Sweden’s leading abattoir and meat group Swedish Meats reported a small profit for the last four months to August after years of losses, and the unexpected improvement in earnings could signal that a turn-around is imminent in the depressed Swedish meat industry.

Swedish Meats posted an operating profit of Skr59m (US$5.57m) for the May to August period, compared with a Skr69m loss year on year. Sales in the period rose 23% to Skr3.2bn. For the eight-month period to August, Swedish Meats reported sales up 17% to Skr6.1bn, and the operating loss narrowed to Skr23m from Skr175m a year-ago.

The improvement was due to internal cost cutting and better margins, the company said. Volumes, despite the strong increase in sales, are still depressed.

Improved earnings reported earlier by smaller meat groups give further evidence conditions are changing for the better, however industry figures to May showed that domestic meat consumption was down 8% year-on-year.

Instead, higher prices have helped the industry recover so far. According to Statistics Sweden, retail beef prices were 9.6% higher and pork meat prices up by 15.2% in year to August, and analysts explain that the meat industry could pick up the returns, as the tough retail competition would not have allowed the price hike to benefit that sector.

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Further growth will have to come through higher volumes and signs are indicating domestic producers are crawling back, alas on a shrinking market. Trade figures to March had showed pork meat imports slumping 19.5% and beef by 8.7%, declines far more than the fall in consumption.

Recent figures from the National Board of Agriculture also showed a build-up in Swedish livestock. A dramatic 9% fall in number of heads in domestic pig production in last year had shrunk to a 1% drop this June.

As positive developments earlier this year starts ciphering through the sector, as indicated by the improvement in Swedish Meats April-August earnings, the future for the battered meat industry looks brighter than it has done for many years. The challenge ahead is stemming the fall in consumption.

By Jerry Simonsson, just-food.com correspondent