Hkfoods Oyj Class A · OMXHEX:HKFOODS
Hkfoods Oyj Class A — HKScan — Q3 2019 Earnings Presentation
40 slides from Hkfoods Oyj Class A's earnings presentation, Nov 6, 2019
Slide 1: Interim Report Q3 2019
Interim Report Q3 2019 Osavuosikatsaus Q3 2019 Tero Hemmilä, CEO Jyrki Tero Paappa, Hemmilä, CFO toimitusjohtaja Jyrki Paappa, talousjohtaja 6 November 2019 6.11.2019
Slide 2: Implementation of the turnaround programme proceeding according to plan
Implementation of the turnaround programme proceeding according to plan Towards profitable growth Stabilising business 2021 Balancing company 2020 finances 2019 Cash flow, Profitability, Balance sheet Share issue, Turnaround, Strategy INTERIM REPORT Q3 2019 2
Slide 3: The systematic implementation of the turnaround programme continues
The systematic implementation of the turnaround programme continues • The goal of the programme is to turn profitability to a healthy level during 2019-2021 • The performance improvement target has been set for three years and all market areas • The performance improvement target has been put into p
Slide 4: The turnaround programme is implemented widely
The turnaround programme is implemented widely The impact of areas of the turnaround programme on profitability in 1-9/2019 Poultry, FI Operational Commercial SGA costs Sourcing Excellence Excellence INTERIM REPORT Q3 2019 4
Slide 5: HKScan – Q3 2019 in brief
HKScan – Q3 2019 in brief • The company was on the right track and its financial performance was improving as planned • The goal-oriented, systematic implementation of the turnaround programme continued • Net sales were EUR 439.4 (416.2) million, increasing nearly 6%. Growth in all markets. • EBIT s
Slide 6: HKScan Q3 – net sales increased clearly
HKScan Q3 – net sales increased clearly Net sales, EUR million Q3 2019 • Growth in all market areas + 1.6% • Sales of red meat increased 1260,7 1280,6 by more than 5% • Sales of poultry in Finland + 5.6% increased by more than 15% 416,2 439,4 • HKScan’s pork exports from Finland to China increased i
Slide 7: HKScan Q3 – growing net sales
HKScan Q3 – growing net sales Q3 2019 Net sales, EUR million • Net sales increased in Finland thanks to the improved delivery capability and productivity of the Rauma poultry unit. Sales increased in all other product categories, as well. • In Sweden, the good development of food service and retail
Slide 8: HKScan Q3 – comparable EBIT showing profit of EUR 4.5 million
HKScan Q3 – comparable EBIT showing profit of EUR 4.5 million Comparable EBIT, EUR million Q3 2019 • Profitability improved widely in all Q3 Q1-Q3 market areas and product categories 4.5 • The result improved thanks to • positive development of poultry business in Finland -9.8 -8.0 • commercial succ
Slide 9: HKScan Q3 – EBIT improved in all market areas
HKScan Q3 – EBIT improved in all market areas EBIT Q3 2018 – Q3 2019, EUR million Q3 2019 • In Finland, the result was improved by the strengthened performance +0.8 4.5 of the poultry business +0.8 +1.4 +10.7 • In Sweden, comparable EBIT continued to improve despite the unfavourable currency effect
Slide 10: Outlook 2019 (Unchanged)
Outlook 2019 (Unchanged) HKScan expects its improvement programmes and other corrective actions to record results in 2019, and the company’s EBIT is expected to improve clearly from the previous year. Global meat consumption is projected to increase during the coming years. Within HKScan’s home mark
Slide 11: HKScan – key figures
HKScan – key figures (EUR million) Q3 2019 Q3 2018 Q1-Q3 Q1-Q3 2018 2019 2018 Net sales 439.4 416.2 1 280.6 1 260.7 1 715.4 EBIT 4.5 -9.8 -16.7 -44.8 -48.3 - EBIT margin, % 1.0 -2.4 -1.3 -3.6 -2.8 Comparable EBIT 4.5 -9.8 -8.0 -44.4 -46.3 - EBIT margin, % 1.0 -2.4 -0.6 -3.5 -2.7 Profit for the perio
Slide 12: HKScan – key figures
HKScan – key figures (EUR million) Q3 2019 Q3 2018 Q1-Q3 Q1-Q3 2018 2019 2018 Cash flow before investments 12.5 -9.4 18.1 -38.2 -3.4 Cash flow before debt service 6.6 -19.8 -7.0 -117.3 -95.4 Return on capital employed -2.6 -9.6 -6.7 (ROCE) before taxes, % Net debt 308.8 352.0 335.6 Net gearing, % 90
Slide 13: Sweden Q3 – net sales increased in local currency
