Scandi Standard (SCST SS) · 2019-05-09 · 2 This presentation contains various forward-looking statements that reflect management’scurrent views with respect to future events

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Scandi Standard (SCST SS)Q1 2019 Presentation – 9 May 2019 Revenue by category

Revenues per country

Revenue by channel

Sweden 27%

Denmark 34%

Norway 16%

Ireland 19%

Finland 4%

Chilled 52%

Frozen 11%

Ready to eat 19%

Other 18%

Retail 64%

Food service 19%

Export 8%

Industry 5%

Other 4%

Note: EBITDA based on new IFRS standard for 2017 and 2018

2

This presentation contains various forward-looking statements that reflect management’s current views with respect tofuture events and financial and operational performance. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,”“estimate,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or similar expressions identify certain ofthese forward-looking statements. Others can be identified from the context in which the statements are made. Theseforward-looking statements involve known and unknown risks, uncertainties and other factors, which are in some casesbeyond the Company’s control and may cause actual results or performance to differ materially from those expressed orimplied from such forward-looking statements. These risks include but are not limited to the Company’s ability to operateprofitably, maintain its competitive position, to promote and improve its reputation and the awareness of the brands in itsportfolio, to successfully operate its growth strategy and the impact of changes in pricing policies, political and regulatorydevelopments in the markets in which the Company operates, and other risks.

The information and opinions contained in this document are provided as at the date of this presentation and are subject tochange without notice.

No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness,accuracy or completeness of the information contained herein. Accordingly, none of the Company, or any of its principalshareholders or subsidiary undertakings or any of such person’s officers or employees accepts any liability whatsoeverarising directly or indirectly from the use of this document.

Forward looking statements

3

• Exceptionally strong growth in revenues (16%)

• Adj. EBIT increase of MSEK 28

- Uplift in performance and improving market conditions

- Increased marketing investments

- Change in depreciation accounted for MSEK 9

• 72% increase in EPS

• Dividend proposal of SEK 2.00 (1.80) per share

• IFRS 16 changes implemented fully retrospectively

Q1 2019 – Strong growth in sales and earnings

1)Net cash flow excluding dividend and acquisitions

4

• 9% underlying revenue growth

- Strong performance in Chilled Ready-to-cook and Ready-to-eat segment

• Contingency supply to European Ready-to-eat client (2%)

- Demonstrates capability of expanded Farre plant

- Enforcement of relationship

• Consolidation of Rokkedahl Food (3%)

• Currency effect of 3%

Breakdown of the exceptionally strong top line growth

Underlying

Rokkedahl

Contingency

16%

Currency 3%

3%

2%

9%

5

• Volume growth across the group

• Price increases and mix effects have already more than offset the significant raw material increases in 2H 2018

- Ireland still lagging

• Some OPEX increases

- Marketing investments 10m

• Reduced depreciation

- Alignment of economic life of assets carried out Q4 2018

Raw material cost increase offset by price increases

82

110

26

79 73

14 9

DeprAdj EBIT Q1 2018

Volume Price/Mix

2

COGS OPEX Curr Adj EBIT Q1 2019

6

• Sweden

• Positive development after challenging period

• Denmark

• Earnings driven by strong top line growth

• Norway

• Best in class margins

• Ireland

• Soft performance due to temporary open exposure to raw material price increases

• Finland

• Another step in the right direction

Earnings improvement in all countries except Ireland

82

110

109

8

NorwayAdj EBIT Q1 2018

6 4

DenmarkSweden

4

Ireland Finland Other

2

Currency Adj EBIT Q1 2019

7

Product categories and sales channels

• Strong growth in Chilled Ready-to-cook and Ready-to-eat

- Chilled Ready-to-cook segment very strong across the Group

- Underlying growth within Ready-to-eat of 25%

- Contingency order represent 11% of the 36% overall growth

• Decline in less profitable frozen and export segments

• Growth in both Retail and Food Service

Note: (1) Share of group sales, category/channel q/q growth in parenthesis (2) RTC=Ready-to-cook, RTE=Ready-to-eat

8

Ready to Eat increasingly important part of our buisness

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Ready to Eat products, part of revenue

2015 2018 2019 Q1

9 %

18 %19 %

9

• 7% increase in net sales

• 33% increase in adj. EBIT

• Significant price increases to compensate for higher raw material costs

• Strong growth in Ready to Eat segment

- Sausages, meat balls etc.

