Scandi Standard Ab · OMXSTO:SCST
Scandi Standard Ab — Q3 2022 Earnings Presentation
32 slides from Scandi Standard Ab's earnings presentation, Oct 28, 2022
Slide 1: Scandi Standard Q3 Presentation – 28 October 2022
Scandi Standard (SCST SS) Q3 Presentation – 28 October 2022 Net Sales and EBIT margin 1
Slide 2: Q3 2022: Strong recovery
2 Q3 2022: Strong recovery - Continued market uncertainty • 22% growth on lower throughput MSEK Q3 2022 Q3 2021 ∆ - Cost inflation generally compensated Net sales 3,202 2,632 22% Operating income (EBIT) 112 30 273% - Domestic price increases Operating margin (EBIT) % 3.5% 1.1% 2.4ppt • High export p
Slide 3: Recovery from inflationary downturn
Recovery from inflationary Net Sales and EBIT margin downturn ▪ 2016-2020 - High organic growth and stable margins - 6.0% Net sales CAGR - Stable EBIT margin of ~4% and ROCE of ~10% ▪ 2H 2021- Q1 2022 Downturn driven by inflation - Lead times in passing through massive cost inflation to customers -
Slide 4: Input costs relatively stable in the quarter - Preparing for another round of inflation
Input costs relatively stable in the quarter - Preparing for another round of inflation ▪ Significant cost inflation during 2H 2021 and 1H 2022 Cost Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 element actuals actuals actuals actuals forecast index vs index vs index vs index vs index vs ▪ Input prices relatively s
Slide 5: Strong positions in consolidated markets characterised by consumer preference for local produce
Strong positions in consolidated markets characterised by consumer preference for local produce ▪ Substantial price increases implemented ▪ Demand elasticity countered by temporary reduction in throughput ▪ Own actions have substantial impact on market balance ▪ In some cases, at the expense of mark
Slide 6: Significant recovery in export prices
Significant recovery in export prices ▪ Further increase in achieved export prices in Q3 2022 Export price development - Significant reductions in European supply of chicken +27% 127 - Post Covid demand increase in food service - Reduced bird-flu related export restrictions 114 ▪ Focus areas startin
Slide 7: Q3 2022 – Positive EBIT development in all areas
Q3 2022 – Positive EBIT development in all areas Change in EBIT Net sales Q3 2022 per segment (% change vs YA in parenthesis) Ready-to-cook Ready-to-eat Other Total MSEK Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Net sales 2,265 1,942 802 589 135 102 3,202 2,632 EBIT 34 7 70 46
Slide 8: Ready to cook – Improved domestic and export pricing
Ready to cook – Improved domestic and export pricing – lower production utilization drives cost per kg ▪ 17% increase in net sales MSEK Q3 2022 Q3 2021 R12M 2021 Net sales 2,265 1,942 8,300 7,611 ▪ EBIT of MSEK 34 (7) affected by 34 7 -16 110 EBIT 1.5% 0.4% -0.2% 1.4% ▪ Short term price elasticity c
Slide 9: Ready to cook Denmark – No quick fix
Ready to cook Denmark – No quick fix ▪ Continued large losses realised during the last periods RTC Denmark EBIT Development, MSEK - Consumer price sensitivity impacting demand for slow growing 100 products - Strengthened export market 0 ▪ Changes to slow growing bird business -35 -30 -50 -51 -50 - F
Slide 10: Ready to cook – Strong performance in food service – Price elasticity in retail
Ready to cook – Strong performance in food service – Price elasticity in retail Retail Net sales development, (MSEK) Sales per country (Q3) (% change vs LY in parenthesis) +0.4% +6.8% +16.1% +3.7% -1.8% -4.2% -5.8% +2.8% +5.2% +7.2% +7.8% 1,562 1,575 1,590 1,759 1,519 1,668 1,582 1,581 1,512 1,515 1
Slide 11: Ready to eat – Significant profitable growth
Ready to eat – Significant profitable growth ▪ 36% increase in net sales at stable volumes MSEK Q3 2022 Q3 2021 R12M 2021 Net sales 802 589 2,736 2,112 ▪ Products well positioned in inflationary environment EBIT 70 46 188 138 ▪ Quick service restaurant demand is particularly strong EBIT margin, % 8.
