2017-05-03 07:10:02 CEST
2017-05-03 07:10:02 CEST
REGULATED INFORMATION
HKScan Oyj - Interim report (Q1 and Q3)
HKScan Group’s interim report 1 January—31 March 2017: Challenging start to the year–operational restructuring started
HKScan Corporation INTERIM REPORT
3 May 2017, at 08:10 am
HKScan Group’s interim report 1 January—31 March 2017: Challenging start to the
year–operational restructuring started
* Net sales were EUR 420.7 (439.1) million.
* EBIT was EUR -6.8 (-4.3) million, and the EBIT margin -1.6 (-1.0) per cent.
Comparable EBIT was EUR -6.8 (-3.1) million. The corresponding EBIT margin was
-1.6 (-0.7) per cent.
* Cash flow before investments was EUR -22.4 (-8.4) and before debt service EUR
-41.8 (-16.1) million.
* Profit/loss before taxes was EUR -8.2 (-7.3) million. Comparable profit/loss
before taxes was EUR -8.2 (-6.1) million.
* EPS was EUR -0.14 (-0.17).
* Net financial expenses were EUR -2.2 (-2.2) million.
* Net debt was EUR 185.2 (164.3) million and net gearing 46.5 (39.6) per cent.
* Outlook for 2017 (unchanged): HKScan aims to reach the comparable operating
profit (EBIT) of the year 2016 (EUR 13.2 million).
As of the beginning of 2017, the Group has amended its segment reporting. The
market areas’ net sales and EBIT no longer include intercompany sales and
margins. Figures for the comparison period 2016 have been revised accordingly.
The amendment has no effect on Group-level figures. The reported and restated
market area figures in 2016 are given in the notes to the consolidated interim
report in this bulletin.
Jari Latvanen, HKScan’s President and CEO, comments on the first quarter of
2017:
“The Group’s first quarter result remained dissatisfactory, with both EBIT and
cash flow in decline. This was mainly due to the declined sales margins of the
processed category in Finland, and increased Group administration costs related
to the new way of working renewal process.
During the first quarter, we managed to stabilize our pork meat raw material
supply in Finland, which improved our margins. We also gained some market share
in value terms, despite the overall market decline. In Sweden, where we have
suffered from scarce availability of beef raw material, we saw some recovery in
sales of beef and in the processed category. Moreover, our consistent work to
improve efficiency of the Group’s Danish operations paid off in the form of
reduced costs. Our Danish export business, which was challenging during the
entire past year, showed signs of improvement. In the Baltics, red meat margins
recovered after a longer period of unsatisfactory low margin levels.
Consumer confidence is strengthening on all our home markets, and the Asian
export business is also showing a positive trend. These factors combined
provide us with good prerequisites for our future strategy implementation. We
strongly believe that that sustainability and quality throughout the food value
chain gives us a significant competitive advantage. A new export licence from
Finland to Japan, growing business in Hong Kong, as well as a rising interest
in our elementary antibiotic-free grown pork and poultry are good examples of
the opportunities we systematically continue to seize.
As announced in February, a renewed Group leadership team has been appointed
and the team is now in place. At the same time, we also communicated the review
of the Group’s operating model. The planned operating model renewal was
assessed in Group-wide statutory negotiations. As informed today, the
negotiations have now been completed and the changes of the operating model
will result in a headcount reduction of 160 persons. The new operating model
will be in place on 1 June 2017.
During the past months, we have been conducting an evaluation of HKScan’s
strategic market presence, ways of working and the cornerstones of our future
success. We are now on the final stretch of the path to defining our renewed
strategic direction and we aim to communicate and implement it from the third
quarter onwards.
The new strategic direction and operating model will together secure us a
sharper focus on consumers and customers. It will also give us the leading role
in the food value chain as one, unified company. By putting all these measures
into effect, we will strive to improve our recipe to being more competitive and
consequently more profitable.”
KEY FIGURES, Q1
(EUR million) Q1/2017 Q1/2016 2016
----------------------------------------------------------------------------
Net sales 420.7 439.1 1 872.9
----------------------------------------------------------------------------
EBIT -6.8 -4.3 9.7
----------------------------------------------------------------------------
- % of net sales -1.6 -1.0 0.5
----------------------------------------------------------------------------
Profit/loss before taxes -8.2 -7.3 0.9
----------------------------------------------------------------------------
- % of net sales -2.0 -1.7 0.0
----------------------------------------------------------------------------
Profit/loss for the period -7.0 -9.4 -3.6
----------------------------------------------------------------------------
- % of net sales -1.7 -2.1 -0.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Comparable EBIT -6.8 -3.1 13.2
----------------------------------------------------------------------------
- % of net sales -1.6 -0.7 0.7
----------------------------------------------------------------------------
Comparable profit/loss before taxes -8.2 -6.1 4.4
----------------------------------------------------------------------------
- % of net sales -2.0 -1.4 0.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EPS, EUR -0.14 -0.17 -0.10
----------------------------------------------------------------------------
Cash flow before investments -22.4 -8.4 79.8
----------------------------------------------------------------------------
Cash flow before debt service -41.8 -16.1 23.7
----------------------------------------------------------------------------
Cash flow before financing activities -43.7 -17.2 17.1
----------------------------------------------------------------------------
Return on capital employed (ROCE) before taxes, % 1.8 1.5 2.1
----------------------------------------------------------------------------
Net debt 185.2 164.3 137.2
----------------------------------------------------------------------------
Gearing, % 49.5 41.4 35.2
----------------------------------------------------------------------------
Net gearing, % 46.5 39.6 33.5
----------------------------------------------------------------------------
JANUARY–MARCH
HKScan Group’s net sales decreased in the first quarter. Net sales of market
area Sweden, in particular, continued to decline whereas the other market areas
were close to the level of the previous year. Although the Baltics and Denmark
slightly improved their EBIT, Finland and Sweden showed a decline, resulting in
the Group’s total EBIT being lower than in the first quarter of 2016. The
Group’s cash flow also declined, mainly as a result of rising inventories
during the first quarter, and as the Rauma poultry plant investment spend was
recorded.