Sweden Q3 – net sales increased in local currency Net sales, EUR million - 4.3% 500,1 478,6 - 0.9% 162,8 161,4 Q3 Q1-Q3 2018 2019 • Net sales increased in local currency, thanks to improved food service sales and successful branded sales in retail • The sales responsibility for Danish poultry sold i
Slide 14: Sweden Q3 – profitability improved due to cost savings
Sweden Q3 – profitability improved due to cost savings Comparable EBIT, EUR million + 0.6 + 1.9 EUR million EUR million 5.6 3.6 3.7 3,0 Q3 Q1-Q3 2018 2019 • Despite the unfavourable currency impact, comparable EBIT increased as a result of better sales margins, improved operational efficiency and lo
Slide 15: Finland Q3 – sales increased in all categories
Finland Q3 – sales increased in all categories Net sales, EUR million + 6.2% 526,3 559,1 + 10.6% 172,0 190,2 Q3 Q1-Q3 2018 2019 • Net sales increased clearly particularly thanks to growth in the poultry business • Sales increased also in all other meat categories and meals INTERIM REPORT Q3 2019 15
Slide 16: Finland Q3 – EBIT was positive
Finland Q3 – EBIT was positive Comparable EBIT, EUR million + 10.7 + 29.3 EUR million EUR million Q3 Q1-Q3 1.3 -4.3 -9.4 -33.6 2018 2019 • Profitability improved especially thanks to the improved delivery capability and productivity of the Rauma poultry unit • The profitability of other categories,
Slide 17: The position of the Kariniemen brand in Finland is unmatched
The position of the Kariniemen® brand in Finland is unmatched • In Finland, HKScan’s sales of poultry in July–August increased by more than 20% • In January–September, sales increased by more than 15% • The Kariniemen brand has the strongest image in Finland by far • Kariniemen is the best known, mo
Slide 18: Denmark Q3 – good retail sales development increased net sales
Denmark Q3 – good retail sales development increased net sales Net sales, EUR million + 3.3% 113,6 117,3 + 11.4% 39,4 43,9 Q3 Q1-Q3 2018 2019 • The increase in net sales was impacted by strengthened retail sales, good product mix and increased export volumes INTERIM REPORT Q3 2019 18
Slide 19: Denmark Q3 – profitability improved after a challenging start for the year
Denmark Q3 – profitability improved after a challenging start for the year Comparable EBIT, EUR million + 1.4 - 0.9 EUR million EUR million Q3 Q1-Q3 -0.1 -1.5 -3.4 2018 2019 -4.3 • Comparable EBIT improved clearly thanks to improved sales mix, operational efficiency measures and tight cost control,
Slide 20: Baltics Q3 – sales continued to increase
Baltics Q3 – sales continued to increase Net sales, EUR million + 4.0% 120,7 125,5 + 4.8% 41,9 43,9 Q3 Q1-Q3 2018 2019 • Net sales increased thanks to improved retail sales, better product sales mix and increased market prices of pork INTERIM REPORT Q3 2019 20
Slide 21: Baltics Q3 – EBIT improved clearly
Baltics Q3 – EBIT improved clearly Comparable EBIT, EUR million + 0.8 + 3.3 EUR million EUR million 3.5 1.7 0.9 0.2 Q3 Q1-Q3 2018 2019 • Profitability improved due to improved sales margins and operational efficiency measures • The change of biological asset revaluation amounted to EUR 0.0 (-0.2) mi
Slide 22: Cash flow strengthened clearly as profitability improved
Cash flow strengthened clearly as profitability improved Cash flow before investments, EUR million Group investments, EUR million 34.8 15.0 14.7 13.8 20.9 12.3 12.5 11.8 11.1 10.1 7.6 -9.4 -15.3 -39.9 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 INTERIM REPORT
Slide 23: Net gearing was clearly below the corresponding period
Net gearing was clearly below the corresponding period Net debt and net gearing • Net debt and net gearing decreased from the corresponding period due to 364.7 the successful share issue in June and 358.0 360.8 the clearly improved cash flow 352.0 335.6 • Net gearing remained stable compared to Q2 2
Slide 24: Debt profile and maturity structure
Debt profile and maturity structure Interest-bearing debt by credit type, Maturity of Group’s interest-bearing debt*, EUR million* EUR million 15.0 200 25.3 10.7 160 120 153.3 80 74.3 40 0 Total interest-bearing debt: EUR 278.6 million 2019 2020 2021 2022 >2022 Bonds Bank loans Commercial papers *EU
Slide 25: We make life tastier - today and tomorrow
We make life tastier - today and tomorrow HKScan Corporate Strategy starting 2020
Slide 26: HKScan’s market areas and categories
