2016-07-19 07:00:01 CEST
2016-07-19 07:00:01 CEST
REGULATED INFORMATION
HKScan Oyj - Interim report (Q1 and Q3)
HKScan Group’s interim report 1 January—30 June 2016: Slight growth in net sales, profit lagging in the second quarter
HKScan Corporation INTERIM REPORT
19 July 2016, at 08:00 am
HKScan Group’s interim report 1 January—30 June 2016:
Slight growth in net sales, profit lagging in the second quarter
* Net sales for January–June were EUR 921.8 (940.8) million and EUR 482.7
(474.8) million in the second quarter.
* EBIT for January–June was EUR -2.6 (2.9) million. Comparable EBIT was EUR
-0.9 (2.9) million. The corresponding EBIT margin was -0.1 (0.3) per cent.
* For the second quarter, EBIT was EUR 1.7 (3.7) million. Comparable EBIT was
EUR 2.2 (3.7) million. The corresponding EBIT margin was 0.5 (0.8) per cent.
* Cash flow before debt service was EUR 0.1 (19.2) million for January–June and
EUR 16.2 (19.7) million in the second quarter.
* Comparable profit/loss before taxes was EUR -5.4 (-1.9) million for
January–June and EUR 0.7 (1.2) million in the second quarter.
* EPS was EUR -0.18 (-0.04) for January–June, and EUR -0.01 (0.01) in the
second quarter.
* Net financial expenses were EUR -4.0 (-4.8) million for January–June and
EUR-1.8 (-2.3) million in the second quarter.
* Net debt was EUR 156.4 (150.4) million and net gearing 38.6 (35.8) per cent.
* Outlook for 2016 (unchanged): HKScan expects comparable operating profit
(EBIT) to improve from 2015.
HKScan has revised the terminology used for alternative performance measures
due to new guidelines by the European Securities and Market Authority. ‘EBIT
excluding non-recurring items’ has been replaced with ‘comparable EBIT’ and
‘profit/loss before taxes excluding non-recurring items’ has been replaced with
‘comparable profit/loss before taxes’. Definitions of these performance
measures and of items affecting comparability can be found in the tables of
this interim report under calculation of financial indicators. HKScan reports
alternative performance measures to show the business performance and to
enhance comparability between reporting periods.
Aki Laiho, HKScan’s Deputy CEO, comments on the second quarter of 2016:
“In the second quarter, comparable EBIT lagged behind last year, and was EUR
2.2 million. Main reasons were high beef raw material prices in Sweden – which
stabilized in June – and oversupply of pork in the EU affecting the sales
prices negatively especially in Finland.
Mitigation actions to balance pork oversupply, with a voluntary reduction
scheme of piglet production, have successfully been initiated in Finland. In
Sweden, high beef purchase prices are being passed on to sales prices.
Additionally, domestic sales of Danish fresh poultry continued the positive
trend already seen in the previous quarter.
In total, the Group’s net sales showed modest year-on-year growth of 1.7 per
cent.”
KEY FIGURES, Q2
(EUR million) Q2/2016 Q2/2015 Q1-Q2/201 Q1-Q2/20 2015
6 15
--------------------------------------------------------------------------------
Net sales 482.7 474.8 921.8 940.8 1 917.1
--------------------------------------------------------------------------------
EBIT 1.7 3.7 -2.6 2.9 9.6
--------------------------------------------------------------------------------
- % of net sales 0.4 0.8 -0.3 0.3 0.5
--------------------------------------------------------------------------------
Profit/loss before taxes 0.2 1.2 -7.1 -1.9 2.2
--------------------------------------------------------------------------------
- % of net sales 0.0 0.3 -0.8 -0.2 0.1
--------------------------------------------------------------------------------
Profit/loss for the period -0.2 1.0 -9.6 -1.8 1.9
--------------------------------------------------------------------------------
- % of net sales 0.0 0.2 -1.0 -0.2 0.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Comparable EBIT 2.2 3.7 -0.9 2.9 21.5
--------------------------------------------------------------------------------
- % of net sales 0.5 0.8 -0.1 0.3 1.1
--------------------------------------------------------------------------------
Comparable profit/loss before 0.7 1.2 -5.4 -1.9 14.1
taxes
--------------------------------------------------------------------------------
- % of net sales 0.1 0.3 -0.6 -0.2 0.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EPS, EUR -0.01 0.01 -0.18 -0.04 0.01
--------------------------------------------------------------------------------
Cash flow before debt service 16.2 19.7 0.1 19.2 32.2
--------------------------------------------------------------------------------
Cash flow before financing 16.1 22.2 -1.1 18.3 25.0
activities
--------------------------------------------------------------------------------
Return on capital employed 1.3 3.3 2.3
(ROCE)
before taxes, %
--------------------------------------------------------------------------------
Net debt 156.4 150.4 144.0
--------------------------------------------------------------------------------
Gearing % 40.6 38.6 36.1
--------------------------------------------------------------------------------
Net Gearing % 38.6 35.8 33,8
--------------------------------------------------------------------------------
JANUARY–JUNE 2016
The market demand in general grew on all HKScan home markets from January to
June, but slowed during the second quarter. The Group’s net sales grew slightly
in the second quarter, but still lagged behind the previous year for
January–June. Sales margins still decreased in Sweden but stabilized in the
other market areas in the second quarter. The Group’s EBIT remained behind both
the previous year’s second quarter and the whole reporting period. Market area
Denmark improved its EBIT, whereas Sweden, Finland and the Baltics were still
behind during the second quarter. Group’s operational efficiency measures
advanced well during January–June, and continued with success in Sweden and
Denmark in the second quarter.