Sales of beef improved somewhat in Sweden despite the fierce competition. In
the processed foods category, excluding cold cuts, sales recovered and started
growing during the first quarter. HKScan lost some market share in value terms,
and cold cuts sales continued to decline. Animal raw material costs increased
in both beef and pork.
In Finland, pork raw material supply was kept in balance, and therefore the
sales margins of pork improved. Beef raw material, meanwhile, was in scarce
supply causing a decrease in sales and sales margin. Sales prices declined in
the processed food category. A slight gain in market share was achieved,
despite the continued market decline.
In Denmark, operational efficiency efforts paid off. Export sales rose to a
relatively good level during the first quarter, despite the avian flu
restrictions prevailing in some Asian countries. Domestic sales in total failed
to improve and inventory levels increased. The fresh products’ category,
however, performed well.
Sales margins of red meat recovered in the Baltics as sales prices rose due to
the undersupply of pork raw material, but sales price levels were low in
poultry and processed food categories.
In March, HKScan Finland received a permit for direct exports of poultry meat
for Japan. Exports are scheduled to begin this spring. HKScan already exports
Finnish pork and Danish poultry meat to Japan.
In February, HKScan informed on a renewed Group Leadership Team and on
initiating a review of its operating model. As part of the review, HKScan also
embarked a planning of a partial re-organization of its operations. The
potential impacts on personnel of the renewed operating model and efficiency
upgrades have been assessed in Group-wide statutory negotiations.
After the reporting period, on 3 May, HKScan informed that the operating model
review and the related statutory negotiations were completed. The changes of
the operating model will result in a headcount reduction of 160 persons. The
Group now initiates the implementation of the new operating model, which will
be in place on 1 June 2017.
MARKET AREA SWEDEN
(EUR million) Q1/2017 Q1/2016 2016
-----------------------------------------
-----------------------------------------
Net sales 171.3 185.8 790.8
-----------------------------------------
EBIT -0.6 -0.3 9.5
-----------------------------------------
- EBIT margin, % -0.3 -0.2 1.2
-----------------------------------------
-----------------------------------------
Comparable EBIT -0.6 -0.3 11.1
-----------------------------------------
- EBIT margin, % -0.3 -0.2 1.4
-----------------------------------------
In Sweden, net sales were EUR 171.3 (185.8) million and comparable EBIT was EUR
-0.6 (-0.3) million.
Demand for Swedish meat remained high, as did the animal purchase prices. The
volume of imported meat increased, and private label continued to grow in all
categories in Sweden. Demand for locally produced, ecological and vegetarian
products remained also high.
Net sales continued to decline during the first quarter partly due to the
different timing of Easter sales compared to the previous year. The decrease
was biggest in the categories of red meat (pork), poultry and cold cuts.
Despite the continued shortage of beef, its net sales recovered and slightly
grew from the previous year. Some growth was recorded also in the bacon product
category. The profitability of red meat remained at the level of the previous
year but decreased for processed products due to lower sales prices. In total,
sales margins declined from the previous year, and the first quarter EBIT was
lower.
MARKET AREA FINLAND
(EUR million) Q1/2017 Q1/2016 2016
-----------------------------------------
-----------------------------------------
Net sales 176.6 179.8 774.9
-----------------------------------------
EBIT -1.1 0.9 15.3
-----------------------------------------
- EBIT margin, % -0.6 0.5 2.0
-----------------------------------------
-----------------------------------------
Comparable EBIT -1.1 0.9 15.5
-----------------------------------------
- EBIT margin, % -0.6 0.5 2.0
-----------------------------------------
In Finland, net sales were EUR 176.6 (179.8) million and comparable EBIT was
EUR -1.1 (0.9) million.
HKScan achieved a slight gain in market share in value terms, even though the
market continued to decline. Price competition in retail continued. The raw
material prices of red meat increased in Europe, which was reflected also in
animal purchasing prices in Finland. Meanwhile, poultry price levels were on a
par with last year.
Net sales remained almost at the level of the previous year even though Easter
sales this year took place after the reporting period. The sales development
varied substantially in different product categories. Thanks to the improved
meat balance for pork, excess sales decreased, whereas sales for processed
category increased. As a result, the profitability of pork improved, but due to
lower sales prices, the margins for processed products decreased. A shortage of
beef raw material decreased net sales and lowered the profit. Poultry sales
grew slightly from the previous year and margins were kept at the same level.
In total, sales margins declined in Finland from the previous year and resulted
in a lower EBIT for the first quarter.