Slide 12: Ready to eat
Ready to eat mi KANAA, | cireuton An a at — <. = Vitlik, Cation & Orter - aw Scandi Standard
Slide 13: Ready to eat – Strong demand across channels
Ready to eat – Strong demand across channels Retail development, MSEK Sales per country (Q3) +18.7% +19.2% (% change vs YA in parenthesis) +18.3% +17.6% +12.1% +12.8% +19.3% -0.8% 146 +1.7% 149 +7.7% +0.9% 135 123 125 123 114 110 112 109 105 105 101 95 96 2019 2020 2021 2021 Q1 Q2 Q3 Q4 Food service
Slide 14: CFO comments
CFO comments 14
Slide 15: Q3 2022 P&L – Strong recovery
Q3 2022 P&L – Strong recovery MSEK Q3 2022 Q3 2021 Δ R12M 2021 ▪ EBITDA MSEK 212 (126) Net sales 3,202 2,632 22% 11,485 10,101 EBITDA 212 126 68% 645 598 ▪ EBIT MSEK 112 (30) Depreciation -87 -84 4% -375 -328 Amortization -13 -12 8% -51 -50 - No Non comparable items in quarter Operating income EBIT
Slide 16: Strong increase in annualised return
Strong increase in annualised return Capital Employed and ROCE ▪ Last twelve months Average Capital Employed, MSEK ROCE% 5.8 % 6.000 6.0 % - ROCE 5.2% (5.8%) 5.2 % - ROE 4.0% (6.3%) 4.000 4.0 % ▪ Third quarter annualised 2.000 4.305 4.254 2.0 % - ROCE 10.5% (4.0%) - ROE 12.5% (0.5%) 0.000 Q3 2021 Q3
Slide 17: Low working capital level
Low working capital level September September December SEK million 30, 2022 30, 2021 31, 2021 Inventory 885 805 888 ▪ Negative working capital Trade and other receivables 1 156 928 811 - Increased inventory driven by inflation Trade and other payables -1 658 -1 303 -1 291 - Higher payables and recei
Slide 18: Strong cash flow
Strong cash flow MSEK Q3 2022 Q3 2021 R12M 2021 Opening balance NIBD 1,949 1,967 1,891 1,933 EBITDA 212 126 645 598 Change in working capital 115 31 126 162 Net capital expenditure -67 -31 -211 -306 Other operating items -12 -14 -103 -108 ▪ EBITDA MSEK 212 Operating cash flow 248 112 457 347 ▪ Relea
Slide 19: Cash flow guidance
Cash flow guidance ▪ 2022 capital expenditures estimated to be around MSEK 300 Capital expenditure and Depreciation (306) Capital expenditure (MSEK) Capex/Depreciation - YTD capex MSEK 143 700 2.5 600 - Facilitate further profitable growth in Ready-to-eat 500 2.0 400 1.5 - New ERP system 300 1.0 200
Slide 20: Improved LTI results; Temporary escalation of Irish antibiotics use being addressed
Improved LTI results Temporary escalation of Irish antibiotics use being addressed ▪ Health & safety: LTIs stabilized on a lower level Time series for selected Sustainability KPI’s - Action plan taking effect - Around 30% lower than 2021 ▪ Animal Welfare and Antibiotics use - Unsatisfactory performa
Slide 21: Scandi Standard is climate labelling products in all of its home markets
Scandi Standard is climate labelling products in all of its home markets ▪ As communicated in the second quarter, bespoke model to calculate carbon footprint developed, covering all stages of internal and external part of value chain (i.e., cradle-to-grave) ▪ Shouldering our market leader responsibi
Slide 22: Four strategic pillars to take Scandi Standard to the next level
Four strategic pillars to take Scandi Standard to the next level Ramp up Build a winning Increase the value A future-proof our efficiency culture together of our protein company – end-to-end
Slide 23: Areas of large potential
Areas of large potential Match domestic supply and demand Quality and production processes Value of the whole bird Cross border activities Your Title Here Ready to eat potential Export business 23
Slide 24: Summary and outlook
Summary and outlook ▪ Inflation largely compensated in the quarter ▪ Preparing for an uncertain market ▪ Another round of inflation ▪ Changed consumer behaviour ▪ Changes to Ready-to-cook Denmark underway ▪ Q4 seasonally weak quarter due to Christmas season ▪ Volume recovery expected once meat marke
Slide 25: Q&A
Q&A 25
Slide 26: Appendix
Appendix
Slide 27: Forward looking statements
Forward looking statements This presentation contains various forward-looking statements that reflect ’ current views with respect to future events and financial and operational performance. The words “b ”“ ”“ ”“ ”“ ”“ ” “ ”“ ”“ ”“ ”“ ”“ ” or, in each case, their negative, or similar expressions ide
Slide 28: Strong drivers for substitution towards chicken
Strong drivers for substitution towards chicken Climate impact in line with fish and plant-based The impact of chicken on the climate • CO2 impact of chicken ten Chicken consumption times lower than red meat per person and year USA 45 kg • Similarly low climate impact UK 37 kg as fish and plant-base
Slide 29: Ready to cook EBIT overview
Ready to cook EBIT overview: EBIT Q3 2021 – Q3 2022 (MSEK) 29
Slide 30: Ready to eat EBIT overview
Ready to eat EBIT overview: EBIT Q3 2021 – Q3 2022 (MSEK) 30
Slide 31: Segment information by quarter
Segment information by quarter Ready-to-cook, MSEK Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2021 Q1 2022 Q2 2022 Q3 2022 Net sales 1,879 1,883 1,900 1,806 7,467 1,899 1,912 1,983 1,824 7,619 1,938 1,943 1,942 1,789 7,611 2,046 2,199 2,
Slide 32: Other, MSEK
Other, MSEK Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2021 Q1 2022 Q2 2022 Q3 2022 Net sales 91 91 99 100 381 103 110 106 92 411 88 85 102 103 377 104 109 135 Adjusted EBITDA 6 7 4 1 18 2 5 5 0 11 -1 0 5 11 15 10 19 23 Depreciations -2