HKFoods Oyj (HEL:HKFOODS)
Finland flag Finland · Delayed Price · Currency is EUR
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Apr 28, 2026, 6:29 PM EET
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Earnings Call: Q1 2022

May 10, 2022

Speaker 1

HKScan's Q1 comparable EBIT was down from the comparison period as expected. The reasons for this are clear and concern all our market areas. A strong cost inflation which started already at the end of last year and was further accelerated by the war in Ukraine quickly pushed up HKScan's costs considerably. To secure the availability of domestic meat raw material that is central for our business, we increased producer prices for meat raw material faster than we expected. However, we were not able to fully compensate for the exceptionally strong cost increases by raising sales prices and improving production efficiency. In January-March, our net sales increased by almost 4% in comparable figures from the comparison period. Food service sales and retail sales of meals and meal components showed clear growth.

Food service sales growth is expected to further strengthen during the rest of the year, supporting the group's positive profit development. In all our business units except Denmark, our comparable EBIT was below the comparison period. In Denmark, we have managed to implement our strategy and improve our comparable EBIT. In Finland and in Sweden, we were unable to increase sales prices at the same time with rapidly rising cost level. As a result, comparable EBIT declined in both of these markets. The sharpest EBIT decline was seen in the Baltics. The completely exceptional price situation in the meat and grain markets challenged our entire long value chain and business model in the Baltics. As a key part of our food company strategy, we announced after the review period a partnership with Finland's leading vegetable wholesaler, Vihannes-Laitila.

We founded a joint venture to develop and launch a fresh added value vegetables. The new products will be launched within a year. High quality vegetable products are a good complement to our existing product portfolio, which will also strengthen our commercial operations. The unstable geopolitical situation is changing the market in a way that strengthens the role of supply chain reliability, product availability, and domestic raw materials. In addition, input prices are likely to remain above normal levels also in the near future. Consumer food prices will probably rise, which is also likely to affect consumer demand. HKScan is well-positioned in the market. This creates new opportunities for the company as a reliable local player.

The situation is also an opportunity for our customers who will appreciate more security of supply and domestic origin as global supply chains are becoming increasingly uncertain. The most significant near-term risk in our home markets relates to the availability of meat raw material this year and next. Especially, food industry and retail trade will be required to react quickly to cost changes as the magnitude and speed of price changes in the market are very likely to continue. Active discussions with customers to pass on cost through the whole value chain will also play an important role during the rest of the year and will probably also mean a clear increase in consumer prices.

It is also the way to create continuity for the production of domestic meat raw material and food as the current producer price level does not allow for it at current production input, price levels. I do believe that all our food chain players understand the seriousness of the situation and are ready to take decisions that will secure the basis and foundation for domestic food production. In the unstable, geopolitical situation, this is certainly in the interest of consumers as well. In the current unstable geopolitical situations, changes in the business environment are also very difficult to anticipate. The war in Ukraine has exposed new business risks, including the availability, and price of Russian energy and increased cyber risk. As a company, we have prepared for energy risks and made plans that are well underway already.

At HKScan, we have shifted the focus to short-term measures to minimize the negative impact on performance and to ensure profit development, for the rest of the year. Our outlook for 2022 remains unchanged, and we are confident in our ability to strengthen our performance during the rest of the year. Thank you, and have a great springtime. See you again in July.

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