Third quarter report 2020
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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