HKScan announced in April, that it had initiated 100% antibiotic-free grown
pork production in Finland. The first batch of antibiotic-free meat will be
available on the market in July 2017. In February, HKScan announced that HKScan
Finland had switched to using 100% responsibly produced and certified soy.
HKScan Sweden switched to using 100% responsibly produced soy during 2014–2015.
In January, HKScan announced that it had acquired the remaining 50% stake in
Paimion Teurastamo Oy (Paimio Slaughterhouse). HKScan Finland acquired a 50%
holding in the company in summer 2015. HKScan’s investment in the Rauma poultry
production facility proceeded according to plans during the first quarter.
MARKET AREA: DENMARK
(EUR million) Q1/2017 Q1/2016 2016
-----------------------------------------
-----------------------------------------
Net sales 36.0 36.5 149.5
-----------------------------------------
EBIT -1.1 -1.0 -6.6
-----------------------------------------
- EBIT margin, % -3.1 -2.7 -4.4
-----------------------------------------
-----------------------------------------
Comparable EBIT -1,1 -1,0 -6,2
-----------------------------------------
- EBIT margin, % -3.1 -2.7 -4.1
-----------------------------------------
In Denmark, net sales were EUR 36.0 (36.5) million and comparable EBIT was EUR
-1.1 (-1.0) million.
Consumer demand in Danish retail remained positive, and continued to grow
although at a slower pace than in 2016. Animal purchase prices decreased from
the fourth quarter 2016 onwards due to avian flu, and they remained at a low
level also during the first quarter of 2017.
Net sales remained almost at the level of the previous year. Despite the export
ban to certain Asian countries due to avian flu, export sales were higher than
in the previous year. Domestic sales, however, decreased. The fresh products’
segment continued to grow while the frozen segment was stagnant. Lowered animal
raw material costs partly offset the decrease in sales prices. Additionally, as
a result of improved operational efficiency, costs were cut so that the decline
in sales margin was compensated.
MARKET AREA: BALTICS
(EUR million) Q1/2017 Q1/2016 2016
-----------------------------------------
-----------------------------------------
Net sales 36.9 37.1 157.7
-----------------------------------------
EBIT 0.4 0.3 6.2
-----------------------------------------
- EBIT margin, % 1.1 0.7 3.9
-----------------------------------------
-----------------------------------------
Comparable EBIT 0.4 0.3 6.2
-----------------------------------------
- EBIT margin, % 1.1 0.7 3.9
-----------------------------------------
In the Baltics, net sales were EUR 36.9 (37.1) million and comparable EBIT EUR
0.4 (0.3) million in the first quarter.
Pork prices in the Baltics were above the average EU level, due to the scarcity
of pigs. A considerable proportion of Baltic pig farms remained in the African
Swine Fever protection zone three, i.e. there are limitations on handling and
selling meat. Due to increased producer prices of milk, also beef procurement
prices started to increase. Higher animal raw material prices placed pressure
on processed product margins. Exports witnessed an upturn in the Baltics, as
they have all over the EU.
Net sales remained almost at the level of the previous year and sales
development was relatively uniform from product category to product category.
Sales prices showed a negative trend in the processed products’ category but
positive for meat. In addition, the decrease of the primary production costs
led to slightly better total sales margin. Operational costs were kept almost
unchanged, and the EBIT improved slightly as a result. In the first quarter,
the change in the fair value of biological assets amounted to EUR 0.2 (0.3)
million.
FINANCING
The Group’s interest-bearing debt at the end of March rose to EUR 197.4 (172.0)
million due to increased inventories and investments. Net debt was EUR 185.2
(164.3) million and the net gearing ratio 46.5 (39.6) per cent.
The Group’s liquidity was good. Committed credit facilities at 31 March 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 65.0 (32.0)
million.
During the beginning of 2017, the Group signed new 8.5-year loan arrangements
for approximately EUR 30 million in total. The loan arrangements are guaranteed
by a group of foreign export credit agencies. The loan amount will be withdrawn
in the latter part of the year. In addition, the Group signed a new bilateral
4-year term loan (bullet) of EUR 40 million, which will be entirely withdrawn
at the year’s end. Simultaneously the Group rearranged its bilateral committed
credit facility of EUR 35 million maturing in 2018. The new arrangement is for
three years and there is also an option for an extension. With the
arrangements the Group prepares for increasing investment expenses.
Net financial expenses were EUR -2.2 (-2.2) million in the first quarter.
SHARES AND SHAREHOLDERS
At the end of March, 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
Lantmännen ek.för. (665 000 shares) and are not listed.
At the end of March 2017, 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 March stood at EUR 188.0 (175.4)
million breaking down as follows: Series A shares had a market value of EUR
169.2 (158.0) million, and the unlisted Series K shares a calculational market
value of EUR 18.8 (17.6) million.
In January-March, a total of 3 022 581 (3 408 596) of the company’s shares with
a total value of EUR 9 976 062 (11 186 603) were traded. The highest price
quoted in the period under review was EUR 3.48 (3.89), and the lowest was EUR
3.08 (3.06). The average price was EUR 3.30 (3.28). At the end of March, the
closing price was EUR 3.48 (3.25).
