Artoparto's Blog: HKScan Denmark

Showing posts with label HKScan Denmark. Show all posts

Friday, May 22, 2015

HKScan all out for poultry

HKScan has launched halal chicken meat products in U.K., Hong Kong market opens for HKScan Estonia’s chilled and frozen poultry and in Denmark HKScan invests organic chicken. All in all, HKScan goes all out for poultry.

HKScan’s halal poultry products in U.K. aim at important domestic consumer group. The products are quick to prepare and they are evidently targeted specifically at young consumers. In fact they form their own product category and they are marketed under their own brand Aafiyah, and they have their own website as well.

HKScan Estonia’s head Teet Soorm comments on the company’s Hong Kong export certification and says that the quality of their products is now recognized and the company is aiming to offer also highly processed poultry products to H.K.

In Denmark, demand for HKScan’s organic chicken rose last year more than 30% and now the company has to increase its production significantly. The company believes that when times get better, the demand for organic products is continuing to intensify even further. Although most of the production goes to domestic market, HKScan is launching its Danish organic chicken in Sweden as well.

No doubt, HKScan’s chicks are flying.

This rooster, however, quits blogging. Thank you.

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Friday, December 5, 2014

A few remarks about HKScan’s poultry business

But at first shortly about meat export. In a recent issue of Kauppapolitiikka, it’s Trade Policy, published by the ministry concerned, there is, under the title “Blue and white food tours” (in Finnish), an interesting article about HKScan and the main message is that reputation of cleanness and safeness boosts Finnish food export. As an example of Finnish quality, Hanny Kottonen, CEO HKscan, mentions that in Japan, Finnish pork is served raw in local sushi. This is something that even Sweden has failed to do, Kottonen notes. By-products, those parts of carcass, which do not sell in Finland, are perhaps another key to success. Still one key, mentioned by Kottonen, is that HKScan should also export - in addition to raw meat - also consumer products with strong brands. Now we can only hope that the new Flodins brand does the job. However, the article tells, export is not easy business, even close neighbors, like Russia and Norway, have proven to be challenging.

And now shortly about poultry. Of all Group’s units only HKScan Denmark, is unprofitable. For reason or another, this is now explicitly stated in a Danish newspaper. Chicken do not sell and prices are low. Group’s problem child is the term used. It just came into my mind that Rose Poultry could be for sale. After the fire, the factory has of course been renovated and it might interest possible buyers. The Group after all, has invested heavily on poultry in Estonia and plans to invest in Finland, as already noted on this blog earlier. One additional fact is that Denmark is more vulnerable to avian influenza. Perhaps the group does not even think of selling Rose Poultry but I think that there’s some idea to go through this case more closely in the near future.

Talking about chicken, the valuable Finnish brand ”Kariniemen”, is in fact not that valuable. On the Finnish list of most prestigious brands, it holds rank number 121 of all 1043 examined brands. Considering that “Kariniemen” is an old brand and its awareness is high, ranking outside top 100 is terribly bad.

Now Kariniemen is campaigning ethical farming. Ordinary people, picked by the company, were allowed to videotape freely in a henhouse and make questions freely, company’s Youtube Channel tells. Well, think about this: they were free to ask anything they wanted. Superb! Okay, I don’t think that this kind of theatre has any positive impact. Factory farming is factory farming and that’s it. Personally I would have liked to see chicken catcher in operation and I would have liked to ask about tetracycline use.

We will discuss HKScan later but on Friday, December 19^th, we are going to look at Atria’s businesses. Chicken rocks!

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

Friday, April 25, 2014

HKScan’s Q1 2014 - Minor loss expected by analysts

HKScan’s Q1 2014 Interim Report will be released on early May, so let’s look at analysts’ expectations. Bloomberg brings together analysts' forecasts and Q1 2014 EPS estimates range from €-0.05 to €-0.02. Consensus EPS is €-0.04. Last year’s Q1 EPS was €-0.08, hence a smallish improvement is expected.

In order to reach EPS of €-0.04, the entire Group's Q1 EBIT should be approximately €3 million. Let's look briefly what kind of country-specific results the Group might need.

Figure: Quarterly earnings before interest and taxes by year and by market area. All non-recurring items are excluded. Figures are highly unofficial.

Actual EBITs are indicated with solid lines. Dashed ovals show a set of reasonable market area specific 2014 Q1 EBIT figures, which could lead to the whole Group’s Q1 EPS of about €-0.04, which corresponds to analysts’ consensus.

HKScan Finland needs a positive Q1 result, something comparable to those achieved in recent years. The analysts, so it seems, perhaps think that EBIT of €2 million is achievable. That’s not much.

However, immediate future looks better, at least interesting. Namely HKScan’s stock exchange release on April 10th is big news. According to it, Finnish rapeseed pork will be GMO free already from September. Soy will be replaced by domestic protein sources. Evidently feeding systems are ready. This will be the real beginning of the rapeseed pork product line’s boom. The biggest rival has been absolutely stubbornly uninterested in GMO free feed but Snellman, a medium sized rival, already has such beef products. It is clear, that these two players will ensure that very soon consumers are taking GMO free products for granted when it comes to high or medium priced products. HKScan’s biggest rival will be in trouble and possibly they have to make considerable changes in their brand new feed plant in order to keep up with the consumer’s new requirements.

HKScan Sweden has to improve to meet the expectations. However, analysts are likely not expecting but a slight loss. Then Q1 EBIT of €-1 million is a good guess.

A new, but well-known (together with Annerstedt) Swedish brand Flodins will be launched on all Group’s markets. It is meant to be a brand for traceable, trendy, easy-to-use, easy-to-prepare products. It must mean also new product lines and of course in the short run it means only costs. The other news, not as good, is that HKScan Group has become a member of the Round Table on Responsible Soy Association and HKScan Sweden is at the forefront. But supposedly in consumers’ minds GMO free soy is the key, and this membership does not all require it. Just to mention one other member of the association: Monsanto.

HKScan Denmark’s Q1 2013 result should not be negative, and Q1 EBIT of €0 million is reachable.

A salmonella contamination incident at Vinderup plant in early April may have a negative effect on results later this year.

HKScan Baltics should also reach Q1 result something similar to those in recent years. In an interview this week, Teet Soorm, head of HKScan Estonia, pointed out that labor costs are rising but noted also that warm winter has reduced energy costs. Then Q1 EBIT of €1 million is undoubtedly possible.

HKScan Poland needs a result close to its Q1 in recent years and EBIT of €4 million is probably expected by analysts. During the quarter, HKScan sold its stake of Sokołów.

The transaction is expected to be approved by the authorities quite soon. This means that in the short run HKScan’s revenues and especially earnings will decrease dramatically, of course.

The sum of those country-specific figures is €6 million. Subtracting Group administration costs, perhaps some €3 million, we end up with the needed figure of €3 million.

This EBIT of €3 million might indeed result in the analysts’ consensus Q1 EPS of €-0.04. Namely first adding the share of associates' results perhaps some €0.5 million, then subtracting net financial expenses perhaps about €5 million, then continuing guesswork and subtracting taxes about €0.5 million and finally subtracting profit attributable to non-controlling interests, perhaps now close to €0 million, we end up with the sum of €-2 million. The number of shares is approximately 55 million, which means that Q1 EPS would be €-0.036 which is close to the analysts’ consensus EPS of €-0.04.

We will discuss HKScan later but on Friday, May 9^th, we are going to look at Atria’s businesses. But even before that, we are going to look very briefly at both companies' Q1 reports as soon as they are released. Okay, just some poetry here: Earnestly urging earnings urgently.

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