HK RUOKATALO?S INTERIM REPORT FOR 1 JANU
HK Ruokatalo Oyj STOCK EXCHANGE BULLETIN 11 Aug. 2004, 10:30am 1(6)
HK RUOKATALOS INTERIM REPORT FOR 1 JANUARY TO 30 JUNE 2004
HK Ruokatalo Groups turnover for the first six months of 2004 was EUR
328.8 million, up by six per cent on the figure a year earlier. The
operating profit rose by 17.3 per cent to EUR 12.4 million. The six-
month result before exceptional items was EUR 10.1 million, up by 23.6
per cent on the corresponding figure of EUR 8.1 million a year
earlier. Earnings per share at 30 June were EUR 0.34 (EUR 0.22 in
2003).
Sales volumes showed positive growth throughout the first half of the
year. Especially growing sales volumes in barbecue and poultry meat
was a prevailing trend during the grilling season. In processed meats
HK Ruokatalo retained its position as clear market leader in Finland
as well as in the Baltics.
The most gratifying news was from the Groups international business,
which surpassed many targets. At home, the Groups poultry group met
its business and profitability targets. Domestic pork and beef, so-
called red meat, operations, posed the greatest challenges during the
period under review and fell short of targets set. A fiercely
competitive market adversely impacted on the profitability of red
meat.
The Baltics and Poland are currently generating earnings at double the
Finnish rate and are making an increasingly greater contribution to
Group earnings. The efficiency measures embarked on by Rakvere
Lihakombinaat and Tallegg in 2003 are now delivering results. Turnover
from the Groups Baltic operations during the first six months of the
year rose to EUR 53.5 million (EUR 51.9m). The result before
exceptional items doubled to EUR 3.0 million compared to EUR 1.5
million a year earlier.
Sokolów, our Polish associate, continued to make good progress, which
is evidenced in higher turnover and improved profitability. Sokolóws
exports to the western EU area developed apace.
INVESTMENTS AND FINANCE
HK Ruokatalo consolidated its position in Poland through the
acquisition of the Sokolów shares owned by Conrad Jacobson GmbH of
Germany. The deal was concluded in May and the first stage of the deal
in July took HK Ruokatalos holding in Sokolów from 21.12 per cent to
30.10 per cent.
The Groups gross investments totalled EUR 12.6 million (EUR 27.7m)
during the first six months of the year. Of this sum, EUR 7.0 million
was spent at home and EUR 5.6 million in the Baltics. Production
investments included a start on earthworks for the freezing plant to
be built at Forssa and modernisation of the slicing line at Vantaa.
Likewise at Vantaa, a start was made on enlarging the terminal
adjoining the production plant and on modernisation and raising the
level of automation of the existing terminal. Completion of Rigas
Miesnieks new logistics centre in Latvia was a landmark event. In
Estonia, Ekseko, a pig farm company, continued to make investments
aimed at reducing adverse environmental impacts.
Group interest-bearing debt totalled EUR 152.3 million (EUR 141.9m) at
30 June 2004. The equity ratio was on track at 42.3 per cent (42.6%).
EMPLOYEES
The Group employed an average of 4,838 persons (5,069) during the
first six months of the year. This fall was attributable to staff cuts
in the Baltics. An analysis of employees by country at the end of June
is as follows: Finland 63.4%, Estonia 30.8%, Latvia 4.5%, Lithuania
1.2% and other countries 0.1%.
ANNUAL GENERAL MEETING
The Annual General Meeting held on 22 April 2004 adopted the financial
statements for 2003 and discharged the Board of Directors and the CEO
from liability. It was decided to declare a dividend of EUR 0.28 per
share in line with the Board of Directors recommendation. The Annual
General Meeting confirmed as five the number of members of the Board
of Directors. Marcus H. Borgström, Agricultural Counsellor (Hon),
Markku Aalto, farmer, Lars Danell, director, Tiina Varho-Lankinen MSc
and Heikki Kauppinen BSc were all re-appointed to the Board.
