Earnings call transcript: Scandi Standard’s record Q3 2025 boosts stock

Scandi Standard reported its strongest quarter ever in Q3 2025, with an 11% increase in net sales and a 21% rise in EBIT. The company’s stock surged 6.85% following these results, reflecting positive investor sentiment. According to InvestingPro data, the company maintains a "FAIR" Financial Health score of 2.24, indicating stable operational performance. Despite the earnings beat, specific EPS and revenue forecasts were not provided for comparison.

Key Takeaways

• Scandi Standard achieved record financial performance in Q3 2025.
• The company’s EBIT per kilo increased by 10%.
• Operating cash flow reached approximately SEK 190 million.
• Stock prices rose by 6.85% post-announcement.
• Strong consumer demand for chicken protein continues to drive growth.

Company Performance

Scandi Standard’s Q3 2025 marked a milestone as its strongest quarter on record. The company benefited from a robust demand for chicken protein, which is increasingly seen as an affordable and sustainable alternative to red meat. Scandi Standard’s strategic investments in production capabilities and operational efficiencies have positioned it well in its five key European markets.

Financial Highlights

• Revenue: Increased by 11% year-over-year.
• EBIT: Increased by 21% to record levels.
• EBIT per kilo: Rose from SEK 2.15 to SEK 2.36.
• Operating cash flow: Approximately SEK 190 million.
• Leverage: Improved to 2.2, below the target of 2.5.

Market Reaction

Following the earnings announcement, Scandi Standard’s stock price increased by 6.85%, closing at 96.7. This movement reflects investor confidence in the company’s ability to sustain growth and manage operational efficiencies. InvestingPro data reveals the stock has delivered an impressive YTD return of 9900%, though it experienced a -50% return over the past six months. The stock generally trades with low price volatility, making it potentially attractive for stability-focused investors. Want deeper insights? InvestingPro offers exclusive access to detailed financial metrics and expert analysis through its comprehensive Pro Research Report.

Outlook & Guidance

Looking forward, Scandi Standard aims for a 5-7% net sales growth and an EBIT margin exceeding 6% by 2027. InvestingPro analysis shows the company has maintained dividend growth for three consecutive years, demonstrating commitment to shareholder returns. The company plans to invest around SEK 450 million in capital expenditures, with a focus on expanding production capabilities and enhancing operational efficiencies. The expected blended tax rate is approximately 20%. Unlock more valuable insights and 5 additional ProTips with an InvestingPro subscription.

Executive Commentary

CEO Jonas Tunestål highlighted the affordability of chicken across all segments, emphasizing the company’s alignment with consumer trends. CFO Fredrik Sylwan noted that Q3 2025 was the company’s strongest quarter ever, underscoring the successful execution of strategic initiatives.

Risks and Challenges

• Supply Chain: Potential disruptions could impact production and delivery schedules.
• Market Saturation: Increased competition in the chicken protein market could pressure margins.
• Economic Conditions: Macroeconomic pressures might affect consumer spending.
• Regulatory Changes: Changes in food safety or environmental regulations could increase costs.
• Commodity Prices: Fluctuations in feed and energy prices could impact profitability.

Scandi Standard’s strong performance in Q3 2025, coupled with strategic initiatives and favorable market conditions, has positioned the company for continued growth. However, potential risks related to supply chain and market dynamics remain important considerations for future performance.

Full transcript - Scandi Standard publ AB (SCST) Q3 2025:

Jonas Tunestål, CEO and Managing Director, Scandi Standard: Good morning, everyone, and welcome to this presentation of Scandi Standard’s result for Q3 2025. My name is Jonas Tunestål, and I’m the CEO and Managing Director of Scandi Standard. By my side, I have Fredrik Sylwan, our CFO, and I’m pleased to have him by my side today. I’m also glad to report a strong growth and result in the quarter. Next slide, please. We have 11% growth in net sales and increase in volumes, and that is supported by growth across countries, channels, and segments. Sales are supported by continuous strong underlying demand. We have the highest EBIT ever, up 21%, delivering continual steps towards our financial targets. We see strong improvement across Ready-to-Cook. Our new integrated business in Lithuania, which was started up earlier this year, is already contributing with a solid EBIT per kilo.

Ready-to-Eat segment bottomed out in the quarter as price increases to compensate higher input costs will be implemented in the coming quarters. When we go to Netherlands, we have successfully started up our first production line in our newly acquired RTE plant in Oosterwolde, Netherlands, and that is earlier than expected. Now we’re preparing our main products line for startup in the first half 2026. Next slide, please. This is the reason why we see strong demand. It’s related to these three value drivers for chicken: responsible, safe, and nutritious; convenient, versatile, and tasteful; and affordable because it’s sustainable. We can move in the next slide. Here you can see the strong historical and ongoing consumer trend for chicken. On top of the increased consumption, chicken is also benefiting from a long-term inflow from other proteins. Next slide, please.

