Good morning, everyone.
Good morning. Thank you for attending today's Scandi Standard Interim Report for Fourth Quarter 2025. My name is Sarah, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, press star 1 on your telephone keypad.
I would like to pass the conference over to our host, Jonas Tunestål, Chief Executive Officer. Please go ahead.
Thank you. Good morning, everyone, and welcome to this presentation of Scandi Standard's results for Q4 2025. My name is Jonas Tunestål, and I'm the CEO and Managing Director of Scandi Standard. By my side, I have Fredrik Sylwan, our CFO, and I'm really pleased to have him by my side today. I'm also glad to report a strong quarter and result. Next slide, please. In Q4 2025, we see a strong growth in net sales and margins. We have a 9% growth, and that is mainly driven by substitutions from other proteins. Long-term, we see this underlying growth in poultry and chicken. We have managed to do a 46% increase in EBIT, and the margin is up to 4.5%. That is based on solid improvements in our Ready-to-Cook business.
We also have net sales growth in Ready-to-Eat, but we have gradual margin improvement and recovery underway. Our integrations of our acquired entities are also on track, and we have a dividend proposal of SEK 3.3 per share, and that is up 32% compared to last year. Our outlook for 2026 is strong. Next slide, please. Here's the reason why we see a strong demand. It is related to these three value drivers for chicken: responsible, safe, and nutritious. Convenient, versatile, and tasteful. And affordable because it's sustainable. Next slide, please. Here you can see the strong historical and ongoing consumer trend for chicken. The latest 10 years, that's been 50% growth, and we see a 3% volume CAGR in the Nordics and Ireland going forward.
As you can see on the graph on the right, it is a substitution from other proteins, and you can see on the right-hand side the growth of 3% in poultry. Next slide, please. Chicken is an affordable product. Price has always been important for consumers, and chicken is affordable across all segments. This is an interesting thing: fillets, that is, the highest-priced part on the chicken, is competitively priced versus average and low-end cuts in other proteins. Next slide, please. On this slide, we want to present our EBIT per kilo measure. EBIT per kilo is a good measurement of value creation for our business, and we see a positive momentum towards our 2027 target of SEK 3 per kilo. In Q4 2025, our EBIT per kilo is SEK 2.03, and that is compared to the SEK 1.55 in the same quarter last year.
So that's a 31% increase, and we need to bear in mind that Q4 is seasonally the weakest quarter in Scandi Standard. And we are expecting another material steps in 2026. Next slide, please. And then we move into Ready-to-Cook. So we see material progress in Ready-to-Cook. And here you can see the segments, and we see strong net sales growth in nearly all markets. There are lower net sales in Finland due to the exit in our loss-making contract that we have mentioned a couple of quarters now. Then if you look into the Norwegian numbers, there have been some technical accounting adjustments in the quarter linked to our ERP implementation, and that's impacting top line. But Norway is contributing well in Scandi Standard in the quarter.
We also want to remind you of the category other, that includes our ingredients business and our corporate costs. So next slide, please. Here you can see our sustainability scorecard, and we are transparent on multiple parameters, and I'm glad that most of them show a positive trend. You see slightly higher numbers in the quarter on antibiotic use, and that is linked to some challenges in our Irish production. Next slide, please. If we move to Ready-to-Cook, that's another solid step forward: 9% increase in net sales. We have an 11% increase in chicken processed, that's our grill weight, and we see a positive volume and price mix effects. This is our strongest segment. We have an EBIT of SEK 120 million compared to SEK 63 million last year, and we moved the margin to 4.6% compared to 2.6% last year.
We need to remind you also that there were SEK 40 million startup costs in Lithuania in Q4 2024, but it is a broad improvement across all markets and channels, and structured improvement programs that are now yielding results. Next slide, please. And when we move over to the feed costs, we see minor softening of feed prices, but they are fairly stable. There are still uncertainties. It is a volatile, uncertain market, so we need to be prepared for further volatility. But our model, where most of the input costs are linked to top line, we feel that we have good security in the feed costs. And also worth to mention is that we have limited trade with the U.S. and China. And feed costs, that is one-third of our cost base. So feed costs have a major impact on Scandi Standard's results.
So next slide, please. We see increased export prices. They're up 4% compared to Q4 2024, a slight decrease compared to Q3 2025, and we are expecting volatile pricing in 2026. That is linked to a lot of avian influenza in Eastern Europe that will maybe affect the supply, but the volatility will continue over the year. The underlying growth in demand for chicken continues quarter by quarter. Next slide, please. Then on this slide, you can see the channel development more in detail, and through this detail, you can notice the increase in both food service and retail in the quarter. In general, we'll be seeing strong demand growth in several of our markets in the quarter.