HKScan’s market areas and categories Net sales 2018 Market area Category Key Brands Key Channels (million euros) Food Finland 722 Retail service Other Food Sweden 682 Retail service Other FS Baltics 162 Retail Other FS Denmark 149 Retail Other HKScan exports to ~ 50 countries worldwide and is Export
Slide 27: Our aspiration
Our aspiration HKScan is a versatile food company based on naturalness, responsibility, healthiness and good taste. In addition to our responsibly produced red meat, we will strengthen our position in consumers’ food moments by growing in poultry and meals. We are also looking into expanding our bus
Slide 28: Trends driving our strategic choices
Trends driving our strategic choices New product categories challenging meat Cross-border competition on the plate Healthiness and sustainability of food Changes in consumers’ Distribution channels Changes in ideology and under disruption primary production consumption habits 28
Slide 29: Our strengths
Our strengths Value Market Leading chain from Committed leadership brands farms to owners consumers Skilled Delivery Local raw people capacity materials 29
Slide 30: Our new strategy: We make life tastier
Our new strategy We make life tastier – today and tomorrow TERO HEMMILÄ 30 24.9.2019
Slide 31: We make life tastier – today and tomorrow
We make life tastier – today and tomorrow In our strategy, we will • lead successful turnaround programme • grow in food moments - consumer encounter in categories and channels • drive performance excellence • incorporate responsibility into our business • improve the competitiveness of our farming
Slide 32: Strategic priorities
Strategic priorities 1. Leading the 2. Implementation of 3. Growth in turnaround the new operating consumers’ programme model and food moments partnership strategy 4. Performance 5. Advanced 6. Competitive excellence responsibility farming work community 32
Slide 33: We successfully lead our Turnaround programme
We successfully lead our Turnaround programme • In recent years, HKScan’s financial performance has been very weak leading to a situation where its future has been at stake. • The company strengthened its balance sheet with a successful share issue, reduced financial risk and took extra time to turn
Slide 34: We are planning a new operating model and implementing a partnership strategy
We are planning a new operating model and implementing a partnership strategy • We plan to move from a matrix organisation to country-specific organisations with clear profit responsibilities of market areas. • Our key group-level functions will continue to capture the important synergies in busines
Slide 35: We grow in consumers’ food moments
We grow in consumers’ food moments • In the short term, we will strengthen our market position by focusing on growth opportunities in our existing categories and channels • We are seeking strong growth in the poultry and meal categories. We will commercialise sustainably produced red meat. • We are
Slide 36: We drive performance excellence in all our business
We drive performance excellence in all our business • We advance performance excellence by improving all our key business processes. • We develop our commercial processes and ability to create value for our customers and consumers and, consequently, for our own business. • We develop and strengthen
Slide 37: We lead advanced Corporate Responsibility
We lead advanced Corporate Responsibility • Corporate Responsibility throughout the value chain is at the core of our strategy and daily operations. • By actively implementing our CR programme, we make our sustainable way of operating as our competitive advantage. • Our Group- and brand-level respon
Slide 38: We develop competitive farming community
We develop competitive farming community • Changing consumer habits lead to changes in the farming community. HKScan is committed to develop the community together with farmers. This way, we can secure the availability of high-quality, local raw material. • We deepen the cooperation and integration
Slide 39: Long term financial targets
Long term financial targets Return on capital EBIT employed (ROCE) above above 4% 12% of net sales Net gearing Dividend less than more than 100% 30% of net profit 39
Slide 40: TERO HEMMILÄ
TERO HEMMILÄ 40 24.9.2019