The Annual General Meeting authorised the Board of Directors to decide
whether to increase the share capital. The authorisation is explained
below in Board of Directors Authorisationsö.
BOARD OF DIRECTORS AUTHORISATIONS
The Board of Directors is authorised to decide whether to increase the
share capital through one or more rights issues, whether to issue one
or more convertible bond loans and/or warrants so that in a rights
issue or when issuing convertible bonds or warrants, a maximum of
2,000,000 of the companys new A Shares having a nominal value of EUR
1.70 may be issued and the companys share capital may be raised by no
more than EUR 3,400,000.
The authorisation allows the Board of Directors to disapply the pre-
emption rights of existing shareholders and to decide the issue price
and other terms and conditions of subscription and the terms and
conditions of a convertible bond loan or warrants. The authorisation
is valid until 22 April 2005. To date, the Board of Directors has not
exercised this authorisation.
SHARE PERFORMANCE
During the first six months of 2004, 4,253,262 HK Ruokatalo A Shares
were traded on the Helsinki Exchanges for an estimated total of EUR
27,737,664. The middle price was EUR 6.52 and the June closing price
was EUR 6.49. HK Ruokatalos market capitalisation at 30 June 2003 was
EUR 167.7 million (EUR 149m).
INCREASE IN SHARE CAPITAL
Between 2 and 30 January 2004, the exercise of warrants attached to
shares issued in the 1998 Employee Offering increased the number of
the companys A Shares by 595,705 new A Shares and the share capital
by EUR 1,012,698.50. The issue price was EUR 5.94 per share. The
increase was entered in the Trade Register on 13 February 2004. The
new shares are entitled to receive a dividend for the financial year
ending 31 December 2003 and thereafter. The warrant scheme expired on
31 January and this subscription period was the last. A total of
150,000 warrants were originally attached to Employee Shares. Of
these, 119,656 were exercised to subscribe new A Shares. Around 220
members of staff employed by the Group at the time subscribed to
shares in the 1998 Employee Offering.
NOTICES OF CHANGE IN OWNERSHIP
On 13 February 2004, Markku Helander, pursuant to Chapter 2, Section 9
of the Securities Market Act, reported that he had reduced his stake
in HK Ruokatalo to 4.91 per cent of the shares and 0.99 per cent of
the votes.
Likewise, on 16 February 2004, Sampo Life Insurance Company reported
that its stake in HK Ruokatalo had fallen to 4.94 per cent of the
shares and 0.99 per cent of the votes.
EVENTS TAKING PLACE SINCE 30 JUNE 2004
On 6 August 2004, HK Ruokatalo announced it was to enter into
strategic cooperation with Europes largest meat company, Danish Crown
of Denmark, to develop Sokolów, Polands leading meat company. HK
Ruokatalo currently has a 30.10 per cent and Danish Crown a 22.54 per
cent stake in Sokolów. The plans are for cooperation to be effected
through a holding company owned on a 50/50 basis. The scope of the
envisaged cooperation and Polands stock market legislation require
the approval of both the Polish authorities and EU competition
authority.
THE FUTURE
No major changes are in sight in either the companys business or
profitability and progress made during the first six months is
expected to continue as planned for the rest of the year.
Work continues on logistics arrangements at home in a bid to centre
dispatch operations on the Vantaa and Tampere production facilities.
Additionally, one particular area of focus is to improve the
competitiveness of meat processing. We are also progressing with
structural arrangements within the Group.
In our Baltic units, the focus is on perfecting our core process and
drawing on the Groups synergetic advantages. EU membership has
created a common market in the Baltic states, which improves the
Groups business conditions.
In Poland, we expect to continue to make good progress in Sokolów and
to retain good profitability. Since both companies have extensive
excellence in the meat industry, joint cooperation by HK Ruokatalo and
Danish Crown as owners will further the development of Sokolów from
now on.
