Good morning, everyone, and welcome to this presentation of Scandi Standard's result for Q1 2026. 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 pleased to have him by my side today. I'm also glad to report the strong growth and result in the quarter. The next slide, please. We report Q1 2026 with strong growth and in net sales and margin. We have 9% growth in net sales and increasing volumes, supported by growth across all countries, channels, and segments. Sales are supported by continuous strong underlying demand. EBIT is up 35%, solid improvements in Ready-to-Cook. We have low Ready-to-Eat margin but a positive outlook.
Improvement program continued with full force, supported by significant investments in 2026, and the integration of Lithuania and Netherlands are progressing well. In general, we have a strong outlook for the business. Next slide, please. Now we move into the growth and value drivers and, the reason why we see a strong demand. It's 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. On the graphs on the right-hand side, you can see long-term growth in chicken benefiting from substitutions from other proteins like pork and beef. As you can see in the top bullet, we're estimating 3% volume CAGR in the Nordics and Ireland. Next slide, please.
One of the three value drivers is the affordability, and it's benefiting from other proteins just because it's sustainable and affordable. Price has always been important for consumers, and the focus has increased even more in the current environment of high food prices. Beef prices are increasing and are becoming more and more expensive, which chicken is benefiting from, but also the long-term trend of switching proteins from red meat to poultry. Chicken is affordable in all segments, and that gives us further opportunities to drive long-term volume value creation. We see further opportunities to drive more volumes out of the chicken due to its affordability relative to peers. That you can see on the right-hand side in the graphs at the top. Next slide, please.
On this slide, we present our EBIT per kilo measure, and EBIT per kilo is a good measurement of value creation for our business. In Q1 2026, EBIT per kilos was SEK 2.22 compared to SEK 1.73 last year. That is an increase of 29%. Our home markets are contributing well, and Oosterwolde will be an addition for us reaching our 2027 goals. We're expecting to take another material step in 2026. In the different colors in the diagram, you can see the development in different segments. As you can see, RTE is a very small part of the earnings, which gives us fundament for future growth when recovering prices and ramping up our new RTE capacity. Next slide, please.
Now we're moving into the segments, and the table shows the reconciliation of our segments. Strong net sales growth in all markets and strong EBIT contribution from Ready-to-Cook, whereas Ready-to-Eat still has low results in the quarter. As always, we want to remind you of the category other includes our ingredients business and our corporate costs. Next slide, please. Here you can see the summary of our sustainability scorecard, and we are transparent on multiple parameters. Q1 shows mixed results, partly driven by exceptional cold winter this year. You see slightly higher numbers in the quarter on antibiotic use, linked to some challenges in our Irish and Lithuanian operations, but we expect a positive trend during 2026. Next slide, please. If we look at the segment Ready-to-Cook, and that's another step forward with 10% increase in net sales.
We have 5% increase in chicken processed, our grill weight, and we have a positive volume and mix effect. EBIT is SEK 151 million compared to last year's SEK 93 million, and the margin is 5.3% compared to 3.6% last year. It is broad improvements across all markets and channels, and I'm glad to see that our structure and improvement programs are yielding results. If we move into next slide, please. We'll move to the feed prices, and we have now been seeing fairly stable feed prices for some quarters. In quarter one, the prices declined slightly versus previous year, but there are still uncertainties, and we need to be prepared for further volatility.
We also want, as always, to highlight that feed costs are 1/3 of our cost base and that the short production cycle compared to other proteins enable us to be more agile in the supply chain. Generally, we look at feed costs and other costs, such as packaging and energy and transport. We carefully follow the effect of the Middle East crisis with a view to pass on cost increases to our clients. Next slide, please. Then we're moving into the export prices, and we see volatile export prices. In 2025, volatility were driven by supply issues, and that was mainly bird flu issues, Newcastle in Poland, and bird flu in Brazil. Q1 also to mention is seasonally our weakest quarter. That's the effect of the Christmas season, while the chicken consumption or poultry consumption is low.
