Good morning. Thank you for attending today's interim report for the second quarter 2026. 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 one on your telephone keypad. I'd like to pass the conference over to our host, Jonas Tunestål, Chief Executive Officer. Please go ahead.
Good morning, everyone, and welcome to this presentation of Scandi Standard's result for Q2 2026. My name is Jonas Tunestål, and I'm the Chief Executive Officer and Managing Director of Scandi Standard. I'm pleased to have Fredrik Sylwan, our Chief Financial Officer, by my side today. I'm also glad to report a strong growth and result in the quarter. Next slide, please. When we look at Q2 2026, margins continue to improve. We have a 4% growth in net sales and increase in volume, supported by strong demand. We have a 30% increase in EBIT and a margin of 4.9%. It's mainly two things. It's the focus in ready-to-cook to climbing the value ladder, and in ready-to-eat, it's about our growth journey and passing through our cost increase. We also see that our improvement program continued with full force, supported by a significant investment in 2026.
I'm also glad to present a new five-year financing in place at improved terms. Altogether, we have a strong outlook for the business in the coming period. Next slide, please. 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 graphs on the right-hand side, you can see the long-term growth in chicken benefiting from substitution from other proteins like pork and beef. As you can see, we're estimating a 3% volume CAGR in the Nordics and Ireland. Next slide, please. One of those three value drivers is affordability, and it is 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 at a high level and are expensive, which chicken is benefiting from, but also, that is important, the long-term trend of switching proteins from all the red meat to poultry. Chicken is affordable in all segments, and it gives us further opportunities to drive long-term volume and value creation. We see future opportunities to drive more value out of the chicken due to its affordability related to peers that you can see on the right-hand side in the diagram. Next slide, please. On this side, we want to present our EBIT per kilo measure. An EBIT per kilo is a good measurement of value creation for our business.
In Q2 2026, our home markets and Scandi Chicken are contributing well. Oosterwolde will be a good addition for us reaching our 2027 goals. Our EBIT per kilo in Q2 was SEK 2.37, compared to SEK 1.88 last year, which is an increase of 26%. We are expecting to continue to take material steps also in the second half of 2026. In the different colors in the diagram, you can see the development in the different segments. As you can see, RTE is increasing, but still a small part of the earnings, which gives fundament for future growth when recovering prices and ramping up the new RTE capacity. Next slide, please. Now we're moving over to our segments. The table shows the reconciliation of our segments.
Strong net sales growth in most of the markets, strong EBIT contribution from RTC, and improved results from RTE. As always, we want to remind you of the category Other includes Ingredients business and our corporate costs. Ingredients had a negative contribution in the quarter due to an adverse price environment and operational challenges. We, however, see a positive start in the third quarter. Next slide, please. Here you can see the summary of our sustainability scorecard. We are transparent on multiple parameters. Q2 shows improvements in all areas compared to last quarter, but still on a level with room for improvement, especially on the LTI side. We expect a positive trend during the second half of 2026. Next slide, please. Moving into ready-to-cook, as we said before, it's another step on the value ladder.
We see a 3% increase in net sales. We also see a 3% increase in chicken process, what we call the grill weight. To mention, Sweden held back due to low supply, driven by a few disease cases in our external parent stocks, but full production since July and the demand is high. We also see positive volume and mix effect. That comes up to an EBIT of SEK 156 million compared to last year of SEK 115 million. An EBIT margin of 5.6% compared to 4.2% last year. We'll remain focused to continue climb the value ladder. There's a lot of different activities in that. Of course, product development, going into more convenience and branding is one important thing, but it's also supported by more investment like leg deboners and RoboBatchers to improve the quality, improve the efficiency, and improve the yield.
We also have had a project of reduced giveaway and improved our product mix, and that is together with our pragmatic customers to actually find more value out of the chicken. At the same time, we do further investment in our backward integration. Next slide, please. When we move into the feed prices, we have now been seeing fairly stable feed prices for some quarters. In Q2, the prices decreased slightly versus last year, but still there are a lot of uncertainties, and we need to be prepared for further volatility. Latest days have shown a significant increase in wheat prices. Generally, we look at feed costs and other costs such as packaging, energy, and transportation.
