Hkfoods Oyj Class A · OMXHEX:HKFOODS
Hkfoods Oyj Class A — HKScan — FY2019 Earnings Presentation
36 slides from Hkfoods Oyj Class A's earnings presentation, Feb 6, 2020
Slide 1: Financial Statements 2019
Financial Statements 2019 6 February 2020 Tero Hemmilä, CEO Jyrki Paappa, CFO
Slide 2: HKScan – key figures in 2019
HKScan – key figures in 2019 • Net sales EUR 1,744.4 (1,715.4) million - Growth +1.7% - Growth in all market areas • Comparable EBIT EUR -2.2 (-46.3) million - Improvement of EUR +44.1 million • EUR -21.0 (-2.0) million in non-recurring items impacting the EBIT • Cash flow from operating activities
Slide 3: The turnaround programme was implemented widely
The turnaround programme was implemented widely The impact of areas of the turnaround programme on profitability in 2019 Poultry, FI Operational Commercial SGA costs Sourcing efficiency excellence SGA costs = Sales, marketing and administrative expenses FINANCIAL STATEMENTS 2019 3
Slide 4: Balancing company finances and stabilising business
Balancing company finances and stabilising business were HKScan’s key priorities during 2019 Q1 Q2 Q3 Q4 EBIT + 8 M€ + 22 M€ + 36 M€ + 44 M€ Cash flow + 25 M€ + 33 M€ + 57 M€ + 74 M€ Implementation of Renewed the Turnaround Share New Group CR BoD starts programme starts issue programme New CEO start
Slide 5: HKScan – key figures in Q4 2019
HKScan – key figures in Q4 2019 • Net sales EUR 463.8 (454.7) million - Growth +2% • Comparable EBIT EUR 5.8 (-1.9) million - Improvement of EUR +7.7 million • EUR -12.3 (-1.7) million in non-recurring items impacting the EBIT • Cash flow from operating activities EUR 48.6 (31.9) million - Improveme
Slide 6: HKScan 2019 – net sales increased
HKScan 2019 – net sales increased 1-12 / 2019 Net sales, EUR million • In comparable figures, net sales increased in all market areas and in all product categories + 1.7% • In Finland and Sweden, total meat 1715,4 1744,4 consumption decreased slightly, the rise in consumer prices of meat contributin
Slide 7: In comparable figures, net sales increased in all market areas
HKScan 2019 – in comparable figures, net sales increased in all market areas 1-12 / 2019 Net sales 2019, EUR million • The decrease in Sweden’s reported net sales was impacted by the weakening of the Swedish krona and the transfer of the sales responsibility of Danish poultry sold in Sweden to marke
Slide 8: HKScan 2019 – comparable EBIT improved significantly
HKScan 2019 – comparable EBIT improved significantly Comparable EBIT, EUR million 1-12 / 2019 • The strong improvement of the poultry business performance in Finland continued Q4 Q1-Q4 and was the most significant factor 5.8 strengthening the Group’s comparable EBIT -1.9 -2.2 • Comparable EBIT was a
Slide 9: HKScan 2019 – Finland improved its result the most
HKScan 2019 – Finland improved its result the most Comparable EBIT 2018 – 2019, EUR million 1-12 / 2019 • In Sweden, EBIT was improved by +5.8 successes in several business areas +1.2 -2.2 +33.9 +0.5 • The main contributor to HKScan’s EBIT improvement was the strengthening of the poultry business in
Slide 10: HKScan Q4 2019 – strong improvement of financial performance
HKScan Q4 2019 – strong improvement of financial performance continued Comparable EBIT Q4 2018 – Q4 2019, EUR million 10-12 / 2019 • Profitability improved across the business +2.5 in all market areas and in all product categories +5.8 +1.4 -1.6 • The continued positive development of the +4.6 poult
Slide 11: Cash flow from operating activities strengthened significantly
Cash flow from operating activities strengthened significantly Cash flow from operating activities, EUR million + 73.5 48.6 EUR million 31.9 59.2 19.4 11.9 8.7 -15.4 -17.5 -42.6 -14.3 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 2018 2019 FINANCIAL STATEMENTS 2019 11 OSAVUOSIKATSAUS Q4 2019
