FINLAND: HKScan FY profit drops on weaker margins
Margins under pressure at HKScan
Finnish meat group HKScan reported lower profitability in 2013 as "headwinds in all market areas" partially offset its turnaround efforts.
The group said net profit in the year fell to EUR9.8m (US$13.3m), down from EUR17.7m in the comparable period of 2012. Operating profit fell to EUR30.5m in the year to the end of December, down from EUR43.1m last year.
The company has embarked on a turnaround drive that has included restructuring and centralising its operations in an effort to cut costs, while also increasing its brand investments. CEO Hannu Kottonen said HKScan had done some "good work" on strengthening its share flow and balance sheet.
The firm achieved profitability in the Baltics and Poland and returned Sweden to a "profit making track" - although more work remains, Kottenen said. However, he characterised the results in Finland and Denmark as the "biggest disappointments".
Margins came under pressure due to the tough competitive environment, which hindered the group's ability to take action on pricing. However, sales remained relatively stable in the year, dipping to EUR2.48bn from EUR2.5bn.
Looking to 2014, Kottenen said the company now has a "more stable foundation" to improve its performance. The company forecast EBIT margins of 1-2%, compared to 0.5% in 2013.
HKScan Group’s financial statements release 1 January—31 December 2013: Strong cash flow
Net sales were EUR 2 478.6 (2 503.1) million in January–December, and EUR 640.6 (662.4) million in the fourth quarter.
In January–December, reported EBIT was EUR 30.5 (43.1) million, and the EBIT margin was 1.2 (1.7) per cent. Comparable EBIT excluding non-recurring items for the year was EUR 30.0 (36.7) million, and the corresponding EBIT margin was 1.2 (1.5) per cent.
For the fourth quarter, reported EBIT was EUR 15.2 (21.9) million, and the EBIT margin was 2.4 (3.3) per cent. Comparable EBIT excluding non-recurring items for the quarter was EUR 11.1 (15.5) million, and the corresponding EBIT margin was 1.7 (2.3) per cent.
Cash flow before debt service was EUR 103.4 (65.8) million in 2013 and EUR 89.6 (39.7) million in the fourth quarter.
Profit before taxes was EUR 9.7 (14.3) million in 2013 and EUR 8.7 (15.5) million in the fourth quarter.
EPS was EUR 0.16 (0.30) in 2013 and EUR 0.10 (0.27) in the fourth quarter.
Net financial expenses were EUR -24.2 (-31.7) million in 2013.
Net debt was EUR 355.7 (440.9) million, and net gearing was 87.0 (109.2) per cent in 2013.
Outlook for 2014: HKScan expects the comparable operating profit (EBIT) margin to be 1 – 2 per cent, and anticipates that the last quarter will be the strongest. In 2013, the corresponding comparable operating profit (EBIT) margin was 0.5 per cent.
The outlook takes into account that the market area Poland (HKScan’s 50 per cent share of Sokolów) will be excluded in the consolidated operating profit based on the change of IFRS 11 in the International Financial Reporting Standards as of 1 January 2014. The restated 2013 key figures are included in this bulletin.
Original source: HKScan
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