Hkfoods Oyj Class A · OMXHEX:HKFOODS
Hkfoods Oyj Class A — HKScan — H1 2022 Earnings Presentation
29 slides from Hkfoods Oyj Class A's earnings presentation, Jul 20, 2022
Slide 1: Half Year Financial Report 2022
Half Year Financial Report 2022 Tero Hemmilä, CEO Jyrki Paappa, CFO 20 July 2022
Slide 2: Safety First: Goal-oriented work towards zero accidents at work
Safety First: Goal-oriented work towards zero accidents at work 40 * Accident frequency, LTIR Rolling 12 months average 30 20 10 0 Q2/19 Q2/20 Q2/21 Q2/22 -30% lost-time accidents -32% days of absence due to accidents In May, HKScan won the Danish Occupational +80% safety observations Health Award 2
Slide 3: Highlights Q2/2022
Highlights Q2/2022 Clear sales price Comparable EBIT increases improved to 1.5 M€ • Sales price increases largely HKScan’s drivers for covered the sharp rise in profit improvement: production input prices • Better sales mix • Producer prices increased to • Production efficiency secure the availabili
Slide 4: Q2/2022: Comparable EBIT strengthened +0.8 M€
Q2/2022: Comparable EBIT strenghthened Net sales, M€ Comparable EBIT, M€ 600,0 +13% +0.8 M€ 3,0 550,0 505.7 2,5 500,0 450,0 449.3 2,0 400,0 1.5 1,5 350,0 1,0 300,0 0.7 0,5 250,0 0,0 200,0 Q2/21 Q2/22 Q2/21 Q2/22 Half Year Financial Report 2022 4
Slide 5: Q2/2022: Finland and Denmark improved
Q2/2022: Finland and Denmark improved • Finland improved its comparable EBIT, especially towards the end of the quarter Change of comparable EBIT, M€ • Challenging early spring in Sweden; strong profit development towards 1.4 the end of the quarter • Clear profit improvement in Denmark 0.0 0.5 1.5 -
Slide 6: Net sales growth continuing
Net sales growth continuing Quarterly net sales, M€ 530 510 506 492 490 473 470 464 449 447 450 439 439 441 438 437 429 428 430 410 402 390 370 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 350 2019 2020 2021 2022 Half Year Financial Report 2022 6
Slide 7: Poultry and meals account for an increasing share of net sales
Poultry and meals account for an increasing share of net sales Net sales breakdown Q2/2022 Markets Sales channels Categories (+0.5) 6% 6% 10% (+0.5) 15% 11% (+1) (+2) 12% 35% 42% (+2) (-2) (-1) 24% (+2) 76% (-3) 37% (-1) 26% (-1) Finland Retail Beef and pork Sweden, incl. Poland Food service Charcut
Slide 8: Quarterly comparable EBIT, M€
Quarterly comparable EBIT, M€ 15 12 10 8 8 7 6 5 5 1 1 1.5 0 -1 -5 -3 -4 -10 -8.5 -10 -15 -20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 Half Year Financial Report 2022 8
Slide 9: Feed barley and pork price development in 1/2017 - 6/2022
Feed barley and pork price development in 1/2017 - 6/2022 Index, 1/2017=100 Feed barley (Rotterdam, CIF) 260 Pork price in Germany 240 220 200 180 160 140 120 100 80 0 2017 2018 2019 2020 2021 2022 2023 Source: European Commission – Cereal statistics and Pig333.com Note: Price in NL – Rotterdam – CI
Slide 10: Electricity price development 1/2020 - 6/2022
Electricity price development 1/2020 - 6/2022 Electricity stock exchange price, index 1/2020=100 Finland Denmark 1.000 Sweden Estonia 900 800 700 600 500 400 300 200 100 0 2020 2021 2022 2023 6/2021 Half Year Financial Report 2022 10
Slide 11: HKScan to improve the profitability of its poultry business in Finland
HKScan to improve the profitability of its poultry business in Finland • The statutory negotiations for the Finnish poultry business ended after the review period in July • The measures aim to achieve annual savings of over 3 M€, estimated to be realised during 2023 • As a result of the negotiations
Slide 12: Outlook for 2022 unchanged
Outlook for 2022 unchanged HKScan estimates that the Group’s comparable EBIT in 2022 will improve compared to 2021. Early 2022 comparable EBIT is expected to be weaker than the comparison period due to inflation, which strongly affects the company’s profit development, and significant imbalances in
Slide 13: HKScan – key figures
HKScan – key figures EUR million 4-6/2022 4-6/2021 1-6/2022 1-6/2021 2021 Net sales 505.7 449.3 942.9 876.8 1 815.3 EBITDA 15.9 16.3 21.7 31.0 78.1 EBIT -14.3* 3.7 -23.2* 2.6 17.9 - EBIT margin, % -2.8 0.8 -2.5 0.3 1.0 Comparable EBIT 1.5 0.7 -7.0 -0.5 14.5 - EBIT margin, % 0.3 0.1 -0.7 -0.1 0.8 Pro
Slide 14: HKScan – key figures
HKScan – key figures EUR million 4-6/2022 4-6/2021 1-6/2022 1-6/2021 2021 Cash flow from operating activities 22.4 24.9 -12.0 28.1 54.6 Cash flow after investing activities 15.2 14.3 -23.3 83.9* 81.2* Return on capital employed (ROCE) before taxes, % 0.0 5.1 3.6 Interest-bearing net debt 346.3 298.5
Slide 15: Finland Q2/2022: Clear sales increase for meal components
