Release Date: October 25, 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 significant volume of profit and growth in Q3 2024, with a 3% increase in volumes.
- The company's EBITDA increased by 11% to 155 million SEK, with an improved EBITDA margin from 4.2% to 4.6%.
- Strong demand and progress in both ready-to-cook and ready-to-eat segments contributed to the company's growth.
- The acquisition in Lithuania is expected to enhance production capacity and has already secured orders for the remainder of the year.
- Scandi Standard AB (LTS:0QVR) has a strong balance sheet with positive operating cash flow and net cash flow, allowing for debt reduction despite dividend payments.
Negative Points
- The ready-to-eat segment experienced an 8% decline in net sales due to the loss of a contract in Central Europe.
- The company faced adverse developments in personal injuries, particularly in Denmark, affecting employee safety metrics.
- Sales have been impacted by price reductions driven by lower costs for feed and currency headwinds.
- The company is experiencing increased finance costs due to the timing of depreciation related to previous financing arrangements.
- There is uncertainty in the macroeconomic environment, which could impact future export prices and feed costs.
Q & A Highlights
Q: Can you provide more details on the growth and profitability outlook for the Ready to Eat segment, especially after losing a major contract?
A: We expect continuous growth in the Ready to Eat segment, although it will come in steps. The lost contract has been partially replaced with higher-margin products, though the volume is lower. We have a strong pipeline for 2025, and while Q4 is typically weaker than Q3, we anticipate ongoing growth. β Jonas Tunestal, CEO
Q: Regarding the Lithuanian acquisition, how is the production pipeline looking for 2025, and what is the expected ramp-up?
A: We have already secured orders for the planned production this year and see a strong demand pipeline for 2025. The ramp-up will start with low volumes in Q4, gradually increasing. We aim for a controlled ramp-up over six months, expecting the business to become profitable post-ramp-up. β Jonas Tunestal, CEO
Q: Can you elaborate on the customer base for the Lithuanian plant, and is it split between internal and external demand?
A: The customer base includes both retail and food service clients, primarily in Europe and the Nordics, with some exports outside Europe. The split between internal and external demand is roughly 50/50. We have several anchor customers and a clear strategy for expanding the customer base. β Jonas Tunestal, CEO
Q: What are the expected price trends for Q4, and can we expect growth in the Ready to Eat business in Denmark?
A: Q3 is typically our strongest quarter, and while Q4 is slower, we expect to continue our growth trajectory. Growth in the Ready to Eat segment occurs in sequences, so it can vary quarter to quarter. We are not providing specific guidance for Denmark but are working to improve value and profitability there. β Jonas Tunestal, CEO
Q: How does the new financing arrangement support your growth plans, and what are the terms?
A: The new financing arrangement provides long-term stability with a five-year tenor and increased total financing by over 50% to approximately 3.2 billion SEK. This supports both organic and inorganic growth, with an accordion option up to 1.5 billion SEK for future expansions. The arrangement is linked to our sustainability targets. β Fredrik Sylwan, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