In Sweden, the demand for domestic meat remained strong also during the second
quarter. Tough competition caused both an increase in animal purchase prices
and a shortage of beef. Sales price increases were made with success in all
product categories in Sweden. In Finland, the oversupply of pork persisted
during the second quarter, resulting in lower sales prices, which together with
fierce price competition in retail further decreased sales margins. In Denmark,
good progress was seen in sales of fresh chicken in the domestic retail market,
whereas the export market remained challenging. In the Baltics, the market
situation was weak and price levels were low but HKScan managed, however, to
maintain its established market position.
Good progress was made with initiatives to strengthen the Group’s operational
footprint in line with the profitable growth strategy. Investment in the
growing poultry segment proceeded well in Rauma, Finland, with the cornerstone
of the new production plant laid in mid-May. An expansion investment in the
Group’s Polish bacon plant was approved and the project is in progress.
On 27 May, HKScan announced that Jari Latvanen had been appointed as the
Group’s new President and CEO. He will be joining HKScan from Stora Enso by the
end of November 2016 at the latest. Aki Laiho, COO, will continue to serve as
the deputy CEO until Jari Latvanen assumes his position.
MARKET AREA SWEDEN
(EUR million) Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 2015
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 205.0 208.3 394.1 410.4 841.9
-----------------------------------------------------------------
EBIT 3.3 3.4 4.4 5.4 21.1
-----------------------------------------------------------------
- EBIT margin, % 1.6 1.6 1.1 1.3 2.5
-----------------------------------------------------------------
-----------------------------------------------------------------
Comparable EBIT 3.3 3.4 4.4 5.4 21.6
-----------------------------------------------------------------
- EBIT margin, % 1.6 1.6 1.1 1.3 2.6
-----------------------------------------------------------------
In Sweden, net sales for January–June were EUR 394.1 (410.4) million and EUR
205.0 (208.3) million in the second quarter. Comparable EBIT for January–June
totalled EUR 4.4 (5.4) million and EUR 3.3 (3.4) million in the second quarter.
Meat consumption in general continued to grow in Sweden, and demand for
domestic meat remained strong during the second quarter. The overall shortage
of domestic meat, however, caused a slight increase in the share of imported
meat in Sweden.
Despite sales price increases in all categories, net sales decreased both for
January–June and in the second quarter. This was mainly due to lower sales
volumes depending on an intensive competition of domestic beef raw material.
Animal purchase prices continued to increase in the second quarter, especially
in beef, but stabilized at an extraordinary high level in June. Operational
efficiency continued improving, thus partially offsetting the decrease in sales
margins.
Sales of the new ‘Korvish®’ and ‘Järpish®’ products, launched in the first
quarter, met the expectations. The products contain half meat and half
vegetables. Marketing investments to further strengthen the Scan® brand
continued. Sales of barbecue products developed well during the second quarter.
MARKET AREA FINLAND
(EUR million) Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 2015
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 207.4 195.5 394.3 389.0 801.6
-----------------------------------------------------------------
EBIT 2.2 3.8 3.0 7.4 4.9
-----------------------------------------------------------------
- EBIT margin, % 1.1 2.0 0.8 1.9 0.6
-----------------------------------------------------------------
-----------------------------------------------------------------
Comparable EBIT 2.2 3.8 3.0 7.4 16.3
-----------------------------------------------------------------
- EBIT margin, % 1.1 2.0 0.8 1.9 2.0
-----------------------------------------------------------------
In Finland, net sales for January–June were EUR 394.3 (389.0) million and EUR
207.4 (195.5) million in the second quarter. Comparable EBIT for January–June
totalled EUR 3.0 (7.4) and EUR 2.2 (3.8) million in the second quarter.
Market demand in general decreased slightly during the second quarter. The only
growing categories were poultry and processed food. The market price level for
meat products was low in all customer segments. Net sales increased as a result
of higher poultry sales volumes in the second quarter. Moreover, the
acquisition of Paimion Teurastamo Oy in 2015, contributed to the increased net
sales.
In the second quarter, animal raw material costs remained at the level of the
first quarter. Sales prices decreased in all main categories partly due to the
oversupply of pork, which also led to increased production costs. Active
measures to correct oversupply have been planned in cooperation with animal
producers, with implementation already under way.
Kivikylän Kotipalvaamo Oy, subsidiary of HKScan continued to improve its net
sales and profitability during the second quarter.
The Group’s strategic investment project targeting the growing poultry segment
continued in Rauma. The cornerstone of the new production facility was laid in
mid-May.