Next slide, please. This slide is to remind you of our strong market position in all our five home markets, and the countries are highly consolidated. The markets have large hurdles for new entries. They can individually be regarded as semi-closed markets due to the strong consumer preference for domestic produce. Due to our strong market position, our own supply decisions have a meaningful impact on the market, which has helped us during the recovery process from inflation. Note that each market, however, also includes consumer segments sensitive to provenance.
Next slide, please. This slide is just to show our Ready-to-Cook plants. You can see on the right-hand corner, Lithuania and Žarniškiai. There we produce 11 million chicken, but we're planning for double that volume with another shift in the future. When we have the demand, then we will increase the supply in Lithuania.
Next slide, please. If we move into Ready-to-Eat, we have gradual margin recovery underway. So we have good growth in the segment, 11% growth in net sales, and that is driven by the strong recovery in the food service demand. But we also have a significant drop in EBIT versus Q4 2024, and that is the delay in passing through increased raw material costs. So when we have increased results and sales prices in our Ready-to-Cook segments, that also means higher input costs in our Ready-to-Eat. So we are passing those price increases through, so we will see gradual improvement, and that is expected during 2026. Worth noting is that we in January have a maintenance stop in our big Ready-to-Eat plant in Faroe Islands to change some equipment to increase our efficiency going forward. But we are really on track with our successful startup in the Netherlands. We are already producing kebab in Factory A on our first line there.
The second kebab line will be up and running in June, and then we will gradually ramp up the new Factory C and those two big lines in Q4 2026. Next slide, please. And here you can see it in figures. It's, of course, very encouraging to see the growth in food service after several periods of weak demand in Ready-to-Eat. Growth in retail channels continues to be very strong, and Ready-to-Eat will be an important long-term tool on developing EBIT per kilo, so more specifically to increase the value of our protein. Next slide, please. And this slide is a reminder of our strong historic organic growth in Ready-to-Eat in the latest 10 years, and I'm confident that we will continue that trend. There was a setback in 2023 through the first half of 2025. There was a general drop in the QSR demand post-COVID.
We had this loss of this large Continental European QSR contract, and at the same time, we saw strong increases in raw material prices during 2025. But the inflection point from quarter three, so we're encouraging in turning into higher European QSR demand, and we are in process of passing through the increased costs. And the average EBIT margin is 6% the latest five years. Next slide, please. There is a healthy market growth expected for the breaded products. You can see the market players are divided into tiers: there are the European players, the regional players, and the local players. Scandi Standard has been a large regional player with 36,000 tons product weight in 2024. That's about 5% of our European market. The production platform was not competitive for the top tier.
If we move into the next slide. That's why we made the acquisition in Oosterwolde, and that will take Scandi Standard's breaded activities up to the top tier. So the Oosterwolde plant was acquired in Q1 2025, and it was in idle state. There had been a fire in Factory B under previous ownership. Then we have started up Factory A in Q3, and that has increased our capacity for our popular kebab products. We see a strong demand for kebab products in our different markets. And then Factory C will be prepared for the start of a ramp-up in the first half of 2026, but we will go commercial in Q4 2026. And that will have the two largest, the most efficient breaded product lines in Europe. And that will be a long-term significant growth platform for Scandi Standard.
So if we move into the next slide, please. Here you can see our main processing plants in Ready-to-Eat. We have our plant in Faroe Islands producing a capacity of 50,000 tons, the same capacity in Oosterwolde, and then we have our local Ready-to-Eat plants in Stockholm, Norway, and Honkajoki in Finland.
So with that, I will hand over to you, Fredrik Sylwan.
Thank you, Jonas, and good morning, everyone. As Jonas mentioned, next slide, please. Yes, I'm sorry. As Jonas mentioned, Q4 was very strong. In fact, our strongest fourth quarter ever. But also, Q4 is our second strongest quarter ever across all quarters during the seasonally weakest quarter, which is very, very positive to see. And top line is growing both driven by RTC and RTE, supported by strong underlying EBIT growth in our Ready-to-Cook segment, partly offset by Ready-to-Eat, which is normal when burden raw material prices increase.
Ready-to-Eat profitability has started to recover and is also expected to continue during the coming quarters. In total, EBIT is up 46% in the quarter with a 110 basis points margin improvement. Keeping in mind that Q4 last year includes the startup costs in Lithuania of SEK 14 million, but adjusted for that effect, it is clear that the underlying performance is very strong. Finance net is 13% lower than last year, and the cost for increased bank loan is more than offset by lower interest rates. But also, we have a reduced positive impact from our interest rate swaps that have expired. Tax expenses are slightly below last year, but the effective tax rate is significantly lower, and the main driver is the utilization of previously non-deductible interest costs in Sweden.