Slide 12: HKScan – Outlook 2020
HKScan – Outlook 2020 HKScan estimates that the Group’s comparable EBIT in 2020 will improve compared to 2019. FINANCIAL STATEMENTS 2019 12
Slide 13: HKScan – key figures
HKScan – key figures (EUR million) Q4 2019 Q4 2018 Q1-Q4 Q1-Q4 2019 2018 Net sales 463.8 454.7 1,744.4 1,715.4 EBIT -6.5 -3.5 -23.2 -48.3 - EBIT margin, % -1.4 -0.8 -1.3 -2.8 Comparable EBIT 5.8 -1.9 -2.2 -46.3 - EBIT margin, % 1.2 -0.4 -0.1 -2.7 Profit for the period -10.6 -9.3 -37.5 -51.3 EPS, EUR
Slide 14: HKScan – key figures
HKScan – key figures (EUR million) Q4 2019 Q4 2018 Q1-Q4 Q1-Q4 2019 2018 Cash flow from operating activities 48.6 31.9 59.2 -14.3 Cash flow before debt service 45.6 21.9 38.7 -95.4 Return on capital employed -3.1 -6.7 (ROCE) before taxes, % Interest-bearing net debt 275.8 335.6 Net gearing, % 84.8 1
Slide 15: HKScan's market areas, categories and channels 2019
HKScan’s market areas, categories and channels 2019 Net sales 2019 EBIT* 2019 Market area Categories Key Channels Key Brands (million euros) (million euros) Red meat Retail Poultry Finland 771 -2 Processed Food service Other Meals Red meat Retail Poultry Sweden 652 12 Processed Food service Other Me
Slide 16: Sweden 2019 – comparable net sales increased slightly
Sweden 2019 – comparable net sales increased slightly Net sales, EUR million - 4.4% 682,1 652,1 - 4.6% 181,9 173,5 Q4 Q1-Q4 2018 2019 2019 • Net sales decreased due to the weakening of the Swedish krona and the transfer of the sales responsibility of Danish poultry sold in Sweden to market area Denm
Slide 17: Sweden 2019 – profitability improved clearly
Sweden 2019 – profitability improved clearly Comparable EBIT, EUR million + 2.7 EUR million + 0.7 12,0 EUR million 9,3 5,6 6,3 Q4 Q1-Q4 2018 2019 2019 • Despite the weakening of the Swedish krona, comparable EBIT improved due to commercial successes, improved operational efficiency and other cost sa
Slide 18: Finland 2019 – sales increased in all product categories
Finland 2019 – sales increased in all product categories Net sales, EUR million + 6.7% 721,9 770,6 + 8.1% 195,6 211,5 Q4 Q1-Q4 2018 2019 2019 • Net sales increased mainly due to the significantly improved delivery capability and productivity of the Rauma poultry unit • Sales increased on a wide scal
Slide 19: Finland 2019 – profitability improved on a wide scale
Finland 2019 – profitability improved on a wide scale Comparable EBIT, EUR million + 4.6 + 33.9 Q4 million Q1-Q4 million 2,6 -2,0 -1,7 2018 2019 -35,6 2019 • The impact of the strengthening of the poultry business on comparable EBIT was over 50% • The wide-scale commercial successes as well as impro
Slide 20: HKScan invests in the growing demand of poultry
HKScan invests in the growing demand of poultry • During the second half of the year, HKScan reclaimed the position of market leader in the Finnish poultry category and Kariniemen® gained a market leadership position in branded products • The demand and sales of Kariniemen products are expected to g
Slide 21: Denmark 2019 – weak beginning, but growth at the end of the year
Denmark 2019 – weak beginning, but growth at the end of the year Net sales, EUR million + 2.7% 149,3 153,3 + 0.7% 35,7 36,0 Q4 Q1-Q4 2018 2019 2019 • After the weak beginning of the year, commercial successes resulted in sales growth in the second half of the year • Industrial sales and export, incl
Slide 22: Denmark 2019 – profitability improved
Denmark 2019 – profitability improved Comparable EBIT, EUR million + 1.4 + 0.5 EUR million EUR million Q4 Q1-Q4 -1,0 -2,4 2018 2019 -5,8 -5,3 2019 • Commercial successes in the second half of the year improved comparable EBIT • Profitability was also improved by operational efficiency measures and c
Slide 23: Baltics 2019 – net sales increased in main channels
