Interim report, first quarter 2015
- Net sales decreased by 3 percent to MSEK 1,309.6 (1,353.4), and by 6 percent at constant exchange rates. Net sales from Sweden increased by 6 percent, Denmark increased by 1 percent and Norway decreased by 27 percent at constant exchange rates. The decline in Norway was due to the termination of the ICA Norway contract as of 1 April last year. Excluding this contract, net sales for the Group increased by 2 percent at constant exchange rates.
- Operating income decreased to MSEK 67.6 (78.6 adjusted), also because of the termination of the ICA contract, corresponding to an operating margin of 5.2 percent (5.8 adjusted).
- Finance expenses were significantly lower than last year as a result of the refinancing of the bank loans in July 2014.
- Income for the period increased to MSEK 41.6 (35.7 adjusted) and earnings per share was SEK 0.69 (0.71 adjusted).
- Operating cash flow amounted to MSEK 100.3 (120.9 adjusted).
- A new supply agreement was signed with Coop Norway on 22 May, including the stores acquired from ICA Norway, with deliveries to be phased in gradually from 1 August 2015.
- The acquisition of Huttulan Kukko Oy’s factory and business in Finland was completed as of 25 May.
| MSEK | Q1 2015 | Q1 2014 | Change | LTM | 2014 | |
| Net sales | 1,309.6 | 1,353.4 | -3% | 5,223.4 | 5,267.2 | |
| EBITDA | 114.0 | 120.1* | -5% | 464.1* | 470.2* | |
| Operating income | 67.6 | 78.6* | -14% | 290.0* | 301.0* | |
| Operating margin | 5.2% | 5.8%* | - | 5.6%* | 5.7%* | |
| Income for the period | 41.6 | 35.7* | 17% | 151.0* | 145.1* | |
| EPS | 0.69 | 0.71* | -3% | 2.62* | 2.63* | |
| Operating cash flow | 100.3 | 120.9* | -17% | 417.5* | 438.1* | |
| *) Adjusted for non-comparable items in Q1 2014 of MSEK -8.2 in EBITDA and operating income, and -6,4 MSEK in income for the period. For further information on the impact of non-comparable items, see page 4. | ||||||
CEO Statement
The year has started similar to last year with good sales growth in Sweden, largely unchanged sales in Denmark and lower sales in Norway. The decline in Norway was due to the termination of the ICA Norway contract and weak market demand in the quarter, but this was partly offset by new sales and product listings with existing and new customers. Excluding the ICA Norway contract, net sales in Norway in the quarter increased by 3 percent.
The market in Sweden continued its positive development, with customers appreciating the health benefits of eating chicken, with higher sales of chilled products over frozen and with good performance of recently launched products. The Danish operation benefitted from a better export market, but the domestic market continued to be characterised by customer focus on price and by competitive pressure. The market in Norway was weak throughout the quarter and every month was below last year as adverse media stories regarding chicken continued. We do believe that the impact of these stories will pass and the market will recover, but timing is uncertain.
Operating income increased substantially in Sweden and Denmark benefitting from higher operational efficiency and an improved sales mix in both countries compared to last year when we were clearing out excess inventory. The decline in the Group’s operating income and margin was due to the termination of the ICA Norway contract.
On 19 May, we signed an agreement to acquire Huttulan Kukko Oy’s factory and business in Finland. The agreement was conditional on receiving certain bank and supplier consents, and was completed on 25 May. The purchase price was MEUR 10, of which MEUR 5 is assumed debt. The price may increase to MEUR13m over five years depending on future performance.
Finland is an attractive market that shares many of the features of quality, health and welfare of chicken with the other Nordic countries. Huttulan started operations last year and has developed a premium concept which is sold to retail and foodservice customers. The acquisition brings an established team in Finland to the Group and a newly built facility currently processing approximately 1.4 million chickens on an annual basis. This is a good first step into this market and is in line with the strategy for developing our business that was established last year.
I am also pleased that we on 22 May signed a new supply agreement with Coop Norway, which includes the stores recently acquired from ICA Norway. This is expected to lead to additional sales of approximately MNOK 250 annually, phased in gradually from August 2015.
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
Jonathan Mason, Chief Financial Officer. Tel: +45 22 77 86 18
Patrik Linzenbold, Head of Investor Relations. Tel: +46 708 25 26 30
Financial calendar
- Interim report for the second quarter 2015: 28 August 2015.
- Interim report for the third quarter 2015: 26 November 2015.
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 29 May 2015.
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