When we compare prices versus last year's, and prices are up 2%, and we also see that current prices is above Q1 2026 levels. Our aim is to reduce exposure to volatile markets, so we're looking for long-term partnership, optimized S&OP, and an integration benefits with our Ready-to-Eat business. Next slide, please. On this slide, you can see the channel development more in detail. Through these details, you can notice the increase in both food service and retail in the quarter. In general, we're seeing strong demand growth in all of our markets in the quarter. Next slide, please. This slide is to remind you of our strong market position of all our five home markets, and the countries are highly consolidated. These markets have large hurdles for new entrants.
They can individually be regarded as semi-closed market due to the strong consumer preference for domestic produce. Due to our strong market position, our own supply decision have a meaningful impact on market balance, which has proven to be strong instrument in periods with volatile markets. Note that each market, however, also includes consumer segments less sensitive to provenance. Next slide, please. Here you can see our Ready-to-Cook plants. As we always mention, we should note that 11 million chicken in Lithuania is just one shift. If the market have a positive momentum, we have the possibility to scale up another shift and double the production. Next slide, please. We move into Ready-to-Eat, and the headline is low result and positive outlook. We see gradual margin recovery underway.
10% growth in net sales, and that is driven by strong recovery in food service demand. What we see is a significant drop in EBIT versus Q1 2025. Part of it is driven by a planned maintenance stop in Farre during the first quarter. It's also structural. It takes longer time to pass through increased raw material costs. We're on track with our sequential start-up in Netherlands, successful kebab processing in factory A, outperforming our internal targets. We're also looking into double capacity during the second half of 2026 on the kebab production. In the factory C, we will do the trial runs as planned in the second half 2026. Next slide, please. Here you can see the figures.
It's of course very encouraging to see growth in food service after several periods of weak demand in Ready-to-Eat. Growth in the retail channel continued to be very strong. Ready-to-Eat will be an important long-term tool in developing EBIT per kilo. More specifically, I will talk about that later in our strategic pillars. It is about increasing the value of our protein. Next slide, please. This slide is a reminder of the strong historic organic growth in Ready-to-Eat business the latest 10 years. I'm confident that it will continue that trend. There are two main types of businesses. Three-quarters is breaded products on the European market, and 1/4 is integrated local business in Sweden, Norway, and Finland. It gives us, normalized, a high return on capital employed, an average EBIT margin of 6% the last five years.
In the quarter, we only had 2.7% for the reasons described earlier, which also shows the potential going forward. It is low capital employed compared to Ready-to-Cook. As you remember, we lost the continental contract in 2023, but since December 2023, we have growth quarter by quarter. Next slide, please. We're also expecting a healthy market growth in Europe over the coming years. Market players are divided into tiers, European players, regional players, and local players. Scandi Standard has been a large regional player with 36,000 tons product weight in 2024, and that is about 5% of the European market share. There's been a stagnant market after COVID-19 and inflation and some European overcapacity. We see the expected growth to 2030 is about 120 tons.
Maybe you can change the slides for us Anna? Next slide, please.
Just one second. Well, there.
Next slide. 19. Good. This is the reason why we acquired the Oosterwolde plant in Q1 2025, and we acquired that in idle state, and there has been a fire in factory B under previous ownership. The start-up of factory A in Q3 2025 after refurbishment, and that increased our capacity for popular and profitable kebab products that we're producing. Factory C is being prepared for the second half 2026 of a start-up of trial products. Factory C has two of Europe's largest and most efficient breaded products lines with a capacity of 50,000 ton annual capacity. One of the few with advanced form product capability, and it's tailored to meet criteria of the largest clients.
We are expecting this as a significant long-term growth platform for Scandi Standard. If you move into next slide, please. Here we show our four main processing plants in Scandi Standard, and the two European plants is Farre plant in Denmark and our Oosterwolde plant in Netherlands. Stokka in Norway and Honkajoki in Finland are serving our local markets. I hand over now to Fredrik Sylwan.
