Scandi Standards AB (publ) interim report January - December 2022
Strong result in a challenging market
October – December 2022
- Net sales amounted to MSEK 3,069 (2,435) in the fourth quarter of 2022. At constant exchange rates net sales increased by 20 per cent.
- Operating income (EBIT) increased to MSEK 99 (30), corresponding to a margin of 3.2 (1.2) per cent.
- Income for the period amounted to MSEK 55 (4). Earnings per share amounted to SEK 0.86 (0.08).
- Operating cash flow was MSEK -192 (69).
January – December 2022
- Net sales amounted to MSEK 12,119 (10,101) in the year of 2022. At constant exchange rates net sales increased by 16 per cent.
- Operating income (EBIT) increased to MSEK 290 (222), corresponding to a margin of 2.4 (2.2) per cent.
- Income for the period amounted to MSEK 138 (103). Earnings per share amounted to SEK 2.02 (1.60)
- Operating cash flow was MSEK 197 (347).
- The Board of Director proposes a dividend for the financial year 2022 of SEK 1,15 per share, corresponding to MSEK 75 (0).
Key metrics2)
| MSEK | Q4 2022 | Q4 2021 | Δ | 2022 | 2021 | Δ |
| Net sales | 3,069 | 2,435 | 26% | 12,119 | 10,101 | 20% |
| EBITDA | 202 | 125 | 62% | 722 | 598 | 21% |
| Operating income (EBIT) | 99 | 30 | - | 290 | 222 | 31% |
| EBITDA margin % | 6.6% | 5.1% | 1.5,ppt | 6.0% | 5.9% | 0.0,ppt |
| EBIT margin % | 3.2% | 1.2% | 2.0,ppt | 2.4% | 2.2% | 0.2,ppt |
| Non-comparable items1) | - | 26 | -100% | - | 9 | -100% |
| Adjusted EBITDA1) | 202 | 98 | 106% | 722 | 589 | 23% |
| Adjusted operating income (Adj. EBIT)1) | 99 | 3 | - | 290 | 213 | 36% |
| Adjusted EBITDA margin1) % | 6.6% | 4.0% | 2.5,ppt | 6.0% | 5.8% | 0.1,ppt |
| Adjusted EBIT margin1) % | 3.2% | 0.1% | 3.1,ppt | 2.4% | 2.1% | 0.3,ppt |
| Income after finance net | 67 | 8 | 759% | 186 | 140 | 32% |
| Income for the period | 55 | 4 | - | 138 | 103 | 34% |
| Earnings per share, SEK | 0.86 | 0.08 | - | 2.02 | 1.60 | 26% |
| Return on capital employed % | 6.7% | 5.2% | 1.5,ppt | 6.7% | 5.2% | 1.5,ppt |
| Return on equity % | 6.2% | 5.5% | 0.7,ppt | 6.2% | 5.5% | 0.7,ppt |
| Operating cash flow | -192 | 69 | - | 197 | 347 | -43% |
| Net interest-bearing debt | 1,983 | 1,980 | 0% | 1,983 | 1,980 | 0% |
| NIBD/Adj. EBITDA | 2.7 | 3.4 | -18% | 2.7 | 3.4 | -18% |
| Lost time injuries (LTI) per million hours worked | 24.8 | 38.0 | -35% | 27.4 | 39.2 | -30% |
| Feed efficiency (kg feed/live weight) | 1.51 | 1.52 | -1% | 1.50 | 1.52 | -1% |
1) Restated non-comparable items. see note 6.
2) For a definition of alternative performance measures see page 22
CEO Comments
Scandi Standard reported strong results for the fourth quarter despite a challenging market. We have adapted sales prices and performed favourably in the Ready-to-eat segment, thus compensated for increased costs. We have during the quarter decided on ambitious new long-term sustainability goals. These form the basis for continued development of more sustainable solutions and work methods for our chicken production.
During 2022, we have successfully implemented efficient measures to combat challenging conditions in our markets. Despite lower volumes, net sales increased 26 per cent to MSEK 3,069 (2,435) in the fourth quarter. At the same time, we reported strong operating income of MSEK 99 (30) in a quarter that is typically weak due to seasonal variation, with less demand for chicken during the Christmas and new year holidays.
Continued uncertainty in our markets
The high rate of inflation in the past six months has forced consumers to change their purchasing behaviour and preferences. Our assessment is that the changed purchasing behaviour will continue in the short term, creating an imbalance in the market.
The production cycle for chicken is significantly shorter than, for example, beef and pork, which has resulted in Scandi Standard being able to compensate for inflation by adapting the volumes we produce to the declining demand. With distinct positions in consolidated local markets, our rapid actions have had a clear impact on balancing supply and demand. At the same time, long lead times for transitioning the production of beef and pork have led to surpluses, creating price pressure across the entire protein area. As the market appears right now, we assess that the surplus of beef and pork will remain until at least the end of the first half of 2023. When supply and demand has reached a balance in the market for pork and beef, we will be ready to gradually increase volumes once more.
The trend of more consumers selecting white meat rather than red is distinct and is expected to continue. I am convinced that we will be able to continue to drive the choice of chicken ahead of other proteins.