We carefully follow the effect of the Middle East crisis, where we see some challenges with the fertilizer supply that can have impact on the grain prices in the future. We also see challenges with El Niño, and that can cause an uncertainty, if it will have impact on the grains. Also the Ukraine war, where we see disturbances in the sales of grains. We're following this closely. We have seen a stabilization, but there are uncertainty. We also want to highlight that feed cost is 1/3 of our cost base, and also that the short production cycle compared to other proteins enable us to be more agile in our supply chain. Next slide please. Moving into export prices. As you know, 2025 volatility were driven by supply issues, bird flu in Poland and Brazil.
We have seen stable prices versus Q1 2026 and Q2 2025. We see possible disruptions driven by EU import restrictions on Brazilian chicken in late 2026. There will be a ban of Brazilian chicken from September, but there are a lot of stock in Europe. We think if that continue to go, there will be effects in late 2026 or in 2027. There's a lot of uncertainties in that. We are aiming to reduce our exposure to the volatile markets. We have long-term partnership, we have optimized sales and operation planning, and we're also benefiting from integration with ready-to-eat. Next slide please. In this slide, you can see the strong demand in retail. You can see our channel development more in detail. Through these details, you can notice the increase in retail in the quarter.
In general, we're seeing a strong demand in all our home markets in the quarter. Next slide please. This slide is to remind you on our strong market position in all our five home markets, and the countries are highly consolidated. These market have large hurdles for new entrants. 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 decision have a meaningful impact on the market balance, which has proven to be a strong instrument in the period with volatile markets. Note that each market, however, also includes consumer segment less sensitive to provenance. Next slide please. Here you can see our ready-to-cook plants.
Note that 11 million chickens in Lithuania is just one shift, and if positive momentum in the market, we will have the possibility to scale up another shift and double the production. Next slide please. Now moving over to ready-to-eat. We see improved results and a positive outlook. We have 12% growth in net sales driven by demand in both food service and retail. We have an EBIT margin of 4.1% compared to 3.2% last year. We continue to build back margins towards historical average. But our lead time in passing through raw material pricing, but we have a positive outlook for the second half. When we look at our Netherlands plant, we're on track with a sequential startup. Our kebab line in Factory A is fully utilized, and we're installing another. Factory C is preparing for the second-half trial runs.
Next slide, please. Here you can see the 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 channel continued to be very strong. Ready-to-eat will be an important long-term tool on developing EBIT per kilo, and more specifically, to increase the value of our protein. Next slide, please. This slide is also a reminder of the strong historic organic growth in our ready-to-eat business the latest 10 years. I am confident that we will continue the trend. Our two main type of businesses, three quarters is breaded products, European market, and one quarter is integrated local business in Sweden, Norway, and Finland. There is a high return on capital in this segment and our average EBIT margin of 6% the last five years.
In this quarter, we have a 4.1% EBIT margin, which shows the potential going on forward. That combined with low capital employed compared to ready-to-cook makes this as an interesting investment. As you remember, we lost some continental contract in 2023, but as soon as you can see, we are almost on par with our 2022 high numbers. Next slide, please. We are expecting a healthy market growth in Europe over the coming years. The market players divided into tiers, European players, regional players, and local players. Scandi Standard has been a large regional player with 36,000 ton product weight in 2024, and about 5% European market share. Production platform has not been competitive in the top tier, but we saw in the COVID-19 inflation, some stagnation and some European overcapacity. We still see 100,000 tons market growth expected to 2030.
