HKScan Oyj - Company Announcement

HKScan to improve its operational efficiency and competitiveness by restructuring its production set-up in Sweden

HKScan Corporation                                                        
Stock exchange release 4.3.2014, 9:00 am (EET) 




HKScan to improve its operational efficiency and competitiveness by
restructuring its production set-up in Sweden 

As part of its strategic review in Sweden, leading Nordic meat producer HKScan
Group will improve its operational efficiency by further streamlining and
developing its production structure in Sweden. The planned actions will create
a sustainable production platform in Sweden, supporting the Group's strategic
goal of boosting profitable growth. 

The restructuring to be initiated in Sweden will centralize and enhance the
Group's Swedish production and technology footprint. The plan targets an
annualized profit improvement in excess of EUR 7 million. Scheduled for
completion by the beginning of 2015, the restructuring will entail an
investment of approximately EUR 0.6 million, and the entire roll-out will incur
non-recurring costs of about EUR 10.3 million. Of these non-recurring costs,
EUR 6.5 million are asset impairments. 

The plan involves the discontinuation of pig slaughtering and cutting at the
Skara facility, where production of meatballs, hamburgers and other convenience
foods will continue. In the future, pig slaughtering will be handled by
HKScan's own slaughterhouse located in Kristianstad and by its associated
company Siljans Chark, located in Ickholmen. Beef cutting will be moved to the
Linköping facility. HKScan's operations will additionally be supported by a
contract slaughtering agreement with Skövde Slakteri. As part of the
restructuring, HKScan will relocate the production of skinless sausages from
Örebro to Linköping and discontinue its operations in Örebro. 

After the restructuring, HKScan's production will be centralized and integrated
at four key locations; in Kristianstad, Linköping, Halmstad and Skara. "After a thorough strategic review and analysis of all relevant alternatives,
we trust that these changes will ensure far better capacity utilization, a
competitive cost base and opportunities for profitable growth. HKScan is
strongly committed to developing and investing in the Swedish meat business and
value chain”, says Göran Holm EVP, Consumer Business Scandinavia. 

Negotiations with personnel affected by the forthcoming changes have been
concluded. The restructuring plan will involve a personnel reduction of
approximately 140 employments in total, mainly at the Örebro and Skara units.
The headcount will respectively grow at the Linköping and Kristianstad facility
by approximately 50 employees. In line with its personnel policy, the Group
aims to offer as many impacted employees as possible new employment
opportunities at other HKScan units.  Additionally, new vacancies at the
partner company, Skövde Slakteri are being discussed. HKScan currently has
approximately 2,460 employees in Sweden. 

Strategic review to be finalized - Competitiveness programme to continue in
Sweden 

The Group is proactively investing in its competitiveness in order to secure
the future availability of responsibly produced, high-quality Swedish meat raw
material. Last year, HKScan appointed specific producer collaboration teams
specializing in pig, beef and lamb production, aiming to further develop and
revitalize Swedish primary production. The same cooperation model has already
been applied earlier in Finland, and the best production practices are now
being transferred to Sweden. The Group is also working to develop and renew its
contract models, supplier steering, meat sourcing and producer services. 

HKScan is committed to continue investing in its Swedish consumer brands,
offering and products with the aim of adding value throughout the entire meat
value chain. Recent examples of these efforts include the launch of the Svensk
Rapsgris® concept in 2012 and the acquisition of exclusive rights to NG
Hampshire genetics to reinforce Scan Piggham Swedish pork. Today the Scan brand
is the clear market leader and one of Sweden's best-known brands. The meat raw
material of all Scan products is 100% Swedish in origin. Pärsons is the leading
brand in the cold cuts segment. Poultry produced by HKScan and sold in Sweden
is also sold and marketed under the Pärsons brand. 

HKScan Group


Hannu Kottonen
President and CEO

For further information:
To contact Hannu Kottonen, CEO, HKScan, kindly submit a callback request to
Marja-Leena Dahlskog, SVP Communications, HKScan, tel. +358 50 502 0060. 

Please also submit inquiries to Göran Holm, EVP,Consumer business in
Scandinavia, HKScan, tel.+46 70 657 0034. 

HKScan is the leading Nordic meat expert. We produce, market and sell
high-quality, responsibly-produced pork, beef, poultry and lamb products,
processed meats and convenience foods under strong brand names. Our customers
are the retail, food service, industrial and export sectors, and our home
markets comprise Finland, Sweden, Denmark, the Baltics and Poland. We export to
close to 50 countries. In 2013, HKScan had net sales of EUR 2.5 billion and
some 11 000 employees, making us one of the Europe's leading meat companies. 


DISTRIBUTION:
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www.hkscan.com