Third quarter report 2020

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Good growth and strong operating performance

4 November 2020

  • Net sales increased by 3 percent to MSEK 2,621 (2,541) in the third quarter 2020. Net sales increased in all segments.

  • Adjusted operating income1) increased to MSEK 147 (125), corresponding to a margin of 5.6 (4.9) per­cent.
  • Income for the period increased to MSEK 78 (72). Earnings per share increased to SEK 1.21 (1.12). The change compared to previous year was positively impacted by higher adjusted operating income, and by improved financial net driven by positive currency effects, as the Swedish krona has strengthened compared to the same quarter last year.
  • Operating cash flow2) was MSEK 240 (74). The increase is affected to a higher adjusted operating income and im­proved working capital.
  • Net interest-bearing debt decreased by MSEK 129 from 30 June 2020 to MSEK 1,929.

MSEK

Q3 2020 Q3 2019 Change 9M 2020 9M 2019 Change LTM 2019
Net sales 2,621 2,541 3% 7,548 7,471 1% 9,968 9,891
Adjusted EBITDA1) 231 207 12% 631 591 7% 816 776
Adjusted operating income (EBIT)1) 147 125 17% 386 350 10% 490 454
Non-comparable items1) -31 - - -91 -13 573% -107 -30
Operating income (EBIT) 116 125 -8% 295 337 -12% 383 424
Finance net -15 -33 -55% -68 -92 -27% -88 -113
Income after finance net 101 92 10% 227 244 -7% 294 312
Income tax expense -23 -20 16% -41 -50 -19% -66 -75
Income for the period 78 72 8% 187 194 -4% 229 237
Adjusted EBITDA margin1) 8.8% 8.2% - 8.4% 7.9% - 8.2% 7.8%
Adjusted operating margin (EBIT)1) 5.6% 4.9% - 5.1% 4.7% - 4.9% 4.6%
Earnings per share, SEK 1.21 1.12 8% 2.84 3.00 -5% 3.44 3.60
Adjusted return on capital employed1) 11.2% 10.5% - 11.2% 10.5% - 11.2% 11.0%
Return on equity 12.2% 16.1% - 12.2% 16.1% - 12.2% 14.2%
Operating cash flow2) 240 74 225% 499 232 115% 804 536
Net interest-bearing debt -1.929 -2.535 -24% -1.929 -2.535 -24% -1.929 -2.200

1) Adjusted for non-comparable items. see page 11 and page 22.
2) Reclassification of cash flow effect for leasing assets has been made for the year and for comparative figures.
 

CEO statement

Scandi Standard delivers another strong result in the third quarter of 2020. With a three percent growth in net sales compared to the same quarter last year, corresponding 7 percent in local currency, adjusted EBIT increased by 17 percent to MSEK 147. The quarterly adjusted EBIT margin of 5.6 percent represent a five-year quarterly record for the Group.

I am pleased to report that we have returned to a strong growth in net sales in the third quarter despite the Covid 19 related reduction in Foodservice demand. The strong retail demand has more than offset the reduced demand from our Foodservice clients. Although we have seen improvement in Foodservice sales compared to the second quarter, demand from this channel remains volatile as a result of changing Covid-19 related consumer behaviours and state measures. All in all, we maintain a good sales mix which contributes to the strong margins.

In all our markets, consumers more than ever focus on locally produced products adhering to the strictest animal welfare and food safety standard. In order to solidify our market positions, we are using the increased momentum to reminding consumers of our products ability to meet these requirements. We expect to achieve lasting effects from this enforcement.

I remain 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.

As we have proven over several years there is great growth potential within chicken-based products as consumers strive to live healthier 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.

Scandi Standard has a strong balance sheet, a solid financing and a significant available liquidity. Compared to the end of the third quarter last year, net interest-bearing debt was reduced by about MSEK 600 to MSEK 1,929. Considering this we have decided to ease our restrictions on capital investment this year and expect to spend MSEK 350 compared to the previous guidance of MSEK 300, still below the initial plan for the year of 420 MSEK. This will allow us to phase in sustainable investments which are expected to have a short payback.

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 strong quarter with continued solid operating performance and resilience to the ongoing Covid-19 pandemic so far. 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 Foodservice puts us in a good position going forward.

We expect to continue to deliver an improvement in adjusted EBIT in the fourth quarter of 2020 compared to the same quarter last year.

Leif Bergvall Hansen
Managing Director and CEO
 

Conference call

A conference call for investors. analysts and media will be held on 4th November 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 fourth quarter 2020            February 11, 2021
  • Interim report for the first quarter 2021                May 7, 2021
  • Interim report for the second quarter 2021           August 26, 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 4th November 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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