HKSCAN CLARIFIES OUTLOOK FOR LATE 2008
HKScan Corporation STOCK EXCHANGE RELEASE 4 July 2008 at 2.30pm
HKSCAN CLARIFIES OUTLOOK FOR LATE 2008 In its financial announcements in the early part of the year, HKScan Corporation projected it would achieve the level of earnings seen in 2007, providing that the difficult situation in the international pork market settled in the latter half of the year. Management now estimates that a reversal in economic trends will be pushed back towards the end of 2008. This will weaken the company's earnings performance in all its markets and, in a departure from earlier estimates, depress full-year earnings clearly below those in 2007. Current projections have the company falling short of anticipated earnings both for the first half of the year and in Q3. Moreover, substantial additional expenditure arising from the use of frozen meat stocks in Finland as well as non-recurring writedowns of primary production in Poland will be booked in Q2. The costs of raw materials and energy have been rising at record rates and the company has in practice been unable to pass these on to sales prices. This is reflected in clearly depressed sales margins in all the Group's markets. Improvements in functional efficiency will cover part of the lost margin, and cost-cutting measures will continue to be pursued. In the short term, however, efficiency measures alone will not be sufficient to compensate for reduced margins. It is therefore obvious that the wholesale prices of meat and meat products must be increased in all Group markets in order to restore normal business conditions as quickly as possible. *** EARLIER PROJECTIONS In its Q1 interim report released on 7 May 2008, the company reiterated the view presented in its financial statements bulletin of the difficult situation in the international pork market significantly eroding the profitability of the meat business and influencing the entire company's performance in all markets, especially in Finland and the Baltics, in the early part of the year. Full-year earnings from operations for the entire Group in 2008 will be in line with the previous year, provided that the company's estimate of the pork market evening out in the latter half of the year is realised. *** HKScan Corporation Kai Seikku CEO Further information is available from CEO Kai Seikku. Please leave any messages for him to call with Marjukka Hujanen on +358 (0)10 570 6218. DISTRIBUTION: OMX Nordic Exchange Main media www.hkscan.com