HKScan stays weak throughout Scandinavia

In Finland, Sweden and Denmark, the Q4 results were poor and any new cure is not forthcoming. Feed cost reduction is, after all, only a small joy and blaming of primary production is cheap talk. Throughout the whole Scandinavia HKScan seems to be unable to produce selling products for a sensible profit, even though the company’s market position is strong.  In the Baltics the position is strong as well, and there everything goes smoothly. In Poland Sokołów’s market share is only about 10%, competition is hard, exports account for about 25% of net sales, and nonetheless all goes well. One may wonder if HKScan will ever achieve good results in Scandinavia. Where the money goes?

Hannu Kottonen, CEO HKScan, comments the Q4 result rather mildly. He regards the strong cash flow the most positive achievement.  But otherwise, he’s satisfied only with Christmas sales, Baltics and Poland. 

During the past year, Kottonen has given a plethora of reasons for poor results, bad weather as an example. Headwind was the reason this time.  So to speak.  Changes made in the company’s strategy he considers successful and according to him, setting is now in place for a long time to come. Believe if you like.

We have focused on implementing the strategy and operating model. The progress has been good and many goals have been achieved. Unfortunately when looking at the financial performance, the headwind in all market areas has partly eliminated the good work. However, we as HKScan Group now have a more stable foundation for better performance in 2014 and beyond.

HKScan Finland lost net sales when compared to the same period in 2012 but the main rival is currently clearly ahead.  Management has been replaced, rationalization has been made in many production units, technological improvements have been made, rapeseed pork has been pushed into the markets, organic pork products are launched. But in terms of profits, nothing has changed for the better.

HKScan Baltics didn’t quite reach the same level as in Q3.  Anyway, Tabasalu’s plant is now in full steam and new products are launched all the time.  One may come to conclusion, that in Estonia, they truly master the product development.  For instance one new product, the Kiev cutlet, fried breaded chicken-broiler fillet roll with butter-dill filling  from Talleg surely is a novelty as a ready-to-eat product, compared for instance to Finnish so called novelty Poppikset, which is nothing but the old chicken nuggets in an updated shape, and even in the same kind of package.  No problems in the Baltics.

HKScan Sweden disappointedly fell short of expectations again, and so the report says again: “The strategic review is continuing in Sweden.”  So far, results have not been seen. Probably workers are laid off haphazardly, units are shut down just for show, and pseudo reforms are made in primary production.

In the Short-term Risks section, the report states very interestingly:

Additionally, the Group’s on-going development projects and organisational restructurings can bring uncertainties caused by own actions and unforeseen extra costs.

What might that mean?

HKScan Denmark’s Rose Poultry is completely dependent on export of frozen chicken. If it does not succeed at reasonable prices, the company does not make profit. It has not succeeded. Export of fresh products to Sweden is not enough to make the company profitable.

HKScan Poland’s Sokołów succeeds from quarter to quarter.  There is a large, multi-page interview with Boguslaw Miszczuk, President of Sokołów, interview surely worth reading.  Picking just one  point here:  Miszczuk  tells that in 2014 the company does not plan any major investments.  However, in the next three years the company intends to make significant investments. Miszczuk declines to reveal any details.  I’ve been anticipating that HKScan will during 2014 sell its stake of Sokołów or a significant portion of it.  I believe that HKScan will be out of these investments.

Update 2014-02-28:  Sokołów stake sold!  The Release came while writing the above text. 

We will discuss HKScan later but on Friday, March 14^th, we are going to look at Atria’s businesses.  Nothing Gold Can Stay.

This is Artoparto and here is my Disclaimer.  Please read it.

Disclaimer:  All content provided on this site is for entertainment purposes only.  This site does not provide any investment advice and content on this site should not be construed as recommendation to buy or sell any financial instruments.  Please consult a qualified financial adviser before making any financial decision.  I make no representations as to the accuracy, completeness, suitability, or validity, of any information on this site or found by following any link on this site.  I will not be liable for any errors, omissions, or any losses, injuries, or damages arising from displaying or using any content provided on this site.  I am not responsible for users' comments.  I reserve the right to update or delete any content on this site for any reason.

Atria’s Q4-2013 - passable or even satisfactory results far and near

Atria Group’s Q4 result is not especially thrilling but it’s still quite fine.  It does not happen often that Atria Group makes profit in every market area (non-recurrent items excluded). However, improvements seem to be mostly due to spending cuts only.  Unfortunately the Financial Statement Report is rather concise and does not tell at all for instance about how the new products sell in Russia.

