Slide 1: Interim Report Q1/2019
Interim Report Q1/2019 Jyrki Paappa, CFO 8 May 2019
Slide 2: Q1 Highlights and Lowlights
Q1 Highlights Lowlights • Finnish poultry business and the related • The impact of Easter sales, which last year Rauma operations improved clearly – EBITDA contributed to Q1 net sales, was visible in turned positive in March Sweden and in Finland • Operational efficiency improvement actions • In Swe
Slide 3: HKScan Group Q1/2019
HKScan Group Q1/2019 EUR million Q1/2019 Q1/2018 2018 Net Sales 401,8 411,0 1 715,4 EBIT -14,7 -18,3 -48,3 - % of net sales -3,6 % -4,4 % -2,8 % Profit/loss before taxes -17,4 -20,7 -58,5 - % of net sales -4,3 % -5,0 % -3,4 % Profit/loss for the period -16,9 -16,7 -51,3 Comparable EBIT -10,1 -18,1 -
Slide 4: HKScan Group – EBIT improvement continues
HKScan Group – EBIT improvement continues • Net sales decreased due to weaker Swedish krona • Poultry business performance improved clearly and compared to the previous year contributed to the EBIT improvement • The impact of Easter sales, which last year contributed to • Operational efficiency impr
Slide 5: Sweden – steady with positive note in local currency
Sweden – steady with positive note in local currency • Net sales decreased mainly due to the weakened SEK • Despite the negative currency effect, comparable EBIT • In local currency, net sales were close to on par with the increased from the comparison period previous year, despite the fact that the
Slide 6: Finland – clear EBIT improvement
Finland – clear EBIT improvement • Net sales decreased compared to the previous year due to • Performance of the Rauma unit improved clearly, with the the impact of Easter sales, which last year contributed to unit recording a slightly positive EBITDA in March the first quarter net sales • Operation
Slide 7: Denmark – in the midst of a customer base transition
Denmark – in the midst of a customer base transition • Decrease in net sales was attributed to lower retail • Changes in the customer structure and sales mix as well sales, which were partly offset by increased export as increased raw material costs had a negative impact on and industrial sales EBIT
Slide 8: Baltics – growing with slight EBIT improvement
Baltics – growing with slight EBIT improvement • Domestic retail sales continued to grow, product mix improved • EBIT was impacted positively by lower administration • Branded sales of processed meat products developed costs that, together with change of biological asset positively and demand for po
Slide 9: Cash flow improved significantly
Cash flow improved significantly 2018 figures re-stated due to IFRS 16 INTERIM REPORT Q1/2019 9 8 May 2019
Slide 10: Net debt and net gearing
Net debt and net gearing 2018 figures re-stated due to IFRS 16 INTERIM REPORT Q1/2019 10 8 May 2019
Slide 11: Funding base and maturity structure
Funding base and maturity structure Interest-bearing debt Maturity of Group’s interest-bearing debt (EUR million)* by credit type *EUR 40 million hybrid bond is treated as equity (early redemption option in Sept. 2023) INTERIM REPORT Q1/2019 11 8 May 2019
Slide 12: Outlook for 2019
Outlook for 2019 Global meat consumption is projected to increase during the coming years. Within HKScan’s home markets, consumption growth is estimated to be led by poultry and meal categories, while demand in other categories is expected to remain stable. HKScan expects its improvement programmes
Slide 13: Thank you
Thank you INTERIM REPORT Q1/2019 13 8 May 2019
Slide 14: Towards profitable growth by balancing finances
Towards profitable growth by balancing finances Tero Hemmilä, CEO 8 May 2019
Slide 15: Operating profit development in the sector
Operating profit development in the sector Operating profit, MEUR 60 50 40 30 Company X 20 HKScan has lost its market leader position, 10 Company Y which has led to weak 0 financial development 2018 Average – the root causes are -102010 2011 2012 2013 2014 2015 2016 2017 mainly internal -20 HKScan's
Slide 16: Root causes of negative result
