Hkfoods Oyj Class A · OMXHEX:HKFOODS
Hkfoods Oyj Class A — HKScan — Q2 2020 Earnings Presentation
32 slides from Hkfoods Oyj Class A's earnings presentation, Jul 16, 2020
Slide 1: Half Year Financial Report 2020
Half Year Financial Report 2020 Tero Hemmilä, CEO Jyrki Paappa, CFO 16 July 2020
Slide 2: HKScan – Highlights Q2 2020
HKScan – Highlights Q2 2020 • Strategy implementation continued successfully • Turnaround programme proceeded with the company’s comprehensive change • Covid-19 pandemic slowed progress, causing both direct and indirect effects on the profit improvement • The pandemic caused changes in consumer beha
Slide 3: HKScan – Key figures Q2 2020
HKScan – Key figures Q2 2020 • Net sales EUR 440.9 (439.4) million - Comparable net sales grew • Comparable EBIT EUR 0.6 (-2.5) million - Improvement of EUR +3.1 million • Cash flow from operating activities EUR 27.8 (19.4) million - Improvement of EUR +8.4 million • On annual level (rolling 12 mont
Slide 4: HKScan's Turnaround programme proceeding
HKScan’s Turnaround programme proceeding 2019 Q1 2020 Q2 2020 + 44 M€ EBIT + 50 M€ + 53 M€ CASH FLOW + 74 M€ + 84 M€ + 92 M€ Implementation of Turnaround New Group strategy New Group responsibility Founding of Boltsi Oy programme begins Share issue published programme published with Leivon Leipomo N
Slide 5: Wide-ranging results in the Turnaround programme
Wide-ranging results in the Turnaround programme The impact of areas of the Turnaround programme on profitability in 2019 - 2020 Operational Poultry, FI Commercial SGA costs Sourcing efficiency excellence SGA costs = Sales, marketing and administrative expenses HALF YEAR FINANCIAL REPORT 2020 5
Slide 6: HKScan Q2 2020 – The decline of food service sales weakened net sales growth
HKScan Q2 2020 – The decline of food service sales caused by the pandemic weakened the growth of net sales Q2 2020 Net sales, EUR million • Commercial improvements and the strong growth in retail sales caused by the pandemic in + 3.4% all markets • Food service sales were significantly lower than 84
Slide 7: In comparable figures, net sales increased in Sweden, Baltics and Denmark
HKScan Q2 2020 – In comparable figures, net sales increased in Sweden, Baltics and Denmark Q2 2020 Change of net sales Q2 2019 – Q2 2020, • Strong growth in Denmark due to increased EUR million home market sales and strengthened sales of 4.7 440.9 added value products 439.4 • The Baltics showed stro
Slide 8: HKScan comparable EBIT improved clearly
HKScan Q2 2020 – comparable EBIT improved clearly Q2 2020 Comparable EBIT, EUR million • According to our estimate, the negative Q2 Q1-Q2 immediate impact of the pandemic to 0.6 comparable EBIT was some two million euros • In addition, the indirect impacts of the pandemic decreased the EBIT because
Slide 9: Denmark's improvement strongest
HKScan Q2 2020 – Denmark’s improvement strongest Change of comparable EBIT Q2 2019 – Q2 2020, Q2 2020 EUR million • Denmark, Sweden and Finland improved 1.0 0.6 their comparable EBIT despite the pandemic • Strong development in Denmark and Sweden 1.7 • Finland’s EBIT strengthened but was 1.4 negativ
Slide 10: Our brands succeeded in all markets
Our brands succeeded in all markets The responsible Good growth Hållbarhetsgrisen pork in Kariniemen was succesfully barbeque products launched in Sweden Tallegg herb butter chicken was chosen The sales of the as the Best Meat climate-friendly Rose Product of the Year minced chicken meat in Estonia
Slide 11: Cash flow from operating activities continued on positive track
Cash flow from operating activities continued on positive track Cash flow from operating activities, EUR million + 8.4 M€ 27.8 + 18.6 M€ 19.4 20.5 1.9 Q2 Q1-Q2 2019 2020 HALF YEAR FINANCIAL REPORT 2020 11 OSAVUOSIKATSAUS Q4 Q2 2020
Slide 12: Outlook 2020
Outlook 2020 HKScan estimates that the Group’s comparable EBIT in 2020 will improve compared to 2019. OSAVUOSIKATSAUS Q1 2020 OSAVUOSIKATSAUS Q4 2019 12
Slide 13: HKScan – key figures
HKScan – key figures (EUR million) 4-6 2020 4-6 2019 1-6 2020 1-6 2019 Net sales 440.9 439.4 869.8 841.2 EBIT 0.1 -6.6 -3.8 -21.2 - EBIT margin, % 0.0 -1.5 -0.4 -2.5 Comparable EBIT 0.6 -2.5 -3.4 -12.5 - EBIT margin, % 0.1 -0.6 -0.4 -1.5 Profit for the period -3.2 -10.4 -10.1 -27.3 EPS, EUR -0.05 -0
Slide 14: HKScan – key figures
HKScan – key figures (EUR million) 4-6 2020 4-6 2019 1-6 2020 1-6 2019 Cash flow from operating 27.8 19.4 20.5 1.9 activities Cash flow after investing -24.1* 10.9 -42.7* -17.0 activities Return on capital employed - - -0.3 -4.7 (ROCE) before taxes, % Interest-bearing net debt - - 315.0 304.7 Net ge
Slide 15: Finland Q2 2020 – lower food service sales slowed down growth
Finland Q2 2020 – lower food service sales slowed down growth Net sales, EUR million + 1.2% 368.9 373.5 195.1 191.6 Q2 Q1-Q2 2019 2020 Q2 2020 • Retail sales grew strongly, clear decline in food service sales because of the pandemic • Cooking at home increased the sales of products with less added v
Slide 16: Finland – the pandemic impacted Finnish business the most
Finland Q2 2020 – the pandemic impacted Finnish business the most Comparable EBIT, EUR million + 0.5 M€ Q2 Q1-Q2 -2.2 -2.7 2019 2020 -5.7 -5.7 Q2 2020 • The negative immediate impact of the pandemic on comparable EBIT was clear • Decrease in food service sales weakened profitability • Performance of