We are carefully monitoring developments in raw material prices and prices for energy, logistics and personnel costs. Our operations are dealing with increased costs in the beginning of 2023, which have yet to be fully compensated for by price increases.
Improved performances in all segments
The Ready-to-cook segment reported growth of 21 per cent, and operating income increased to MSEK 31 (-32). All markets have worked intensively to manage increased cost inflation in a long-term and sustainable manner. The positive earnings effects of these efforts have been partially offset by increased imports with lower price points in some of our home markets.
Market conditions in Denmark remain challenging and we reported a loss of MSEK -51 (-59) in the Ready-to-cook segment. Even if the situation in Denmark remains unsatisfactory, the earnings of Ready-to-cook combined with Ingredients in Denmark demonstrate that the gradual operational improvements are yielding effects. We will adjust our product range in the first quarter of 2023 to meet increased price sensitivity in the market but also to complete further efficiency enhancements in the value chain.
Scandi Standard’s second segment, Ready-to-eat, reported a continued positive performance in the quarter. Net sales increased 39 per cent and operating income increased 66 per cent to MSEK 53 (32). To enable continued growth, capacity at the Danish factory in Farre was expanded in the quarter. At the same time, we have also commenced the construction of an additional production line that will increase production capacity in Farre by approximately 30 per cent in the beginning of 2024.
New sustainability goals setting guidelines for 2030
Scandi Standard adopted new sustainability goals in the fourth quarter. The goals are tied to important areas for the operations of Scandi Standard such as food safety, product development, climate impact, animal welfare, health and safety, employee engagement and resource usage. For each goal, key metrics have been identified and an objective for 2030 has been defined from a Group perspective. Focus for the first half of 2023 has been on integrating Group-wide goals in national operations by implementing local goals as well as action plans for reaching them.
The science-based climate targets were submitted to the Science Based Targets initiative for validation during the quarter.
Stable financial position
As a result of the challenges that began in 2021, we introduced measures to secure financial flexibility. These have gradually been lifted in line with improved earnings in 2022. Net interest-bearing debt was stable in 2022 and amounted to MSEK 1,983 (1,980) at the end of December 2022. Investments amounted to MSEK 311 (306), of which MSEK 168 (68) was in the fourth quarter. We expect investments to amount to approximately MSEK 400 in 2023, with focus on expanding operations in Ready-to-eat, the roll-out of the new ERP system and investments connected to efficiency, maintenance and sustainability.
I am pleased to close 2022 with a stable balance sheet and, given the turbulent year, I consider our banks renewing their confidence in us in the form of a new five-year financing plan to be a sign of strength.
In light of Scandi Standard’s positive performance and stable financial position, the Board of Directors proposes of a dividend for the 2022 financial year of SEK 1,15 (0.00) per share.
Focus moving forward on long-term stable earnings
There is considerable potential to increase the value per bird processed. This will be essential for Scandi Standard to establish long-term stable earnings above the levels reported between 2015 and 2020. The transition requires focus on the right culture, governance and leadership, increased efficiency throughout the value chain and innovative development of our product portfolio. In parallel, we will continue to create a fundamentally sustainable business in the long term. Comprehensive efforts within these strategic focus areas are ongoing across the Group.
Having successfully managed the tough, prevailing conditions in our markets, my main priorities are to achieve price compensation in all areas, ensure correct inventory levels through balancing production and demand, and continue to turn around Ready-to-cook in Denmark. We continue our detailed monitoring of market developments to enable us to adapt quickly to further changes.
Stockholm, 9 February 2023
Jonas Tunestål, Managing director and CEO
Conference Call
A conference call for investors, analysts and media will be held on 9 February 2023 at 8.30 AM CET.
Dial-in numbers:
UK: 020 3936 2999
Sweden: 010 884 80 16
US: +1 646 664 1960
Other countries: +44 20 3936 2999
Slides used in the conference call can be downloaded at www.scandistandard.com under Investor Relations. A recording of the conference call will be available on www.scandistandard.com afterwards.
Further information
For further information, please contact:
Jonas Tunestål, Managing director and CEO and Julia Lagerqvist, CFO
Tel: +46 10 456 13 00
Henrik Heiberg, Head of M&A, Financing & IR
Tel: +47 917 47 724
This interim report comprises information which Scandi Standard is required to disclose pursuant to EU market abuse regulation and the Securities Markets Act. It was released for publication at 07:30 AM CET on 9 February 2023.
Financial calendar
| Interim report for Q1 2023 | May 3, 2023 |
| Annual General Meeting | May 4, 2023 |
| Interim report for Q2 2023 | August 23, 2023 |
| Interim report for Q3 2023 | October 26 2023 |
About Scandi Standard
Scandi Standard is the leading producer of chicken-based food products in the Nordic region and Ireland. The company produces, markets and sells ready to eat, chilled and frozen products under the well-known brands Kronfågel, Danpo, Den Stolte Hane, Manor Farm and Naapurin Maalaiskana. Eggs are also produced and sold in Norway. We are approximately 3,000 employees with annual sales of more than SEK 12 billion.