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Significant volume and profit growth
Key metrics[1)]
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MSEK Q1 2024 Q1 2023 Δ R12M 2023
Net sales 3,160 3,284 -4% 12,890 13,014
EBITDA 225 196 15% 909 880
Operating income (EBIT) 122 93 32% 486 457
EBITDA margin % 7.1% 6.0% 1.2ppt 7.1% 6.8%
EBIT margin % 3.9% 2.8% 1.0ppt 3.8% 3.5%
Non-comparable items[2)] - - - 8 8
Income after finance net 88 61 44% 359 333
Income for the period 70 44 59% 299 273
Earnings per share, SEK 1.07 0.83 28% 4.35 4.11
Return on capital 11.1% 7.8% 3.3ppt 11.1% 11.0%
employed %
Return on equity % 11.6% 8.2% 3.4ppt 11.6% 11.4%
Operating cash flow -70 58 -220% 544 671
Net interest-bearing 1,709 1,984 -14% 1,709 1,571
debt
NIBD/EBITDA 1.9 2.5 -26% 1.9 1,8
Chicken processed (tonne 70,133 65,103 8% 274,810 269,780
gw)[3)]
EBIT/kg 1.74 1.42 23% 1.77 1.69
Lost time injuries (LTI) 24.1 20.3 19% 24.8 23.8
per million hours worked
Feed efficiency (kg 1.50 1.50 0% 1.50 1.50
feed/live weight)
1) For details about alternative KPIs, see note 4.
2) Adjusted for non-comparable items, see note 5.
3) Previously reported figures showed live weight, tonne. Historical data converted by a factor of 0.72.
CEO Comments
Scandi Standard increased its profit and margins in the first quarter of 2024. While the first quarter of 2023 was dominated by substantial price hikesfor input goods, energy and transportation costs, market conditions have now returned to more normal levels. The situation has enabled price reductions that have benefited consumers in parallel with stimulating demand for our products. Overall, this has resulted in significant volume and earnings growth, even though net sales were lower for the Group. Our focus on disciplined volume growth, an improved product mix and increased efficiency has resulted in the Group's operating income increasing with 32 per cent to MSEK 122 (93). The EBIT margin strengthened to 3.9 per cent (2.8).
Continued improvement in Ready-to-cook
Ready-to-cook (RTC) reported a significant year-on-year increase in sales, up x per cent to MSEK 2,441 (2,373), primarily driven by volume growth that was partially affected by lower prices for feed. Operating income improved to MSEK 96 (31), mainly due to successful work to ensure disciplined volume growth and an improved product mix.
Retail comprise the main channel for most sales. We experienced strong demand from our consumers in most markets, driven by lower raw material prices which also benefited customers without negatively impacting our profitability. This reinforces our conviction that chicken is a versatile and attractive protein, irrespective of fluctuations in consumer purchasing power, and it is reassuring to see confirmation of the strength of our local brands.
In RTC, our largest business area, a number of initiatives are ongoing that focus on increased efficiency and gradual performance improvements, such as investments to increase added value and specific improvements in individual markets, together with increased integration between the Ready-to-cook and Ready-to-eat segments.
Turnaround in Ready-to-eat
Ready-to-eat (RTE) posted net sales of MSEK 594 (765) and an operating income of MSEK 25 (45) for the first quarter. Even if, compared with the same period last year, earnings remained affected by lower capacity utilisation at the production plant in Farre, Denmark, we noted that the sales volume increased and that profitability in Ready-to-eat levelled out in the previous quarter. We continue to rebuild the order book and expect to gradually replace lost volumes with a more diversified customer base.
Ingredients accounted for MSEK 125 (146) of revenue for the quarter, contributing operating income of MSEK 7 (24). Challenging conditions in the external environment, with falling world market prices, impacted operations in the quarter. However, the segment has considerable strategic importance for the Group since it enables us to utilise a greater proportion of each bird, and to add value through processing the raw material as far as possible. This is a key element in improving profit.
Focus firm on increased integration of sustainability
Scandi Standard supplies the market with sustainable, safe and nutritious products and integrating sustainability into both strategy and operations remains a priority focus area. We took another important step on that journey in the first quarter by systematically integrating sustainability into the Group's investment decisions. The assessment is made quantitatively - by assessing changes in both energy consumption and climate impact - as well as qualitatively where a number of material areas are included in the overall assessment such as water quality, animal welfare, cyber security, and occupational health and safety.
Our ambition is to be a sustainability leader in the global poultry space and we achieved the majority of our sustainability goals in the past year. We have now set new, ambitious targets for 2024 to ensure we continue our journey toward 2030.
Stable financial position
Compared with the previous quarter, net interest-bearing debt increased to MSEK 1,709 (1,571) As expected, the seasonal increase in tied-up working capital resulting from the timing of Easter and quarterly fluctuations has offset the positive impact from the strengthening of EBITDA for the quarter. Overriding work on the reduction of tied-up working capital continues and includes measures such as closer coordination of bird purchases with sales and business planning.
We have a strong financial position, even after taking into account the extensive investment program that has been implemented to support targets for growth and margin improvement by 2027. Investments of approximately MSEK 500 are planned for 2024 that are linked to efficiency improvements, expansion and increased added value. We are concurrently launching a new business system and investing further in our climate transition plan.
During the quarter, we have worked purposefully with the continued implementation of Scandi Standard's strategy, increasing the value of our protein, introducing initiatives to improve our efficiency, integrating sustainability throughout the value chain and leveraging the strength of collaboration across the entire Group. We conducted a number of activities and projects to achieve the above and I continue to see considerable development potential in all these areas.
In summary, today, Scandi Standard has attractive, tasty and affordable products, strong market positions, a clear focus on effective processes and on increased and improved collaboration across all parts of the Group. In conclusion, I can state that this quarter we have delivered in line with the strategy we decided in the fourth quarter of 2023, and we look to the future with great confidence. We are well-positioned to increase long-term value creation in the Group
Stockholm, 3 May 2024
Jonas Tunestål,
Managing Director and CEO,
Scandi Standard
Conference Call
A conference call for investors, analysts and media will be held on 3 May 2024 at 8.30 AM CET.
Dial-in numbers:
UK: 020 3936 2999
Sweden: 010 884 80 16
US: +1 646 664 1960
Other countries: +44 20 3936 2999
Slides used in the conference call can be downloaded at www.scandistandard.com under Investor Relations. A recording of the conference call will be available on www.scandistandard.com afterwards.
Further information
For further information, please contact:
Jonas Tunestål, Managing director and CEO and Fredrik Sylwan, CFO
Tel: +46 10 456 13 00
Henrik Heiberg. Head of M&A, Financing & IR
Tel: +47 917 47 724
This interim report comprises information which Scandi Standard is required to disclose pursuant to EU market abuse regulation and the Securities Markets Act. It was released for publication at 07:30 AM CET on 3 May 2024.
Financial calendar
Interim report for Q2 2024 July 17. 2024
Interim report for Q3 2024 October 25. 2024
About Scandi Standard
Scandi Standard is the leading producer of chicken-based food products in the Nordic region and Ireland. The company produces, markets and sells ready to eat, chilled and frozen products under the well-known brands Kronfågel, Danpo, Den Stolte Hane, Manor Farm and Naapurin Maalaiskana. Eggs are also produced and sold in Norway. We are approximately 3.200 employees with annual sales of more than SEK 13 billion