• Increased marketing investments

• Margin affected by reduction in depreciation

• Incremental improvements expected in 2H 2019

Sweden – Positive development after challenging period

MSEK Q1 2019 Q1 2018 LTM 2018

Net Sales 695 649 2,703 2,656

Adj. EBITDA 60 58 245 243

Depreciation -18 -26 -96 -104

Adj. EBITA 42 32 150 139

Amortisation -0 -0 -1 -1

Adj. EBIT 42 31 148 138

Non-recurrings items - - -42 -42

EBIT 42 31 107 96

Adj. EBITDA margin 8.7% 8.9% 9.1% 9.2%

Adj. EBITA margin 6.0% 4.9% 5.5% 5.3%

Adj. EBIT margin 6.0% 4.8% 5.5% 5.2%

10

• 35% revenue growth

- Strong underlying growth of 16%

- Consolidation of Rokkedahl Foods

- Contingency order within Ready-to-eat segment

- Currency effects of 5%

• Improvement in underlying profitability

- Margin diluted by contingency order

• Positive development for new brand

- De Danske Familiegårde

• Low price realisation in export markets

• Lower Q/Q growth in coming quarters

Denmark – Exceptionally strong growth

MSEK Q1 2019 Q1 2018 LTM 2018

Net Sales 860 635 2,975 2,750

Adj. EBITDA 53 42 174 163


Adj. EBITA 33 23 103 94


Adj. EBIT 32 22 102 92


EBIT 32 22 100 90


Adj. EBITA margin 3.8% 3.6% 3.5% 3.4%

Adj. EBIT margin 3.7% 3.5% 3.4% 3.3%

11

• 11% revenue increase

- 7% growth in local currency

• Strong margins

- Improved product mix

- Increased efficiency within production

• Most profitable geographic segment

- Successful investments

- Best practice transfer

- Strengthened product offering

Norway – Strong performance

MSEK Q1 2019 Q1 2018 LTM 2018

Net Sales 400 362 1,551 1,512

Adj. EBITDA 55 48 215 208


Adj. EBITA 41 32 156 148


Adj. EBIT 37 28 140 131

Non-recurrings items - - - -

EBIT 37 28 140 131


Adj. EBITA margin 10.2% 8.8% 10.1% 9.8%

Adj. EBIT margin 9.2% 7.8% 9.0% 8.7%

12


- 2% in local currency

• Delay in implementing price increases to mitigate increased raw material costs

• Significant investments planned for 2019

- Cost efficiency

- Animal welfare and food safety

- Debottlenecking

Ireland – Price increases laggingMSEK Q1 2019 Q1 2018 LTM 2018

Net Sales 496 464 1,926 1,894

Adj. EBITDA 32 35 155 157


Adj. EBITA 25 27 123 125


Adj. EBIT 17 20 94 96


EBIT 17 20 92 94


Adj. EBITA margin 5.0% 5.8% 6.4% 6.6%

Adj. EBIT margin 3.5% 4.3% 4.9% 5.1%

13


- 2% in local currency

• 6% EBITDA margin

• Improved product mix

- Branded and value added products

• Strong focus on further improvement

- Improved product mix and innovations

- Manufacturing yields

- Costs efficiency

Finland – Further improvement MSEK Q1 2019 Q1 2018 LTM 2018

Net Sales 112 106 422 416

Adj. EBITDA 6 1 14 9


Adj. EBITA 1 -5 -7 -13

Amortisation - 0 0 0

Adj. EBIT 1 -5 -7 -13

Non-recurrings items - - - -

EBIT 1 -5 -7 -13


Adj. EBITA margin 0.5% -5.0% -1.6% -3.1%

Adj. EBIT margin 0.5% -5.0% -1.6% -3.1%

14

Group Q1 2019 Q1 2018 LTM 2018

Net sales 2,458 2,116 9,140 8,797

Adj. EBITDA 190 170 739 719


Adj. EBITA 123 95 459 430


Adj EBIT 110 82 409 381

Non-recurring items - - -49 -49

EBIT 110 82 361 333

Net financial items -21 -29 -91 -99

Earnings before tax 89 53 269 233

Taxes -17 -11 -39 -33

Net income 72 42 231 200

Average number of shares, million 65.3 65.2 65.3 65.3

EPS 1.11 0.64 3.51 3.05

Adj. EPS 1.11 0.64 4.27 3.81


Adj. EBITA margin 5.0% 4.5% 5.0% 4.9%

Adj. EBIT margin 4.5% 3.9% 4.5% 4.3%

