Finland-based food group HKScan is to sell its Swedish business to local agri-food group Lantmännen.
In a stock exchange statement, HKScan said Lantmännen will pay around €60m ($65.9m) for HKScan Sweden. It will also hand over the shares it holds in HKScan Corporation, which have a calculated market value of €5.5m.
Lantmännen will in addition re-pay an intra-group loan between HKScan Corporation and HKScan Sweden worth approximately €50m.
HKScan CEO Juha Ruohola said: “The divestment of the Swedish business will strengthen HKScan’s balance sheet. In addition, the sale will allow us to better focus on our remaining businesses and implement our long-term strategy.
“We will continue to operate on our foundations as a strongly Finnish but internationally-active listed company. Our market position is significant and we have strong brands. Our strategic goal is to grow into a versatile food company.”
Magnus Kagevik, Lantmännen’s group president and CEO, said: “This acquisition is strategically important for Lantmännen and for our members, active Swedish farmers. It broadens and strengthens our business portfolio and creates stronger long-term conditions for Swedish agriculture.
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“Together with HKScan’s market-leading brands and knowledge, we see good opportunities for further developing our businesses.”
Lantmännen is owned by 18,000 Swedish farmers, with 10,000 employees and operations in more than 20 countries. It has net sales of €5.6bn and is known for its consumer brands including Vaasan, Myllyn Paras and Start.
HKScan said the newly-announced transaction does not include the Polish bacon unit, which has previously been reported as part of the Sweden business unit. In future, it will be reported as part of the Finland business unit.
The company has operated in Sweden since 2007 where it owns consumer brands Scan, Pärsons and Bullens. It employs around 1,800 people in production units at Linköping, Kristianstad, Skara and Halmstad.
In 2022, the Swedish business had net sales of €736.2m. HKScan’s net sales for continuing operations (Finland and Denmark) totalled €1.09bn.
Following the disposal, HKScan said it expects its earnings from continuing operations to improve compared to 2022.
It now estimates the 2023 comparable EBIT for the company’s continuing operations to be €13m-€16m. The comparable EBIT for 2022 for the Finnish and Danish business units (including the Polish unit) was a loss of €2.8m.
It said: “The full-year performance will be significantly affected by inflation and the development of consumer purchasing power in the company’s home markets. On the other hand, in the beginning of 2023, energy and logistics costs were on a more moderate level than in the peak of 2022.”
Last March, HKScan announced it was cutting jobs at a domestic poultry plant in an attempt to “improve profitability”.
The company saw its CEO Tero Hemmilä depart six months earlier alongside a statement saying “urgent measures” were necessary to “improve the profitability of the core business and to strengthen the balance sheet”.