UP
Scandi Standard (SCST SS)Q1 2020 Presentation – 12 May 2019 Revenue by category
Revenues per country
Revenue by channel
Sweden 28%
Denmark 30%
Norway 16%
Ireland 21%
Finland 5%
Chilled 54%
Frozen 11%
Ready to eat 19%
Other 16%
Retail 66%
Food service 18%
Export 8%
Industry 5%
Other 3%
Note: Figures for 2017, 2018 and 2019 are compiled in accordance with changed accounting principles for IFRS 16 Leases, note 21 in the 2018 Annual Report 2018
2
Forward looking statements and accounting issues
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.
3
2020 – Strong operating performance
1)Net cash flow excluding dividend and acquisitions
• 1% growth in revenues
• 6% growth in adj. EBIT
• Strong operational cash flow
• Business resilient to Covid-19 effects
- Non-comparable items of MSEK 42
Financial highlights
MSEK Q1 2020 Q1 2019 LTM 2019
Net sales 2 479 2 458 9 911 9 891
Adj. EBITDA 200 190 786 776
Adj. EBITA 130 125 517 511
Adj. EBIT 117 110 461 454
Non-recurring items -42 - -72 -30
EBIT 75 110 389 424
Adj. EBITDA margin 8,1% 7,7% 7,9% 7,8%
Adj. EBIT margin 4,7% 4,5% 4,7% 4,6%
Op. cash flow* 95 41 644 590
NIBD -2 134 -2 411 -2 134 -2 200
EPS 0,51 1,11 3,00 3,60
EPS adj. 1,16 1,11 4,10 4,06
Net cash flow per share1) 1,02 -0,64 4,20 2,56
Adj. ROCE 10,8% 9,9% 10,8% 11,0%
Return on Equity 11,0% 14,1% 11,0% 14,2%
4
44
Net Sales Q1 2019
Retail
13
Foodservice
10
Other Net Sales Q1 2020
2 479
2 458
37
76
17
41
21 20
NorwayNet Sales Q1
2019
Sweden Denmark Ireland Finland Elim Net Sales Q1
2020
2 458
2 479
+5% - 9% +5% +8% +19%
+3% -2%
Q1 Stable top line development
• Total top line growth 1%
• Growth in retail, helped by Covid-19 last two weeks of March
• Foodservice negatively impacted
• Strong growth in four out of five countries
- Denmark negatively impacted by short term gap in listings and Covid-19 pandemic
Growth by segment*
Growth by country*
* Increase vs. Q1 2019
5
• Strong volume growth
- Driven by Ready-to-cook
• Price decreases to pass through lower feed price
• Some OPEX increases
- Marketing and general cost inflation
• Increasing depreciation
- Capex level higher than depreciation
6% growth in adj. EBIT
Price/Mix
15 0
Adj EBIT Q1 2019
Volume
110
54 54
COGS
5
OPEX
3
Depr Curr Adj EBIT Q1 2020
117
6
Development by product categories
• Stable development in Chilled Ready-to-cook
- Reduced prices to pass through lower feed prices
- Replacement of retail client in Denmark
- Gap in supplies February through April
- Underlying growth in Chilled Ready-to-cook +7%*
• Stable quarterly development in Ready-to-eat
- 7% growth in January/February
- 14% drop in March due to Covid-19 effects
Net sales by product category as percentage of total net sales (change from same period last year in parenthesis)
RTC=Ready-to-cookRTE= Ready-to-eat
54%
11%
6%
19%
4%6%
Ingredients (+11%)
RTC Chilled (0%)
RTC Export (+19%)
RTC Frozen (+1%)
RTE (0%)
Other
* Adjusted for client replacement
7
Covid-19 - Effects on Retail and Food Service cancel each other out
• 2/3 of sales normally through retail channel- 7% increase in retail sales in April
• 20% of sales normally through food service channel- 31% drop in food service sales in April
• Large operational adjustments required in processing- Increased throughput of consumer products
- Temporary shut-down of some Ready-to-eat lines
• MSEK 27 non-recurring costs related to Covid-19 in the quarter- MSEK 9 provisions for inventory write-down
- MSEK 11 provisions for bad debt
- MSEK 7 additional operating costs in the quarterNet sales by product category as percentage of total net sales (change from same period last year in parenthesis)
66%
18%
5%
8%
Export (+7%)
Retail (+3%)
Foodservice (-2%)
Industry (+10%) 3%
Other
Sale channels: Trend from March continue in AprilTotal sales -1% in April
508
FebJan March April
482
542 541 540
604
543
492
-0.3%
-2.1%
+11.9%
+6.9%
2019 2020
144
April
154
99
Jan
176
MarFeb
181
144 144
116
+3.2%
+7.4%
