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.

HKScan - growth-seeking but shrinking company

HKScan shrinks but the strategy for profitable growth is kept alive.  Currently it means plans of investing in poultry product plant in Finland and some kind of a “Flodins factory” in Rakvere, Estonia.  It is noteworthy, that the Group seems to be investing in poultry.  In Estonia, a new poultry facility was just opened and of course, there is already a large unit in Denmark, which has not been very successful lately.  It is true, that consumption of chicken meat is rising constantly but anyway plans to invest quite heavily in poultry in Finland makes me think if there will be overcapacity.

There are many so funny writings in the net including those of mine, especially the posting on this blog May, 23.  At that time I was so excited to announce the fact that in autumn and thereafter HKScan Finland’s rapeseed products will be GMO free.  I wrote for instance: “We’ll see, but GMO free product group might well be a game changer in Finland.” And perhaps or even likely HKScan would succeed in the competition and win it.  That’s what I thought in May.  Currently, I would be surprised, if HKScan wins any competition anywhere.  Looks like the term ‘win’ is not included in the Group’s playbook.

Hannu Kottonen, CEO HKScan, has always found lot of reasons for bad results:  expensive feed, private labels, low demand, aging population, recession, surplus of meat and also lack of meat, for instance.  The latest Q3 report gives one reason more.  Namely the company tells about decreasing retail sales volumes in Finland and this time one reason is that food wastage among consumers remained low.  That’s straight out of Dilbert, the comic strip.

We will discuss HKScan later but on Friday, November 21^st, we are going to look at Atria’s businesses.  But now, let’s look at some failures in Russia.

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.

HKScan Finland - fragmentary observations about Flodins brand and Finnish meat product export potential

What will happen to the Group's renewed Flodins brand which is committed to using only meat from the company's own market area. This is what we asked in this blog about a month ago. Well, now Flodins is in stores, at least in Finland, a few products of domestic origin.   The net pages in Finnish are in fact partly in English. Not a very impressive start.

What about the commitment?  Somewhat alarming is the fact that for horeca sectorin Finland, HKScan offers 11 Flodins products, of which a significant part is not from the group’s market area. A blatant example of cooked minced beef: born, raised, slaughtered, cut, cooked and packaged in Brazil.  Horeca pages are not up to date?  Or is it that the promise of HKScan’s own market area origin has been thrown out right away?

In a seminar arranged by Makery Oy in September, Petri Haaparanta, VP HKScan Export, has given a presentation.  Material available in the net is mostly in English.  The theme of the seminar was that Finnish food export has great potential and Haaparanta shed light on the situation from HKScan's point of view. At least my knowledge increases when he tells of the Group's export distribution by country: the largest export markets are Russia 16%, UK 12%, New Zealand 8% and Hong Kong 8%.

But also here we have one alarming piece of info. The presentation includes a diagram of how reliable do consumers consider processed meat products manufactured in different countries.   The online presentation unfortunately does not tell the countries in which the survey was conducted and what countries were involved in the comparison. Haaaparanta’s chart includes Finland, Belarus, Russia, Latvia, Estonia and Poland.

 

The result is shocking.  It is no surprise that Finnish meat products are trusted most, average on a 7-point scale is 5.4.  However, difference to Belarus and Russia is negligible, both of them having average of 5.2.  And yes, the survey truly found differences, namely Estonia got a low reading of 4.4 and Poland a reading of only 3.3.

Once again it should be emphasized that there is no information about what are the countries where the survey was conducted, but whatever they are, the results tells a terrible thing, that on those markets Finnish meat products, when it comes to trustworthiness, have no lead compared for instance to Russian meat products.

Hence these Haaparanta’s statements in the presentation seem fairly arrogant and even funny.

Choose your partner – don’t let your partner choose you.

Our offering comes with a promise of delicious food, Nordic purity and responsibility. That promise applies to every step in the meat value chain and every person involved in what we do.

We will discuss HKScan later but on Friday, October 24^th, we are going to look at Atria’s businesses.  Okay, Estonian meat food is not trusted, the survey says. So, let's look at the atmosphere in Tartu food and beer festival. Please note that one alcohol brand is featured prominently in the video.

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.