BOARD OF DIRECTORS’ AUTHORIZATIONS
From January to March 2017, the Board did not exercise the authorizations given
by the Annual General Meeting (AGM) on 13 April 2016. See also ‘Events after
the reporting period’.
The new authorizations, granted to the Board by the AGM 2017 on 6 April 2017,
are described in the section ‘Annual General Meeting 2017’.
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. HKScan’s risks are reported more detailed in the risk
management section of the annual report 2016.
EVENTS AFTER THE REPORTING PERIOD
According to a stock exchange release issued on 10 April 2017, the Board of
Directors of HKScan Corporation had approved a share based long-term incentive
plan for the Group´s top management and selected key employees for 2017–-2019.
The new share based incentive plan comprises a one-year performance period,
2017, followed by a restriction period extending to 2018–2019. The potential
rewards payable based on the plan will be based on HKScan Group´s return on
capital employed (ROCE) and earnings per share (EPS) in the performance period.
Those eligible to participate in the new share based incentive plan are 28
members of HKScan´s top management and other selected key employees.
On 3 May 2017, HKScan informed that the operating model review and the related
statutory negotiations were completed. The changes of the operating model will
result in a headcount reduction of 160 persons. The Group now initiates the
implementation of the new operating model, which will be in place on 1 June
2017.
ANNUAL GENERAL MEETING 2017
The Annual General Meeting (AGM) of HKScan Corporation held on 6 April 2017 in
Turku, adopted the parent company’s and consolidated financial statements and
discharged the members of the Board of Directors and the CEO from liability for
2016. The AGM resolved that a dividend of EUR 0.16 be paid for 2016.
The AGM also resolved on the annual remuneration of the Board’s members, deputy
members and the chairs of the committees. Of the current Board members were
re-elected Mikko Nikula and Pirjo Väliaho, and as new members were elected Per
Olof Nyman, Marko Onnela, Riitta Palomäki and Tuomas Salusjärvi until the end
of the Annual General Meeting 2018. In addition, as deputy Board members were
elected Veikko Kemppi and Carl-Peter Thorwid until the end of the Annual
General Meeting 2018. At the organizational meeting after the AGM, the Board
re-elected Mikko Nikula as Chairman and elected Marko Onnela as new Vice
Chairman.
PricewaterhouseCoopers Oy, authorized public accountants, with Markku
Katajisto, APA, as the responsible auditor, was elected as the auditor until
the close of the next AGM.
The AGM authorized the Board to decide on share issue, option rights as well as
other special rights entitling to shares, and on the purchase of the Company’s
own Series A shares and/or on the acceptance the Company's own Series A shares
as pledge. The authorizations will be effective until 30 June 2018, revoking
the authorizations given by the AGM 2016.
The resolutions of the Annual General Meeting have been published in full in
the stock exchange release of 6 April 2017, and they are also available on the
company’s website at www.hkscan.com.
OUTLOOK FOR 2017 (unchanged)
HKScan aims to reach the comparable operating profit (EBIT) of the year 2016
(EUR 13.2 million).
NEXT FINANCIAL REPORT
HKScan Group’s interim report January–June 2017 will be published on 19 July
2017.
Vantaa, 3 May 2017
HKScan Corporation
Board of Directors
For further details, kindly contact Jari Latvanen President and 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 food company. We sell, market and produce
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 2016, HKScan had net sales of nearly EUR 1.9 billion and
some 7 300 employees.
DISTRIBUTION:
Nasdaq Helsinki
Main media
www.hkscan.com
CONSOLIDATED INTERIM REPORT 1 JANUARY–31 MARCH 2017
CONSOLIDATED INCOME STATEMENT
(EUR million) Note Q1/2017 Q1/2016 2016
--------------------------------------------------------------------------------
Net sales 420.7 439.1 1 872.9
--------------------------------------------------------------------------------
Cost of goods sold -399.4 -413.6 -1 750.8
--------------------------------------------------------------------------------
Gross profit 21.3 25.5 122.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other operating items total 1. 1.6 2.1 8.3
--------------------------------------------------------------------------------
Sales and marketing costs -13.1 -14.1 -56.5
--------------------------------------------------------------------------------
General administration costs 1. -16.6 -17.8 -64.4
--------------------------------------------------------------------------------
Operating profit -6.8 -4.3 9.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 0.4 0.5 2.3
--------------------------------------------------------------------------------
Financial expenses -2.6 -2.7 -11.1
--------------------------------------------------------------------------------
Share of profit/loss in associates and joint 0.8 -0.7 -0.1
ventures
--------------------------------------------------------------------------------
Profit/loss before taxes -8.2 -7.3 0.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income tax 1.2 -2.1 -4.4
--------------------------------------------------------------------------------
Profit/loss for the period -7.0 -9.4 -3.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-controlling interests -0.3 0.1 -1.8
--------------------------------------------------------------------------------
Profit/loss for the period -7.3 -9.3 -5.4
--------------------------------------------------------------------------------
Earnings per share calculated on profit attributable to equity holders
of the parent:
-----------------------------------------------------------------------
EPS, undiluted, continuing operations, EUR/share -0.14 -0.17 -0.10
--------------------------------------------------------------------------------
EPS, diluted, continuing operations, EUR/share -0.14 -0.17 -0.10
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
------------------------------------------------------------------------------
(EUR million) Q1/2017 Q1/2016 2016