-19.1% -31.5%
2019 2020
Retail Develepment per month, MSEK Food Service Development per month, MSEK
9
4 x organic growth in Ready-to-eat in 5 years
• Rapidly growing market for convenience products
• Developing platforms for the future
Ready-to-eat products, Total sales (MSEK) and share of Group sales
10
• 5% increase in net sales
- Solid retail demand
• 7% increase in adj. EBIT
- Good development in operating performance
• Limited Covid-19 effects (MSEK 4*)
- Cost relating to increased sick leave and bad debt provisions
Sweden –Solid growth and improved margins
MSEK Q1 2020 Q1 2019 LTM 2019
Net Sales 732 695 2 900 2 864
Adj. EBITDA 67 60 264 257
Depreciation -18 -18 -74 -74
Adj. EBITA 49 42 190 183
Amortisation -0 -0 -1 -1
Adj. EBIT 49 42 189 182
Non-recurrings items -4 - -4 -
EBIT 45 42 185 182
Adj. EBITDA margin 9,2% 8,7% 9,1% 9,0%
Adj. EBITA margin 6,7% 6,0% 6,6% 6,4%
Adj. EBIT margin 6,7% 6,0% 6,5% 6,3%
* Non recurring items
11
Denmark – Weak quarter, new listings from May and progress for differentiation strategy going forward
• 9% drop in net sales
- Gap in connection with shift in retail client portfolio (February through April)
• Progress for differentiation strategy
- Increased listings from May
- Expected lower export sales going forward
• Covid-19 related non-recurring items of MSEK 11
- Cost relating to closure of production lines and provisions for inventory write down and bad debt
MSEK Q1 2020 Q1 2019 LTM 2019
Net Sales 784 860 3 351 3 426
Adj. EBITDA 42 53 175 186
Depreciation -22 -20 -84 -83
Adj. EBITA 21 33 89 103
Amortisation -1 -1 -4 -4
Adj. EBIT 20 32 88 101
Non-recurrings items -11 - -31 -20
EBIT 8 32 57 80
Adj. EBITDA margin 5,4% 6,2% 5,2% 5,4%
Adj. EBITA margin 2,6% 3,8% 2,6% 3,0%
Adj. EBIT margin 2,5% 3,7% 2,6% 2,9%
Covid 19 costs incurred in April MSEK 8
12
Norway – Another quarter of strong growth and solid margins
• 5% revenue increase
- 9% in local currency
• Continued best in class margins
• Limited Covid-19 effects (MSEK 3*)
- Provisions for bad debt and write-down of inventory
MSEK Q1 2020 Q1 2019 LTM 2019
Net Sales 419 400 1 637 1 619
Adj. EBITDA 51 55 220 223
Depreciation -14 -14 -57 -57
Adj. EBITA 38 41 163 166
Amortisation -4 -4 -16 -16
Adj. EBIT 34 37 147 150
Non-recurrings items -3 - -3 -
EBIT 31 37 145 150
Adj. EBITDA margin 12,3% 13,7% 13,4% 13,8%
Adj. EBITA margin 9,0% 10,2% 10,0% 10,3%
Adj. EBIT margin 8,1% 9,2% 9,0% 9,2%
* Non recurring items
13
Ireland – Strong growth and improved margins
• 8% revenue growth (6% in local currency)
• Good operational performance
• Covid-19 related non-recurring items of MSEK 9
- Provisions for bad debt and write down of inventory
MSEK Q1 2020 Q1 2019 LTM 2019
Net Sales 538 496 2 013 1 972
Adj. EBITDA 54 32 191 169
Depreciation -10 -8 -35 -33
Adj. EBITA 44 25 156 137
Amortisation -8 -7 -30 -30
Adj. EBIT 36 17 126 107
Non-recurrings items -9 - -9 -
EBIT 27 17 117 107
Adj. EBITDA margin 10,0% 6,5% 9,5% 8,6%
Adj. EBITA margin 8,2% 5,0% 7,8% 6,9%
Adj. EBIT margin 6,8% 3,5% 6,3% 5,4%
14
Finland – Strong growth and good operations
• 19% revenue growth
- 16% in local currency
• 4.9% EBITDA margin
• Limited Covid-19 effects
• Investments underway to debottleneck
MSEK Q1 2020 Q1 2019 LTM 2019
Net Sales 134 112 513 491
Adj. EBITDA 7 6 21 20
Depreciation -6 -6 -22 -22
Adj. EBITA 1 1 -1 -2
Amortisation - - - -
Adj. EBIT 1 1 -1 -2
Non-recurrings items - - -9 -9
EBIT 1 1 -10 -10
Adj. EBITDA margin 4,9% 5,6% 4,0% 4,1%
Adj. EBITA margin 0,7% 0,5% -0,2% -0,3%
Adj. EBIT margin 0,7% 0,5% -0,2% -0,3%
15
Strategic review concluded in the quarter
• Broad process to absorb best ideas for path to extract organic growth and earnings potential
• Focus on
- Future strategic direction - “where to play”
- Operating model – “how to play”
• Decision to form new segments to focus and refine skill sets in the organisation
Wide product range including whole chicken, cuts, marinated,
steaks, skewers, organic, free-range, etc.