MARKET AREA: DENMARK
(EUR million) Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 2015
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 46.6 45.6 91.3 94.5 175.9
-----------------------------------------------------------------
EBIT -2.6 -2.4 -4.9 -5.9 -9.3
-----------------------------------------------------------------
- EBIT margin, % -5.6 -5.3 -5.3 -6.2 -5.3
-----------------------------------------------------------------
-----------------------------------------------------------------
Comparable EBIT -2.1 -2.4 -4.4 -5.9 -9.3
-----------------------------------------------------------------
- EBIT margin, % -4.6 -5.3 -4.8 -6.2 -5.3
-----------------------------------------------------------------
In Denmark, net sales for January–June amounted to EUR 91.3 (94.5) million and
EUR 46.6 (45.6) million in the second quarter. Comparable EBIT for January–June
was EUR -4.4 (-5.9) million and EUR -2.1 (-2.4) million in the second quarter.
Net sales increased due to higher sales volumes in the second quarter. Sales
development of fresh products’ category in the domestic market were
nevertheless very positive, resulting in higher volumes, improved margins, and
market share gains. The Rose® brand reached a leading position on the Danish
poultry market.
Performance in the export market was negatively affected by fierce price
competition. Some improvement in price levels in Asia was though seen during
the second quarter. Operational efficiency measures contributed to the improved
EBIT.
Investment in the Rose® brand showed good results, with Rose® establishing a
clearly higher brand value than competitors. The launch of Flodins® snacks
continued.
MARKET AREA: BALTICS
(EUR million) Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 2015
-----------------------------------------------------------------
-----------------------------------------------------------------
Net sales 41.5 44.6 79.4 85.5 173.6
-----------------------------------------------------------------
EBIT 1.8 2.6 2.0 2.5 5.4
-----------------------------------------------------------------
- EBIT margin, % 4.3 5.8 2.6 2.9 3.1
-----------------------------------------------------------------
-----------------------------------------------------------------
Comparable EBIT 1.8 2.6 2.0 2.5 5.4
-----------------------------------------------------------------
- EBIT margin, % 4.3 5.8 2.6 2.9 3.1
-----------------------------------------------------------------
In the Baltics, net sales for January–June were EUR 79.4 (85.5) million and EUR
41.5 (44.6) million in the second quarter. Comparable EBIT for January–June was
EUR 2.0 (2.5) million and EUR 1.8 (2.6) million in the second quarter.
The overall market situation remained challenging with low price levels
prevailing. The export market remained weak. Net sales development was in total
negative as a result of lower sales prices, volumes and the divested egg
business (in Q1/2015). Towards the end of the second quarter, the market price
for pork started to recover and showed some increase. On the domestic market,
increased sales volumes compensated for lower sales prices. Regardless of
fierce competition, the Group managed to maintain its strong market position.
Rakvere® and Tallegg® branded products maintained their strong foothold. Active
measures to prevent the spread of African Swine Ffever (ASF) continued in
Estonia. Both HKScan’s own farms and its contract farmers adhere to the
strictest biosecurity standards.
Actions to expand the Rakvere® and Tallegg® brands from Estonia into pan-Baltic
brands started during the second quarter. The Rigas Miesnieks® brand identity
was successfully renewed and launched in Latvia.
FINANCING
The Group’s interest-bearing debt at the end of June stood at EUR 164.5 (162.1)
million. Net debt was EUR 156.4 (150.4) million and the net gearing ratio 38.6
(35.8) per cent. In the second quarter, the parent company paid EUR 7.6 million
as dividend for 2015 (EUR 26.4 million for 2014).
The Group’s liquidity was good. Committed credit facilities at 30 June stood at
EUR 100.0 (100.0) million, and were entirely undrawn. The EUR 200.0 million
commercial paper programme had been drawn to the amount of EUR 23.0 (15.0)
million.
Net financial expenses decreased and were EUR -1.8 (-2.3) million in the second
quarter and EUR -4.0 (-4.8) million in January–June.
SHARES
At the end of June, HKScan Group’s share capital stood at EUR 66 820 528. The
Group’s total number of shares issued, 55 026 522, were divided into two share
series as follows: A Shares, 49 626 522 (90.19% of the total number of shares)
and K Shares, 5 400 000 (9.81%). The A Shares are quoted on the Nasdaq
Helsinki. The K Shares are held by LSO Osuuskunta (4 735 000 shares) and
Sveriges Djurbönder ek.för. (665 000 shares) and are not listed.
On 8 April 2016, the company transferred 44 885 treasury A shares as rewards
according to the share based incentive plan 2013. At the end of June 2016, the
company held 1 008 849 A Shares as treasury shares corresponding 1.8 per cent
of the company’s total number of shares and 0.6 per cent of the total number of
votes.
HKScan’s market capitalization at the end of June stood at EUR 167.5 (287.7)
million, breaking down as follows: Series A shares had a market value of EUR
150.7 (258.9) million, and the unlisted Series K shares a calculational market
value of EUR 16.7 (28.8) million.
In January–June, a total of 7 275 746 (12 606 842) of the company’s shares with
a total value of EUR 23 354 718 (68 257 415) were traded. The highest price
quoted in the period under review was EUR 3.89 (6.25), and the lowest was EUR
2.94 (3.24). The average price was EUR 3.21 (5.41). At the end of June, the
closing price was EUR 3.10 (5.33).
