Scandi Standards AB (publ) interim report January - September 2024
Significant volume, and profit growth
July – September 2024
- Chicken processed (grill weight) amounted to 71 (69) thousand tonnes which corresponded to a 3 per cent increase.
- EBIT/kg amounted to 2.15 (2.00)
- Net sales amounted to MSEK 3,343 (3,308). At constant exchange rates, net sales increased by 4 per cent.
- Operating income (EBIT) increased to MSEK 153 (139), corresponding to a margin of 4.6 (4.2) per cent.
- Income for the period amounted to MSEK 94 (90). Earnings per share amounted to SEK 1.44 (1.16).
- Operating cash flow was MSEK 216 (232).
January – September 2024
- Chicken processed (grill weight) amounted to 211 (201) thousand tonnes which correspondeds to a 5 per cent increase.
- EBIT/kg amounted to 1.91 (1.75)
- Net sales amounted to MSEK 9,853 (10,003). At constant exchange rates, net sales decreased by 1 per cent.
- Operating income (EBIT) increased to MSEK 402 (352), corresponding to a margin of 4.1 (3.5) per cent.
- Income for the period amounted to MSEK 235 (207). Earnings per share amounted to SEK 3.60 (3.11)
- Operating cash flow was MSEK 316 (562).
Significant events during and after the quarter
- In September 2024, a long-term financing solution consisting of a five-year sustainability-linked bank loan for a total of SEK 3,200 million was signed.
- Scandi Standard agreed to acquire an integrated state-of-the-art poultry processor in Lithuania and in October 2024, Scandi Standard formally took over the business.
Key metrics1)ey merics
| Q3 2024 | Q3 2023 | Δ | 9M 2024 | 9M 2023 | Δ | R12M | 2023 | |
| Net sales | 3,343 | 3,308 | 1% | 9,853 | 10,003 | -1% | 12,864 | 13,014 |
| EBITDA | 256 | 248 | 3% | 712 | 673 | 6% | 918 | 880 |
| Operating income (EBIT) | 153 | 139 | 11% | 402 | 352 | 14% | 507 | 457 |
| EBITDA margin % | 7.7% | 7.5% | 0.2ppt | 7.2% | 6.7% | 0.5ppt | 7.1% | 6.8% |
| EBIT margin % | 4.6% | 4.2% | 0.4ppt | 4.1% | 3.5% | 0.6ppt | 3.9% | 3.5% |
| Non-comparable items2) | - | 8 | - | - | 8 | - | - | 8 |
| Income after finance net | 115 | 107 | 7% | 292 | 256 | 14% | 369 | 333 |
| Income for the period | 94 | 90 | 5% | 235 | 207 | 13% | 301 | 273 |
| Earnings per share, SEK | 1.44 | 1.16 | 24% | 3.60 | 3.11 | 16% | 4.60 | 4.11 |
| Return on capital employed % | 11.7% | 10.5% | 1.2ppt | 11.7% | 10.5% | 1.2ppt | 11.7% | 11.0% |
| Return on equity % | 12.1% | 11.1% | 1.0ppt | 12.1% | 11.1% | 1.0ppt | 12.1% | 11.4% |
| Operating cash flow | 216 | 232 | -7% | 316 | 562 | -44% | 425 | 671 |
| Net interest-bearing debt | 1,696 | 1,678 | 1% | 1,696 | 1,678 | 1% | 1,696 | 1,571 |
| NIBD/Adj. EBITDA2) | 1.8 | 1.9 | -4% | 1.8 | 1.9 | -4% | 1.8 | 1.8 |
| Chicken processed (tonne gw)3) | 71,468 | 69,333 | 3% | 210,811 | 201,419 | 5% | 279,172 | 269,780 |
| EBIT/kg | 2.15 | 2.00 | 7% | 1.91 | 1.75 | 9% | 1.82 | 1.69 |
| Lost time injuries (LTI) per million hours worked | 24.7 | 22.5 | 10% | 27.6 | 23.9 | 15% | 26.6 | 23.8 |
| Feed efficiency (kg feed/live weight) | 1.49 | 1.50 | -1% | 1.49 | 1.50 | -1% | 1.49 | 1.50 |
1) For details about alternative KPIs, see note 4.
2) Adjusted for non-comparable items, see note 5.
3) Previously reported figures showed live weight, tonne. Historical data converted by a factor of 0.72
CEO Comments
Scandi Standard reports increased operating income, improved margins and as well as significant growth in volumes during the third quarter. This aligns well with the plan for reaching our long-term financial targets. The earnings improvement was driven by strong performances both in Ready-to-cook and in Ready-to-eat. The positive trends in the segments are generating broad growth, which supported both earnings and profitability in the quarter. Disciplined volume growth, a better product mix and increased efficiency have enabled us to improve operating income 11 per cent to MSEK 153 (139) and to strengthen the operating margin to xx per cent (4.2).
