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2008-01-17 13:00:00 CET 2008-01-17 13:00:00 CET REGULATED INFORMATION HKScan Oyj - Company AnnouncementCOSTS OF FINNISH RESTRUCTURING EXCEED PROJECTIONS AT HKSCAN IN Q4/2007HKScan Corporation STOCK EXCHANGE RELEASE 17 January 2008, at 2pm COSTS OF FINNISH RESTRUCTURING EXCEED PROJECTIONS AT HKSCAN IN Q4/2007 - Low export prices of pork present challenge in early part of the year The non-recurring charges from the industrial restructuring launched in HKScan's Finnish business in 2006 exceeded the earlier estimate of ca. EUR 3 million and rose to more than EUR 5 million in the last quarter of 2007. Earnings in the said quarter will be eroded by the full weight of the non-recurring charges incurred. The cost overrun is due to the higher than anticipated costs of production transfers. In addition, the extended ramp-up of the production lines transferred to the Vantaa plant resulted in delivery problems and loss of sales in the run-up to the holiday season, a time crucial in terms of sales. Efficiency has improved markedly at the Vantaa plant since the turn of the year and the remaining delivery issues will be resolved in the current quarter. The logistics centre, which comes online in spring, will bring the company's delivery reliability to a competitive level. The profitability of the meat business also deteriorated in Finland in the last quarter of 2007. Underlying this development was the rapid rise in the prices of feed raw materials seen in autumn. In the early part of 2008, the international market situation and high inventories of pork in Europe will keep export prices at an exceptionally low level relative to prices in the company's home markets. Although part of the rise in feed costs was passed on to sales prices at the beginning of January 2008, the meat business will fall short of its profitability target in the early part of the year. This deviation from earnings targets will be especially evident in Finland and the Baltics, where the company's dependence on the export market is substantial. The market outlook for pork will hamper performance in the early part of the year and the Group's Q1 earnings are estimated to fall short of the corresponding figure for 2007. The company estimates the pork market cycle will turn around in the latter half of 2008. This presumed balancing of supply and demand will narrow the gap in prices between the company's home markets and export markets, which will restore the development of profitability to the projected track. HKScan Corporation Kai Seikku CEO Further information is available from CEO Kai Seikku. Please leave any messages for him to call with Katja Backman on +358 (0)10 570 2428 DISTRIBUTION: OMX Nordic Exchange Main media www.hkscan.com |
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