ANNUAL GENERAL MEETING 2016 AND BOARD OF DIRECTORS’ AUTHORIZATIONS
The Annual General Meeting of HKScan Corporation was held on 13 April 2016 in
Helsinki. The resolutions of the AGM, including authorizations given to the
Board, are reported in full in a stock release the same day. The Board has not
exercised the authorizations given by the AGM 2016.
The AGM resolved that a dividend of EUR 0.14 be paid for 2015. All the Board
members: Teija Andersen, Niels Borup, Tero Hemmilä, Mikko Nikula, Henrik
Treschow and Pirjo Väliaho, as well as all the current deputy Board members:
Per Nilsson and Marko Onnela were re-elected for a further term of office. At
the organizational meeting, the Board re-elected Mikko Nikula as Chairman and
Niels Borup as Vice Chairman.
On 8 April 2016, HKScan reported that the Board of HKScan Corporation had
resolved on a directed share issue according to the Group’s share based
incentive plan 2013, payment of the rewards for the performance period
2013–2015. In total 44 885 HKScan Corporation’s A shares owned by the Group
were gratuitously transferred to the participants of the incentive plan. Its
terms have been announced by a stock exchange release published on 20 December
2012. After the transfer, HKScan holds a total of 1 008 849 own shares.
CHANGES IN THE BOARD AND GROUP MANAGEMENT
On 11 May 2016, HKScan’s Board of Directors reported that its member Tero
Hemmilä resigned from the Company's Board as of the same date.
On 27 May 2016, HKScan’s Board of Directors reported having appointed Jari
Latvanen (52), MBA, as HKScan’s new President and CEO. He will be joining
HKScan from Stora Enso by the end of November 2016 at the latest. Aki Laiho,
COO, will continue to serve as the deputy CEO until Jari Latvanen assumes his
new position.
On 13 June 2016, HKScan reported that Sari Suono, EVP HR and member of the
Group’s Management Team, will leave HKScan by the end of September.
On 23 June 2016, it was announced that Anders Jeppesen Jensen, General Manager
of HKScan Denmark and member of the Group’s extended management team, will
leave the company. Göran Holm, EVP Consumer Business, Scandinavia, will be
acting General Manager of HKScan Denmark until further notice.
SHORT-TERM RISKS AND UNCERTAINTY FACTORS
The most significant uncertainty factors in the HKScan Group’s business are
related to sales and raw material prices, as well as management of global and
local meat balances.
The risks include various unexpected actions potentially taken by authorities
or pressure groups, which may cause restrictions to the business or volatility
in demand.
In the food industry’s raw material supply, the risks of animal diseases, such
as the African Swine Fewer (ASF) currently in Estonia, or any international or
regional food scandals impacting the overall consumption outlook cannot be
fully excluded.
OUTLOOK (UNCHANGED)
HKScan expects its comparable operating profit (EBIT) to improve from 2015.
HKScan expects the economic and demand outlook to remain challenging. Sales
price competition will accordingly remain tough in 2016. The Group’s strategy
implementation, continuous improvement projects and active sales margin
management contributes to better financial performance.
NEXT FINANCIAL REPORT
HKScan Group’s interim report January–September 2016 will be published on 2
November 2016.
Vantaa, 19 July 2016
HKScan Corporation
Board of Directors
For further details, kindly contact Aki Laiho, Deputy CEO or Tuomo Valkonen,
CFO, HKScan Corporation. Please submit a call-back request via Marja-Leena
Dahlskog, SVP Communications, HKScan Corporation,
marja-leena.dahlskog(at)hkscan.com or tel. +358 10 570 2142.
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 and the Baltics. We export to close
to 50 countries. In 2015, HKScan had net sales of approximately EUR 1.9 billion
and some 7 400 employees.
