Interim report, third quarter 2014

Underlying sales growth, but lower margins

Third quarter compared to the same period 2013 pro forma

  · Net sales increased by 3 percent to 1,358.9 (1,313.7) MSEK, with strong
growth in Sweden offsetting lower sales in Norway. Net sales were flat in
constant FX.
  · Adjusted* operating income decreased to 66.5 (75.5) MSEK and adjusted
operating margin decreased to 4.9 (5.7) percent, mainly due to the termination
of a major contract in Norway as of 1 April 2014.
  · Significantly lower finance costs following the refinancing of the bank
loans in July 2014.
  · Adjusted* income for the period increased to 39.1 (21.7) MSEK, and adjusted*
earnings per share were 0.65 (0.43) SEK.
  · Adjusted* operating cash flow improved to 65.9 (35.9) MSEK, including a
further reduction of inventories.
  · Acquisition of Bosarpskyckling AB, the leading producer of organic chicken
in Sweden, was completed during the quarter.
  · Outlook for the full year 2014 has been raised for net sales and lowered for
adjusted operating income. See page 3.

CEO Statement
Overall, the Group’s performance in the quarter was encouraging in terms of
sales. Strong growth in sales in Sweden offset the reduction in sales in Norway
from the termination of the ICA Norway contract as of 1 April 2014. Excluding
that contract, net sales increased by 12 percent.

Operating income and margin declined because of the termination of the ICA
Norway contract. The growth in sales in Sweden has been at lower margins than
the lost sales in Norway. We also had some non-recurring costs related to the
IPO (Initial Public Offering), although much smaller than in the previous
quarter, and have now taken almost all transition costs for the formation of the
new Group.

Income for the period and earnings per share grew year on year, benefitting from
lower finance costs after the refinancing of the loans in early July. Cash flow
showed a strong improvement including the benefit of a further reduction in
inventories.

The Swedish operation showed strong growth in net sales and adjusted operating
income in comparison to a weak third quarter last year. Margins were, however,
affected by higher production costs caused by uneven bird-weight due to slower
broiler growth in the unseasonably hot summer weather. The acquisition of
Bosarpskyckling AB was finalised during the quarter, and integration has
proceeded according to plan. The acquisition complements Kronfågel’s product
offering and will further strengthen our position in the premium segment.

Trends in Denmark showed some signs of improvement compared to previous
quarters. Net sales showed a good increase within chilled products. Adjusted
operating income and margin remained below last year, partly impacted by the
Russian import ban which has caused lower prices on some products in export
markets in Europe.

The decline in net sales and adjusted operating income in Norway was due to the
termination of the ICA contract. This has been offset to some extent by new
product listings and sales, although at a slower pace than anticipated. As
recently announced, Fredrik Strømmen will be joining as new country manager in
Norway from March next year. He has 20 years of experience from several senior
positions within branded foods sales and joins us from Orkla. I am delighted to
welcome Fredrik to Scandi and I am sure he will contribute to driving further
sales growth.

We continue to focus on improving product innovation by capitalising on our
strengths in brand and product development. The successful launch of Minutfilé
in Sweden earlier in the year was followed by launches of this product in both
Denmark and Norway in the quarter. The collaboration with the MAX restaurant
chain, which has only just started, has been very successful so far and our co
-branded nuggets have become the best-selling product in this category in the
Swedish retail market.

On the basis of sales growth year to date, we have raised the outlook for net
sales for the full year to be in line with 2013 pro forma. The impact of the
termination of the ICA Norway contract and the slower than anticipated
replacement of these sales will continue to affect us in the fourth quarter. We
have therefore lowered the outlook for adjusted operating income for the full
year to be in line with or lower than 2013 pro forma.

Leif Bergvall Hansen
Managing Director and CEO


For further information, please contact:
Leif Bergvall Hansen, Chief Executive Officer,  Tel: +45 22 10 05 44
Jonathan Mason, Chief Financial Officer,           Tel: +45 22 77 86 18
Patrik Linzenbold, Head of Investor Relations, Tel: +46 708 25 26 30

This interim report comprises information which Scandi Standard is required to
disclose under the Securities Markets Act and/or the Financial Instruments
Trading Act. It was released for publication at 07:30 CET on 28 November 2014.