HKScan - turn for the better is not yet in sight

In the Q1 2013 Interim Report’s Group Overview Hannu Kottonen CEO HKScan comments on the first quarter broadly.  He is neither particularly satisfied nor totally disappointed.   Utmost cheap is this understatement: “The best performing of the market areas was Poland.”  If I remember right, the other market areas, Baltics excluded, have rarely been anywhere near Poland’s level and apparently this seems to be hard to admit.

One of Kottonen’s comments is this: “Cross-border knowledge is also being utilised, e.g. by sharing the best product concepts and preparing for group-wide product launches later this year.” At least I am eagerly waiting what does this mean in practice, not the “sharing of concepts” and other abracadabra but especially those group-wide product launches.

Kottonen’s comment on the cooperation with producers turns out to be extremely interesting.  He says (underlining is mine):  “In Finland, a model for cooperation with producers was developed during 2012 and its implementation started in the first quarter.”  We must recall, that in March this year, in the Annual Report, there was said: “The introduction of the new producer cooperation model will continue in 2013 especially in Finland, but also in Sweden.” What’s more, still a little earlier, in the Financial Statement 2012, released in February this year, there reads: “To improve competitiveness of the primary production, a new cooperation model for producers was planned and introduced both in Finland and Sweden.” It is possible that the case proceeds only in Finland while HKScan Sweden’s project HKScan Partner is badly stuck.

Brief remarks on the Q1 report by marketing area

In Finland “the total market volume decreased during the quarter”, the report says.  That’s gloomy indeed. The trend likely will continue. Hence, if the profit is to improve, it will be due only to personnel adjustments and efficiency development. Price competition hardens.

In The Baltics, a number of cost increases were encountered during the first quarter: feed, grain, personnel, energy and transportation. But, the report also says, “efficiency improvement projects and the implementation of Group’s operating model continued in the market area neutralising the cost impact.” So, HKScan Baltics, in a practical way once again, reacted to rising costs immediately.

In Sweden, the report declares: “Actions within the development programme have taken effect, and can be seen in the improved results. Nevertheless, EBIT still remained in the red. The development programme measures and actions continue.” Yes, there was improvement compared to last year’s super-trashy Q1. Nothing else. Everyone is waiting for the breakthrough of Rapeseed Pork products and of course some positive news about those “measures and actions”.

In Denmark, the report interestingly tells: “Preparations for the re-launch and sales of fresh poultry products on the Swedish market under the Pärsons brand were made with good initial listings.”  Why not under the Rose Poultry brand? These new products are chicken breast and thigh fillets. On the pages of Pärsons there is said something like this: For many Swedes Pärsons is synonymous with Thin Slices, Sweden's most popular toppings that made grand entrance at the counters in 1999. It seems that this will be quite a brand extension.

In Poland, according to the report: “The performance improvement was attributable to successful product-mix management, active meat sourcing and production cost control.” Would it be simply attributable to better business management compared to other HKScan’s market areas? And one more statement in the Q1 2013 report regarding the Polish market area: “Export volumes stayed at a low level.” This sounds peculiar, because the 2012 financial statement says as follows: “Export sales were strong, though the strengthened Polish currency continued to reduce margins.” Should one conclude that the Group does not know much of anything about Sokołów’s businesses activities.  But it would not be a bad thing, in my opinion.

Summer has come. Who would have believed!  But after three months, on Friday, August 30^th we will look at Atria’s businesses.

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