------------------------------------------------------------------------------
Profit/loss for the period -7.0 -9.4 -3.6
------------------------------------------------------------------------------
------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME (after taxes):
------------------------------------------------------------------------------
Exchange differences on translating foreign operations 0.4 -0.3 -4.1
------------------------------------------------------------------------------
Cash flow hedging 0.2 -1.0 2.5
------------------------------------------------------------------------------
Actuarial gains or losses - - -2.9
------------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE INCOME 0.6 -1.3 -4.4
------------------------------------------------------------------------------
------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -6.4 -10.7 -8.0
------------------------------------------------------------------------------
------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO:
-------------------------------------------------------------------------------
Equity holders of the parent -6.7 -10.6 -9.8
------------------------------------------------------------------------------
Non-controlling interests 0.3 -0.1 1.8
------------------------------------------------------------------------------
Total -6.4 -10.7 -8.0
------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(EUR million) Note 31.3.2017 31.3.2016 31.12.2016
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Intangible assets 2. 145.0 146.5 143.0
--------------------------------------------------------------------------------
Tangible assets 3. 410.3 361.9 401.7
--------------------------------------------------------------------------------
Holdings 35.8 35.7 34.9
--------------------------------------------------------------------------------
Other non-current assets 29.7 32.7 28.5
--------------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 620.8 576.8 608.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Inventories 4. 134.6 130.6 116.1
--------------------------------------------------------------------------------
Current receivables 126.1 121.0 123.9
--------------------------------------------------------------------------------
Cash and cash equivalents 11.9 7.5 6.6
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 272.6 259.1 246.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL ASSETS 893.3 835.9 854.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY 5. 398.8 415.2 409.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-current loans, interest-bearing 122.2 134.4 126.9
--------------------------------------------------------------------------------
Non-current liabilities, 38.3 37.8 39.8
non-interest-bearing
--------------------------------------------------------------------------------
TOTAL NON-CURRENT LIABILITIES 160.5 172.3 166.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Current loans, interest-bearing 75.2 37.6 17.2
--------------------------------------------------------------------------------
Current liabilities, 258.9 210.8 261.2
non-interest-bearing
--------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 334.1 248.4 278.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 893.3 835.9 854.8
--------------------------------------------------------------------------------
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 -9.9 143.5 10.3 -5.3 0.0 116.5 394.8 14.9 409.7
1.1.2017
--------------------------------------------------------------------------------
Result for - - - - - - - -7.3 -7.3 0.3 -7.0
the
financial
period
--------------------------------------------------------------------------------
Other
comprehen
sive
income (+)
/ expense
(–)
--------------------------------------------------------------------------------
Transl. - - - - - 0.4 - - 0.4 - 0.4
diff.
--------------------------------------------------------------------------------
Cash flow - - 0.2 - - - - - 0.2 - 0.2
hedging
--------------------------------------------------------------------------------
Actuarial - - - - - - - - - - -
gains or
losses
--------------------------------------------------------------------------------
Total - - 0.2 - - 0.4 - -7.3 -6.7 0.3 -6.4
comprehen
sive
income for
the
period
--------------------------------------------------------------------------------
Direct - - - - 0.0 - - 0.0 0.0 0.0 0.0
recogniti
ons
--------------------------------------------------------------------------------
Transfers - - - - - - - - - - -
between
items
--------------------------------------------------------------------------------
Transactio - - - - - - - -1.3 -1.3 -3.2 -4.5
ns with
non-
controllin
g
interests
--------------------------------------------------------------------------------
Dividend - - - - - - - - - - -
distribut
ion.
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -9.8 143.5 10.3 -4.8 0.0 107.8 386.7 12.0 398.8
31.3.2017
--------------------------------------------------------------------------------
(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 - - - - - - - -9.3 -9.3 -0.1 -9.4
the
financial
period
--------------------------------------------------------------------------------
Other
comprehen
sive
income (+)
/ expense
(–)
--------------------------------------------------------------------------------
Transl. - - - - - -0.3 - - -0.3 - -0.3
diff.
--------------------------------------------------------------------------------
Cash flow - - -1.0 - - - - - -1.0 - -1.0
hedging
--------------------------------------------------------------------------------
Actuarial - - - - - - - - - - -
gains or
losses
--------------------------------------------------------------------------------
Total - - -1.0 - - -0.3 - -9.3 -10.6 -0.1 -10.7
comprehen
sive
income for
the
period
--------------------------------------------------------------------------------
Direct - - - - 0.0 - - 0.1 0.1 - 0.1
recogniti
ons
--------------------------------------------------------------------------------
Transfers - - - - - - - - - - -
between
items
--------------------------------------------------------------------------------
Dividend - - - - - - - - - - -
distribut
ion.