Ready-to-cook (RTC) increased net sales compared with the corresponding quarter last year by x per cent to MSEK 2,536 (2,431), driven by volumes. Operating income also improved to MSEK 111 (105). Traditionally, the third quarter is the strongest for the segment and is mainly driven by the barbecue season.
We have noted a clear long-term trend toward increased chicken consumption, primarily locally produced chicken where we have well-established positions in our domestic markets, but have also noted a positive demand trend in the European market. In Ready-to-cook, Scandi Standard is focusing on increased efficiency and we implemented efficiency investments in the Swedish and Finnish operations during the quarter. Moreover, we are strengthening our position in the chilled range, which has provided us with opportunity to once again increase volumes together with improved profitability.
Higher operating income for Ready-to-eat
Ready-to-eat (RTE) posted lower net sales of MSEK 677 (734) for the third quarter, as expected. We have successfully adjusted the cost structure in a period of lower capacity utilisation, which resulted in operating income increasing 39% to MSEK 44.
We have noted rising demand and are making targeted investments to meet the need in a number of our most profitable product categories. Customer base growth and diversification initiatives are continuing as planned and we expect turnover growth for the segment going forward..
The ingredients business in the Other segment contributed operating income of MSEK 10 (11) in the third quarter. In recent quarters, the energy-linked operations of ingredients have experienced a challenging market, which has affected the segment’s profitability. However, Ingredients represents an area with considerable profit potential and is of strategic significance for Scandi Standard. Determined initiatives to add value to the raw material make important contributions to overall profitability for the Group.
Sustainability efforts make a mark
Scandi Standard endeavours to drive the industry forward in the areas of sustainability and animal welfare. Our ambition is to be the industry leader with sustainability integrated as a cornerstone of our strategy. When summarising the Group’s third quarter performance, we note that the trends for several key performance indicators remain positive.
In terms of antibiotics use, the improvement noted in the second quarter has continued and results were more than 60 per cent better compared with last year, with antibiotics use at Group level at 2.5 per cent for the quarter. The improvement was mainly driven by lower antibiotics use in the Irish operations.
The carbon intensity of our own operations has decreased 5 per cent year-on-year, evidence that the implemented initiatives are starting to deliver results. For example, the shift from propane to district heating in the Norwegian operations has resulted in reduced emissions.
Financial position
On the positive side, net interest-bearing debt decreased quarter-on-quarter to MSEK 1,696 (1,796) and, even with the distribution of a dividend of MSEK 75 in the quarter, cash flow improved. Scandi Standard’s efforts to decrease tied-up working capital are ongoing and comprise initiatives including continued improvement of synergies between bird purchases and our sales and operational planning.
As announced previously, we also secured long-term financing for the company during the quarter. We feel well-equipped to drive future growth and profitability, both organically and through acquisitions. Our strong financial position supports the identified investments that will drive us forward to meet our growth and margin improvement targets until 2027. Planned investments in 2024 will amount to around MSEK 500 with the aim of ensuring continued efficiency improvements, expansion and higher value added.
At the beginning of the fourth quarter, an integrated state-of-the-art poultry processor was acquired in Lithuania. The acquisition comprises a major step in strengthening Scandi Standard’s overall operations and a catalyst for reaching our financial targets. In addition to the acquired business being well-placed to become a competitive and high-quality player in the local market, the acquisition will also enable us to better serve the most price-sensitive segments in our domestic markets and to be a cost-efficient supplier that meets the stringent raw material criteria for our Ready-to-eat products. Production commences November this year before gradually increasing as planned in the coming quarters and clients already secured for planned 2024 throughput.
Scandi Standard continues to perform well in regard to the financial targets adopted for 2027. Our ambition is to increase the value of our protein, to improve efficiency and to integrate sustainability throughout our value chain. Several initiatives were launched at local level in the quarter, where two exciting initiatives comprise the implementation of an investment programme in our Swedish operations, aimed at increased automation and modernised production, and a capacity-increasing investment in Norway.
Scandi Standard reports strong growth, increased operating income and improved margins in the third quarter. These positive developments are driven by strong consumer trends we are noting in all our markets combined with the impact of the planned improvements currently being implemented in the country organisations. Combined with new robust financing, this makes me optimistic looking forward and I am confident that we have the requisite resources and skills to realise the potential of our new operations in Lithuania.
Stockholm, 25 October 2024
Jonas Tunestål,
Managing Director and CEO,
Scandi Standard
Conference Call
A conference call for investors. analysts and media will be held on 25 October 2024 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 afterward.
Further information
For further information. please contact:
Jonas Tunestål. Managing director and CEO and Fredrik Sylwan. 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. It was released for publication at 07:30 AM CET on 25 October 2024.
Financial calendar
| Interim report for Q4 2024 | February 6, 2025 |
| Interim report for Q1 2025 | April 29, 2025 |
| Annual General Meeting | April 29, 2025 |
| Interim report for Q2 2025 | July 17, 2025 |
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 3.200 employees with annual sales of more than SEK 13 billion.