An oversupply of pork and strong competition has resulted in Finnish meat group HKScan‘s profits lagging in the second quarter, with a slight growth in net sales.

Net sales for January to June were  EUR921.8m (US$1bn) and EUR482.7m in the second quarter. The group said total net sales showed “modest year-on-year growth of 1.7%”.

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HKScan’s deputy CEO Aki Laiho said: “In the second quarter, comparable earnings before income and tax (EBIT) lagged behind last year, and was EUR2.2m. Main reasons were high beef raw material prices in Sweden – which stabilised in June – and oversupply of pork in the EU affecting the sales prices negatively, especially in Finland.” 

To address this problem, HKScan said a voluntary reduction scheme of piglet production had been successfully introduced in Finland, while in Sweden high beef purchase prices are being passed onto consumers. Additionally, domestic sales of Danish fresh poultry continued the positive trend already seen in the previous quarter.

The market demand in general grew on all HKScan home markets from January to June, but slowed during the second quarter. The group’s net sales grew slightly in the second quarter, but still lagged behind the previous year for January–June.

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Sales margins decreased in Sweden but stabilised in the other markets in the second quarter. The group’s EBIT remained behind both the previous year’s second quarter and the whole reporting period.

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HKScan said Denmark improved its EBIT, whereas Sweden, Finland and the Baltics were still behind during the second quarter. The group’s operational efficiency measures advanced well during January-June and continued with success in Sweden and Denmark in the second quarter.

In Sweden, the demand for domestic meat remained strong, although tough competition caused both an increase in animal purchase prices and a shortage of beef, the group said. This resulted in an increase in sales prices.