Interim report Q1 2021
Stable development in a challenging environment
January-March 2021
- Net sales amounted to MSEK 2,469 (2,479) in the first quarter 2021. At constant exchange rates net sales increased by 3 percent.
- Adjusted operating income (Adj. EBIT)1) increased by 17 percent to MSEK 88 (75), corresponding to a margin of 3.5 (3.0) percent.
- Income for the period increased to MSEK 54 (35). Earnings per share increased to SEK 0.84 (0.51).
- Operating cash flow was MSEK 109 (95).
- Net interest-bearing debt of MSEK 1,941 increased by MSEK 8 compared to the end of the previous quarter, mainly due to repurchase of own shares during the first quarter of MSEK 32 (-).
- New segment reporting supporting our strategy for continued growth and value creation, focusing on the two reportable segments Ready-to-cook and Ready-to-eat, effective as of 1 January 2021.
- New definition for treatment of items affecting comparability with stricter classification was introduced during the first quarter 2021. See note 8 for further details and restated figures. Comparisons in this report are made against restated figures for the performance measures adjusted EBITDA and adjusted operating income (Adj. EBIT).
Key metrics
| MSEK | Q1 2021 | Q1 2020 | % | R12M | 2020 |
| Net sales | 2,469 | 2,479 | 0% | 9,931 | 9,940 |
| Adj. EBITDA1) | 180 | 159 | 14% | 777 | 756 |
| Adj. EBITA1) | 100 | 87 | 15% | 471 | 457 |
| Adj. EBIT1) | 88 | 75 | 17% | 422 | 410 |
| Non-comparable items1) | - | - | - | -59 | -59 |
| EBIT | 88 | 75 | 17% | 364 | 351 |
| Finance net | -16 | -33 | -51% | -74 | -90 |
| Income after finance net | 71 | 41 | 72% | 290 | 260 |
| Income tax expense | -17 | -6 | 182% | -63 | -52 |
| Income for the period | 54 | 35 | 54% | 227 | 208 |
| Adj. EBITDA margin1) % | 7.3% | 6.4% | - | 7.8% | 7.6% |
| Adj. EBITA margin1) % | 4.1% | 3.5% | - | 4.7% | 4.6% |
| Adj. EBIT margin 1) % | 3.5% | 3.0% | - | 4.3% | 4.1% |
| EBIT margin % | 3.5% | 3.0% | - | 3.7% | 3.5% |
| Earnings per share, SEK | 0.84 | 0.51 | 65% | 3.50 | 3.16 |
| Adjusted return on capital employed1) | 9.8% | 9.3% | - | 9.8% | 9.7% |
| Return on equity | 11.9% | 11.0% | - | 11.9% | 11.5% |
| Operating cash flow2) | 109 | 95 | 15% | 490 | 476 |
| Net interest-bearing debt | -1,941 | -2,134 | - | -1,941 | -1,933 |
| NIBD/EBITDA | 2.5 | 2.8 | 2.5 | 2.6 | |
| Feed efficiency3) | 1.53 | 1.54 | -1% | 1.52 | 1.52 |
| LTI per million hours worked (no)3) | 31.8 | 29.6 | -1% | 31.2 | 31.0 |
1) Restated non-comparable items. see note 6 and 8.
2) Reclassification of cash flow effect for leasing assets has been made for the year and for comparative figures.
3) See definitions in the Overview – segment consolidation and KPIs section, page 4.
CEO comments
Scandi Standard reports another quarter of underlying growth and a satisfactory operating result provided the turbulence around us. Net sales was stable at SEK 2,469 (2.479) but increased by 3 percent in local currency. Adjusted operating income (Adj. EBIT) increased by 17 percent to MSEK 88 (75), implying a margin of 3.5 (3.0) percent. Adjusted operating income (Adj. EBIT) was negatively impacted by MSEK 27 (27) due to effects from covid-19 and bird flu.
Sustainability is at the core of what we are doing in Scandi Standard and we see a high degree of alignment between sustainability and financial performance. Our Nordic businesses already have a leading European position across many of the key dimensions. Although we are working continually to improve our position further, I am proud to say that poultry stand out in the protein industry and Scandi Standard stand out in the poultry industry. To increase transparency, we have decided to report quarterly performance for a number of KPIs and we look forward to hosting our first ESG day in 2021.
While Scandi Standard’s presence in five geographical markets provides a stable platform diversifying country-specific risk, an integral part of the strategy for continued growth and value creation is to share best practice, capitalize on product development and drive scale efficiencies across the group. In addition, Scandi Standard sees an opportunity to export best practice when adding new markets through potential strategic acquisitions and partnerships.
