Jobs at risk as HKScan issues second profit warning

By Oscar Rousseau

- Last updated on GMT

HKScan has issued a profit warning following poor sales
HKScan has issued a profit warning following poor sales

Related tags: 2016, Beef, Pork, Poultry

Finnish meat processor HKScan has lowered its 2016 operating profit forecast for the second time in a matter of months, with at least 35 jobs set to be axed. 

The meat processor expects its full-year comparable operating profit – or earnings before interest and taxes (EBIT) – to remain between €12 million and €14m. In contrast, the business posted operating profit of €21.5m in 2015.

HKScan said it was again lowering its operating profit forecast as meat sales in its biggest market, Sweden, continued to fall below company expectations. HKScan issued its first operating profit warning in October 2016.

News of the second profit warning comes as the meat processor enters talks today (16 January) with its workforce with a view to trimming staff.

On 11 January 2017, HKScan confirmed it was planning to streamline its operations by implementing automation technology in the cutting area of its Forssa factory, Finland. Talks are now set to take place with a view to cutting at least 35 staff across the Forssa and Outokumpu production plants, which collectively employ 430 staff. Around 15 staff are expected to be cut from Forssa, while 20 will be axed from Outokumpu.

The writing has been on a wall for several months after HKScan reported in November 2016 that its net sales dropped from €474.9m in Q3 2015 to €465.9m in Q3 2016.

Low sales in Sweden were tipped as the primary factor, but a rise in beef prices, combined with rising raw material costs created significant headwinds for HKScan.

After HKScan CEO Aki Laiho called the performance in Sweden a “disappointment”​ in November, the company’s chief financial officer, Tuomo Valkonen, told GlobalMeatNews​ the business might have to cut costs.

He said there “will not be an area ​[of costs] that we do not touch in 2017… It’s also a sensitive issue as the second-biggest cost to our business is personnel, so we need to watch what we do with that,”​ Valkonen told this site in November.

It now seems these plans have come to fruition.

HKScan is expected to publish its full-year financial results for 2016 on 8 February 2017.

Related topics: Meat

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