Cooked chicken,
e.g. nuggets,
salad chicken,
skewers,
meatballs etc.
Bi-
products
Ready-to-Cook Ready-to-Eat Ingredients
16
Income statement
• 1% revenue growth in the quarter
• Increased depreciation
- Investment level above depreciation
• Non recurring items
- MSEK 27 Covid-19 effects
- MSEK 16 strategic review process costs
• Net financial items MSEK 33
- Increase mainly driven by currency
• Low quarterly tax
- Tax rate 15%
• EPS SEK 0.51 (1.11)
- Adj EPS 1,16 (1,11)
MSEK Q1 2020 Q1 2019 LTM 2 019
Net sales 2 479 2 458 9 911 9 891
Adj. EBITDA 200 190 786 776
Depreciation -70 -67 -275 -273
Adj. EBITA 130 123 513 505
Amortisation -13 -13 -57 -58
Adj. EBIT 117 110 461 454
Non-recurring items -42 - -72 -30
EBIT 75 110 389 424
Net financial items -33 -21 -125 -113
Earnings before tax 41 89 264 312
Taxes -6 -17 -64 -75
Net income 35 72 199 237
-
Average number of shares, million 65,4 65,3 65,6 65,4
EPS 0,51 1,11 3,00 3,60
Adj. EPS 1,16 1,11 4,10 4,06
Adj. EBITDA margin 8,1% 7,7% 7,9% 7,8%
Adj. EBITA margin 5,3% 5,0% 5,2% 5,1%
Adj. EBIT margin 4,7% 4,5% 4,7% 4,6%
17
Statement of financial position
9.910.8
0
2
4
6
8
10
12 5
0
3
1
2
4
Average Capital Employed, BSEK
Q1 2020
Adj. ROCE %
4,1
Q1 2019
4,34,1
14.1 14.6
0
5
10
15
0,0
0,5
1,0
1,5
2,0
1,6
Adj. ROE% Average Equity, BSEK
Q1 2019
1,8
Q1 2020
• Continued improved returns
- Adj. ROCE 10.8%
- ROE 14.6%
• Equity ratio 28.8% (27.3%)
18
Working capital Working capital
617710
632 654
509563
498 543
211 181
0
1
2
3
4
5
6
7
8
0
100
200
300
400
500
600
700
8007.5%
Q2 2018
7.8%
Q3 2018
7.5%
Q4 2017 Q1 2018
7.7%
5.8%
Q4 2018
6.2%
Q1 2019
5.3%
Q2 2019
5.6%
Q3 2019
2.1%
Q4 2019
1.8%
Q1 2020
• Reduction in working capital
- Increased factoring and vendor financing
• Working capital / Sales 1.8%
• Target level adjusted for financing expected to be around 7%
- Q1 2020 Adjusted for financing elements 7,1% (Q1 2019 8,4%)
Working capital
Working capital / Sales
MSEK
31 mars
2020
31 mars
2019
31 dec
2019
Inventory 856 781 826
Trade and other receivables 954 986 901
Trade and other payables -1 249 -968 -1 117
Other working capital, net -380 -238 -400
Working capital 181 563 211
Net working capital/Sales 1,8% 6,2% 2,1%
19
Strong cash flow
1)Net cash flow excluding dividend and acquisitions
• EBITDA drop due to Covid-19 effects
- Non-recurring items of MSEK 42
- Non cash provisions relating to bad debt and inventory is listed under change in working capital
• Significant working capital release
• High quarterly capital expenditure
• Net cash flow per share SEK 1.02
MSEK Q1 2020 Q1 2019 LTM 2019
Opening balance NIBD -2 200 -2 370 -2 200 -2 370
EBITDA 159 190 718 748
Adjustments for non-cash items 5 4 30 29
Change in working capital 52 -68 385 264
Capital expenditure -103 -72 -450 -419
Net increase in leasing assets -17 -12 -38 -33
Operating cashflow 95 41 644 590
Paid finance items net -19 -22 -70 -72
Paid tax -16 -23 -42 -49
Paid dividend 0 0 -131 -131
Acquisitions 0 0 -133 -133
Other items 7 -37 8 -36
Net cash flow 66 -42 278 170
Closing balance NIBD -2 134 -2 411 -2 134 -2 200
Capex/Depreciation 172% 126% 177% 166%
Paid financial expenses/NIBD 1% 1% 3% 3%
Net cash flow per share1) 1,02 -0,64 4,20 2,56