One of the major reasons why it’s benefiting from the other protein is because it’s sustainable and affordable. Price has always been important for consumers, and the focus has increased even more in the current environment of high food prices. Beef prices are increasing and are becoming more and more expensive, which chicken is benefiting from, but also the long-term trend of switching protein from red meat to poultry. Chicken is affordable in all segments. You can see that on the top right side, and it gives us further opportunities to drive long-term volume and value creation. We see further opportunities to drive more value out of the chicken due to its affordability. We can move into the next slide. On this slide, we want to present our EBIT per kilo measure. EBIT per kilo is a good measurement of our value creation for our business.

Q3 2025 EBIT per kilo is SEK 2.36 compared to SEK 2.15 last year, and that is an increase of 10%. Our home markets, together with Lithuania, are contributing well, and Oosterwolde in the Netherlands will be a good addition for us reaching our 2027 goals. We are expecting to take another material step in 2026. In the different colors in the diagram, you can see the development in the different segments. Next slide, please. Now we’re moving over to our segments. This table shows the reconciliation of our segments: strong net sales growth in nearly all markets, lower net sales in Finland, and that is due to our exiting loss-making contract. We also want to remind you of the category other. That includes both ingredients and our corporate costs. Next slide, please. Here you can see our summary of our sustainability scorecard.

We are transparent on multiple parameters, and I’m glad to show that most of them show positive results. What stands out in the quarter is the critical complaints, which are linked to a specific plant, and we have addressed the problem and expect it to be solved shortly. Next slide, please. Now we move into Ready-to-Cook. That’s a 13% increase in net sales, a 10% increase in chicken processed, and we have this positive mix effect. EBIT is up a staggering 33% to SEK 159 million, and EBIT margin is 5.5% compared to 4.4% last year. We have low quarterly injury, our LTI rate. That is 16.4 compared to 37.1, and that’s a reduction of 44%. This is an effect of our effort focus during the last quarters. Sadly, we had a fatal accident during the quarter in one of our newly acquired farms in Lithuania.

A formal investigation has been initiated, and it’s receiving our highest level of attention. Next slide, please. Let’s move into feed. We are now seeing fairly stable feed prices for some quarters. In quarter three, the prices declined slightly, but there are still uncertainties, and we need to be prepared for further volatility. Our model has most of the input costs linked to our top line. We also want to mention that we have no limited trade with the U.S. or China. We also want to highlight that feed costs are one third of our cost base, and the short production cycle compared to other proteins enables us to be more agile in our supply chain. When we look at other costs such as packaging and energy, we see costs are more at a stable level, and we are hedging the majority of our electricity exposure. Next slide, please.

Let’s move into the export prices. Our realized export prices reached historical heights. Expectation of increased prices reflecting higher bird prices in Europe, and we are forecasting continued elevated prices. We’re also working strategically to improve our market performance. We have this long-term partnership. We prioritize customers in focus, optimized S&OP, our sales and operation planning. That is super important for us. Enhanced flexibility between export and Ready-to-Eat, and reduced exposure to volatile spot markets. At the same time, we’re working to broaden our export permits from all countries. Next slide, please. On this slide, you can see the channel development in more detail. Through these details, you can notice the increase in retail in the quarter. We see a minor decrease of net sales in the food service, though, but that is due to prioritization from our side to the more profitable local retail segment.

In general, we have been seeing a strong demand growth in several of our markets in the quarter. Next slide, please. This slide is to remind you of 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 position, our own supply decisions have a meaningful impact on the market balance, which has helped us in the recovery process from inflation. Note that each market, however, includes consumer segments less sensitive to provenance. Next slide, please. Now we’ll move into Lithuania, and this is a reminder of our successful startup of our acquired low-cost Ready-to-Cook platform in Lithuania. It’s a fully integrated business model, allowing control of cost, welfare, and food safety.

The recent acquisition of farms accelerates this process. We’re also planning to build additional farm capacity in 2026. Positioned to serve high-quality products to segments in our existing markets less sensitive to provenance, but also to our own Ready-to-Eat plants and to our strategic export clients. We are targeting medium-term EBIT per kilo, well above SEK 3 per kilo. Let’s move into the next slide, please. Here you can see our Ready-to-Cook plants. Note that 11 million chickens in Lithuania is just one shift. If the market has a positive momentum, we have the possibility to scale up with another shift and double the production. Next slide, please. Ready-to-Eat. We have strong net sales. They are up 5% and 15% growth in retail sales. We have reached the inflection point for our food service after a weak period. EBIT suffered from increased input costs, though.

