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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