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -13.4 143.5 10.2 -4.0 0.0 125.6 401.5 13.7 415.2
31.3.2016
--------------------------------------------------------------------------------
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) Q1/2017 Q1/2016 2016
-------------------------------------------------------------------------
Cash flow before change in net working capital 6.3 6.3 58.4
-------------------------------------------------------------------------
Change in net working capital -28.7 -14.7 21.4
-------------------------------------------------------------------------
Financial items and taxes -2.2 -1.3 -8.9
-------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES -24.6 -9.7 70.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flow from investing activities -19.1 -7.5 -53.9
-------------------------------------------------------------------------
CASH FLOW AFTER INVESTING ACTIVITIES -43.7 -17.2 17.1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Change in loans 53.2 15.1 -12.3
-------------------------------------------------------------------------
Dividends paid - - -8.2
-------------------------------------------------------------------------
Transactions with non-controlling interests -4.5 - -
-------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES 48.7 15.1 -20.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
NET CASH FLOW 5.0 -2.1 -3.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 6.6 9.5 9.5
-------------------------------------------------------------------------
Translation differences 0.3 0.1 0.7
-------------------------------------------------------------------------
Cash and cash equivalents at end of period 11.9 7.5 6.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FINANCIAL INDICATORS
31.3.2017 31.3.2016 31.12.2016
-----------------------------------------------------------------------------
Earnings per share (EPS), undiluted, EUR -0.14 -0.17 -0.10
-----------------------------------------------------------------------------
Earnings per share (EPS), diluted, EUR -0.14 -0.17 -0.10
-----------------------------------------------------------------------------
Equity per share, EUR 7.16 7.44 7.31
-----------------------------------------------------------------------------
Equity ratio, % 44.6 49.7 47.9
-----------------------------------------------------------------------------
Adjusted average number of shares, mill. 55.0 55.0 55.0
-----------------------------------------------------------------------------
Gross capital expenditure on PPE, EUR mill. 23.7 13.5 97.6
-----------------------------------------------------------------------------
Employees, end of month average 7 000 6 950 7 319
-----------------------------------------------------------------------------
CALCULATION OF FINANCIAL INDICATORS
Return on capital employed (ROCE) Profit before tax + interest and x 100
before tax, last 12 months (%) 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
Net debt Interest-bearing debt – cash and
bank
NOTES TO THE CONSOLIDATED INTERIM REPORT
ACCOUNTING POLICIES
HKScan Corporation’s interim report for 1 January–31 March 2017 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 2016. 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 2016. The interim report is unaudited.
As of the beginning of 2017, the Group has amended its segment reporting. The
market areas’ net sales and EBIT no longer include intercompany sales and
margins. The reported and restated figures for the comparison period 2016 are
in the tables below. The amendment has no effect on Group-level figures.
ANALYSIS BY SEGMENT 2016 (reported)
Net sales and EBIT by market area
--------------------------------------
(EUR million) Q1/2016 Q2/2016 Q3/2016 Q4/2016 2016
-------------------------------------------------------------------------
NET SALES
-------------------------------------------------------------------------
- Sweden 189,1 205,0 201,1 209,1 804,4
-------------------------------------------------------------------------
- Finland 187,0 207,4 198,7 213,4 806,5
-------------------------------------------------------------------------
- Denmark 44,7 46,6 42,6 39,3 173,2
-------------------------------------------------------------------------
- Baltics 38,0 41,5 41,4 40,4 161,3
-------------------------------------------------------------------------
- Between segments -19,7 -17,7 -18,0 -17,0 -72,4
-------------------------------------------------------------------------
Group total 439,1 482,7 465,9 485,2 1 872,9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBIT
-------------------------------------------------------------------------
- Sweden 1,1 3,3 5,3 3,2 12,9
-------------------------------------------------------------------------
- Finland 0,8 2,2 4,6 7,0 14,6
-------------------------------------------------------------------------
- Denmark -2,3 -2,6 -2,1 -2,6 -9,5
-------------------------------------------------------------------------
- Baltics 0,3 1,8 3,3 1,0 6,4
-------------------------------------------------------------------------
- Group administration costs -4,2 -2,9 -3,1 -4,5 -14,7
-------------------------------------------------------------------------
Group total -4,3 1,7 8,1 4,2 9,7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
COMPARABLE EBIT
-------------------------------------------------------------------------
- Sweden 1,1 3,3 5,3 4,8 14,5
-------------------------------------------------------------------------
- Finland 0,8 2,2 4,6 7,2 14,8
-------------------------------------------------------------------------
- Denmark -2,3 -2,1 -2,1 -2,6 -9,1
-------------------------------------------------------------------------
- Baltics 0,3 1,8 3,3 1,0 6,4
-------------------------------------------------------------------------
- Group administration costs -3,0 -2,9 -3,1 -4,5 -13,5
-------------------------------------------------------------------------
Group total -3,1 2,2 8,1 6,0 13,2
-------------------------------------------------------------------------
ANALYSIS BY SEGMENT 2016 (restated)
Net sales and EBIT by market area
----------------------------------
(EUR million) Q1/2016 Q2/2016 Q3/2016 Q4/2016 2016
------------------------------------------------------------------------------
NET SALES
------------------------------------------------------------------------------
- Sweden 185,8 201,5 197,5 206,1 790,8
------------------------------------------------------------------------------
- Finland 179,8 199,4 190,8 204,9 774,9
------------------------------------------------------------------------------
- Denmark 36,5 41,4 36,8 34,8 149,5
------------------------------------------------------------------------------
- Baltics 37,1 40,5 40,7 39,5 157,7
------------------------------------------------------------------------------
- Between segments - - - - -
------------------------------------------------------------------------------