DISTRIBUTION:
Nasdaq Helsinki
Main media
www.hkscan.com
CONSOLIDATED INTERIM REPORT 1 JANUARY–3O JUNE 2016
CONSOLIDATED INCOME STATEMENT
(EUR million) Note Q2/201 Q2/201 Q1-Q2/201 Q1-Q2/201 2015
6 5 6 5
--------------------------------------------------------------------------------
Net sales 482.7 474.8 921.8 940.8 1 917.1
--------------------------------------------------------------------------------
Cost of goods sold 1. -452.2 -442.6 -865.8 -881.2 -1
799.5
--------------------------------------------------------------------------------
Gross profit 30.5 32.2 56.0 59.6 117.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other operating items total 2.3 2.7 4.5 4.8 11.6
--------------------------------------------------------------------------------
Sales and marketing costs -14.8 -15.1 -28.9 -30.0 -57.8
--------------------------------------------------------------------------------
General administration 1. -16.3 -16.1 -34.1 -31.4 -61.9
costs
--------------------------------------------------------------------------------
Operating profit 1.7 3.7 -2.6 2.9 9.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 1.0 0.6 1.4 1.1 2.1
--------------------------------------------------------------------------------
Financial expenses -2.7 -2.9 -5.4 -5.9 -11.2
--------------------------------------------------------------------------------
Share of profit/loss in 0.3 -0.3 -0.5 0.0 1.7
associates
--------------------------------------------------------------------------------
Profit/loss before taxes 0.2 1.2 -7.1 -1.9 2.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income tax -0.5 -0.2 -2.5 0.1 -0.3
--------------------------------------------------------------------------------
Profit/loss for the period -0.2 1.0 -9.6 -1.8 1.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-controlling interests -0.5 -0.3 -0.4 -0.2 -1.6
--------------------------------------------------------------------------------
Profit/loss for the period -0.7 0.7 -10.0 -2.0 0.3
--------------------------------------------------------------------------------
Earnings per share calculated on profit attributable to equity holders of the
parent:
--------------------------------------------------------------------------------
-
EPS, undiluted, continuing operations, -0,01 0,01 -0,18 -0,04 0,01
EUR/share
--------------------------------------------------------------------------------
EPS, diluted, continuing operations, -0,01 0,01 -0,18 -0,04 0,01
EUR/share
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
--------------------------------------------------------------------------------
(EUR million) Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 2015
--------------------------------------------------------------------------------
Profit/loss for the period -0.2 1.0 -9.6 -1.8 1.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
(after taxes):
--------------------------------------------------------------------------------
Exchange differences on -2.5 0.9 -2.8 2.3 2.6
translating
foreign operations
--------------------------------------------------------------------------------
Cash flow hedging 0.6 1.9 -0.4 1.1 0.3
--------------------------------------------------------------------------------
Actuarial gains or losses 0.0 0.0 0.0 0.0 -1.5
--------------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE -1.8 2.8 -3.1 3.4 1.4
INCOME
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME -2.1 3.8 -12.7 1.6 3.3
FOR THE PERIOD
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD ATTRIBUTABLE
TO:
--------------------------------------------------------------------------------
Equity holders of the parent -2.5 3.5 -13.1 1.4 1.7
--------------------------------------------------------------------------------
Non-controlling interests 0.5 0.3 0.4 0.2 1.6
--------------------------------------------------------------------------------
Total -2.1 3.8 -12.7 1.6 3.3
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(EUR million) Note 30.6.2016 30.6.2015 31.12.2015
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Intangible assets 2. 144.3 145.5 147.3
--------------------------------------------------------------------------------
Tangible assets 3. 367.5 369.5 361.8
--------------------------------------------------------------------------------
Holdings 35.6 35.9 36.6
--------------------------------------------------------------------------------
Other non-current assets 31.8 39.8 35.0
--------------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 579.2 590.6 580.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Inventories 4. 119.6 115.5 124.2
--------------------------------------------------------------------------------
Current receivables 123.4 120.8 122.9
--------------------------------------------------------------------------------
Cash and cash equivalents 7.9 11.6 9.5
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 250.9 247.8 256.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL ASSETS 830.1 838.4 837.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY 5. 405.0 419.9 425.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-current loans, interest-bearing 132.2 121.8 117.2
--------------------------------------------------------------------------------
Non-current liabilities, 35.1 38.5 39.4
non-interest-bearing
--------------------------------------------------------------------------------
TOTAL NON-CURRENT LIABILITIES 167.3 160.4 156.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Current loans, interest-bearing 32.3 40.2 36.6
--------------------------------------------------------------------------------
Current liabilities, 225.5 218.0 218.4
non-interest-bearing
--------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 257.8 258.2 255.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 830.1 838.4 837.3
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
(EUR 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
million)
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -12.4 143.5 10.2 -3.7 0.0 134.7 412.0 13.8 425.8
1.1.2016
--------------------------------------------------------------------------------
Result for - - - - - - - -10.0 -10.0 0.4 -9.6
the
financial
period
--------------------------------------------------------------------------------
Other
comprehen
sive
income (+)
/ expense
(–)
--------------------------------------------------------------------------------
Transl. - - - - - -2.8 - - -2.8 - -2.8
diff.
--------------------------------------------------------------------------------
Cash flow - - -0.4 - - - - - -0.4 - -0.4
hedging
--------------------------------------------------------------------------------
Actuarial - - - - - - - - - - -
gains or
losses
--------------------------------------------------------------------------------
Total -0.4 -2.8 -10.0 -13.1 0.4 -12.7
compreh.
income for
the
period
--------------------------------------------------------------------------------
Direct - - - - 0.0 - - 0.1 0.1 - 0.1
recogniti
ons
--------------------------------------------------------------------------------
Transfers - - - - 0.0 - - 0.0 0.0 - 0.0
between
items
--------------------------------------------------------------------------------
Dividend - - - - - - - -7.6 -7.6 -0.7 -8.2
distribut
.
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -12.8 143.5 10.3 -6.5 0.0 117.3 391.5 13.5 405.0
30.6.2016
--------------------------------------------------------------------------------
(EUR 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
million)
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -12.7 143.5 10.1 -6.3 0.0 162.2 436.5 8.7 445.2
1.1.2015
--------------------------------------------------------------------------------
Result for - - - - - - - -2.0 -2.0 0.2 -1.8
the
financial
period
--------------------------------------------------------------------------------
Other
comprehen
sive
income (+)
/ expense
(–)
--------------------------------------------------------------------------------
Transl. - - - - - 2.3 - - 2.3 - 2.3
diff.
