HKScan Corporation              Stock Exchange Release         5 April 2012, at 12:00
 

Difficult first months for HKScan in Sweden – Group-wide development programme to be launched


HKScan’s business in Sweden has faced major challenges during the first months of 2012 due to the higher-than-foreseen prices of and poorer access to Swedish pork and beef. The production of Swedish pork and beef has clearly continued to fall, resulting in higher purchase prices and lower slaughtering volumes. The long period of strengthening seen in the Swedish krona has also resulted in considerable increases in meat imports and made it difficult to raise the price of increasingly expensive Swedish meat raw material in retail trade in particular. Price increases and cost adaptation have taken place in Sweden, but so far these measures have shown insufficient results. The Swedish business posts a loss for the first quarter, which also takes the entire HKScan Group slightly into the red in Q1 of 2012.

Performance in the Group’s other market areas has been in line with targets, with Finland in particular delivering improved performance year-on-year. The first quarter is traditionally the weakest one of the year for the HKScan Group. The guidance issued earlier for the entire year will not, however, be affected by EBIT falling slightly below target in Q1. In its financial statement release of 17 February 2012, HKScan estimated that EBIT for 2012 would be better than in 2011.


Development programme to be launched in the Group

HKScan is launching a development programme to be implemented until the end of 2013. The aim is to achieve annual performance improvements exceeding EUR 20 million and considerable reductions in invested capital. The programme covers the Group’s operations in Finland, Sweden, Denmark and the Baltics. The main focus will be on the management of production and the product offering in response to demand as well as on variable and fixed costs and working capital. The programme also includes the tightening of the Group structure and the more efficient utilisation of Group synergies that are already underway.

Longer-term strategic alternatives for business development will also be explored regarding the business in Sweden, where the operations focused on Swedish meat have for quite some time experienced and still continue to face major challenges.

HKScan will issue the interim report for Q1/2012 on 8 May 2012.

HKScan Corporation

Hannu Kottonen
CEO

Further information is available from CEO Hannu Kottonen. Please leave any messages for him to call with communications manager Marja Siltala, tel. +358 10 570 2290 or marja.siltala@hkscan.com

HKScan is one of the leading food companies in Northern Europe with home markets in Finland, Sweden, Denmark, the Baltic countries and Poland. HKScan manufactures, sells and markets pork and beef, poultry products, processed meats and convenience foods under strong brand names. Its customers are retail, the HoReCa sector, industry and export customers. It had net sales of EUR 2.5 billion in 2011. HKScan has operations in ten countries and has some 11 400 employees.


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