Thank you, Jonas, and good morning, everyone. Next slide, please. As Jonas mentioned, Q1 was a very strong quarter. We see a positive development where top line was driven by both RTC and RTE, supported by strong underlying EBIT growth in RTC, partly slowed down by RTE, which is normal when raw material prices increase. We expect the RTE profitability to recover during the coming quarters. In total, EBIT is up 35% in the quarter with almost 90 basis points margin improvement. Q1 last year includes start-up costs in Lithuania amounting to SEK 17 million. Adjusted for that effect, it is clear that the underlying performance is very strong. Finance net is down 14% versus previous year, and the cost for increased bank loan is more than offset by lower interest rates.
On the back of the reduced positive impact from interest rate swaps have expired, so we don't see that positive effect during this quarter. The effective tax rate is higher than last year, and this is due to correction of capitalized tax losses in the Netherlands, and the effective tax rate is expected to return to previous level. Feed efficiency remains stable and at a strong level. As Jonas mentioned earlier, lost time injuries is up during the quarter. Next slide, please. Capital employed increased year-on-year from SEK 4.5 billion to SEK 4.9 billion, reflecting acquisition activity and integration ramp up. Return on capital employed improved to 13.3%, which is almost 2 percentage points up despite higher capital employed, indicating that incremental capital is being deployed efficiently.
Our return on equity also strengthened to 14.9% from 10.7%, driven by improved profitability and disciplined capital allocation. The equity ratio increased to 36.2% from 34.7%. As said, 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 maintain flexibility for future investments. Next slide, please. Operating cash flow was SEK 69 million in the quarter, primarily driven by strong EBITDA together with reduced CapEx as the Oosterwolde acquisition last year was an asset deal. Other operating items are driven primarily by FX impact on personnel costs. Paid tax is below previous year due to less tax paid in both Norway and Sweden.
Other items are impacted by FX on interest-bearing debt, as well as the stock buyback linked to the 2025-year long-term incentive program. Our net interest bearing debt is close to flat versus year-end. Reported leverage landed at 1.9, which is below our internal aim of 2.5. Next slide, please. Working capital remains low in the quarter, despite unfavorable impact from stronger sales and a low level exiting 2025. We see a 7% inventory decrease versus year-end and almost flat versus Q1 last year, despite having a higher level of live birds, as Lithuania was basically not in the base last year. Other working capital consists mainly of personnel related costs, such as VAT. Our target for working capital as a percentage of sales adjusted for financing remains at 6%.
In Q1, this metric stood at 4.4%, including financing adjustments, meaning that we are at an efficient and low working capital level for the quarter. Next slide, please. For this year, we expect CapEx to increase to approximately SEK 650 million, which is driven by focus on three main areas, which are the same as last time. The first one is increased chicken farming capacity in Lithuania, then debottlenecking and increased capabilities. The third one, finalize the Netherlands for the start-up of factory C. As we ramp up factory C, we expect an increase in working capital, which will start in the middle of the second half of this year. We also expect finance costs to be around 7% of our net interest-bearing debt, which includes cost for leasing, factoring and refinancing.
The blended effective tax rate is expected to be approximately 19%. Next slide, please, and back to you, Jonas.
Thank you, Fredrik. This slide, I want to talk about one of our cornerstones and license for us to operate. There are three key areas when it comes to creating trust for what we do. It is responsible animal welfare, safety for consumers and employees, and nutritious products. This is closely linked to our strategic pillars. If we move into next slide. Those of you who have followed us for a while have seen these pillars before. These are the four strategic pillars that will support us achieving our goals. It is about increase the value of our protein, e.g. taking out more value out of the bird and processing more and utilizing more of the bird. It is about ramping up efficiency, and that is ramping up efficiency in the whole value chain end to end.