--------------------------------------------------------------------------------
Cash flow - - 1.1 - - - - - 1.1 - 1.1
hedging
--------------------------------------------------------------------------------
Actuarial - - - - - - - - - - -
gains or
losses
--------------------------------------------------------------------------------
Total - - 1.1 - - 2.3 - -2.0 1.3 0.2 1.6
compreh.
income for
the
period
--------------------------------------------------------------------------------
Direct - - - - 0.0 - - -0.2 -0.2 - -0.2
recogniti
ons
--------------------------------------------------------------------------------
Transfers 0.0 - - - 0.0 - - - - - -
between
items
--------------------------------------------------------------------------------
Dividend - - - - - - - -26.4 -26.4 -0.3 -26.7
distribut
.
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -11.7 143.5 10.1 -4.1 0.0 133.6 411.2 8.7 419.9
30.6.2015
--------------------------------------------------------------------------------
COLUMNS: 1. Share capital, 2. Share premium reserve, 3. Revaluation reserve, 4.
Reserve for invested unrestricted equity (RIUE), 5. Other reserves, 6.
Translation differences, 7. Treasury shares, 8. Retained earnings, 9. Equity
holders of the parent, 10. Non-controlling interests, 11. Total
CASH FLOW STATEMENT
(EUR million) Q1-Q2/2016 Q1-Q2/2015 2015
-------------------------------------------------------------------------------
Cash flow before change in net working capital 20.7 30.9 78.1
-------------------------------------------------------------------------------
Change in net working capital 2.9 6.1 -2.2
-------------------------------------------------------------------------------
Financial items and taxes -2.6 -2.2 -9.1
-------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES 21.0 34.8 66.8
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash flow from investing activities -22.1 -16.5 -41.8
-------------------------------------------------------------------------------
CASH FLOW AFTER INVESTING ACTIVITIES -1.1 18.3 25.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Change in loans 8.0 4.0 -4.3
-------------------------------------------------------------------------------
Dividends paid -8.2 -26.7 -26.7
-------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES -0.3 -22.7 -31.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NET CASH FLOW -1.4 -4.4 -6.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 9.5 16.4 16.4
-------------------------------------------------------------------------------
Translation differences -0.2 -0.4 -1.0
-------------------------------------------------------------------------------
Cash and cash equivalents at end of period 7.9 11.6 9.5
-------------------------------------------------------------------------------
FINANCIAL INDICATORS
30.6.2016 30.6.2015 31.12.2015
-----------------------------------------------------------------------------
Earnings per share (EPS), undiluted, EUR -0,18 -0,04 0,01
-----------------------------------------------------------------------------
Earnings per share (EPS), diluted, EUR -0,18 -0,04 0,01
-----------------------------------------------------------------------------
Equity per share, EUR 7,25 7,62 7,63
-----------------------------------------------------------------------------
Equity ratio, % 48,8 50,1 50,9
-----------------------------------------------------------------------------
Adjusted average number of shares, mill. 54,0 54,0 54,0
-----------------------------------------------------------------------------
Gross capital expenditure on PPE, EUR mill. 35,4 25,6 49,6
-----------------------------------------------------------------------------
Employees, end of month average 7 341 7 544 7 437
-----------------------------------------------------------------------------
CALCULATION OF FINANCIAL INDICATORS
Return on capital employed (ROCE) Profit before tax + interest and x 100
before tax (%) other financial expenses
-------------------------------------
Balance sheet total –
non-interest-bearing liabilities
(average
Equity ratio (%) Total equity x 100
-------------------------------------
Balance sheet total – advances
received
Net gearing ratio (%) Net interest-bearing liabilities x 100
-------------------------------------
Total equity
Earnings per share (EPS) Profit for the period attributable
to equity holders of the
parent
-------------------------------------
Average number of outstanding shares
during period
Equity per share Equity attributable to holders of
the parent
-------------------------------------
Number of outstanding shares at end
of period
Market capitalisation The number of outstanding shares at
the end of period X
the closing price on the last
trading day of the financial
year
Cash flow before debt service Cash flow before financing
activities and financial items
Employee numbers Average of workforce figures
calculated at the end of
calendar months
Items affecting comparability One-time charges, which are not
related to the normal
continuing operations and
materially affect company's
finance. Examples of such expenses
are: capacity
adjustment (restructuring),
redundancy, legal costs
relating to restructuring or
similar, one-time expenses
related to efficiency /
reorganization programmes,
significant compensations or
penalties paid out due to
legal verdict or settlement,
transaction fees / expenses
related to business acquisitions
(consultation, advisory,
legal, due diligence, registration
etc.) and gains/losses of
business disposals.
Comparable EBIT Operating profit – items affecting
comparability
Comparable profit/loss before Profit/loss before taxes – items
taxes affecting comparability
NOTES TO CONSOLIDATED INTERIM REPORT
ACCOUNTING POLICIES
HKScan Corporation’s interim report for 1 January–30 June 2016 has been
prepared in compliance with IAS 34 Interim Financial Reporting standards. The
same accounting principles have been applied in the interim report as in the
annual financial statements for 2015. Due to the rounding of the figures to the
nearest million euros in the interim report, some totals may not agree with the
sum of their constituent parts. Accounting principles are explained in the
financial statements for 2015.