Next slide, please. Capital employed increased year on year from SEK 4.7 billion-SEK 5.0 billion, reflecting acquisition activity and integration ramp-up. Return on Capital Employed improved by 70 basis points to 12.5% despite our higher capital employed, and that indicates that incremental capital is being deployed efficiently. Return on Equity strengthened to almost 14%, mainly driven by improved profitability. The equity ratio decreased somewhat from 36%-35%, primarily driven by increased investment activity. While the decline is modest, the company remains well capitalized and within our targeted capital structure. As always, we continue to monitor our leverage position to ensure financial stability and to maintain flexibility for future investments.
Next slide, please. Our EBITDA is now north of SEK 1 billion, rolling 12, which is a milestone for us as a company. Operating cash flow was almost SEK 200 million in the quarter, primarily driven by strong profitability and positive working capital effect. It's partly offset by increased capital expenditures, mainly in Sweden, Denmark, and the Netherlands. The CapEx in Sweden and Denmark are mainly linked to efficiency and capacity, while in the Netherlands, it's focused on making the factory production ready. Paid tax is below previous year due to tax refund in Sweden this year linked to 2024. Other items are positively impacted by currency effect on our interest-bearing debt. All in all, for the quarter, we managed to reduce our net interest-bearing debt by SEK 160 million, giving us a reported leverage at 1.9x, which is well below our internal aim of 2.5x.
Next slide, please. Working capital remains low in the quarter. We do see a 2% inventory increase versus year-end, which is driven by a higher level of live birds, keeping in mind that Lithuania was basically not in base last year. Our target for working capital as a percentage of net sales adjusted for financing remains at 6%, and in Q4, this metric stood at 3.7%, including the financing adjustments, meaning that we are at an efficient and low working capital level for the quarter. Next slide, please. Total capital expenditures for 2025 was close to SEK 450 million, excluding the acquisitions carried out in the Netherlands and Lithuania in the beginning of the year, of which totaling approximately SEK 330 million.
For 2026, we expect our CapEx to increase to approximately SEK 650 million, which will mainly be focused on increased chicken farming capacity in Lithuania, debottlenecking , and increased capabilities in Ready-to-Cook segment, and last but not least, finalize the Netherlands for the startup of Factory C. As we ramp up Factory C, we expect increased working capital, which will start mid of 2026. The planned effective tax rate is expected to be approximately 20%.
Next slide, please, and back to you, Jonas.
Thank you, Fredrik. Next, I would like to talk about our cornerstones and license for us to operate. There are these three areas when it comes to creating trust to what we do. It is about responsible animal welfare, and there, I think it's important we have a strong heritage of animal welfare up in the Nordics. We are working continuously together with our farmers and all our suppliers to actually continuously improve in that area every day.
Then we have the safety for consumers and employees, and it's also a super important area for us, and it creates the bottom trust that is important in the food industry. And then chicken is a nutritious product. And these three areas are closely linked to our strategic pillars. So if we move into the next slide, please. And for those of you that have been watching this presentation for a while, you have seen these four pillars before, but they are super important for our ways of working. And increase the value of protein, that is about taking out more value out of every chicken.
Everything from the consumer product to the things that can go into biogas or rendering products, it is about climbing what we call the poultry ladder, and that is to take out the most value of every product. Then we have ramp-up of our efficiency. Ramp-up our efficiency, that means efficiency end-to-end that starts out at the farms and it ends at the consumer. And that is an important topic that we are working with in several different angles to increase the efficiency all through our value chain. And when it comes to the pillar of sustainability, we call that integrated sustainability, and that is that we are working with sustainability in all means integrated in our business. It's not a separate pillar. It is a pillar that we work in with all our customers and internally in Scandi Standard all the time.
And then we have the fourth pillar, better together. And that means taking out the strength of actually being one Scandi Standard. We are very local in the market that we are, but we will take out the strength of being one Scandi Standard, both in terms of benchmarking, best practice, and using the competence all across markets when it comes to innovations and so as well. So if we move into the next slide, please. And on this slide, we want to remind you of our 2027 targets, and you can see them on the right-hand side. And we are expecting a strong growth over the coming years, and we set the target 2027 of organic net sales growth of 5%-7%. We want to exceed 80%, above 6%, and ROCE above 15%.
We want to reduce our CO2 emissions with 42% and have an antibiotic use below 1%. Then we want to work with the LTIFR below 15, and we want to have the employer satisfaction above 75. This is our 2027 target, and I think that we have built a strong foundation to be able to manage to reach them at the end of 2027. Next slide, please. When we come to the sustainability and the ESG rating, we can proudly present that we have, once again, got the Climate A in the CDP rating. For us, it's important to have this structured approach to ESG topics and go for facts, and I think that we are progressing really well in that area.
