Lantmännen: announces strong result improvement

Stockholm / SE. (lg) Lantmännen’s income after net financial items, adjusted for items affecting comparability, for the first eight months of 2015 was 908 million SEK, compared to 437 million SEK for the same period in the previous year. All sectors have increased their results compared to the previous year. Operations within the Agriculture and Energy Sectors have improved significantly.

«Lantmännen’s operating income during the year’s first eight months have improved substantially and we have doubled our result. 2015 has so far been a very good year for Lantmännen and we have carried out large and strategically important transactions that strengthen our position for the future, and I look forward to continue to develop our business», says Per Olof Nyman, Group President and CEO, Lantmännen.

All figures below are adjusted for items affecting comparability and refer to the period from January to August 2015. Last year’s results in brackets.

The Agriculture Sector’s operating income continues to improve and amounts to 126 million SEK (minus eleven million SEK), particularly thanks to several cost-adjustments and efficiency measures in the Swedish agriculture business. Significant focus has been placed on increasing local presence in the business, to get closer to customers and increase service levels. Competition on the agricultural markets in Northern Europe remains tough, as for example evidenced by the feed segment. Profitability in the Swedish dairy industry is also under pressure, which has a negative effect on farmers’ ability to invest. During the second four month period a new range of feed was launched, providing better conditions for an effective and profitable dairy production. Forecasts point toward the largest grain harvest in 25 years, and Lantmännen’s harvest work has generally worked very well, although the large volumes have involved logistical challenges, mainly in the area north of Lake Mälaren.

The operating income in the Machinery Sector increases and amounts to 122 million SEK (88 million SEK), mainly as a result of cost-adjustment and efficiency measures. The tractor markets in Scandinavia continue to decrease, but Lantmännen retains its market shares on the declining Swedish market. The very challenging situation for the dairy farmers has led to further reduced demand.

The Energy Sector presents an improved operating income of 139 million SEK (23 million SEK), mainly driven by large result improvements within Lantmännen Agroetanol. An increased percentage of ethanol is now sold on the German market, where demand for Lantmännen’s sustainable ethanol has continued to increase due to legislation that rewards climate benefits of fuel. Intense work has also been done to reduce costs, use alternative raw materials, take advantage of bi-products and diversify the product portfolio.

Two major corporate transactions in line with Lantmännen’s long-term strategy – Strategy 2020 – have been completed within the Food Sector during the second four month period: the acquisition of bakery group Vaasan and the divestment of Lantmännen Doggy. The Sector presents an operating income amounting to 514 million SEK (364 million SEK), a significant improvement primarily attributable to a positive development in Lantmännen Unibake’s international operations as well as positive income contribution from Vaasan, which is part of the Sector from June 2015. Lantmännen Cerealia continues to work intensively with product development and initiatives to create value in the grain value chain, and during the second four month period investments have been made in Strängnäs Valskvarn, Sweden, and in the pancake production in Laholm, Sweden. Competition has intensified in most of Lantmännen’s segments in Sweden, and the larger retail chains are very demanding in their tendering.

Lantmännen Real Estate increases its operating income, excluding property sales, to 120 million SEK (108 million SEK), mainly as a result of an increased share of external leasing.

«We will now take further steps within a number of strategic areas and put focus on creating value for the Swedish agricultural business within the grain value chain. Part of the work is to develop a new and more distinct strategy for rye and rye products for Lantmännen. Another central area for the future is to further strengthen and focus our innovation efforts, not least in order to faster move from research to business», says Per Olof Nyman (Image: Lantmännen).