Hkfoods Oyj Class A · OMXHEX:HKFOODS
Hkfoods Oyj Class A — HKScan — Q1 2022 Earnings Presentation
32 slides from Hkfoods Oyj Class A's earnings presentation, May 10, 2022
Slide 1: Interim Report Q1 2022
Interim Report Q1 2022 Tero Hemmilä, CEO Jyrki Paappa, CFO 10 May 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 Q1/19 Q1/20 Q1/21 Q1/22 • Record low accident frequency 1-2/2022 • Days of absence due to accidents -60% from the comparison period 60% Exemplary work Jelgava, Latvia ov
Slide 3: Q1/2022: Net sales increased, EBIT weakened as expected
Q1/2022: Net sales increased, EBIT weakened as expected • Net sales increased in all the company’s market areas Net sales, M€ • Food service sales increased by some 22% with +2.3% the removal of pandemic restrictions 600,0 +4% 427.5 437.2 500,0 in comparable figures 400,0 • The negative performance
Slide 4: Feed barley and pork price development in 5/2014 - 3/2022
Feed barley and pork price development in 5/2014 - 3/2022 Index, 5/2014=100 Feed barley (Rotterdam, CIF) 240 Pork price in Germany 220 200 180 160 140 120 100 80 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: European Commission – Cereal statistics and Pig333.com Note: Price in NL – Rotterda
Slide 5: Electricity price development 1/2018 - 3/2022
Electricity price development 1/2018 - 3/2022 Electricity stock exchange price, index 1/2018=100 Finland Denmark 800 Sweden Estonia 700 600 500 400 300 200 100 0 2018 2019 2020 2021 2022 3/2021 Interim Report Q1/2022 5
Slide 6: Net sales growth continuing
Net sales growth continuing Quarterly net sales, M€ 492 490 473 470 464 449 447 450 441 438 439 439 437 429 428 430 410 402 390 370 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 350 2019 2020 2021 2022 Interim Report Q1/2022 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 Q1/2022 Markets Sales channels Categories (+0.5) 6% 6% 9% (+0.5) 15% 11% (+1) 12% 35% 42% (+2) (-2) 24% (+1) 76% (-3) 38% 26% Finland Retail Beef and pork Sweden, incl. Poland Food service Charcuterie, sausages and ba
Slide 8: Quarterly comparable EBIT, M€
Quarterly comparable EBIT, M€ 15 12 10 8 8 7 6 5 5 1 1 0 -1 -5 -3 -4 -10 -10 -8.5 -15 -20 -25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 Interim Report Q1/2022 8
Slide 9: Comparable EBIT Q1/2022: The Baltics and pricing delays behind the performance downturn
Comparable EBIT Q1/2022: The Baltics and pricing delays behind the performance downturn • Due to the structural delay in pricing, increased sales prices and production efficiency measures did not fully Change of comparable EBIT, M€ compensate for strongly increased costs • In Finland and Sweden, EBI
Slide 10: The war in Ukraine has wide-ranging impacts
The war in Ukraine has wide-ranging impacts • HKScan has no business operations in Russia • Since the sanctions imposed by Russia in 2014, HKScan has had no food exports to Russia • The war in Ukraine has strongly accelerated the rise in prices of grain, energy and other inputs in Europe • Ukraine a
Slide 11: We secure the energy supply for our production units
We secure the energy supply for our production units • HKScan reviewed its energy mix in the unstable geopolitical situation • The company has found alternatives for Russian fossil energy and will switch away from it in about 6 months • Supplier changes and investments well underway - e.g. Tabasalu
Slide 12: The continuity of local food production must be secured
The continuity of local food production must be secured • Domestic food is increasingly valued in all of HKScan's home markets • Farm costs rose sharply in late 2021 and the war in Ukraine has further accelerated cost increases • Taking cost increases further up the food chain is critical to safegua
Slide 13: HKScan is planning to improve the competitiveness and cost efficiency of its poultry business in Finland
HKScan is planning to improve the competitiveness and cost efficiency of its poultry business in Finland • On 9 May, HKScan announced its plan to increase production efficiency, reorganise operations and renew working methods in its Rauma and Eura units • The company targets to achieve annual saving
Slide 14: 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 i
Slide 15: HKScan – key figures
HKScan – key figures EUR million Q1/2022 Q1/2021 2021 Net sales 437.2 427.5 1 815.3 EBITDA 5.9 14.7 78.1 EBIT -8.9 -1.1 17.9 - EBIT margin, % -2.0 -0.3 1.0 Comparable EBIT -8.5 -1.1 14.5 - EBIT margin, % -1.9 -0.3 0.8 Profit for the period -10.9 -6.2 -1.2 EPS, EUR -0.12 -0.07 -0.06 Comparable EPS, E
Slide 16: HKScan – key figures
HKScan – key figures EUR million Q1/2022 Q1/2021 2021 Cash flow from operating activities -34.4 3.3 54.6 Cash flow after investing activities -38.5 69.6* 81.2* Return on capital employed (ROCE) before taxes, % 2.5 4.3 3.6 Interest-bearing net debt 355.0 308.0 314.5 Net gearing, % 110.6 95.6 95.2 * I