Dividend per share - - - 2,00
20
Strong balance sheetPrecautionary cash preservation measures implemented
Notes: (1) Subject to changes – estimates updated on a quarterly basis (2) Yield based on YTD share price (3) Capex/Depreciation for 2018 and 2019E based on changed IFRS standard
• Dividend proposal withdrawn (MSEK 147)
• 2020 capital expenditures estimated to MSEK 300 (419)
- Reduced from MSEK 420
• Renewal of MSEK 200 credit facility and additional credit lines of MSEK 200 obtained from lenders
• Paid interest estimate to 3 - 3.5% of average NIBD
• Blended effective tax rate of about 20-21%
• Contingent liabilities - Manor Farm acquisition
- Three earn out tranches payable in 2019, 2020 and 2021
- 2019 tranche of MSEK 133 paid in Q3 2019
0.0
3.01.0
0.5
3.51.5
4.02.0
0.0
2.5
1.30
2015
0.00
1.80
Dividend yield
2016 2017 2018 2019
1.80
1.35
2.00
2020Paid dividend Dividend yield
Dividend
0
50
100
150
200
250
300
350
400
450
0.0
1.2
0.8
0.2
0.4
1.0
0.6
1.4
Capex/Depreciation
2015 2016 2017 2018 2019 2020E
Capital expenditure Capex / depreciation
Capital expenditure
21
22
The importance of lowering the antibiotics usage
• Antibiotic resistance is considered a global threat
- Often called the “silent pandemic”
• Covid-19 outbreak expose risks and consequences of global antibiotics resistant bacteria
• Preventing antibiotic resistance more important than ever
• Reducing our own usage of antibiotics is a key priority
- Systematic approach with constant improvements
- Nordic level is the benchmark
• The group target is <1% treated flocks
- The 2019 result was 0.1% for the Nordic operations
- No industry statistics available but international usage estimated to be high, in some cases up to 100% of flocks
23
Summary and Outlook
• Overall business resilient to Covid-19 effects
• Solid results in the quarter
• Contingency plans in case of business disruptions
• Solid balance sheet and liquidity situation
• Following structural opportunities closely
• Good start to second quarter
Pro-forma figures and non- comparable items
Appendix I
25
26
Non-recurring items
Non-comparable items in operating income
MSEK Q1 2020 Q1 2019 LTM 2019
Cost related to Covid-19 pandemic1)-27 - -27 -
Strategy projekt2)-16 - -16 -
Staff reduction costs3)- - -12 -12
Restructuring of production4)- - -7 -7
Transaction costs5)- - -1 -1
Costs for incorrect inserts goods6)- - -6 -6
Other - - -4 -4
Total -42 - -72 -30
3) Restructuring costs in Denmark in 2019.
4) Closing of hatchery in Finland in 2019
1) CCost related to Covid-19 pandemic -w ritedow n of inventory for Foodservice MSEK 9, bad debt
reservation of MSEK 11, temporarily closing of production lines for Ready-to-eat products in
Denmark of MSEK 5 and other of MSEK 2.
5) Deal fees mainly related to the acquisitions of Rokkedahl Food ApS in Denmark in 2018 and
Carton Bros ULC in Ireland 2017.
6) Costs for due to quality issues in purchased raw material that have not been covered by
insurance.
2) Comprehensive strategy project in the Group amied to review the business and common strategy
on medium term.
Manor Farm earn-out mechanism
Other
Appendix II
28
• 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