Income statement

• Depreciation and amortisation

- Reduced depreciation due to alignment across segment

- Effect mainly in Sweden

• Q1 effects of IFRS changes implemented on both 2018 and Q1 2019

- EBITDA increased about MSEK 22

- EBIT increased about MSEK 2

- Net income decreased about MSEK 2

• Please see notes to Annual Report for complete IFRS reconciliation of 2018 figures

Restated for IFRS 16

15

Statement of financial position

• Improved return on equity compared to Q1 2018

• Equity to assets ratio improved to 27.3% (27.1%)

• Main IFRS effects

- Total assets increased about MSEK 431

- Capital employed increased about MSEK 421

- NIBD increased by MSEK 461

12.8

10.311.1

10.2 9.9

0

2

4

6

8

10

12

14

2

3

4

5

0

1

Average Capital Employed, BSEKROCE %

2,4

2015

2,5

2016

3,0

2017 Q1 2018

3,9

9,7

2018

3,54,1

Q1 2019

18.1

13.9

0

5

10

15

20

1,0

0,5

1,5

2,0

0,0

ROE %

13,0

Average Equity, BSEK

0,9

2015

0,9

2016

1,2

13,8%

2017

1,5

Q1 2018

14,1

1,6

Q1 20192018

1,5

14,1

Adjusted return on capital employed

Return on equityAdjusted for IFRS 16

16

• Working capital increase in Q1 2019

• Strong revenue growth in the quarter

• Exceptionally low working capital in YE 2018

• Working capital / Sales 6.2%

Working capital

Working capital

580 617710

639 654519 563

0

1

2

3

4

5

6

7

8

0

100

200

300

400

500

600

700

800

5.9%

Q4 2017

7.2%

Q2 2018Q3 2017

7.5% 7.5%7.8%

Q1 2018

7.5%

Q3 2018 Q4 2018

6.2%

Q1 2019

Working capital Working capital / Sales

MSEK 31-Mar-19 31-Mar-18 31-Dec-18

Inventory 782 738 749

Trade and other receivables 1,220 1,145 1,128

Trade and other payables 1,439 1,173 1,357

Working capital 563 710 519

Net working capital/Sales 6.2% 7.8% 5.9%

17

• Improved operational cash flow

• Quarterly capex 19% of 2019 estimate

- MSEK 380

• High quarterly paid financial expenses

- Expenses for extension of loan facilities paid in the quarter

• MSEK 42m quarterly NIBD increase

- Mainly driven by currency

Cash flow

1)Net cash flow excluding dividend and acquisitions

MSEK Q1 2019 Q1 2018 LTM

Opening balance NIBD -2,370 -2,323 -2,391

EBITDA 190 170 682

4 4 4

Change in working capital -68 -35 124

Capital expenditure -72 -90 -354

Net increase in leasing assets -12 -17 -92

Operating cashflow 41 32 364

Paid financial expenses -22 -19 -81

Paid tax -23 -19 -87

Paid dividend - - -118

Acquisitions - - -4

Other items -37 -61 -95

Net cash flow -42 -68 -21

Closing balance NIBD -2,411 -2,391 -2,411

Capex/Depreciation 111% 119% 127%

Paid financial expenses/NIBD 3.7% 3.2% 3.3%

Net cash flow per share -0.64 -1.04 1.54

Dividend per share - - 1.80

18


• Dividend policy

- 60% of net income over time

• Paid interest estimate to 3 - 3.5% of average NIBD

• Blended effective tax rate of about 20-21%

• 2019 capital expenditures estimated to MSEK 380

- Primarily focused on special projects in Ireland

• Contingent liabilities - Manor Farm acquisition

- Three earn out tranches payable in 2019, 2020 and 2021

- 2019 tranche estimated to MSEK 125

- See appendix for details

Cash flow guidance

Notes: (1) Subject to changes – estimates updated on a quarterly basis (2) Dividend for 2018 subject to AGM approval, yield based on YTD share price (3) Capex/Depreciation for 2018 and 2019E based on changed IFRS standard

