HKScan goes China - profitable growth?

After gaining export certification from China, HKScan is now carefully preparing to export pork products, and a sales company will first be established in Hong Kong and later in China mainland.  Interestingly, Tuomo Valkonen, the Group CFO has true experience in China.  He has worked there as a business controller and general manager about three years at the beginning of the millennium.

Let’s hope that right products will be found and even more one has to hope that the export does not generate losses, at least not very large losses.  Too often one finds the phrase ‘unprofitable export’ in the company reports.  Nordic food apparently has a good reputation in China. Cleanliness and safety are the most important factors.

But let’s look very briefly at what the board of directors says in their report for the financial year 2014.  The first sentence in the group overview is this:

“Net sales for 2014 were down six percent on the previous year.”

Yes, that's what happened.  Net sales decreased in all four markets. Not only decreased in Denmark but significantly in Sweden as well. Fortunately in Finland and in the Baltic countries, net sales decreased just a tad.

HKScan’s strategy is unchanged.  The board states:

“The revised strategy for profitable growth advanced to the implementation stage. The Group’s strategic must-win-battles are to be modified to place a sharper focus on profitable growth in the coming years. The execution of the strategy calls for a greater emphasis on value-added products, continuous improvement and new, innovative ways to meet customer and consumer expectations.”

It is hoped, therefore, that the profitable growth strategy also applies to the export to China.  In the domestic markets in Scandinavia and in the Baltic countries, Flodins brand is undoubtedly a key factor when it comes to value-added products.

Okay, this is just business as usual.  The most important thing is that HKScan will continue to be the main sponsor of Rakvere Tarvas, an Estonian basketball team. The team is doing well and today it will play the first semifinal match against the rock-hard Tartu team. What the Rakvere Tarvas team needs, is fighting spirit, and that’s what HKScan needs as well.

We will look at HKScan again later but on Friday, May 8^th we are going to look at Atria’s businesses.  Punk from Beijing.

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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 Finland - The importance of barbecue season?

In the latest Annual Report, Atria Plc shows a lot of interesting information about the company’s markets.  Let’s look very briefly at one set of info, barbecue season figures.  

Nielsen stats in the report tell that in the summer of 2014 (June, July and August), the value of the barbecue product market in Finland was about Eur 170 million.  My big problem is of course that I don’t know if this is in terms of consumer prices, or if it is with or without VAT. However, according to the same stats, Finns purchased 31 million kilos of barbecue products during the summer period.  Just taking these figures as they are, it’s a trivial operation to calculate the mean price per kg, which appears to be about Eur 5.50.  So, perhaps they are in terms of consumer prices without VAT.  Moreover, the same stats tell that Atria Finland’s market share in summer 2014 in barbecue products overall was 31.7%.  Again, a naïve calculation gives roughly Eur 54 million, Atria Finland’s share of the above mentioned barbecue product market.  The report says that the market share figure only includes Atria-branded products and private label products made by Atria are not included.  Perhaps some Eur 10 to 15 million should be added.  Then, Atria’s share of barbecue product market could be about Eur 60 to 70 million.  Assuming that figures really are in terms of consumer prices, one must conclude, that barbecue products don’t add to Atria Finland’s net sales but a few ten million euros.

Consequently, one can conclude, that in terms of net sales, barbecue season is not that important.  Namely Atria Finland’s net sales by quarter from first to last in 2014 in million euros were roughly 220, 250, 240, and 240.  Also these values as such tell that barbecue products increase sales only slightly.  Perhaps demand mostly shifts from other product categories.

We will look at Atria again later but on Friday, April 24^th we are going to look at HKScan’s businesses.  Practicality is practical.

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.