Group total 439,1 482,7 465,9 485,2 1 872,9
------------------------------------------------------------------------------
------------------------------------------------------------------------------
EBIT
------------------------------------------------------------------------------
- Sweden -0,3 2,5 4,7 2,7 9,5
------------------------------------------------------------------------------
- Finland 0,9 2,4 4,7 7,2 15,3
------------------------------------------------------------------------------
- Denmark -1,0 -1,9 -1,5 -2,2 -6,6
------------------------------------------------------------------------------
- Baltics 0,3 1,7 3,2 1,0 6,2
------------------------------------------------------------------------------
- Group administration costs -4,2 -2,9 -3,1 -4,5 -14,7
------------------------------------------------------------------------------
Group total -4,3 1,7 8,1 4,2 9,7
------------------------------------------------------------------------------
------------------------------------------------------------------------------
COMPARABLE EBIT
------------------------------------------------------------------------------
- Sweden -0,3 2,5 4,7 4,2 11,1
------------------------------------------------------------------------------
- Finland 0,9 2,4 4,7 7,5 15,5
------------------------------------------------------------------------------
- Denmark -1,0 -1,4 -1,5 -2,2 -6,2
------------------------------------------------------------------------------
- Baltics 0,3 1,7 3,2 1,0 6,2
------------------------------------------------------------------------------
- Group administration costs -3,0 -2,9 -3,1 -4,5 -13,5
------------------------------------------------------------------------------
Group total -3,1 2,2 8,1 6,0 13,2
------------------------------------------------------------------------------
------------------------------------------------------------------------------
ANALYSIS BY SEGMENT
Net sales and EBIT by market area
----------------------------------
(EUR million) Q1/2017 Q1/2016 2016
------------------------------------------------------------
NET SALES
------------------------------------------------------------
- Sweden 171.3 185.8 790.8
------------------------------------------------------------
- Finland 176.6 179.8 774.9
------------------------------------------------------------
- Denmark 36.0 36.5 149.5
------------------------------------------------------------
- Baltics 36.9 37.1 157.7
------------------------------------------------------------
- Between segments - - -
------------------------------------------------------------
Group total 420.7 439.1 1 872.9
------------------------------------------------------------
------------------------------------------------------------
EBIT
------------------------------------------------------------
- Sweden -0.6 -0.3 9.5
------------------------------------------------------------
- Finland -1.1 0.9 15.3
------------------------------------------------------------
- Denmark -1.1 -1.0 -6.6
------------------------------------------------------------
- Baltics 0.4 0.3 6.2
------------------------------------------------------------
- Between segments - - -
------------------------------------------------------------
Segments total -2.4 -0.1 24.3
------------------------------------------------------------
------------------------------------------------------------
Group administration costs -4.4 -4.2 -14.7
------------------------------------------------------------
Group total -6.8 -4.3 9.7
------------------------------------------------------------
------------------------------------------------------------
INVESTMENTS
------------------------------------------------------------
- Sweden 2.9 4.7 19.8
------------------------------------------------------------
- Finland 18.2 6.6 64.0
------------------------------------------------------------
- Denmark 0.2 0.7 3.1
------------------------------------------------------------
- Baltics 2.4 1.4 10.8
------------------------------------------------------------
Total 23.7 13.5 97.6
------------------------------------------------------------
------------------------------------------------------------
AVERAGE NUMBER OF
EMPLOYEES
------------------------------------------------------------
- Sweden 2 029 2 057 2 162
------------------------------------------------------------
- Finland 2 815 2 636 2 912
------------------------------------------------------------
- Denmark 646 671 686
------------------------------------------------------------
- Baltics 1 511 1 586 1 560
------------------------------------------------------------
Total 7 000 6 950 7 319
------------------------------------------------------------
NOTES TO THE INCOME STATEMENT
1. ITEMS AFFECTING COMPARABILITY
(EUR million) Q1/2017 Q1/2016 2016
------------------------------------------------------------------------------
Comparable EBIT -6.8 -3.1 13.2
------------------------------------------------------------------------------
Personnel costs, Group Administration 1) - -1.2 -1.2
------------------------------------------------------------------------------
Termination of employment, Denmark 1) - - -0.5
------------------------------------------------------------------------------
Termination of employment, Finland 1) - - -0.3
------------------------------------------------------------------------------
Environmental provision, Sweden 2) - - -1.5
------------------------------------------------------------------------------
EBIT -6.8 -4.3 9.7
------------------------------------------------------------------------------
1) Included in the Income Statement in the item ”General administration costs”
2) Included in the Income Statement in the item ”Other operating items total”
NOTES TO THE STATEMENT OF FINANCIAL POSITION
2. CHANGES IN INTANGIBLE ASSETS
(EUR million) Q1/2017 Q1/2016 2016
------------------------------------------------------------
Opening balance 143.0 147.3 147.3
------------------------------------------------------------
Translation differences 0.2 -0.4 -3.5
------------------------------------------------------------
Additions 0.2 0.1 0.9
------------------------------------------------------------
Additions, business acquisitions - - -
------------------------------------------------------------
Disposals - - 0.0
------------------------------------------------------------
Depreciation and impairment -0.6 -0.6 -2.1
------------------------------------------------------------
Reclassification between items 2.2 0.0 0.4
------------------------------------------------------------
Closing balance 145.0 146.5 143.0
------------------------------------------------------------
3. CHANGES IN TANGIBLE ASSETS
(EUR million) Q1/2017 Q1/2016 2016
------------------------------------------------------------
Opening balance 401.7 361.8 361.8
------------------------------------------------------------
Translation differences 0.5 -0.1 -2.1
