweden and was also more phased to the first half of the year than in 2015. Working capital showed an increase compared to a significant decline last year.

Net sales for the Swedish operation showed strong growth in chilled products and the Group strengthened its market share in this category. The adjusted operating margin was unchanged from last year as additional costs mentioned above had a negative impact. We are working on increasing both efficiency and capacity in production. The rebuilding of the Valla facility is expected to be finalised during the third quarter this year.

The strong increase in net sales for the Norwegian operation referred to the new contract with COOP Norway. Deliveries under this contract started in August 2015. We also signed a new contract with NorgesGruppen earlier this year under which deliveries started in the first quarter 2016. The retail market for chicken products in Norway showed a continued recovery and grew by approximately 13 percent in value in the quarter compared to a decline by 4 percent last year. Adjusted operating income and margin for the Norwegian operation improved. The market share was strengthened from last year.

Net sales for the Danish operation were higher than last year but the adjusted operating margin declined due to continued price pressure in both the local market and on exports. The majority of sales for the Danish operation refers to exports. Our efforts in product development will allow us to gradually expand our presence in the premium segment in the local market where Danpo is the leading brand, and also to offer more of further processed products for export. In the quarter we started to supply one of Europe’s leading foodservice providers with further processed products. As communicated in March, Mark Hemmingsen took over as new country manager as of August 1. I want to welcome Mark to the Group and I am convinced that his experience in consumer products and brand building will contribute to profitable growth for the Danish operation.

Volumes for the Finnish operation more than doubled quarter over quarter as a result of new and extended customer contracts. The retail market for chicken products in Finland grew by approximately 14 percent in value in the quarter compared to last year. Adjusted operating income remained negative, however, due to additional costs for handling inefficiencies and bottlenecks in production as volumes were significantly ramped up to meet demand. We are taking a number of actions to improve productivity in the facility and expect to see a gradual improvement over the coming quarters.

We expect continued good growth in market demand and have great opportunities to grow net sales and develop the category. We are working hard to take advantage of this growth and at the same time improve the Group's results and financial position.

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
Tobias Wastensson, Head of Group Finance Tel: +46 10 456 14 86

   
Financial calendar

  •  Interim report for the third quarter 2016: 3 November 2016

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 24 August 2016.

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