That is the reason why we did the acquisition in Oosterwolde. Next slide, please. The Oosterwolde plant was acquired in Q1 2025 in an idle state. There has been a fire in factory B under previous ownership. The startup of factory A in Q3 2025 after refurbishment. That increased our capacity for our profitable and popular kebab products. Factory C is being prepared for the second half trial runs. Factory C has two of Europe's largest and most efficient breader lines that can produce 50,000 ton annual capacity. It is one of the few with advanced form product capability tailored to meet the criteria of the largest clients. We have bought a significant growth platform for Scandi Standard. Next slide, please. Here you can see our main processing plant in Scandi Standard. With that, I hand over to Fredrik Sylwan, our Chief Financial Officer.
Thank you, Jonas, and good morning, everyone. Next slide, please. Next slide, please. Q2 was another strong quarter with continued growth in both sales and profitability. Net sales increased by 4%, driven by continued strong demand across both RTC and RTE. EBIT increased by 30% to SEK 179 million, corresponding to margin improvement of approximately one percentage point. The EBIT improvement was primarily driven by a favorable mix and price, and also continued operational improvements as well as higher production efficiency. Ready-to-eat continued its positive development with profitability improving further during the quarter. Net finance expenses decreased by 18% versus last year, driven by SEK 5 million, one-off reversal of accrued leasing costs related to the Valla transaction. The effective tax rate is higher than last year as we continue not to recognize deferred tax assets on tax losses in the Netherlands.
Earnings per share increased 39%, reflecting the strong operational performance together with lower financing costs. Feed efficiency remained at a stable and strong level, while long-term injury rate increased compared with last year, but below rolling 12 months. This is, of course, an important area that gets a lot of focus, and we expect positive development already in Q3. Next slide, please. This quarter, we continue to improve our returns while at the same time increasing the capital employed in the business. Average capital employed increased by 12%, primarily reflecting our acquisition strategy and continued investments to support future growth. Despite the higher capital base, return on capital employed improved by 2 percentage points to 13.1% as a result of good returns from our recent investments.
Our average equity also increased with the return on equity significantly improved to 15.9% from 11.1%, reflecting higher profitability and improved earnings generation. Despite acquisitions and the dividend payment, we maintain the solid equity ratio of 34.2%. Overall, we continue to balance growth investments with capital discipline while maintaining financial flexibility. Next slide, please. Cash flow in the quarter reflects continued investments to support our long-term growth strategy while our underlying financial position remains strong. Operating cash flow was impacted by the seasonal buildup of inventory, and we also completed the Valla buyback with a cash impact of SEK 270 million, of which SEK 143 million relates to CapEx and SEK 128 million is a reduction of lease liabilities captured under other items. During the quarter, we also completed the acquisition of Danbroiler, as well as we continued investments in our value chain improvements and integration activities.
The one-time effect from the Valla acquisition impacts paid finance items, and adjusted for that, it's close to on par with previous year. As said, we also paid the first dividend installment of SEK 108 million, and the dividend is in line with our dividend policy. As a result of the above, net interest-bearing debt increased during the quarter, but leverage remains at 2.2, which is below our internal ambition of staying below 2.5. Overall, we continue to invest for future growth while maintaining a strong and flexible balance sheet. Next slide, please. Working capital increased during the quarter, primarily reflecting the seasonal buildup of inventory to support high demand and customer activity. Inventory increased by 10% versus year-end and 29% versus the same period last year, mainly driven by the planned inventory buildup and the inclusion of the Lithuania operations as well as Danbroiler that was recently acquired.
Despite continued sales growth, trade receivables remained below last year, and trade payables and other working capital items remained broadly stable. Overall working capital continues to be a focus area. Adjusted for financing items, working capital represents 5% of our rolling 12 sales, which is below our internal target of 6%. Next slide, please. For 2026, we expect CapEx to amount to approximately SEK 680 million, which includes about SEK 140 million for the Valla buyback. In the second half of this year, we will continue to invest in farming capacity in Lithuania, debottlenecking and increased capabilities in the factories, and finalize the Netherlands for the startup of Factory C. As we ramp up Factory C, we expect increased working capital, which will start in the middle of the second half of this year, which will be partly offset by inventory release linked to the seasonal buildup.