------------------------------------------------------------
Additions 23.5 13.3 96.7
------------------------------------------------------------
Additions, business acquisitions - - -
------------------------------------------------------------
Disposals -0.3 -0.3 -1.9
------------------------------------------------------------
Depreciation and impairment -13.0 -12.9 -52.4
------------------------------------------------------------
Reclassification between items -2.2 0.0 -0.4
------------------------------------------------------------
Closing balance 410.3 361.9 401.7
------------------------------------------------------------
4. INVENTORIES
(EUR million) Q1/2017 Q1/2016 2016
------------------------------------------------------------
Materials and supplies 75.1 77.2 61.5
------------------------------------------------------------
Semi-finished products 3.6 4.8 4.7
------------------------------------------------------------
Finished products 48.1 40.5 42.0
------------------------------------------------------------
Other inventories 0.3 0.4 0.3
------------------------------------------------------------
Inventories, advance payments 0.9 1.3 0.9
------------------------------------------------------------
Biological asset 6.6 6.3 6.7
------------------------------------------------------------
Total inventories 134.6 130.6 116.1
------------------------------------------------------------
5. NOTES TO EQUITY
Share Number of Share Share Reserve for invested Treasu Total
capital outstandin capital premium unrestricted equity ry
and share g reserve
premium shares
reserve
--------------------------------------------------------------------------------
1.1.2017 54 017 673 66.8 72.9 143.5 0.0 283.1
--------------------------------------------------------------------------------
31.3.2017 54 017 673 66.8 72.9 143.5 0.0 283.1
--------------------------------------------------------------------------------
DERIVATIVE INSTRUMENT LIABILITIES
(EUR million) 31.3.2017 31.3.2016 31.12.2016
--------------------------------------------------------------------------
Nominal values of derivative instruments
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Foreign exchange derivatives 61.1 36.6 43.6
--------------------------------------------------------------------------
Interest rate derivatives 127.0 128.4 126.9
--------------------------------------------------------------------------
Electricity derivatives 6.2 7.7 7.2
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Fair values of derivative instruments
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Foreign exchange derivatives -0.1 0.0 -0.2
--------------------------------------------------------------------------
Interest rate derivatives -12.6 -15.4 -13.4
--------------------------------------------------------------------------
Electricity derivatives -0.5 -2.8 0.1
--------------------------------------------------------------------------
CONSOLIDATED OTHER CONTINGENT LIABILITIES
(EUR million) 31.3.2017 31.3.2016 31.12.2016
--------------------------------------------------------------------------
Debts secured by pledges or mortgages
--------------------------------------------------------------------------
- loans from financial institutions 0.0 0.0 0.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
On own behalf
--------------------------------------------------------------------------
- Mortgages given 0.0 0.0 0.0
--------------------------------------------------------------------------
- Assets pledged 3.2 3.2 3.2
--------------------------------------------------------------------------
--------------------------------------------------------------------------
On behalf of others
--------------------------------------------------------------------------
- guarantees and other commitments 13.0 13.1 13.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Other contingencies
--------------------------------------------------------------------------
Leasing commitments 6.3 7.7 7.5
--------------------------------------------------------------------------
Rent liabilities 33.9 35.3 31.7
--------------------------------------------------------------------------
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.
31.3.2017 Level 1 Level 2 Level 3
--------------------------------------------------------------------------------
Assets measured at fair value
--------------------------------------------------------------------------------
Financial assets recognised at fair value
through profit or loss
--------------------------------------------------------------------------------
- Trading securities - - - -
--------------------------------------------------------------------------------
- Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps - - - -
--------------------------------------------------------------------------------
- Foreign exchange derivatives 0.1 - 0.1 -
--------------------------------------------------------------------------------
- Commodity derivatives 0.2 - 0.2 -
--------------------------------------------------------------------------------
of which subject to cash flow hedging 0.2 - 0.2 -
--------------------------------------------------------------------------------
Total 0.3 - 0.3 -
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities measured at fair value
--------------------------------------------------------------------------------
Financial liabilities recognised at fair
value
through profit or loss
--------------------------------------------------------------------------------
-Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps -12.6 - -12.6 -
--------------------------------------------------------------------------------
of which subject to cash flow hedging -12.6 - -12.6 -
--------------------------------------------------------------------------------
- Foreign exchange derivatives -0.2 - -0.2 -
--------------------------------------------------------------------------------
- Commodity derivatives -0.8 - -0.8 -
--------------------------------------------------------------------------------
of which subject to cash flow hedging -0.8 - -0.8 -
--------------------------------------------------------------------------------
Total -13.6 - -13.6 -
--------------------------------------------------------------------------------
BUSINESS TRANSACTIONS WITH RELATED PARTIES
-------------------------------------------
(EUR million) Q1/2017 Q1/2016 2016
---------------------------------------------------------
Sales to associates 3.8 12.2 46.9
---------------------------------------------------------
Purchases from associates 7.8 10.3 39.2
---------------------------------------------------------
Trade and other receivables 1.6 1.4 2.2
---------------------------------------------------------
Trade and other payables 5.5 3.9 5.1
---------------------------------------------------------
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