2.0%

2.5%

3.0%

3.5%

4.0%

0.00

0.50

1.00

1.50

2.00

2.50

2015 2016 2017 2018 2019

DP

S/A

ver

ag

e sh

are

pri

ce

SE

K

Dividend

Paid dividend Dividend yield

0

50

100

150

200

250

300

350

400

450

500

2015 2016 2017 2018 2019E

SE

K

Capital expenditure

2015 2016 2017 2018 2019E

19

• 0% antibiotics vision

20

• Strong quarterly growth in revenues and earnings

• Markets driven by secular trends supporting poultry products

- Tasty convenient products

- Attractive nutritional/health profile compared to red meat

- Sustainability profile

- Attractive price to consumers compared to peers

• Strengthened market positions

- Introduction of tasty, convenient products

- Brand development

• Positive market outlook

• Following structural opportunities closely


Q1 2019 Summary and Outlook

Segments, pro-forma figures and non-comparable items

Appendix I

22

Segment information by quarter

Group (MSEK) Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Sales 1,303 1,359 1,252 1,310 1,341 1,396 1,376 1,386 1,504 1,570 1,508 1,594 1,622 1,825 2,061 2,116 2,252 2,263 2,166 2,458

Sales growth 1% 3% -4% -3% 3% 3% 10% 6% 12% 12% 10% 15% 8% 16% 37% 33% 39% 24% 5% 16%

EBIT (Adj) 76 67 80 68 77 72 68 68 74 76 33 59 70 84 116 82 92 102 104 110

EBIT margin 5.9% 4.9% 6.4% 5.2% 5.7% 5.1% 4.9% 4.9% 4.9% 4.8% 2.2% 3.7% 4.3% 4.6% 5.6% 3.9% 4.1% 4.5% 4.8% 4.5%

Sweden (MSEK)

Sales 525 544 488 531 564 573 572 564 619 625 584 648 636 658 615 649 661 692 654 695

Sales growth 17% 15% 3% 6% 8% 5% 17% 6% 11% 9% 2% 5% 3% 5% 5% 0% 4% 5% 6% 7%

EBITA (Adj) 31 30 34 33 43 39 38 44 52 51 28 35 34 41 41 32 28 36 44 44

EBIT (Adj) 30 29 33 33 43 39 37 43 51 51 27 35 34 41 40 31 29 35 43 42

EBIT margin 5.8% 5.4% 6.8% 6.2% 7.7% 6.9% 6.6% 7.7% 8.4% 8.2% 4.7% 5.4% 5.4% 6.2% 6.6% 4.8% 4.3% 5.1% 6.5% 6.0%

Denmark (MSEK)

Sales 523 585 554 585 571 589 539 549 596 637 550 580 625 654 671 635 688 729 698 860

Sales growth 1% 9% 8% 7% 9% 1% -3% -6% 5% 8% 2% 6% 5% 3% 22% 9% 10% 12% 4% 35%

EBITA (Adj) 24 24 32 33 35 38 34 29 22 30 14 22 29 35 35 23 23 28 20 33

EBIT (Adj) 23 24 32 33 35 38 34 28 22 30 12 21 28 34 34 22 22 28 19 32

EBIT margin 4.5% 4.1% 5.8% 5.6% 6.1% 6.4% 6.3% 5.2% 3.6% 4.7% 2.1% 3.7% 4.6% 5.2% 5.0% 3.5% 3.2% 3.9% 2.8% 3.7%

Norway (MSEK)

Sales 307 309 279 276 280 201 322 332 353 361 388 388 374 360 361 362 393 384 373 400

Sales growth -22% -18% -28% -26% -9% -3% 15% 20% 26% 20% 21% 17% 6% 0% -7% -7% 5% 7% 3% 11%

EBITA (Adj) 28 24 25 13 10 16 22 20 26 - 28 31 32 28 30 32 38 35 42 41

EBIT (Adj) 24 20 21 9 6 12 18 16 22 -4 24 27 28 24 26 28 34 31 38 37

EBIT margin 7.8% 6.5% 7.5% 3.3% 2.0% 6.0% 5.5% 4.9% 6.3% -1.0% 6.1% 7.0% 7.5% 6.7% 7.3% 7.8% 8.7% 8.2% 10.1% 9.2%

