HKScan - demand for poultry products higher than expected

HKScan - demand for poultry products higher than expected

Finnish meat processor HKScan is to invest EUR6m (US$6.6m) in its domestic poultry unit at Rauma to meet increased demand.

The announcement comes just three months after the Helsinki-listed company flagged up possible job losses at the site as part of restructuring plans.

Today (22 January), HKScan announced the capacity of the Rauma poultry unit will increase and suggested productivity will also improve.

It said its investment will significantly improve raw material yields, productivity and operational reliability and ensure the capacity required for growing demand. The investment will be implemented in stages at the end of this year.

HKScan CEO Tero Hemmilä said: "We will renew the whole first part of the poultry unit's production process in Rauma since the slaughter line introduced in 2017 does not meet the standards required by the group's current management. 

"With the investment, the processing capacity of the slaughter line will increase by some 20% and raw material yields by some 10%. The investment will also ensure a significant reduction in the consumption of utilities, such as water and district heating. Demand for poultry products continues to increase and the investment enables us to better meet this strong demand in the coming years."

With the investment, the current slaughter line will be dismantled. As a result, HKScan said it will record a EUR6.9m write-down of the residual value of the current line balance sheet. The company said the write-down has no impact on cash flow.

HKScan revealed demand and sales of its poultry products in Finland have grown faster and stronger than expected. It said sales of Kariniemen poultry products, in particular, are expected to grow faster than the market.

In December, HKScan announced a new operating model for the company that was due to become operational this month.

November 2019: HKScan CEO Tero Hemmila on managing the Nordic meat group's turnaround programme while looking for growth – the just-food interview