Continued margin improvement

• Net sales amounted to MSEK 3,308 (3,202). At constant exchange rates net sales decreased by 2 per cent.
• Operating income (EBIT) increased to MSEK 139 (112), corresponding to a margin of 4.2 (3.5) per cent.
• Income for the period amounted to MSEK 90 (66). Earnings per share amounted to SEK 1.16 (0.99).
• Operating cash flow was MSEK 232 (248).

• Net sales amounted to MSEK 10,003 (9,050). At constant exchange rates net sales increased by 6 per cent.
• Operating income (EBIT) increased to MSEK 352 (191), corresponding to a margin of 3.5 (2.1) per cent.
• Income for the period amounted to MSEK 207 (83). Earnings per share amounted to SEK 3.11 (1.17)
• Operating cash flow was MSEK 562 (389).

• In August 2023 Morningstar Sustainalytics published an updated ESG Risk Rating and ranked Scandi Standard 10[th] globally out of 360 evaluated companies in the Packaged foods category.
• As part of its turnaround process for Denmark, Scandi Standard AB (publ) has entered into an agreement to divest its majority stake in Rokkedahl Food ApS. The divestment will reduce complexity in production and free up resources to focus on the ongoing turnaround process of our Ready-to-cook business in Denmark.

Key metrics[2)]
 

[][][][][]
Q3 Q3 Δ 9M 9M Δ R12M 2022
2023 2022 2023 2022
Net sales 3,308 3,202 3% 10,003 9,050 11% 13,072 12,119
EBITDA 248 212 17% 673 520 29% 875 722
Operating 139 112 23% 352 191 84% 451 290
income
(EBIT)
EBITDA 7.5% 6.6% 0.9ppt 6.7% 5.7% 1.0ppt 6.7% 6.0%
margin %
EBIT margin 4.2% 3.5% 0.7ppt 3.5% 2.1% 1.4ppt 3.5% 2.4%
%
Non 8 - - 8 - - 8 -
-comparable
items[1)]
Adjusted 240 212 13% 665 520 28% 867 722
EBITDA[1)]
Adjusted 130 112 16% 344 191 80% 443 290
operating
income (Adj.
EBIT)[1)]
Adjusted 7.2% 6.6% 0.6ppt 6.6% 5.7% 0.9ppt 6.6% 6.0%
EBITDA
margin[1)] %
Adjusted 3.9% 3.5% 0.4ppt 3.4% 2.1% 1.3ppt 3.4% 2.4%
EBIT
margin[1)]
%
Income after 107 84 27% 256 119 116% 323 186
finance net
Income for 90 66 35% 207 83 149% 262 138
the period
Earnings per 1.16 0.99 17% 3.11 1.17 166% 3.96 2.02
share, SEK
Return on 10.5% 5.2% 5.3ppt 10.5% 5.2% 5.3ppt 10.5% 6.7%
capital
employed %
Return on 11.1% 4.0% 7.1ppt 11.1% 4.0% 7.1ppt 11.1% 6.2%
equity %
Operating 232 248 -6% 562 389 45% 370 197
cash flow
Net interest 1,678 1,733 -3% 1,678 1,733 -3% 1,678 1,983
-bearing
debt
NIBD/Adj. 1.9 2.8 -31% 1.9 2.8 -31% 1.9 2.7
EBITDA
Lost time 22.5 27.8 -19% 23.9 28.3 -16% 24.0 27.4
injuries
(LTI)
per million
hours worked
Feed 1.50 1.50 0% 1.50 1.50 0% 1.50 1.50
efficiency
(kg
feed/live
weight)

[1)] Restated non-comparable items. See note 5.
[2)] For definition of alternative KPIs. See page 22.
CEO Comments

The earnings improvement for Scandi Standard continued in the third quarter and it is gratifying to note that our implemented operational and financial measures have largely restored the margin to historical levels. Net sales increased 3 per cent in parallel with an improvement in operating income of 24 per cent. Now standing on a stable foundation, we are moving focus to our future growth journey and long-term value creation.

Strong improvement continues in Ready-to-cook

Ready-to-cook (RTC) reported sales growth of 7 per cent to MSEK 2,431 (2,265) in the third quarter. The operating income improved to MSEK 105 (34), mainly driven by higher sales, lower prices for input goods and clear improvement in profitability in our Danish operations. Earnings were positively impacted by non-comparable items of MSEK 8 pertaining to the divestment of the majority stake in Rokkedahl Food Aps.

Several markets, such as Ireland and Finland, reported growth in combination with rising profitability. This is a result of the strong underlying demand for our products and recognition of the fact that we continue to present innovative products that meet our customers' needs.

