Scandi Standard AB

Good morning, everyone, and welcome to this presentation of Scandi Standard's result for Q1 2025. My name is Jonas Thunestad, and I'm the CEO and Managing Director of Scandi Standard. By my side, I have Fredrik Sulvan, our CFO, and I'm pleased to have him by my side today. I'm also glad to report a strong growth in the quarter.

Next slide, please.

We have a solid growth and improved performance. We see 7% growth in net sales and increase in volumes. And that is supported by a strong consumer trend and driven by substitution from red meat. It is also supported by strength and convenience offering. We can see that the chicken is a convenient product where we are deboning more and more and get the products more convenient. We also have the startup of Lithuanian low-cost platform according to plan. And that has an EBIT impact of minus 7 million euros, 17 million euros in the quarter. And we have also done the acquisition of farm and that will accelerate the backward integration. So without that, we see a strong improvement in underlying EBIT and making continual steps to our financial targets. But as communicated before, we're also preparing our newly acquired ready-to-eat plan in Netherlands, in Oosterwolde, for startup in quarter four 2025. We also see improved performance in our key sustainability KPIs. And the dividend proposal for us is 2.50 SEK compared to 2.30 SEK last year per share. Next slide, please. And this slide shows why we have this growth and our value drivers for this. And that is because it's responsible, safe and nutritious. Chicken is convenient, versatile and tasteful. And it is affordable because it's sustainable. Next slide, please. And we see a strong consumer trend that is in favor of chicken products. So we have seen a strong poultry growth in the Nordics and Ireland. And it is a 44% poultry growth from 2010 to 2023. And we're expecting a 30% poultry growth from 2023 to 2030. And that is 1.7% annual growth. And chicken is benefiting from consumers switching over from other proteins, and that is mainly from red meat. And Scandi Standard has increased our harvest volume by 4% in 2024. And next slide, please. And one of the major reasons why it's benefiting from other proteins is because it's sustainable and affordable. And price has always been important for our consumers. And the focus has increased even more in the current environment of high food prices. So beef prices are increasing and they're becoming more expensive, which chicken is benefiting from, but also from the long term trend of switching proteins from red meat to poultry. So chicken is affordable in all segments, and that gives us further opportunities to drive long-term volume and value creation. And we see future opportunities to drive more value out of the chicken due to its affordability. Next slide, please. And on this slide, we want to present the 80 per kilo measure, which is a good measurement of our value creation for our business. So Q1 2025 AB per kilo is 1.73 compared to 1.74 in Q1 2024. It's slightly lower but if we exclude the startup cost in Lithuania, AB per kilo is 2.05 and that's an increase of 18% versus Q1 2024. And Lithuania and Osterwalde in Netherlands will be good contributors for us reaching our 2027 goals. And we're expecting to make material every per kilo steps in 2025. And in the different colors in the diagram, you can see development in the different segments. And the RTC color includes the ramp-up cost in Lithuania. And in spite of the startup cost in Lithuania, it per kilo is higher than last year. Next slide, please. And this slide is to remind you on our strong market position in all our five home markets, and the countries are highly consolidated. These markets have large hurdles for new entrants. They can individually be regarded as semi-closed markets due to the strong consumer preference for domestic produce. Due to our strong market positions, our own supply decisions have a meaningful impact on the market balance, which has helped us recover the process from inflation. Note that each market, however, also includes consumer segment less sensitive for provenance. So next slide, please. And here we're talking about Lithuania and to fully utilize the potential of our existing markets and clients, it's important to integrate the low cost and high quality hub into Scandi standard. And now we're in the startup process and the ramp up process of our Lithuanian platform. And it will reach 20 to 25,000 tonne grill weights. And it will be a state of the art processing plan and best in class cost position. Our intention is to build a fully integrated hub and that allows us cost control, animal welfare and food safety. And we've also done recent acquisitions of farm and that will accelerate the process. And for the long term being we're planning to build an additional farm capacity from 2026 onwards. So with that, we're well positioned to serve high quality products to segments of existing markets less sensitive for provenance and also into our ready-to-eat plants and export clients. And we are targeting medium to an eight per kilo, well above three sec per kilo. Next slide, please. And if we're looking into our total picture of our ready-to-cook plants, So you can see them here, all our plants and note that down in the right corner, 11 million chickens in Lithuania is just one shift. If market has a positive momentum, we have the possibility to scale up with another shift and double the production. Next slide, please. And now we're moving into ready-to-eat and chicken is becoming the preferred convenience choice. And this slide is a reminder of the strong historic growth in our ready-to-eat business. And I'm confident that it will continue the trend. And there are two main types of businesses. There are three-thirds of breaded products, European market, that is 75%. and 25 of the