CONSOLIDATED PROFIT AND LOSS ACCOUNT (EUR 1000)
1-6/2004 1-6/2003 1-12/2003
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Turnover 328,799 310,211 647,435
Operating profit 12,383 10,555 27,465
Profit before exceptional items 10,060 8,134 22,189
Group result before taxes 10,060 8,134 22,189
Result for the period under review 8,848 5,531 15,380
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The taxes in the profit and loss account take into account the
equivalent tax on income for the period under review. Change in the
Finnish tax rate is also taken into account in taxes.
CONSOLIDATED BALANCE SHEET (EUR 1000)
30.6.2004 30.6.2003 31.12.2003
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ASSETS
Fixed assets
Intangible assets 6,250 7,459 7,247
Goodwill on consolidation 23,583 25,013 24,597
Tangible assets 194,832 192,429 193,279
Financial assets 22,892 13,696 21,366
Fixed assets, total 247,557 238,597 246,489
Current assets
Stocks 41,103 39,661 39,704
Debtors 84,568 76,659 79,724
Cash at bank and in hand 6,673 7,263 12,055
Current assets, total 132,344 123,583 131,483
Assets, total 379,901 362,180 377,972
EQUITY AND LIABILITIES
Shareholders equity 158,955 143,875 153,778
Capital loan 50 50 50
Minority interests 1,651 10,250 1,871
Group reserve - 1,226 -
Provisions for liabilities and charges 168 172 178
Deferred tax liability 7,824 7,375 8,727
Long-term creditors 98,189 94,808 97,765
Short-term creditors 113,064 104,424 115,603
Shareholders equity and liabilities,
total 379,901 362,180 377,972
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CASH FLOW STATEMENT (EUR 1000)
1-6/2004 1-6/2003 1-12/2003
Operating activities
Net cash inflow/outflow from
operating activities 23,694 20,939 48,465
Change in net working capital -7,887 -9,876 -8,451
Financial items and taxes -4,326 -4,671 -9,463
Net cash inflow/outflow from
operating activities 11,481 6,392 30,551
Investments
Net cash inflow/outflow from
investing activities -12,433 -26,421 -55,391
Financing
Change in loans -732 7,888 17,478
Dividends paid -7,237 -6,244 -6,244
Share issue 3,539 9,304 9,317
Net cash inflow/outflow from
financing activities -4,430 10,948 20,551
Change in liquid assets -5,382 -9,081 -4,289
FINANCIAL INDICATORS
Earnings per share (EPS), EUR 0.34 0.22 0.62
Equity per share at 30 June, EUR 6.15 5.70 6.09
Equity ratio, % 42.3 42.6 41.2
Number of shares 25,847,395 25,249,465 25,251,690
Gross fixed asset
investments, EUR million 12.6 27.7 64.8
Gross investments as % of turnover 3.8 8.9 10.0
Employees, end of
- month average 4,838 5,069 5,034
CONSOLIDATED CONTINGENT LIABILITIES (EUR 1000)
30.6.2004 30.6.2003 31.12.2003
Debts for which pledges or
mortgages given as surety
- pension loans 16,426 17,783 16,519
- loans from financial institutions 112,678 97,284 114,949
For own debt
- pledges 10,007 13,827 9,561
- real estate mortgages 89,088 87,890 89,088
- business mortgages 22,056 24,371 23,804
For associated undertakings
- guarantees 120 67 50
For others
- pledges 40 42 40
- guarantees 5,075 5,518 6,292
Other own commitments
Leasing commitments 433 479 510
Other liabilities 3,015 1,115 1,315
Figures in this report are unaudited.
Turku, 11 August 2004
HK Ruokatalo Oyj
Board of Directors
Simo Palokangas
Chief executive officer
DISTRIBUTION:
Helsinki Exchanges
Main media
Internet: www.hk-ruokatalo.fi