Atria Finland’s sales improved, compared to Q4-2012, but not quite to the same extent as during Q2 and Q3 periods.  Severe price competition - Atria likely itself the principal troublemaker - led to low average profits.

More interesting is happening this year. In January the corporate deal by Atria and Saarioinen was approved by Finnish Competition and Consumer Authority FCCA.  However, based on the FCCA’s press release, one might conclude that things have not quite gone Atria’s way.

Here’s a direct quote:

“In the procurement of animals for slaughter, a significant part of Saarioinen's meat producers have become, or are in the process of becoming producers of Atria's competitors. Consequently, Atria's position on the procurement market is not strengthened by the same amount as the market position of the target of the deal. Even after the transaction, companies on the procurement market include, in addition to Atria, HKScan, as well as Oy Snellman Ab, which has been considerably strengthened by the the meat producers that have joined it after leaving Saarioinen. Producers will continue to have the possibility to select their trading partners from among different meat producers.”

And here’s another direct quote:

“In the wholesale market for fresh chicken, a new player, Huttulan Kukko, is starting. The slaughter capacity of Huttulan Kukko and the meat volumes that the company is bringing to the market are very close to the capacity and volume of the target of the deal, which reduces, for its part, the market impact caused by the corporate transaction. In addition, HKScan will remain the largest player on the chicken market even after the deal.”

The release is from 2014-01-23 and it also says the following:  “A public version of the decision will be published on the FCAA website in about two weeks.” Unfortunately I haven’t found it yet.

Atria Scandinavia’s Q4 was very good indeed.  In the Financial Statement Release especially food service and fast food are praised.  Sibylla Sweden at least makes progress. The company aims to increase its current turnover, roughly €80 million, to €100 million. New restaurants are set up in emerging locations.  Efforts are made to ease franchising entrepreneurs’ early stages with the company.  Sibylla’s image will be improved and integrated.  Lycka till!

The Group gives so scantly info about the success of Atria Russia’s new product line but Sibylla Russia at least seems to be expanding from gas stations and sports arenas to streets and the Swedish origin surely is not hided.  

The most important news - which again makes Russia a story of its own - is of course that Russia has banned EU pork due to ASF outbreak in Lithuania.  However, fresh news on Rosselkhotsnadsor’s site seems to indicate that the ban could be terminated if the safety of products is ensured more accurately.  Thus, it might be expected that the ban does not distort the pork market in the EU.

Atria Baltic is narrowly in profit but the primary production may face serious difficulties.  Namely, whether or not Russia’s ban is terminated, the ASF keeps going in Lithuania and could easily spread to the whole Baltics. Estonia has a strong wild boar population and the concern is already brought to public.

We will discuss Atria later but on Friday, February 28^th, we are going to look at HKScan’s businesses.  Become a guru!  Listen How to Write a Haiku.

This is Artoparto and here is my Disclaimer.  Please read it.

Disclaimer:  All content provided on this site is for entertainment purposes only.  This site does not provide any investment advice and content on this site should not be construed as recommendation to buy or sell any financial instruments.  Please consult a qualified financial adviser before making any financial decision.  I make no representations as to the accuracy, completeness, suitability, or validity, of any information on this site or found by following any link on this site.  I will not be liable for any errors, omissions, or any losses, injuries, or damages arising from displaying or using any content provided on this site.  I am not responsible for users' comments.  I reserve the right to update or delete any content on this site for any reason.

Atria’s Q4-2013 went well

Atria Finland’s Q4 result is okay and presumably good enough to meet general expectations. Atria Scandinavia achieved an excellent result, one of the best for years. Atria Russia (non-recurring items excluded) pleasingly showed a slight profit and Atria Baltic fought to profit as well.  We will take a closer look at Atria’s Financial Statement Release tomorrow.

This is Artoparto and here is my Disclaimer.  Please read it.

Disclaimer:  All content provided on this site is for entertainment purposes only.  This site does not provide any investment advice and content on this site should not be construed as recommendation to buy or sell any financial instruments.  Please consult a qualified financial adviser before making any financial decision.  I make no representations as to the accuracy, completeness, suitability, or validity, of any information on this site or found by following any link on this site.  I will not be liable for any errors, omissions, or any losses, injuries, or damages arising from displaying or using any content provided on this site.  I am not responsible for users' comments.  I reserve the right to update or delete any content on this site for any reason.