Baltics 2019 – net sales increased in main channels Net sales, EUR million + 3.9% 162,1 168,5 + 3.6% 41,4 42,9 Q4 Q1-Q4 2018 2019 2019 • Net sales increased due to continued growth of retail and industrial sales, improved sales mix and the positive development of sales prices FINANCIAL STATEMENTS 20
Slide 24: Baltics 2019 – EBIT improved clearly
Baltics 2019 – EBIT improved clearly Comparable EBIT, EUR million + 2.5 + 5.8 5,1 EUR million EUR million 1,6 -0,9 -0,7 Q4 Q1-Q4 2018 2019 2019 • Profitability improved due to the good development of pork market prices and improved sales prices. Operational efficiency measures and cost savings impro
Slide 25: Moderate investments were focused on improving operational efficiency
Moderate investments were focused on improving operational efficiency Group investments, EUR million Group investments, EUR million - 9.2 EUR million 2 5 11,2 2 1 6 11,3 2 3 12 2 41,0 11 10 11 31,7 8 8 7 6 2018 2019 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Investments Additions in right-of-us
Slide 26: Interest-bearing net debt and net gearing decreased in 2019
Interest-bearing net debt and net gearing decreased in 2019 Net debt and net gearing • Interest-bearing net debt and net gearing 358 361 352 365 decreased due to improved cash flow and the 336 305 309 directed share issue carried out in Q2 276 • The IFRS 16 lease liability, included in the interest-
Slide 27: Debt profile and maturity structure as of 31 December 2019
Debt profile and maturity structure as of 31 December 2019 Interest-bearing debt by credit type, Maturity of the Group’s interest-bearing debt*, EUR million* EUR million 200 34.9 160 23.5 123.5 120 10.7 80 40 74.3 0 Total interest-bearing debt: EUR 267.1 million 2020 2021 2022 2023 >2023 Bonds Bank
Slide 28: We make life tastier
Strategy We make life tastier - today and tomorrow
Slide 29: Implementation of the Turnaround programme continues
Implementation of the Turnaround programme continues Towards profitable growth Stabilising business 2021 Balancing company 2020 finances 2019 Cash flow, Profitability, Balance sheet Share issue, Turnaround, Strategy FINANCIAL STATEMENTS 2019 29
Slide 30: Strategic priorities
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 FINANCIAL STATEMENTS 2019 30
Slide 31: Growing into a versatile food company
Growing into a versatile food company In our strategy, we will • lead a successful turnaround programme • implement a new, profit centre-based operating model in the whole Group • grow in food moments in current and new product categories and in developing sales channels • drive performance excellen
Slide 32: Food that does good
Food that does good HKScan’s responsibility programme OSAVUOSIKATSAUS Q4 2019 32
Slide 33: HKScan is implementing its new responsibility programme
HKScan is implementing its new responsibility programme • In defining our new responsibility programme we included a broad and extensive stakeholder dialogue • Our goal is to position HKScan as a versatile food company recognized for its systemic responsibility work in the food industry • During the
Slide 34: Priorities of HKScan's responsibility programme
Priorities of HKScan’s responsibility programme 1 Healthy and responsibly 2 Wide-ranging environmental 3 Community of producers and 4 Animal welfare produced food responsibility employees We are developing our responsibility work throughout our value chain as a systemic change FINANCIAL STATEMENTS 2
Slide 35: Key achievements in 2019
Key achievements in 2019 • We significantly improved occupational safety and our Lost Time Injury (LTI) frequency decreased by over 30 per cent • We stopped using antibiotics in poultry production in Estonia • We succeeded in improving the material efficiency and recyclability of packaging - We aban
Slide 36: We make life tastier
We make life tastier – today and tomorrow FINANCIAL STATEMENTS 2019 36