During the quarter, the change initiatives continued to impact our Danish operations and earnings for Ready-to-cook in Denmark approached breakeven in the third quarter with a loss of MSEK -4. This can be compared with a loss of MSEK -27 in the second quarter 2023 and a loss of -50 MSEK in the corresponding quarter last year and is a result of the ongoing improvement work to meet changing consumer demand and to adapt the product range to a more advantageous product mix.

While we noted feed and other input good prices starting to stabilise in the beginning of the fourth quarter, the current macroeconomic situation does, however, entail continued uncertainty about future developments.

Ready-to-eat (RTE) reported a decrease of 8 per cent to MSEK 734 (802) in net sales for the third quarter. The operating income decreased from MSEK 70 for the same quarter last year to MSEK 32, mainly due to lower capacity utilisation at the production facility in Farre, Denmark. As previously communicated, a contract with a major customer outside of our domestic markets was gradually terminated during the second and third quarter. Capacity utilisation and earnings are expected to slightly further decrease in the fourth quarter but thereafter gradually improve.

We see a good underlying demand for our products and the opportunities to diversify our customer base and increase profitability are significant.

Other/Ingredients, our business and product development area aimed at utilising the whole bird and adding value to our products, contributed an operating income of MSEK 11 (22). The performance reflects a gradual normalisation following a period with highly favourable market conditions.

Integrated sustainability and planning to meet climate targets

Efforts to systematically integrate sustainability into both strategy and operations remain a priority focus area, and during the quarter, work continued with developing tangible action plans to reach our ambitious sustainability goals, both at Group level and in each country. One example comprises the ongoing efforts to develop a detailed plan for Scandi Standard to reach its Science Based Targets by 2030. The work entails identifying improvements at each production facility that will help reduce scope 1 and 2 emissions as well as working with Group-wide strategic projects in the whole value chain (Scope 3) to reduce the climate impact of feed and to compile environmental data at farm level. It also ensures clear integration of sustainability into the investment process and thus that investment decisions take into account sustainability factors.

I am proud that our systematic sustainability initiatives are receiving increasing external recognition, most recently in Morningstar Sustainalytics' ESG risk rating, where Scandi Standard is now ranked 10th globally out of 360 evaluated companies in the Packaged Food category.

Strong cash flow

Operating cash flow improved during the quarter, primarily due to stronger earnings and a reduction in working capital, which was mainly driven by reduced inventory, partly due to seasonal effects.

Net interest-bearing debt decreased MSEK 299 and amounted to MSEK 1,678 at the end of the quarter, mainly driven by the strong cash flow and the divestment of Rokkedahl Food Aps. Our assessment is that investment levels in 2023 will be slightly lower than previously communicated and amount to MSEK 340.

Solid foundation for the next step of our continued growth journey

In the past few years, Scandi Standard has managed many challenges, both in the form of internal challenges in operations and in the form of extensive macroeconomic challenges. I am proud that we have now regained our historical margin levels. The operational and financial measures implemented has secured a solid foundation for the next step of our growth journey.

Our focus has now switched to implementing strategies and processes that will increase long-term value creation in the Group. We are finalising a long-term plan for investments and financial targets, which I will disclose in more detail at our capital markets day on 28 November. Scandi Standard holds a unique market position in an industry that is predicted to continue growing. We have a good financial position which creates headroom for continued strategic investments. Scandi Standard has economies of scale in our operations and geographically risk diversification as we are established in the local markets in which we operate. We are better together and with Scandi Standard's committed employees, I am convinced that we have the right preconditions in place for continued success. 
Stockholm, 26 October 2023
 

Jonas Tunestål,

Managing Director and CEO, Scandi Standard
 

Conference Call

A conference call for investors. analysts and media will be held on 26 October 2023 at 8.30 AM CET.
 
Dial-in numbers:

UK: 020 3936 2999
Sweden: 010 884 80 16
US: +1 646 664 1960
Other countries: +44 20 3936 2999
 
Slides used in the conference call can be downloaded at www.scandistandard.com under Investor Relations. A recording of the conference call will be available on www.scandistandard.com afterwards.

 
Further information

For further information. please contact:

Jonas Tunestål. Managing director and CEO and Julia Lagerqvist. CFO
Tel: +46 10 456 13 00

Henrik Heiberg. Head of M&A. Financing & IR
Tel: +47 917 47 724

This interim report comprises information which Scandi Standard is required to disclose pursuant to EU market abuse regulation and the Securities Markets Act. It was released for publication at 07:30 AM CET on 26 October 2023.  
 

About Scandi Standard
Scandi Standard is the leading producer of chicken-based food products in the Nordic region and Ireland. The company produces. markets and sells ready to eat. chilled and frozen products under the well-known brands Kronfågel. Danpo. Den Stolte Hane. Manor Farm and Naapurin Maalaiskana. Eggs are also produced and sold in Norway. We are approximately 3.200 employees with annual sales of more than SEK 12 billion.