Fourth quarter and year-end report 2014

Fourth quarter compared to the same period 2013

• Net sales decreased by 4 percent to 1,252.0 (1,306.8) MSEK, and by 6 percent at constant FX, with a decline in Norway and higher sales from Sweden and Denmark.
• Adjusted*operating income increased to 79.6 (77.0) MSEK, corresponding to an improved margin of 6.4 (5.9) percent.
• Adjusted* income for the period increased to 48.1 (16.5) MSEK, and adjusted* earnings per share were 0.80 (0.33) SEK.
• Adjusted* operating cash flow improved to 64.5 (-53.2) MSEK.

Full year 2014 compared to pro forma 2013

• Net sales increased by 1 percent to 5,267.2 (5,192.4) MSEK, and were flat at constant FX, with strong growth in Sweden and higher sales in Denmark offsetting lower sales in Norway.
• Adjusted* operating income decreased to 301.0 (317.2) MSEK corresponding to a margin of 5.7 (6.1) percent, due to the termination of a major contract in Norway as of 1 April 2014.
• Adjusted* income for the period increased to 145.1 (89.2) MSEK and adjusted*earnings per share rose to 2.63 (1.78) SEK, positively impacted by lower finance expenses following the refinancing of bank loans in July 2014.
• Adjusted* operating cash flow improved to 438.1 (176.1) MSEK, helped by a reduction of inventories compared to an increase in the previous year.
• The Board of Directors proposes a dividend for 2014 of 1.30 (-) SEK per share.

*) Adjusted for non-comparable items of -6.1 (-19.8) MSEK in operating income in Q4 and -62.5 (-154.3) MSEK
   for the full year 2014. For further details on the non-comparable items, see page 4.

CEO Statement

Net sales for the full year 2014 were slightly up overall, with higher sales in Sweden and Denmark offsetting a decline in Norway following the termination of the ICA Norway contract as of 1 April 2014. Excluding this contract, net sales rose by 7 percent in local currency. The retail market for chicken products in Scandinavia increased by approximately 3 percent* in value for the full year. Group sales increased ahead of the retail market in Sweden and Denmark but behind in Norway.

Adjusted operating income and margin for the full year were lower than 2013 pro forma due to the loss of the ICA Norway contract. The impact of the loss of this contract was to a large extent offset by a strong performance in Sweden and operational cost-savings. In the fourth quarter both operating income and margin improved, benefitting from cost-savings and a more favourable inventory position than last year.

The refinancing of the bank loans in July at lower interest rates led to significantly lower finance expense. As a result, adjusted income for the period and adjusted earnings per share increased strongly both for the quarter and the full year.

Adjusted operating cash flow showed a substantial improvement for the full year, helped by inventory reductions this year compared to increases last year.

Net sales in Sweden showed strong growth and the adjusted operating income and margin improved both for the quarter and the full year. In Denmark, net sales and adjusted operating income also increased for both periods.

In Norway, the process to replace the sales lost on the ICA Norway contract has taken longer than anticipated. The decline in net sales in Norway was more pronounced in the fourth quarter as the whole retail market for chicken products was affected by extensive media coverage regarding bacteria in chicken. The media focus has continued into 2015 with an ongoing negative impact on demand for chicken products. This, in combination with the loss of the ICA contract, will impact negatively in 2015.

In Scandi Standard we go to great lengths to safeguard the healthiness of our products and we believe that chicken products in Norway, as well as in Sweden and Denmark, are among the healthiest in the world. Scandinavian chicken products are generally regarded as being of the highest quality due to the strict standards applied on matters of animal health and welfare and the fact that neither antibiotics nor growth hormones are used in the feed process.

Our product innovation programme delivered a number of successful product launches in the year. We will continue to increase our efforts in this area going forward to support our vision of Scandinavians eating chicken at least once more per week. The acquisition of Bosarpskyckling is a valuable addition to the Group in this respect as it creates a new platform for growth in the premium organic segment. We are now looking to increase the number of external farms that are able to supply organic chicken.

Our actions to improve operational efficiency continued as planned. The number of chickens processed per employee per day in our main plant in Sweden increased by 26 percent from 2013. In Norway, we managed to reduce operating costs but the number of chickens processed per employee and day declined by 16 percent because of the sharp fall in sales volumes. The lower cost base creates a good platform for improved efficiency in production going forward.

We made good progress in many areas during 2014 and strengthened our position as the market leader in chicken-based food products in Scandinavia. The adjusted operating income for the Group was below our initial expectations due to the decline in sales in Norway, but this has not caused us to change our medium-term financial targets communicated in June 2014.

Leif Bergvall Hansen
Managing Director and CEO

For further information, please contact:

Leif Bergvall Hansen, Chief Executive Officer,   Tel: +45 22 10 05 44
Jonathan Mason, Chief Financial Officer,           Tel: +45 22 77 86 18
Patrik Linzenbold, Head of Investor Relations, Tel: +46 708 25 26 30

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 25 February 2015.

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