Lead time is passing them through to customers. We see sequential improvements expected in the coming quarters. We have bottomed out this quarter, and you will see sequential improvements. We also have the successful startup of the plant in the Netherlands. Our kebab processing line started in Q3. That was earlier than expected, and we’re also seeing limited startup costs. During the first quarter of 2026, we will start up our main product lines in what we call Factory C in Oosterwolde. Next slide, please. Here you can see it in figures. It is, of course, very encouraging for us to see growth in food service, Ready-to-Eat, where we believe that we have hit an inflection point after two years of stagnation. Growth in retail channel continues, hitting a five-year high during the quarter.

Ready-to-Eat will be an important long-term tool in developing our EBIT per kilo, more specifically to increase the value of our protein. Next slide, please. This slide is a reminder of the strong historic organic growth in Ready-to-Eat business, and I’m confident that it will continue this trend. Two main types of business: three quarters breaded product for the European market, and one quarter integrated local business in Sweden, Norway, and Finland. It gives us a high return on capital and the average EBIT margin of 6% last five years in the quarter. This quarter, we only had 2.4%, which shows the potential going forward. Low capital employed compared to our Ready-to-Cook business makes this an interesting for us growing segment. As you remember, we lost some continental contracts in 2023, but since December 2023, we have grown quarter by quarter. Next slide, please.

We are also expecting healthy market growth in the future. Marketplace is divided into these three different tiers: European players, regional players, and local players. Scandi Standard has been a large regional player, 36,000 tons of product weight in 2024, about 5% of European market share, but a production platform that is not competitive in the top tier. If we move into the next slide. That is the reason why this acquisition in the Netherlands takes Scandi Standard breaded activities to the top tier. The Oosterwolde plant was acquired in Q1 2025 in idle state, and that was due to a fire in Factory B for the previous owner. We plan for a startup in Factory A in Q3 after refurbishment. We have increased the capacity for our popular kebab products that we are producing in Farø today, and now also in Oosterwolde with a startup in this quarter.

Factory C is being prepared for the first half of 2026 startup. Factory C has two of Europe’s largest and most efficient breaded lines, with an annual capacity of 50,000 tons. It also has one of the few with advanced form product capability. It is tailored to meet the criteria of our largest clients. We will see significant growth in Scandi Standard here in the future, and this is the platform for that. Next slide, please. These are our main processing plants. As you can see, the two big plants are Farø in Denmark and Oosterwolde in the Netherlands, which have a combined capacity of 100,000 tons. Next slide, please. If we look at this in a more holistic perspective, our Lithuanian business is a low-cost and high-quality end-to-end hub in combination with the state-of-the-art breaded capability in the Netherlands and Farø.

That gives us feed efficiency, low labor costs, and efficient logistics together with a scalable platform. With this, together with our strong position in our home markets, it gives us very competitive combined offers to clients. That gives us competitive strength to take market shares. There are typically longer lead times in supplier switchovers, so we need to be patient to onboard a full value chain business with customers. Meanwhile, Lithuania has secured strong customer orders in fresh meat. With that, I will hand over to Fredrik Sylwan, our CFO.

Fredrik Sylwan, CFO, Scandi Standard: Great. Next slide, please. Thank you, Jonas, and good morning, everyone. As Jonas mentioned, Q3 was a strong quarter. In fact, it was our strongest quarter ever. We see positive development where the top line is driven by both Ready-to-Cook and Ready-to-Eat, supported by strong underlying EBIT growth in Ready-to-Cook, partly offset by Ready-to-Eat, which is normal when bird or raw material prices increase. The Ready-to-Eat profitability is expected to recover during the coming quarters. In total, EBIT is up 21% in the quarter with a 40 basis points margin improvement. The ramp-up of the Lithuanian business is going well, and it showed strong positive EBIT for Q3, which is ahead of plan. Finance net is on par with last year. Cost for increased bank loan is close to offset by lower interest rates.

As we talked before, we had seen positive impact from interest rate swaps previously that now have expired. Tax rate is at 18%, which is in line with the previous year. Feed efficiency remains at a stable and strong level. Next slide, please. The returns are quite stable compared to last year, in spite of the large investments in Lithuania and the Netherlands, which are both startup businesses. The equity ratio decreased from 36% to 34%, primarily driven by increased investment activity. While the decline is modest, the company remains well capitalized and within our targeted capital structure. We continue to monitor our leverage position to ensure financial stability and maintain flexibility for future investments. Next slide, please. We are approaching an EBITDA of close to SEK 1 billion, rolling 12, which is a milestone.

Operating cash in the quarter landed close to SEK 190 million, primarily driven by strong results, partly offset by increased capital expenditures linked to both efficiency and capacity. Other operating items were driven by exchange losses on accounts receivable and accounts payable, amounting to SEK 3 million. Paid tax is below previous year due to timing of payment in Ireland of EUR 1.4 million, linked to the 2023 result. The first installment of the dividend was paid in May, and the second and final now in September, to a total amount of SEK 163 million, which is an increase of 9% versus last year. Other items are mainly FX effect on interest-bearing debt. The change on net interest-bearing debt was a reduction of close to SEK 100 million in the quarter, driven by the above. Leverage landed at 2.2, which is below our internal aim of 2.5. Next slide, please.