Next slide, please. In order to reach our target for EBIT margin, we need to increase our EBIT per kilo from the current SEK 2.03 up to the target that we have at SEK 3 per kilo. We are taking material steps. If we look at this quarter four, we are at SEK 2.03 compared to the SEK 1.55 last year. That is about climbing the value ladder and is balancing supply to domestic fillet demand. It is value creation through increased consumer convenience, differentiation, and branding opportunities, and utilize further part of the protein in our ingredients business. We also see a large efficiency potential in the value chain, and that is the pillar where we talk about increased efficiency end-to-end. The ultimate measure for how much value we can take out of our chicken is the EBIT per kilo measurement.
If we move on to the next slide. So if we summarize it all and give you an outlook. We see this strengthened organic growth trend. We have taken another material step in our margin journey. Performance in Ready-to-Cook is progressing well. We have gradual recovery expected in Ready-to-Eat. We are preparing capacity for long-term growth, and we're also confident and make a proposal to increase the dividend by 32%. With that, we're well positioned for further consolidation.
That was all from us. With that, we open up for Q&A.
Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. To remove your question, press star followed by 2. Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. If you are streaming today's call, please dial in and enter star 1. We will pause here briefly as questions are registered. Our first question comes from Daniel Schmidt from Danske Bank. Please go ahead.
Yes. Good morning, Jonas and Fredrik. Hope you can hear me. I was just thinking about the Swedish market. You have been growing close to 10% or above 10% there for five quarters in a row now. And I was just wondering what you think the market growth is in the Swedish market. And then secondly, what do you think is going to happen with demand when the Swedish government lowers the VAT on food by the 1st of April?
Yeah. The first question about the growth in the Swedish market, I think that there will be an underlying growth around the numbers that we have said in the presentation about this 5% growth. When it comes to the VAT part, it is a temporary step-down in VAT that is going to get back again. We are not sure what the outcome will be, but it will be the same for all food. So we are not expecting any consumption increase out of that. There may be some changes in the channels because the reduction of VAT is linked to retail and takeaway and not in the restaurants. So maybe there will be some sort of change, but it will be the same for all food. That is our expectation.
So we are expecting this growth that we have in our financial target as well, a 5% growth in Sweden.
Yeah. But I find that very strange. Why don't you expect any impact on demand if you lower a tax by 6 percentage points?
Because I think that when it's equal to everything that is sold, then it will be lower for the other things that people eat as well. So it's not a lowering for our poultry in specific. It's lowering for beef and pork and plant-based and other proteins as well. Maybe we will see some changes in the channels, and that can, of course, create some growth because we have a stronger foothold in retail than we have in food service. And maybe also higher presence of Swedish meat in retail.
Empirical evidence shows, if you look at Europe, when this has been made in different countries, that there is a price elasticity of -0.5. So why shouldn't that happen in Sweden? I don't get that.
No, it may. We haven't estimated in our forecast, but it's the first time we try it in Sweden. So there may be positive effects. What I can agree on with you, at least, is that we don't see the negative effect of the prices going down to the consumer.
No, I think it's just sort of anyway, if there's anyone that might be losing out, of course, it's the Swedish government. But they, of course, hope that this will lead to more consumption.
Yeah. Yeah. It's a long discussion about the VAT reduction, but let's see what the effects will be. They are also putting in some government committee that will follow this and follow the price changes and follow the consumption. So let's see what the effects will be. We are not calculated in our prognosis, at least.
Okay. No, no. Absolutely. Sort of, it will be sort of followed up in terms of price decreases, but it's only tax. So that's why I don't really get why it should be really positive, I think.
Yeah. It will not be negative for us with lower prices in retail and lower tax. That's for sure. And I also think that it's an important measure they do that they actually see that the prices will go down to the consumer as well. And hopefully, that will have a positive effect on consumption, but it will be equal all. Okay?
Sure. Okay. Sort of, you said that the market growth in Sweden has been 5%, and you've been growing close to 10% now for five quarters in a row or above 10% in some quarters. Why do you think that is?
I think that there's a couple of different things, but I think that the thing that we're talking about, taking more value out of the protein, I think the journey that we do in our Swedish business, we are doing a really good journey on that because it's not about processing more kilos only. It's also about taking out more value out of it, and both up to the RT segment, but major part is in the RTC segment, actually, where we debone more, where we actually take more as pre-prepared meat, where we're actually able to take out more value.
I think that Kronfågel is doing a great job there at the moment. I think that we can expect really good work in that area even into 2026.
Okay. Thank you. That's all from me.
Thank you. Again, if you would like to ask a question, please press star 1. There are no questions waiting at this time, so I'll turn the conference back over to Jonas for any further remarks.
Thank you very much, everyone. Thank you for listening in. If there's no more question, we will close this meeting for now. Thank you very much, everyone. Thank you.