FINLAND - The entire year 2008 was a challenging one from the business perspective, Finnish meat and food processor HKSCan says in its annual report published this week.
The company says that operations in all of its markets were hampered by the difficulties in the international meat market, which first arose in autumn 2007, persisted well into the summer of 2008.
The intense rise in manufacturing costs seen in the early part of the year was also a contributing factor.
The high final costs of the industrial restructuring in Finland and substantial expenses arising from frozen meat destocking seen in the second quarter along with the writedowns taken by the pork primary production unit in Poland dragged performance in the early part of the year into the red.
Performance picked up in the third quarter and the fourth quarter turned out to be the best of the year as HKScan finished the year 2008 according to plans.
The HKScan Group’s net sales increased by 8.9 per cent in the year to €2 294.6 million (€2 107.3million in 2007).
Group EBIT at €38.1 million was down 31.1 per cent from the previous year’s figure of €55.3 million.
HKScan’s earnings performance was inadequate: instead of the company’s target of five per cent, an EBIT margin of only 1.7 per cent was achieved.
The ongoing rise in the cost of financing eroded net earnings to the point that earnings per share only came to €0.12.
The Board has proposed a dividend of €0.24 per share.
Industrial Restructuring in Finland Completed
In Finland, the largest industrial restructuring programme in the company’s history was successfully completed.
However, the implementation of the programme gave rise to disruptions in supply and additional overlap expenditure in the early part of the year.
It was only in the latter half of the year that the investments made and the revised industrial structure along with the fine tuned procedures could be leveraged in full.
The steps taken were reflected in the favourable performance of the Finnish business and its stronger market standing towards the end of the year.
The demand for traditional processed meats, a product category important to the company, rose sharply in the last few months of the year.
Streamlining Measures Continue in Sweden
Scan AB’s business performed as anticipated in the year under review and the company strengthened its market standing towards the end of the year.
As outlined in its effi ciency programme, Scan closed down the Kävlinge plant in southern Sweden and slaughterhouses in Skellefteå and Uppsala during the year under review.
The expansion of Scan’s Swinoujscie plant came online in Poland.
With restructuring completed in Finland, resources will be shifted to the overall development of the Swedish business.
Basic Products Gained Popularity in the Baltics
The decline in the Baltic economies was the swiftest and sharpest seen in all of HKScan’s market areas.
The decline in consumer purchasing power manifested as lower consumption and a shift towards more economically priced basic products.
The company said that thanks to its solid market standing, HKScan is well positioned to weather the current economic downturn.
Steady Development in Poland
Unlike the company’s other market areas, Poland retained a mood of relative optimism throughout the year.
GDP growth slowed down but stood at a fairly healthy four percent in November.
The core business of Sokolów S.A. developed at a steady pace, Agro-Sokolów’s loss-making business was evened out and Pozmeat climbed into the black in late autumn 2008.