There's a lot of gains to do with that focus, and that with integrated sustainability. Doing this in every step along the way as one company, making us constantly better together. It emphasize the collective effort of shared goals and team cooperation, and that leads to improved performance and outcome. If we move into next slides, we then will show the slide there and remind you of our targets for 2027. You can see them at the right-hand side. We are expecting strong growth over the coming years. We have set the targets 2027 to 5%, to 7% net sales growth.
We have targeted an EBIT margin in excess of 6% by 2027, and we're also measuring the progress in terms of EBIT per kilo, for which we have support and targets of SEK 3 , as presented in former slides. Next slide, please. We also want to remind you of, and this slide is to remind that we are structurally working with improved ESG work and improve ourselves in ESG ratings. We have an A in the CDP rating for climate. There's only a few companies that has achieved A- rating, an even smaller group with an A rating. The high scores reflects our standards and the sustainability nature of our business.
If we move into next slide, once again, we want to show you our EBIT per kilo measure, and EBIT per kilo is an important measure for our value creation. As you can see, the Ready-to-Eat part of the EBIT per kilo is very small part of it today. The potential of growing our Ready-to-Eat business in the future is an important part for us to increase our EBIT per kilo. If we move into next slide, please. This is to summarize the outlook. Strengthen organic growth trend. It is another material step on our margin journey. Ready-to-Cook, we have strong improvement momentum. Ready-to-Eat, we have a positive outlook after a low period. Our improvement program are continuing with full force, supported by significant investments in 2026.
We are well-positioned for further consolidation and expecting a strong outlook for 2026. With that said, we are moving to next slide and open up for Q&A.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. To remove your question, press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. We'll pause here briefly as questions are registered. Our first question comes from Daniel Schmidt with Danske Bank. You may proceed.
Yes, hello. Do you hear me?
Yes. Hi, Daniel. Good morning.
Yes, okay, good. Good morning. A couple of questions from me. You clearly perform well again on the group. Ready-to-Eat is still sort of sluggish when it comes to margin performance. Of course I do understand that you had that maintenance stop that also impacted. You also talk about longer lead times to pass on raw material costs. On that topic.
We are of course in a situation now where the world is quite uncertain, and it has an impact on commodity prices in general and maybe also soaring fertilizer prices. Of course, the lead time is quite long. What do you see there, and what do you expect in terms of eventually passing those extra costs on down the line?
I would say, if we take on the cost side, that will reflect the Ready-to-Cook part. The thing that you mentioned about fertilizers and so on, that is a long-term thing. Our focus is that we see at the moment stable feed costs. We see of course, as everyone increasing oil prices and costs for transport and plastics and so on, but we have a really close monitoring that and focus to pass those costs further to the customers. I think we have a good model for that. If we're linking it to the Ready-to-Eat part, it has more been driven by the fact that we have such a strong demand for our Ready-to-Cook raw material.
The sales out of them, there's been a lack of poultry, and that of course optimized the Ready-to-Cook business, but keep some short-term challenges with the Ready-to-Eat business because that's the raw material into Ready-to-Eat. What we have been focusing on is to increase the efficiency in our Ready-to-Eat part and of course pass the prices through, but they have a strong link to what the demand is in Ready-to-Cook. There is a little bit longer lead time as stated. For us, it's more about the high demand for Ready-to-Cook, so they will come after a while. The cost base, we are following that really close and expect to pass those costs through.
We don't see anything on our big cost parameter yet on the feed prices. Of course, it is, as you say, if fertilizer prices are high, that can have an effect for the crops that will be harvested next year and so on. We are monitoring it.
I understand that these two channels are sort of dependent on each other in terms of raw material cost and so on. The fertilizer prices and then hence the feed prices is of course something that could come later, maybe this year or start of next year. What makes you sort of confident that you won't see longer lead times to pass that cost on as well, now that you have seen it in RTE?
Yeah. Because the RTE sourcing or changing. Let me give an example to give it more practical. If we have a high demand for minced meat because of the minced meat and red meat is really high. Then we sell the Ready-to-Cook raw material offcuts as minced meat and drive value out of that. That's also one raw material into our Ready-to-Eat. Then that product is not available. Then you need to change that to another product due to the high demand of offcuts to ready to minced meat. Then we need to change the recipes and push the prices through because we need to use another raw material. The Ready-to-Eat business is more linked to the high demand in Ready-to-Cook.