market is integrated local business in sweden norway and finland and we see a high return on capital employed and an average a bit margin of six percent the last five years and it's also low capital employed compared to ready to cook and as you can see in this graph The last two years, we have declined a little bit and the growth come in an even step. And that is the loss of a European breaded contract in the second half of 2023. But we have a positive momentum on replacing those orders and get growth again in our ready teams. And it looks promising. So next slide, please. And if we look at the market in total, we see healthy market growth expected in European bread market. And there are three different types of players. There are the European players, and there are the regional players, and the local players. And Scandi Standard has been a large regional player with 36,000 ton product weight in 2024. And that is about 5% of European market. The market has been stagnant after COVID-19. And there are also some European overcapacity. But we expect growth, and that growth is about 60,000 tonne until 2029. So next slide, please. And this is why we do the acquisition in Östervolde. And that is to take Scandi Standard breeding activities to the top tier. and are two of europeans most efficient bread of products lines in the factory c that you can see in the top right corner on the picture and it will gives us 48 000 tons of annual capacity and it is one of the few with advanced form production capabilities And as explained and talked about before, the total investment is about 28 million euros. And that will replace a planned investment of 30 million euros in Denmark. And it is tailored to meet the criterias of the large client. And the operation is planned to start in Q4 2025. So next slide, please. So, if we look at the more holistic perspective, our Lithuanian business is a low-cost, high-quality end-to-end hub in combination with the state-of-the-art breaded capability in Netherlands and Faroe. That gives us feed efficiency, low labor costs and efficient logistics with a scalable platform. With this together, with our strong position in our whole market, it gives us a very competitive combined offer to our clients. And that gives us competitive strength to take market shares. But it has typically long lead time in suppliers switchover. So we need to be patient to onboard a full value chain business with customers. Meanwhile, Lithuania has secured a strong customer's orders for fresh meat. So next slide, please. And now we're moving over to our segment. And the table shows the reconciliation of our segments. Adjusted for startup customers in Lithuania, we see a strong positive contribution in both ready to cook and ready to eat. And we also want to remind you of the category other includes our ingredients business and our corporate costs. Next slide, please. And if we look into ready to cook specific, we see a strong growth and improved performance. 6% increase in net sales, 2% increase in processed grill weight and a positive mix effect. The adjusted EBIT is 93 compared to 96 last year, but that includes the Lithuanian startup cost of 70 million. We have an Lower LTIs, injury frequency rate, it's 13.3 compared to 23 last year, and that's a reduction of 42%. And that has an effect of the focus efforts during the last quarters. The animal welfare indicator is 8.5, which is well below target and in line with last, in quarter one last year. Next slide, please. Then we move into the feed prices. So after a long period of increase in feed prices, we have now seen a normalized market for a while. There are still uncertainties and we need to be prepared for future volatility. But our model had most of the input costs linked to our top line. And we have no unlimited trade with US and China. We also want to highlight that feed cost is one third of our cost base. And the short production cycle compared to other proteins enabled us to be more agile in our supply chain. So next slide, please. And now we're moving into export prices. And as you can see, they are down 3% compared to Q4 2024. But increased prices are more than offset by FX and mix. So we see a strong development in export prices and we are also seeing a strong increase in the coming quarter. But that is also due to our effort to improve our market performance. So we are looking into more strategic client relationships, improve sales and operation planning, where we increase flexibility between export and ready to eat. And we have also reduced exposure to spot markets. Next slide, please. And on this slide, you can see the shallot development more in detail. Through these details, you can notice the increase in retail in the quarter. We see a slightly decrease in net sales in food service, though. But in general, we have been seeing strong demand growth in several of our home markets in the quarter. So next slide, please. And in Ready2Eat, we have strong growth and improved EBIT. We have a net sales that is up 9%, and that is driven by, as you saw in the last slide, by strong retail demand. EBIT is 31 million SEK compared to 25 million SEK last year, and it has a slightly negative impact from our stock expansion startup. The QSO market is flat, but we're expecting it to improve later in 2025. We see a really good progress in our preparation of our Osterwolder plant. We have a really positive market feedback and we are preparing and investing for the Q4 startup. And also in this segment, we see a reduced number of injuries. And if we're looking into the segment in ready-to-eat, so we see a strong retail growth also in ready-to-eat, and the food service is still slow. But ready-to-eat will be an important long-term tool on developing AB per kilo, i.e. increasing the value of our protein. So with that, I will hand over to Fredrik for more deep dive in the financials. Fredrik?