We expect finance cost to be about 7% of our net interest-bearing debt, which includes cost for leasing, factoring, and vendor financing. Next slide, please. I'm also very happy to announce that during the quarter, we agreed the new five-year financing package with our existing relationship banks. We are pleased to continue working with the same strong banking syndicate, reflecting the confidence in our strategy, business model, and financial performance. The total committed facilities have increased from about EUR 288 million -EUR 450 million, providing a significant additional financial flexibility to support future growth. At the same time, we have improved the commercial terms of the facilities while maintaining a prudent covenant structure. The agreement extends our debt maturity profile with a five-year tenor and preserves substantial headroom under our financial covenants.
We also have maintained our ambitious sustainability-linked financing framework, which remains an important part of our financing strategy. Overall, the refinancing further strengthens our financial platform and positions us well for both organic growth and future acquisition opportunities. Next slide, please, and back to you, Jonas.
Thank you, Fredrik. Next, I would like to talk about one of our cornerstones and the license for us to operate. There are three key areas when it comes to creating trust for what we do. It is about responsible animal welfare, it is safety for consumers and employees, and it is nutritious products. This is closely linked to our strategic pillars. You've seen this slide before. There are four strategic pillars that will support us in achieving our goals. It's increasing the value of our protein. Next slide, please. It is increasing the value of our protein, it is ramp up our efficiency and with integrated sustainability. Doing this in every step along the way as one company, making us constantly better together.
The thing I mentioned about in the ready-to-cook, it is about increase the value of our protein or climb the value ladder. You also see us investing in ramping up the efficiency because that starts and that is a part of the whole value chain, and our acquisitions in the value chain is a part of that. We know that it emphasized that collective effort and shared goals and team cooperation lead to improved performance and outcomes. These four strategic pillars are super important for us reaching our 2027 goals. If we move into next slide, please. Here you can see our 2027 goals. Here at the right-hand side you can see the targets. We're expecting strong growth over the coming years. We have set a target for 2027 of a 5%-7% net sales growth.
We have an EBIT margin in excess of 6% by 2027. We're also measuring the progress in terms of EBIT per kilo, for which we have a supporting target of SEK 3 per kilo that we have shown before and will show later in the presentation. We are progressing as planned. Next slide, please. Also as a reminder, on this slide you can see that our structured efforts are resulting in a recognition in terms of improved ESG ratings. We have an A in the CDP rating for climate, and there's only a few companies that has achieved A- and an even smaller group that actually have achieved A rating. The high scores reflect our standards and sustainable nature of our business. Next slide, please. Coming back again to our EBIT per kilo measure.
That is a good measurement for our value creation for our business. It is mainly these two headlines that drive the EBIT per kilo. It is about climbing the value ladder. That has of course, a big impact of what we do in terms of S&OP, in terms of utilization, in terms of yield, and so on. There's also a large efficiency potential in our value chain, and that's why we are acquiring something backwards in our value chain, investing in our storehouses and also investing in the market to actually take out that efficiency. That is the building blocks for actually reaching the SEK 3 per kilo. Next slide, please. The summary and outlook, we see a strength and demand trend.
We take another material step in our margin journey in ready-to-cook, it's climbing the value ladder, ready-to-eat, it's growth and our positive outlook after a low period. Our improvement program continues with full force. It's supported by significant investments in 2026. We are well-positioned for further consolidation. To summarize all this, we have a strong outlook for the rest of 2026 and going forward. With that, I say thank you and open up for Q&A. Next slide, please.
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 the 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 will pause briefly as questions are registered. Again, if you would like to ask a question, please press star followed by one on your telephone keypad. There are no questions waiting at this time, so I'll turn the conference back over to Jonas Tunestål for any further remarks.
Thank you very much. The message was clear. No questions this time. With that said, I want to thank you very much for listening in to this call, and I wish you all a great summer. Thank you very much.
Thank you very much. Enjoy the summer.
Thank you. That concludes interim report for the second quarter 2026. Thank you for your participation. You may now disconnect your line.