Those costs we need to pass through because the raw material is utilized better in Ready-to-Cook at the moment. That's one example, more than the cost base back in Ready-to-, in terms of higher feed costs. If, that was one practical example.
Basically, sort of the Ready-to-Eat input base is more complicated maybe, and maybe you also feel that you have a stronger pricing power in Ready-to-Cook if you start to see feed prices going up.
Yeah, exactly. That's where it starts.
Okay. You also talk about, of course, high inflation driving people to look for more affordable choices. Of course, that's been very true for some years now, but we actually have seen food inflation hitting zero in Sweden in March, and it might take off again, given the talk that we just had on fertilizer prices, but that's gonna be further down the line.
Yes.
Do you feel that, with food price inflation hitting zero in March and probably not a big change in the coming months, is that something that could change the behavior of the Nordic consumer?
I think that we if we take the Nordic consumer and including Ireland in that, we see a structural change to poultry. Of course, that's a short-term effect because the minced meat prices, especially on beef, are really high, but there's some structural change from red meat into white meat. Even if there's not high meat prices, that's two effects that are driving in a positive way for us at the moment, but the structural has been for a while, and it seems to increase.
Okay. No change in momentum despite food inflation coming down?
Not that we can foresee now. No.
Okay. Maybe also back to the last question on input costs. Fuel costs have gone up quite a lot on the back of the situation in Middle East. How big part of sort of your cost base is related to fuel prices?
I cannot specify the exact number for you because it's only a part of our fuel prices that actually they call the DMT that are changing. I cannot say that exact percentage by heart, but it's a minor part compared to the other input costs.
Yeah. Okay. Okay, thank you, guys.
Thank you.
Thank you. There are no questions waiting at this time. So once again, if you'd like to ask a question, please press star followed by one on your telephone keypad.
Good.
We have a follow-up question from Daniel Schmidt with the Danske Bank. You may proceed.
Thank you. I might as well continue then. We did talk about the VAT cut c oming through by the 1st of April in Sweden when you reported last time, and that was still ahead of us back then. Any sort of reflections now? It's been basically close to a month since that happened.
Pardon?
The lower VAT from April 1st in Sweden. Have you seen any-
Yeah. Okay.
Any reflections on sort of,
Oh, yeah. Oh, sorry.
Yeah.
Actually, we see a high demand from the market, but we've seen that before the VAT was lowered, and we still see a high demand. Our challenge at the moment is actually to be able to provide the consumers with chicken due to some lower volumes. We see high demand for chicken even before. No, we haven't seen any change in consumer behavior that we can see after the change.
Maybe on the sort of a political question, given that this has become such a hot potato in Sweden when it comes to food prices and the lowering of VAT and it's a special commission that's gonna follow the pricing in Sweden, and it's election year on top of that. Politicians are trying to make a thing out of it. Do you feel in any way that sort of your counterparts, i.e. retailers in Sweden are more forcefully trying to push prices if you need to come through with price increases or any change to that dynamic?
I think that of course there's competitors in the retail that want to have the best offers as possible, and there are competitors around us that wants to create the best offer. Of course there's always tough discussions when it comes to price negotiations and with the sensitivity of consumer that is always a discussion. I think and as I said before I think we have a good model where we actually can present the costs, and I think it has also been proved in media that when the cost comes it's the cost that we are pushing forward. I think that model is actually working pretty well. Of course, it's always a tough discussion when it comes to prices. That's the nature of it.
Yeah. That's okay. Thank you so much. That's all for me.
Thank you.
Thank you. We currently have no further questions, so I'll pass the conference back over to Jonas for closing remarks.
Thank you very much. I want to thank you all of you for listening in to our quarter report. I will wish you all a good day, and thank you very much for joining.
Thank you very much.