Finland Q2/2022: Clear sales increase for meal components Net sales, M€ Comparable EBIT, M€ +10% +0.7 M€ 220,0 213.4 2,0 193.8 200,0 1.4 180,0 1,0 160,0 140,0 0.7 120,0 100,0 0,0 Q2/21 Q2/22 Q2/21 Q2/22 • Exceptionally high cost inflation partly passed on to sales prices, which increased net sales •
Slide 16: Sweden Q2/2022: HKScan maintained its strong position in the market
Sweden Q2/2022: HKScan maintained its strong position in the market Net sales, M€ Comparable EBIT, M€ +8% 190,0 185.4 180,0 171.1 170,0 6,0 160,0 5,0 4.9 4.9 150,0 4,0 140,0 3,0 130,0 120,0 2,0 110,0 1,0 100,0 0,0 Q2/21 Q2/22 Q2/21 Q2/22 • Exceptionally high cost inflation passed on to sales prices,
Slide 17: Denmark Q2/2022: Strong performance continued
Denmark Q2/2022: Strong performance continued Net sales, M€ Comparable EBIT, M€ +36% +1.4 M€ 70,0 60,0 57.4 50,0 42.2 0,5 0.3 40,0 0,0 30,0 -0,5 20,0 10,0 -1,0 0,0 -1,5 -1.1 Q2/21 Q2/22 Q2/21 Q2/22 • Strong demand for poultry products continued, with clear increase in sales volumes • EBIT improved a
Slide 18: Baltics Q2/2022: Market position remained strong
Baltics Q2/2022: Market position remained strong Net sales, M€ Comparable EBIT, M€ excluding change of biological asset revaluation +17% 60,0 0,0 49.4 50,0 42.2 -0,5 40,0 -1,0 -0.6 30,0 -1,5 20,0 -2,0 10,0 -2,5 -2.2 0,0 -3,0 Q2/21 Q2/22 Q2/21 Q2/22 • Net sales driven in particular by higher sales vo
Slide 19: Q2/2022: Investments to secure energy supply
Q2/2022: Investments to secure energy supply • Investments in energy solutions for production units continued Group investments, M€ • We secure energy supply also 12 11.4 in exceptional situations 2.1 • Possibility to switch off from Russian 10 energy in the autumn 0.9 8.1 8 • In Finland, strategic
Slide 20: Q2/2022: Cash flow from operating activities and working capital
Q2/2022: Cash flow from operating activities and working capital Cash flow from operating activities, M€ • Cash flow before the change in working capital increased to 17.6 M€ and working 30,0 24.9 capital was released 25,0 22.4 20,0 • However, the working capital release was 15,0 lower than in the c
Slide 21: Interest-bearing net debt and net gearing
Interest-bearing net debt and net gearing 355 346 323 333 305 309 315 300 308 314 298 299 276 90% 97% * 101% 103% 91% ** 96% 93% 103% 95% 111% 110% 88% 85% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Interest-bearing net debt (EUR million) Net gearing (%) * Q2/2020
Slide 22: Debt profile and maturity structure as of 30 June 2022
Debt profile and maturity structure as of 30 June 2022 Maturity of the Group’s interest-bearing debt*, M€ Interest-bearing debt by credit type, M€* 2.0 160 51.8 120 14.5 128.8 80 5.4 40 50.0 0 2022 2023 2024 2025 >2025 Total interest-bearing debt without IFRS 16: Bonds Bank loans Pension loans EUR 2
Slide 23: New bank facility to repay a bond maturing in September 2022
New bank facility to repay a bond maturing in September 2022 • In September 2017, HKScan issued a 135.0 M€ 2.625 per cent fixed-rate, unsecured and senior bond with a current outstanding amount of some 39.5 M€ • In June 2022, HKScan agreed on a new 39.5 M€ unsecured bank facility to repay the bond m
Slide 24: HKScan and the disruption of the operating environment
HKScan and the disruption of the operating environment
Slide 25: Disruption of the operating environment driving strategic changes across the global food chain
Disruption of the operating environment driving strategic changes across the global food chain Geopolitical Transforming Food uncertainty supply crisis chains Uncertainty Energy of economic crisis growth IMPACT ON THE CONSUMER IMPACT ON INDUSTRY Weakening purchasing power Rising cost levels Covid-19
Slide 26: Measures to secure profitability 2022
Measures to secure profitability 2022 1) Passing on strong cost inflation to sales prices 2) Optimisation of the product portfolio to meet the changing consumer demand 3) Increasing productivity in operations, in particular in production 4) Cost management in all operations Half Year Financial Repor
Slide 27: Measures for strategic renewal 2022
Measures for strategic renewal 2022 1) Developing the product portfolio to respond to changes in customer interface and consumer behaviour • Food service and consumers • Retail and consumers 2) New customers in the transforming supply chains due to instability in global markets 3) New business devel
Slide 28: HKScan's transformation into a versatile food company
HKScan’s transformation into a versatile food company Digital solutions and strengthening consumer experience SALES CHANNELS CUSTOMERS Responsible Responsible Responsible Retail Community pork and poultry vegetables Online beef Processed meat products and Food service meal components Export New Part
Slide 29: - today and tomorrow
- today and tomorrow