Slide 17: Finland Q1/2022: Sales of meals and snacks increased
Finland Q1/2022: Sales of meals and snacks increased Net sales, M€ Comparable EBIT, M€ +1.6% 185,0 179.8 182.6 0,0 180,0 -0,2 175,0 -0,4 170,0 -0,6 -0.5 165,0 -0,8 160,0 -1,0 155,0 -1,2 150,0 -1,4 -1.2 Q1/21 Q1/22 Q1/21 Q1/22 • Net sales boosted by recovering food service sales and higher sales pric
Slide 18: Sweden Q1/2022: Continued sales growth for Scan products
Sweden Q1/2022: Continued sales growth for Scan products Net sales, M€ Comparable EBIT, M€ +1.3% 170,0 161.8 163.9 165,0 160,0 155,0 150,0 145,0 2,5 2.4 2,0 140,0 135,0 1,5 1,0 130,0 125,0 0,5 0.2 120,0 0,0 Q1/21 Q1/22 Q1/21 Q1/22 • In comparable figures, net sales increased by 5% • Recovered food s
Slide 19: Denmark Q1/2022: Strategy implementation progressed as planned
Denmark Q1/2022: Strategy implementation progressed as planned Net sales, M€ Comparable EBIT, M€ +8.7% +0.5 M€ 60,0 49.4 0.5 50,0 45.4 40,0 30,0 20,0 10,0 0.0 0,0 Q1/21 Q1/22 Q1/21 Q1/22 • Recovery in food service sales increased net sales • Strategy implementation progressed as planned and sales in
Slide 20: Baltics Q1/2022: Performance following last year's development
Baltics Q1/2022: Performance following last year’s development Net sales, M€ Comparable EBIT, M€ excluding change of biological asset revaluation +1.8% 50,0 45,0 40.5 41.2 40,0 35,0 -0.2 30,0 25,0 20,0 15,0 10,0 -6.5 5,0 0,0 Q1/21 Q1/22 Q1/21 Q1/22 • Food service sales growth increased net sales • O
Slide 21: Investments to promote strategy and increase productivity
Investments to promote strategy and increase productivity 16 Productivity improvements Group investments, M€ 14 • Increased automation in Skara and Linköping 12 • In Tabasalu, Estonia, processing capacity 9.9 increased at the front end of production 10 1.6 Strategic investments 8 0.6 6.3 • In Finlan
Slide 22: Q1/2022: Cash flow from operating activities
Q1/2022: Cash flow from operating activities • Cash flow weakened as a result Cash flow from operating activities, M€ of performance and a change 10,0 3.3 5,0 in working capital 0,0 -5,0 • Timing of payments on accounts -10,0 -15,0 -20,0 payable increased working capital -25,0 -30,0 • Inventory leve
Slide 23: Interest-bearing net debt and net gearing
Interest-bearing net debt and net gearing 365 355 323 333 305 309 315 300 308 314 298 299 276 120% 88% 90% 85% 97% 101%* 103% 91% ** 96% 93% 103% 95% 111% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Interest-bearing net debt (EUR million) Net gearing (%) Working cap
Slide 24: Debt profile and maturity structure as of 31 March 2022
Debt profile and maturity structure as of 31 March 2022 Maturity of the Group’s interest-bearing debt*, M€ Interest-bearing debt by credit type, M€* 2.0 160 120 85.6 128.7 80 40 16.3 5.4 15.0 0 2022 2023 2024 2025 >2025 Bonds Bank loans Total interest-bearing debt without IFRS 16: Pension loans ECA
Slide 25: Strategy
Strategy
Slide 26: 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 27: HKScan expanding into fresh vegetable products together with Vihannes-Laitila
HKScan expanding into fresh vegetable products together with Vihannes-Laitila • In April, HKScan and Vihannes-Laitila founded a joint venture Kasviskonttori Oy • Shareholding: HKScan 80% and Vihannes-Laitila 20% • Vegetable use in the diet growing and accelerating with new products • Added value of
Slide 28: Into new raw material bases using the Scan brand
Into new raw material bases using the Scan brand • The well-known Scan brand used in new product categories to support strategic growth Scan as a food company expanding • Swedish raw material base behind the Scan brand as a food brand Interim Report Q1/2022 28
Slide 29: Added value and profitability through growth in snacks and meals
Added value and profitability through growth in snacks and meals We grow in snacks and meals Sales cooperation in Sweden Interim Report Q1/2022 29
Slide 30: Added value and profitability through higher level of processing
Added value and profitability through higher level of processing We increase added value for our products Interim Report Q1/2022 30
Slide 31: Changing operating environment driving strategic changes across the global food chain
Changing operating environment driving strategic changes across the global food chain Energy War in Evolving crisis Ukraine supply chains Covid-19 Climate IMPACT ON THE CONSUMER IMPACT ON INDUSTRY change Weakening purchasing power Inflation increases cost levels due to inflation • Increasing product
Slide 32: HKScan
HASCAN We make lige Taster - today and tomorrow