Root causes of negative result • The company's ”From Farm to Fork” strategy continues to provide a relevant framework for operating in an environment where the significance of responsible operations and transparency is emphasised • The focuses in implementing the company's strategy haven't been accu
Slide 17: HKScan's Group Management Team
HKScan’s Group Management Team Tero Hemmilä Jari Leija Sofia Hyléen Toresson Anne Mere Jukka Nikkinen CEO EVP Market Area Finland EVP Market Area Sweden EVP Market Area Baltics EVP Market Area Denmark & International Esa Mäki Mika Koskinen Jyrki Paappa Markku Suvanto EVP Meat Balance & Chief Operati
Slide 18: Turning loss into profit (1/2)
Turning loss into profit (1/2) Changes related to management and ways of working • Changes in the Board of Directors and in company management • Towards new ways of working in 2019: - From a matrix organisation towards clear roles emphasising country-level profit responsibilities, efficient leveragi
Slide 19: Turning loss into profit (2/2)
Turning loss into profit (2/2) Changes related to business operations • Controlled price increases • Efficient local management of the meat value chain, meat balance, and yields • Balanced management of product portfolio and product development, while taking into consideration the entire meat balanc
Slide 20: Profitable growth through balancing finances
Profitable growth through balancing finances TOWARDS PROFITABLE GROWTH STABILISING 2021 BUSINESS 2020 BALANCING COMPANY FINANCES 2019 Cash flow, Profitability, Balance sheet TERO HEMMILÄ 8 MAY 2019
Slide 21: Three-year turnaround plan has been kicked off
Three-year turnaround plan has been kicked off Focus on short-term actions 1. Balancing finances 2. Stabilising business 3. Towards profitable (2019) (2020) growth (2021) BALANCE SHEET AND • Strengthening own capital CAPITAL STRUCTURE • Evaluation of business portfolio • Poultry business • Organisat
Slide 22: HKScan is planning a share issue to strengthen its financial position
HKScan is planning a share issue to strengthen its financial position and capital structure • The planned share issue is intended to provide a strong foundation for developing HKScan’s business portfolio and balancing the Company’s financial situation as well as for building future growth • The Boar
Slide 23: HKScan has completed group-wide statutory negotiations
HKScan has completed group-wide statutory negotiations • In February 2019, HKScan initiated statutory negotiations that affected all white-collar employees and management in all operating countries (Stock exchange release 6.2.2019) • HKScan has now completed country-specific reviews in all markets (
Slide 24: Growth with Kariniemen
Growth with Kariniemen® Primary production Industrial operations Commercial operations • Production capacity • Yield • Growth and increased market • Feed development • Productivity share • Corporate Responsibility • Taking back outsourced • Delivery capability & security 2019 - activities operations
Slide 25: Redefining HKScan's strategy and strategic focus areas
Redefining HKScan's strategy and strategic focus areas for future growth Business focus • Special focus on poultry as a growth driver • Strengthening sustainability aspects in red meat • Growth targets in meals • Export opportunities for sustainably produced and pure meat • HKScan's position as part
Slide 26: Strong CR actions for building sustainable future
Strong CR actions for building sustainable future TERO HEMMILÄ 8 MAY 2019
Slide 27: ARAsTA
ARAsTA Areca ESPANOL einuuTTTPIy PARASTA 1 2 Pa RIBBEA' HOT " GRILLIBOXI
Slide 28: Suomalaista lihaa
SUOMALAISTA LIHAA
Slide 29: Raikasta kesää!
RAIKASTA KESAA!
Slide 30: ] HAMBURGERFIS
] HAMBURGERFIS "Sea ae Wrntic gu t ia
Slide 31: y, LETOGNEM
y, LETOGNEM easy KYLLING I Stic CEQ Wings save = & sah LET OG NEM KYLLING ed Stegte BEQ Urdediw svg f LET OG NEM KYLLING Remucnloeg sTomat a peer {|
Slide 32: Slide 32
Slide 33: Kariniemen – Kotitiloilta
ieee KARINIEMEN — KOTITILOILTA —