The matrix organisation consists of five country organisations, complemented with group functions supporting value creation. The successful expansion of the Ready-to-eat business, which has grown organically from net sales of MSEK 500 to BNSEK 2 since 2015, has accentuated the rationale to follow up Ready-to-cook and Ready-to-eat separately, as they largely represent different skill sets and production processes. In 2020, Scandi Standard conducted a comprehensive strategic review, which further strengthened the view that an increased focus on these two reportable segments will be a better way to identify, nurture and spread best practice to support continued growth and value creation.
Based on the strategic review, Scandi Standard’s internal organisation has been aligned, including internal reporting and decision-making processes. Consequently, with effect from 1 January, 2021, the segment reporting is updated to comprise the reportable segments Ready-to-cook and Ready-to-eat, as it best reflects how Scandi Standard primarily manages and monitors its operations.
Ready-to-cook had a net sales of MSEK 1,938 (1,899) representing a growth of 2 percent, and adjusted operating income (Adj. EBIT) increased by 3 percent to MSEK 69 (68). All countries contributed to the growth in net sales in local currencies.
Raw material prices for feed have risen to a historic high level. We are in the process of ensuring that prices on our products are adjusted accordingly. I am confident that our relationship-based approach to absorb raw material price changes throughout the value chain will lead to high level of compensation for the raw material increases, although there will be some phasing effects.
Our Ready-to-cook business in Denmark continued to struggle, largely due to high costs for live birds combined with stock clearance in a difficult export market, and Denmark Ready-to-cook reported a negative adjusted operating income of MSEK 50 in the quarter. It is my primary focus find a sustainable long term solution for the Danish Ready-to-cook business.
Ready-to-eat had net sales of MSEK 444 (476) representing a decline of 7 percent, due to reduced Food Service sales. Adjusted operating income (Adj. EBIT) increased significantly to MSEK 26 (13). Denmark (61% of net sales) delivered a good result despite soft sales to quick service restaurants in Europe. We have progressed with our plant-based product initiatives, and we had our first product launches at the beginning of the second quarter.
Scandi Standard has a strong balance sheet, a solid financing, and a significant available liquidity. Compared to the end of the fourth quarter 2020, net interest-bearing debt increased by MSEK 8 to MSEK 1,941 (1,933). Our capital investment amounted to MSEK 118 (103) for the quarter and our estimate for 2021 is MSEK 400. Focus for the 2021 investments are a combination of efficiency, capacity and ESG -investments.
The Board proposes at today’s Annual General Meeting a dividend of SEK 1.25 per share. The Board intends to summon an Extraordinary General Meeting during the second half of 2021 to propose a second dividend of 1.25 SEK per share.
We expect gradual improvement in market conditions once Covid‑19 and bird flu restrictions are being lifted.
Stockholm, 7 May 2021
Leif Bergvall Hansen, Managing Director and CEO
Conference Call
A conference call for investors, analysts and media will be held on 7 May 2021 at 8.30 AM CET.
Dial-in numbers:
UK: 020 3936 2999
Sweden: 010 884 80 16
US: +1 646 664 1960
Other countries: +44 20 3936 2999
Slides used in the conference call can be downloaded at www.scandistandard.com under Investor Relations. A replay of the conference call will be available on www.scandistandard.com afterwards.
Further information
For further information, please contact:
Leif Bergvall Hansen, Managing Director and CEO
Tel: +45 22 10 05 44
Julia Lagerqvist, CFO
Tel: +46 72 402 84 02
Henrik Heiberg, Head of M&A, Financing & IR
Tel: +47 917 47 724
Financial calendar
| Annual general meeting | May 7, 2021 |
| Interim report for Q1 2021 | May 7, 2021 |
| Interim report for Q2 2021 | August 26, 2021 |
| Interim report for Q3 2021 | November 12, 2021 |
This interim report comprises information which Scandi Standard is required to disclose pursuant to EU market abuse regulation and the Securities Markets Act. It was released for publication at 07:30 AM CET on 7 May 2021.
About Scandi Standard
Scandi Standard is the leading producer of chicken-based food products in the Nordic region and Ireland. The company produces, markets and sells ready to eat, chilled and frozen products under the well-known brands Kronfågel, Danpo, Den Stolte Hane, Manor Farm and Naapurin Maalaiskana. Eggs are also produced and sold in Norway. We are approximately 3,000 employees with annual sales of more than SEK 9 billion. For more information, please visit www.scandistandard.com.