The interim report is unaudited.
ANALYSIS BY SEGMENT
Net sales and EBIT by market area
------------------------------------
(EUR million) Q2/2016 Q2/2015 Q1-Q2/2016 Q1-Q2/2015 2015
-----------------------------------------------------------------------------
NET SALES
-----------------------------------------------------------------------------
- Sweden 205.0 208.3 394.1 410.4 841.9
-----------------------------------------------------------------------------
- Finland 207.4 195.5 394.3 389.0 801.6
-----------------------------------------------------------------------------
- Denmark 46.6 45.6 91.3 94.5 175.9
-----------------------------------------------------------------------------
- Baltics 41.5 44.6 79.4 85.5 173.6
-----------------------------------------------------------------------------
- Between segments -17.7 -19.3 -37.4 -38.6 -76.0
-----------------------------------------------------------------------------
Group total 482.7 474.8 921.8 940.8 1 917.1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
EBIT
-----------------------------------------------------------------------------
- Sweden 3.3 3.4 4.4 5.4 21.1
-----------------------------------------------------------------------------
- Finland 2.2 3.8 3.0 7.4 4.9
-----------------------------------------------------------------------------
- Denmark -2.6 -2.4 -4.9 -5.9 -9.3
-----------------------------------------------------------------------------
- Baltics 1.8 2.6 2.0 2.5 5.4
-----------------------------------------------------------------------------
- Between segments - - - - -
-----------------------------------------------------------------------------
Segments total 4.6 7.4 4.6 9.4 22.1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Group administration costs -2.9 -3.7 -7.1 -6.5 -12.5
-----------------------------------------------------------------------------
Group total 1.7 3.7 -2.6 2.9 9.6
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
INVESTMENTS
-----------------------------------------------------------------------------
- Sweden 4.4 2.4 9.1 4.4 13.7
-----------------------------------------------------------------------------
- Finland 13.7 9.4 20.4 13.2 19.9
-----------------------------------------------------------------------------
- Denmark 0.9 1.3 1.6 2.7 5.4
-----------------------------------------------------------------------------
- Baltics 2.9 3.0 4.4 5.3 10.6
-----------------------------------------------------------------------------
Total 21.9 16.0 35.4 25.6 49.6
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
AVERAGE NUMBER OF
EMPLOYEES
-----------------------------------------------------------------------------
- Sweden 2 164 2 180 2 176
-----------------------------------------------------------------------------
- Finland 2 899 2 878 2 840
-----------------------------------------------------------------------------
- Denmark 690 738 726
-----------------------------------------------------------------------------
- Baltics 1 588 1 749 1 696
-----------------------------------------------------------------------------
Total 7 341 7 544 7 437
-----------------------------------------------------------------------------
NOTES TO THE INCOME STATEMENT
1. ITEMS AFFECTING COMPARABILITY
(EUR million) Q2/2016 Q2/2015 Q1-Q2/201 Q1-Q2/2015 2015
6
--------------------------------------------------------------------------------
Comparable EBIT 2.2 3.7 -0.9 2.9 21.5
--------------------------------------------------------------------------------
Impairment of assets, Finland 1) - - - - -11.4
--------------------------------------------------------------------------------
Termination of employment, - - - - -0.5
Sweden 2)
--------------------------------------------------------------------------------
Termination of employment, Group - - -1.2 - -
Management 2)
--------------------------------------------------------------------------------
Termination of employment, -0.5 - -0.5 - -
Denmark 2)
--------------------------------------------------------------------------------
EBIT 1.7 3.7 -2.6 2.9 9.6
--------------------------------------------------------------------------------
1) Included in the Income Statement in the item ”COGS Total”
2) Included in the Income Statement in the item ”General
administration costs”
NOTES TO THE STATEMENT OF FINANCIAL POSITION
2. CHANGES IN INTANGIBLE ASSETS
(EUR million) Q2/2016 Q2/2015 2015
------------------------------------------------------------
Opening balance 147.3 144.3 144.3
------------------------------------------------------------
Translation differences -2.3 1.7 2.0
------------------------------------------------------------
Additions 0.3 0.6 0.9
------------------------------------------------------------
Additions, business acquisitions - - 2.2
------------------------------------------------------------
Disposals 0.0 -0.2 -0.1
------------------------------------------------------------
Depreciation and impairment -1.1 -1.3 -2.6
------------------------------------------------------------
Reclassification between items 0.1 0.4 0.5
------------------------------------------------------------
Closing balance 144.3 145.5 147.3
------------------------------------------------------------
3. CHANGES IN TANGIBLE ASSETS
(EUR million) Q2/2016 Q2/2015 2015
------------------------------------------------------------
Opening balance 361.8 369.7 369.7
------------------------------------------------------------
Translation differences -1.6 1.1 1.0
------------------------------------------------------------
Additions 35.1 25.1 48.7
------------------------------------------------------------
Additions, business acquisitions - - 7.8
------------------------------------------------------------
Disposals -1.3 -0.5 -2.8
------------------------------------------------------------
Depreciation and impairment -26.4 -25.6 -62.1
------------------------------------------------------------
Reclassification between items -0.1 -0.2 -0.5
------------------------------------------------------------
Closing balance 367.5 369.5 361.8
------------------------------------------------------------
4. INVENTORIES
(EUR million) Q2/2016 Q2/2015 2015
------------------------------------------------------------
Materials and supplies 68.5 67.4 71.5
------------------------------------------------------------
Semi-finished products 5.4 4.9 5.0
------------------------------------------------------------
Finished products 38.5 34.6 40.1
------------------------------------------------------------