Slide 17: Sweden – Scan brand sales of red meat increased
Sweden Q2 2020 – Scan brand sales of red meat increased Net sales, EUR million 317.2 315.4 163.0 162.0 Q2 Q1-Q2 2019 2020 Q2 2020 • Commercial improvements strongly increased retail sales, compensating the lower food service sales • In comparable figures, net sales increased by 1.3% • Exchange rate
Slide 18: Sweden profitability improved clearly
Sweden Q2 2020 – profitability improved clearly Comparable EBIT, EUR million + 3.8 M€ + 1.4 M€ 5.8 4.3 2.9 2.0 Q2 Q1-Q2 2019 2020 Q2 2020 • EBIT improved due to commercial successes and lower administrative costs • Shortage of locally produced pork meat increased prices as demand grew • Exchange rat
Slide 19: Baltics commercial improvements increased net sales
Baltics Q2 2020 – commercial improvements increased net sales Net sales, EUR million + 7.6% 81.6 87.8 + 2.7% 43.3 44.5 Q2 Q1-Q2 2019 2020 Q2 2020 • Strong growth in retail sales, the success of novelties and especially branded products increased net sales • Food service sales decreased clearly • Exp
Slide 20: Baltics commercial improvements decreased the impact of pandemic
Baltics Q2 2020 – commercial improve- ments decreased the impact of pandemic Comparable EBIT excluding change of biological asset + 2.5 M€ revaluation, EUR million 2.8 1.7 1.7 0.3 Q2 Q1-Q2 2019 2020 Q2 2020 • EBIT was improved by commercial successes, operational efficiency and good cost control • T
Slide 21: Denmark strong growth
Denmark Q2 2020 – strong growth Net sales, EUR million + 26.8% 93.1 + 12.5% 73.4 38.0 42.7 Q2 Q1-Q2 2019 2020 Q2 2020 • The retail sales of fresh poultry products grew by over 30% Food service sales decreased clearly • Net sales grew also due to transfer of sales responsibility of Danish poultry sol
Slide 22: Denmark EBIT improved clearly
Denmark Q2 2020 – EBIT improved clearly Comparable EBIT, EUR million + 1.7 M€ + 5.0 M€ Q2 Q1-Q2 0.8 0.1 2019 2020 -1.6 -4.2 Q2 2020 • EBIT improved by commercial successes in Denmark and Sweden, but the pandemic slowed down the profit development • Profitability was also positively impacted by the i
Slide 23: Investments support the Turnaround programme and growth
Investments support the Turnaround programme and growth Q2 2020 80 Group investments, EUR million 80 • As part of the Turnaround programme, investment level is higher than in the previous 3.0 year to maintain existing capacity and 1.4 to improve productivity in all market areas • The largest single
Slide 24: Interest-bearing net debt and net gearing
Interest-bearing net debt and net gearing 361 352 365 336 305 309 315 298 276 117% 120% 104% 103% 88% 90% 85% 97% 101% * Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Interest-bearing net debt (EUR million) Net gearing (%) *Investment to the plot of Vantaa increased the net gearing ratio app
Slide 25: Debt profile and maturity structure as of June 2020
Debt profile and maturity structure as of 6 June 2020 Interest-bearing debt by credit type, Maturity of the Group’s interest-bearing debt*, EUR million* EUR million 200 69.2 160 123.8 120 21.7 9.6 80 40 74.3 Total interest-bearing debt without IFRS 16: 0 300.5 EUR million 2020 2021 2022 2023 >2023 *
Slide 26: Strategy
Strategy OSAVUOSIKATSAUS Q1 2020 OSAVUOSIKATSAUS Q4 Q2 2020 26
Slide 27: HKScan's strategic priorities
HKScan’s strategic priorities 1. Create growth in consumers’ 2. Drive performance 3. Lead advanced corporate 4. Develop competitive food moments excellence responsibility farming community Lead the turnaround programme Implement new operating model and partnership strategy HALF YEAR FINANCIAL REPORT
Slide 28: Boltsi cooperation with Leivon Leipomo
Boltsi cooperation with Leivon Leipomo • The partnerships support HKScan’s strategic target to expand into new product categories and to grow into a versatile food company • In June, HKScan and Leivon Leipomo established a company aiming to Boltsi product portfolio expansion as well as strong and pr
Slide 29: Target to grow into a versatile food company
Target to grow into a versatile food company • With the pandemic, the big picture of the company’s strategy unchanged • The changes in consumer behaviour will be taken into account, growing e-commerce and digitalisation as examples • Food service channel gradually back on a growth track • Responsibi
Slide 30: Our work towards carbon-neutral meat production continues
Our work towards carbon-neutral meat production continues • HKScan has calculated the carbon footprint of beef, pork and poultry • The carbon footprint of Finnish and Swedish meat is clearly lower than the European averages • Carbon footprint calculation sets the starting point for reducing the clim
Slide 31: We have successfully implemented several measures to minimise the effects of the pandemic
We have successfully implemented several measures to minimise the effects of the coronavirus pandemic. Our priority is to protect the health of personnel and consumers as well as to secure the continuity of production and the whole food chain.
Slide 32: Headline (model slide for content)
Headline (model slide for content) PRESENTER NAME 32 7/15/2020