Ireland (MSEK)

Sales - - - - - - - - - - - - - 166 431 464 499 479 451 496

Sales growth - - - - - - - - - - - - - - - - - - 5% 7%

EBITA (Adj) - - - - - - - - - - - - - 12 24 27 34 30 34 25

EBIT (Adj) - - - - - - - - - - - - - 10 17 20 27 23 26 17

EBIT margin - - - - - - - - - - - - - 5.9% 4.0% 4.3% 5.4% 4.8% 5.9% 3.5%

Finland (MSEK)

Sales - - - - - 20 16 21 34 47 71 70 87 80 91 106 114 99 97 112

Sales growth - - - - - - - - - 141% 345% 237% 157% 70% 29% 51% 30% 24% 6% 6%

EBITA (Adj) - - - - - -9 -12 -9 -12 -11 -20 -13 -10 -13 -8 -5 -4 -3 0 1

EBIT (Adj) - - - - - -9 -12 -9 -12 -11 -20 -13 -10 -13 -8 -5 -4 -3 0 1

EBIT margin - - - - - -46.4% -74.6% -43.4% -35.4% -23.5% -27.8% -18.9% -11.2% -15.8% -8.8% -5.0% -3.7% -3.2% 0.0% 0.5%

23

Non-recurring items

MSEK Q1 2019 Q1 2018 LTM 2018

Staff reduction costs2) - - -1 -1

Restructuring of production3) - - -42 -42

Transaction costs3) - - -11 -11

Effect of changes in est life expectancy of fixed assets5) - - 8 8

Other - - -3 -3

Total adjustments to operating income - - -49 -49

1) Staff reduction costs in Sweden in the second quarter 2018

2)Restructuring of and changes in production in Sweden.

3) Costs related to a fire in Sødams’ facility in Denmark.

4) Deal fees related to the acquisition of Rokkedahl Food ApS in Denmark in 2018 and the Irish company Manor Farm in 2017.

5) Revaluation of contingent consideration in connection with the acquisition of the remaining 20% of the shares in Sødam in Denmark.

6) Costs for cancellation of a leasing contract and project costs in Sweden.

Manor Farm earn-out mechanism

Other

Appendix II

25

• The first earn-out tranche of EUR 0.4 million will be paid if 2017 EBITDA exceeds EUR 13 million

• The three later earn-out tranches

- Nominal aggregate base amount of EUR 25 million

- Subject to adjustment based on the actual EBITDA performance in each of the earn-out years 2018, 2019 and 2020 as compared to the 2016 EBITDA

- For the calculation of each earn-out payment, a sliding EV/EBITDA multiple scale is applied, ranging from a minimum multiple of zero to a maximum multiple of 9

- The earn-out tranches will be paid upon availability of audited accounts for the relevant year, verifying EBITDA

• The agreement includes a provision whereby the vendors would be eligible for a minimum of the base earn-out amount at maturity of each of the remaining earn-out tranches if there is a change of control in Scandi Standard.

Earn-out mechanism

EUR million EBITDA Earn out payment

1 0.1

3 0.6

5 1.5

7 2.7

9 4.2

11 6.1

13 8.3

15 10.9

17 13.1

19 14.6

21 16.2

26

Matrix explaining segment definitions

Wide product range, including whole chicken, cuts, marinated,

steaks, skewers, organic, free-range, etc.

Cooked chicken

sold both

chilled and

frozen, e.g.

nuggets, sallad

chicken etc.Wide product range, including whole chicken, cuts, marinated,

steaks, skewers, organic, free-range, etc.

Mainly

eggs and

ingredie

nts

Chilled

Frozen

Ready-to-Cook Ready-to-Eat Other

• Retail: Retail customers in our domestic markets: SE, DK, NO, IE & FI

• Food Service: Home market FS customers and international key accounts

• Export: Customers outside our home markets, regardless of channels, except international key accounts

• Ingredients: Industry and Pet food customers

• Other: Sales of Day-old chicks and hatching eggs

Product Category split

Sales Channel split

Documents

Scandi Standard (SCST SS) · 2019-05-09 · 2 This presentation contains various forward-looking statements that reflect management’scurrent views with respect to future events