Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Scandi Standard AB (LTS:0QVR, Financial) reported a strong volume and profit growth in Q2 2024, with a 3% increase in volumes and a 5% increase in EBIT to SEK127 million.
- The company has improved its EBIT margin from 3.5% to 3.8% in the quarter, driven by strong performance in the Ready-to-cook segment.
- Scandi Standard AB (LTS:0QVR) has a strong balance sheet and positive operating cash flow, despite the impact of acquisitions and dividend payouts.
- The company is well-positioned to deliver on its financial targets, aiming for an EBIT margin above 6% by 2027.
- Scandi Standard AB (LTS:0QVR) has seen a significant improvement in animal welfare metrics, particularly in Ireland, with better foot pad scores and reduced antibiotic use.
Negative Points
- Net cash flow was negatively impacted by the acquisition of Jæren and dividend payouts.
- The Ready-to-eat segment experienced an 11% decline in net sales and a decrease in EBIT from SEK59 million to SEK38 million, partly due to the loss of contracts in Central Europe.
- There was a negative development in personnel injuries, driven by an ammonia leak incident in Denmark.
- The company faces uncertainties in feed prices, which could lead to further volatility in the market.
- Scandi Standard AB (LTS:0QVR) reported a decrease in net income by 3% to SEK71 million in the quarter, despite a strong first half of the year.
Q & A Highlights
Q: In Denmark, you've indicated previous quarters that you're basically breakeven. Is that still the case for Q2, and what are the next steps for margin improvement in RTC Denmark?
A: We are in the process of improving margins in Denmark. We have reached breakeven and are working on further improvements. This involves optimizing our export and local retail business and integrating our operations with our plant in Farre. We are confident in our progress and see potential for future improvements.
Q: Are there any signs of relief in terms of demand in Sweden for Ready-to-cook products?
A: We see encouraging demand across all markets, including Sweden. Although utilization is currently at 85%, we are slowly increasing it as demand improves. The trend is positive, and we expect continued momentum for chicken products.
Q: Regarding Ready-to-eat, should we expect the same level of sequential growth as seen from Q1 to Q2?
A: While we achieved significant growth from Q1 to Q2, we cannot expect such large jumps every quarter. However, we anticipate continuous growth, albeit at a more moderate pace, as we build on our recent improvements.
Q: Can you provide insights into the performance of the foodservice segment in Denmark, excluding the loss of a contract?
A: We have seen stabilized growth in the quick service restaurant segment and strong underlying growth in other foodservice segments. We expect continued growth in both foodservice and retail, supported by a transition from red meat to white meat.
Q: What are your expectations for raw material prices and pricing effects in the second half of the year?
A: We anticipate more stabilized raw material prices, with strong demand for fresh chicken in Europe. While feed prices remain stable, the market for fresh meat into Ready-to-eat products is volatile, and prices may increase, though it's challenging to predict exact movements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