Our working capital remains low in the quarter. We see a 10% inventory decrease versus year-end and a 4% reduction versus Q3 last year, driven by a lower level of finished goods, partly offset by live animals. Lithuania was not in base last year, which makes the decrease even more positive. Our target for working capital as a percentage of sales, rolling 12, adjusted for financing remains at 6%. In Q3, this metric stood at 4.5%, including the financing adjustments, meaning that we are at an efficient and low working capital level for the quarter. We should expect a more normal level in Q4. Next slide, please. Total capital expenditures for this year are expected to amount to around SEK 450 million, which is a reduction from previously indicated SEK 550 million, as some planned investments in the Netherlands have been deferred to the beginning of next year.

Moreover, the acquisition carried out in the Netherlands and Lithuania earlier this year will be in addition to the SEK 450 million. As we ramp up Factory C, we expect increased working capital, which will start in the middle of the first half of next year. The blended effective tax rate is expected to be approximately 20%. Next slide, please, and back to you, Jonas.

Jonas Tunestål, CEO and Managing Director, Scandi Standard: Thank you, Fredrik. Next, I would like to talk about one of our cornerstones and license for us to operate. There are three key areas when it comes to creating trust for what we do. It is about responsible animal welfare, safety for consumers and employees, and nutritious products. This is closely linked to our strategic pillars. If we move into the next slide, please. They can look pretty simple, but this is what it’s really all about. Those of you who have followed us for a while have seen these pillars before. These are four strategic pillars that will support us achieving our goals. Increase the value of our protein, and this is about optimizing our business and taking more value out of every chicken. It is ramp up our efficiency end-to-end to actually create efficiency in the whole value chain from the very beginning to the consumer.

It is about integrated sustainability, so we do any sustainability in all means of our business. Doing this as better together, leveraging being one Scandi Standard and let the best practice travel all around. It emphasizes the collective effort, shared goals, and team cooperation that leads to improved performance and outcomes. If we move into the next slide, please. On this slide, we want to remind you of our 2027 targets. Here at the right hand, you can see these targets. We’re expecting strong growth over the coming years, and we have set the targets for 2027 of 5% to 7% net sales growth. We target an EBIT margin in excess of 6% by 2027. We’re also measuring the progress in terms of EBIT per kilo, for which we have a supporting target of 3 SEK as presented in the former slides. We are progressing as planned. Next slide, please.

As a reminder, on this slide, you can see that our structured effort is resulting in recognition in form of improved ESG rating. Next slide, please. In order to reach our target for EBIT margin, we need to increase our EBIT per kilo from current rolling 12 of 1.89 to above 3 SEK per kilo. Here are some examples and actions to accomplish this. It is the investment in our ERP system that gives us a common scalable platform to utilize the best practice in Scandi Standard. Our current strong focus on hunting new business in ready-to-eat has yielded surprisingly good results in retail sales. This illustrates how capabilities and convenience products can be utilized. We have investment in Stokke to support the local growth in our Norwegian Ready-to-Eat segment. The new capacity will be in production, and we are producing in full speed at the moment.

We’re also investing in new leg deboning capacity, and the latest investment in leg deboning will come here in the coming quarters in Finland. All of this together, utilizing more of the bird, investing in efficiency that makes us our ability to climb on this EBIT per kilo ladder. In this quarter, we are at 2.36. If we move into the next slide, please. To summarize it all, this is another step on the value ladder. We have a record EBIT in seasonal highest quarter. Solid substitution to our chicken products. Convenient, versatile, and tasteful. Affordable because it’s sustainable. Responsible, safe, and nutritious. We are developing a top-tier European Ready-to-Eat platform with high-quality, low-cost meat input from Lithuania, state-of-the-art processing plant. We’re expecting material progress in Q4 and 2026. With that, we open up for Q&A. Next slide, please. Any questions?

Moderator/Operator: Thank you. If you’d like to ask a question, please press star followed by one on your telephone keypad. To remove your question, press star followed by two. Again, to ask a question, press star one. We’ll pause here briefly as questions are registered. We currently have no questions via audio line. You may continue.

Jonas Tunestål, CEO and Managing Director, Scandi Standard: Okay. If there’s no questions to the report, I want to thank you everyone for listening in to this webcast. Thank you very much, Tommi.

Fredrik Sylwan, CFO, Scandi Standard: Indeed. Many thanks.

Moderator/Operator: Thank you, everyone. That concludes the Scandi Standard interim report for the third quarter 2025. Thank you for your participation. You may now disconnect.

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