Second quarter report 2020
Continued strong operating performance
26 August 2020
- Net sales decreased by 1 percent to MSEK 2,448 (2,472) in the second quarter 2020. Net sales increased in Ireland and Finland but decreased in Sweden, Denmark and Norway.
- Adjusted operating income1) increased to MSEK 122 (115), corresponding to a margin of 5.0 (4.6) percent.
- Income for the period increased to MSEK 73 (50). Earnings per share increased to SEK 1.19 (0.78). The change compared to previous year was positively impacted by higher operating income despite non-comparables related to Covid-19 pandemic, as well as by an improved financial net driven by positive currency effects, as the Swedish krona has strengthened.
- Operating cash flow2) was MSEK 167 (115). The increase was driven by lower capital expenditure as well as improved working capital.
- Net interest-bearing debt decreased by MSEK 76 from 31 March 2020 to MSEK 2,058.
| MSEK | Q2 2020 | Q2 2019 | Change | H1 2020 | H1 2019 | Change | LTM | 2019 |
| Net sales | 2,448 | 2,472 | -1% | 4,926 | 4,930 | 0% | 9,887 | 9,891 |
| Adjusted EBITDA1) | 200 | 194 | 3% | 400 | 384 | 4% | 792 | 776 |
| Adjusted operating income (EBIT)1) | 122 | 115 | 7% | 239 | 225 | 6% | 468 | 454 |
| Non-comparable items1) | -17 | -13 | 30% | -60 | -13 | 346% | -76 | -30 |
| Operating income (EBIT) | 105 | 101 | 4% | 179 | 212 | -15% | 392 | 424 |
| Finance net | -19 | -38 | -49% | -53 | -59 | -11% | -106 | -113 |
| Income after finance net | 85 | 64 | 34% | 127 | 153 | -17% | 286 | 312 |
| Income tax expense | -12 | -14 | -13% | -18 | -31 | -41% | -62 | -75 |
| Income for the period | 73 | 50 | 48% | 108 | 122 | -11% | 223 | 237 |
| Adjusted EBITDA margin1) | 8.2% | 7.8% | - | 8.1% | 7.8% | - | 8.0% | 7.8% |
| Adjusted operating margin (EBIT)1) | 5.0% | 4.6% | - | 4.9% | 4.6% | - | 4.7% | 4.6% |
| Earnings per share, SEK | 1.19 | 0.78 | 53% | 1.70 | 1.88 | -10% | 3.42 | 3.60 |
| Adjusted return on capital employed1) | 11.1% | 10.4% | - | 11.1% | 10.4% | - | 11.1% | 11.0% |
| Return on equity | 12.8% | 15.6% | - | 12.8% | 15.6% | - | 12.8% | 14.2% |
| Operating cash flow2) | 167 | 115 | 44% | 260 | 159 | 64% | 637 | 536 |
| Net interest-bearing debt | -2,058 | -2,451 | -16% | -2,058 | -2,451 | -16% | -2,058 | -2,200 |
1) Adjusted for non-comparable items. see page 11.
2) Reclassification of cash flow effect for leasing assets has been made during the second quarter and for comparative figures.
CEO statement
Scandi Standard delivers strong results for the second quarter of 2020. With stable net sales compared to the same quarter last year, adjusted EBIT increased by 7 percent to MSEK 122, equating to an adjusted EBIT margin of 5.0 percent, a five year record quarterly margin.
The flat development in Net sales is partly attributed to downward price adjustments implemented in late 2019 to pass through decreased raw material prices for feed. Reduced Foodservice sales due to the effects of the Covid-19 pandemic, have been offset by the spike in Retail sales as consumers are spending more time at home, which in turn is driving the margins up.
Our solid business model of supplying safe, sustainable, and domestic products to our end consumers is paying off. In all of our markets consumers are focused on locally produced products adhering to the strictest animal welfare and food safety standard, and marginal use of antibiotics.
Scandi Standard is posting Covid-19 related non-comparable items in the second quarter of MSEK 17 of which the majority relates to the temporary close during April and May of some production lines focused on Foodsevice.
I am proud of the way our organisation has rapidly been able to adapt to the current environment. I am also confident that the robust adjustments and mitigating actions implemented will allow us to optimise our operating performance and secure timely deliveries of high-quality products to the customers in the prevailing environment.
During the initial stages of the Covid-19 pandemic we saw a significant drop in Foodservice sales. Although we expect volatile demand in this sales channel, it was encouraging to see positive traction during the end of the second quarter thas has continued into the third quarter. Interestingly, this has happened with a continued solid momentum in Retail sales.
As we have proven over several years there is great growth potential within chicken-based products as consumers strive to live more healthy and climate smart in addition to loving the taste. In the last five years we have demonstrated an annual organic growth of more than 8 percent, which exceeds the market growth in our main markets. This has been made possible by a solid understanding of the consumers needs and how to meet them. In order to complement our product offering further, we are in the process of assessing plant based concepts.
Scandi Standard has a strong balance sheet, solid financing and a significant available liquidity. Compared to the same time last year, net interest-bearing debt was reduced by about MSEK 400 to MSEK 2 058 compared to the end of the same quarter previous year. The capital investments for 2020 are targeted to be MSEK 300. In the absence of a negative turn of events we will consider selectively phasing in further investments later this year.
Despite the turbulence around us, we continue to carefully monitor the structural changes and opportunities within our sector. Following our recent strategic review, I am confident that we are even better suited as an acquisition vehicle in the poultry market. Acquisitions can generate significant benefits for the Group through sharing of best practice with improved efficiency and sustainable operations as well as contribute to increased stability in earnings.
I am pleased to report a good quarter with continued strong operativ performance and resilience to the ongoing Covid-19 pandemic. Being a key producer of the most affordable main protein source with sales predominantly through the growing Retail channel coupled with increased activity in the Food service puts us in a good position going forward. Based on the positive start of the third quarter I am confident that we can continue the trend of strong and gradually improved results.
Leif Bergvall Hansen
Managing Director and CEO
Conference call
A conference call for investors. analysts and media will be held on 26 August 2020 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
-
Interim report for the third quarter 2020 November 4, 2020
-
Interim report for the fourth quarter 2020 February 11, 2021
-
Interim report for the first quarter 2021 May 7. 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 26 August 2020.
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 over SEK 9 billion. For more information, please visit www.scandistandard.com.
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