Other inventories 0.4 0.5 0.4
------------------------------------------------------------
Inventories, advance payments 0.6 1.2 1.1
------------------------------------------------------------
Biological asset, IFRS 41 6.1 6.9 6.2
------------------------------------------------------------
Total inventories 119.6 115.5 124.2
------------------------------------------------------------
5. NOTES TO EQUITY
Share capital Number of Share Share Reserve for Treasu Total
and share outstanding capit premium invested ry
premium shares al reserve unrestricted
reserve equity
--------------------------------------------------------------------------------
1.1.2016 53 972 788 66.8 72.9 143.5 0.0 283.1
--------------------------------------------------------------------------------
30.6.2016 54 017 673 66.8 72.9 143.5 0.0 283.1
--------------------------------------------------------------------------------
DERIVATIVE INSTRUMENT LIABILITIES
(EUR million) 30.6.2016 30.6.2015 31.12.2015
--------------------------------------------------------------------------------
Nominal values of derivative
instruments
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Foreign exchange derivatives 50.9 61.9 57.7
--------------------------------------------------------------------------------
Interest rate derivatives 127.4 148.4 128.5
--------------------------------------------------------------------------------
Electricity derivatives 6.8 8.6 8.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Fair values of derivative
instruments
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Foreign exchange derivatives 0.2 -0.1 -0.2
--------------------------------------------------------------------------------
Interest rate derivatives -15.3 -13.9 -14.0
--------------------------------------------------------------------------------
Electricity derivatives -1.8 -2.0 -2.9
--------------------------------------------------------------------------------
CONSOLIDATED OTHER CONTINGENT LIABILITIES
(EUR million) 30.6.2016 30.6.2015 31.12.2015
--------------------------------------------------------------------------------
Debts secured by pledges or
mortgages
--------------------------------------------------------------------------------
- loans from financial 0.0 0.2 0.2
institutions
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
On own behalf
--------------------------------------------------------------------------------
- Mortgages given 0.0 0.6 0.4
--------------------------------------------------------------------------------
- Assets pledged 3.1 3.2 3.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
On behalf of others
--------------------------------------------------------------------------------
- guarantees and other commitments 13.1 12.6 10.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other contingencies
--------------------------------------------------------------------------------
Leasing commitments 7.6 12.5 11.0
--------------------------------------------------------------------------------
Rent liabilities 33.7 33.7 36.5
--------------------------------------------------------------------------------
THE FAIR VALUE DETERMINATION PRINCIPLES APPLIED BY THE GROUP ON FINANCIAL
INSTRUMENTS MEASURED AT FAIR VALUE
Derivatives
The fair values of currency derivatives are determined by using the market
prices for contracts of equal duration at the reporting date. The fair values
of interest rate swaps are determined using the net present value method
supported by the market interest rates at the reporting date. The fair value of
commodity derivatives are determined by using publicly quoted market prices.
30.6.2016 Level 1 Level 2 Level 3
--------------------------------------------------------------------------------
Assets measured at fair value
--------------------------------------------------------------------------------
Financial assets recognized at fair value
through profit or loss
--------------------------------------------------------------------------------
- Trading securities - - - -
--------------------------------------------------------------------------------
- Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps - - - -
--------------------------------------------------------------------------------
- Foreign exchange derivatives 0.3 0.0 0.3 0.0
--------------------------------------------------------------------------------
- Commodity derivatives 0.1 - 0.1 -
--------------------------------------------------------------------------------
Available-for-sale financial assets
--------------------------------------------------------------------------------
- Investments in shares 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
Total 0.4 0.0 0.4 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities measured at fair value
--------------------------------------------------------------------------------
Financial liabilities recognised at fair
value
through profit or loss
--------------------------------------------------------------------------------
-Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps -15.3 0.0 -15.3 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -15.3 0.0 -15.3 0.0
--------------------------------------------------------------------------------
- Foreign exchange derivatives -0.1 0.0 -0.1 0.0
--------------------------------------------------------------------------------
of which subject to net investment hedging - - - -
--------------------------------------------------------------------------------
- Commodity derivatives -1.9 0.0 -1.9 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -1.9 0.0 -1.9 0.0
--------------------------------------------------------------------------------
Total -17.3 0.0 -17.3 0.0
--------------------------------------------------------------------------------
BUSINESS TRANSACTIONS WITH RELATED PARTIES
-------------------------------------------
(EUR million) Q1-Q2/2016 Q1-Q2/2015 2015
------------------------------------------------------------
Sales to associates 25.8 33.4 70.1
------------------------------------------------------------
Purchases from associates 19.7 21.2 46.6
------------------------------------------------------------
Trade and other receivables 1.5 2.2 1.4
------------------------------------------------------------
Trade and other payables 4.6 4.5 5.3
------------------------------------------------------------
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