Strong result for Lantmännen – but large drop in profitability in the Swedish food business
31 May 2023, Sweden: The overall positive trend from last year continued during the first four months of 2023, and Lantmännen delivered the highest result ever for the first four-month period.
“The Agriculture Sector continued to develop in a stable manner, while primarily the Energy Sector and the Swecon Business Area once more delivered very strong results. The result in the Food Sector also increased compared to the previous year’s very weak result – although entirely driven by the international operations. The result for the Swedish food business, on the other hand, has decreased by more than 30 percent, and the operation faces continued challenges,” says Magnus Kagevik, Lantmännen’s Group President and CEO.
The figures below refer to operating profit adjusted for items affecting comparability. The previous year’s result in parentheses.
The Agriculture Sector’s result increased compared to the previous year: 138 MSEK (120). The higher result was mainly driven by the Swedish agricultural operations. At the start of the year, conditions were good for a normally-sized Swedish harvest, but the uncertainty has increased during May – among other things due to the late and dry spring in several important cultivation areas. The result in the Finnish agricultural operations was higher than the previous year. Lantmännen Maskin presented a result on the same level as the previous year.
The Energy Sector’s result amounted to 333 MSEK (278). The higher result was primarily due to the contribution from pellet company Scandbio, which is wholly owned by Lantmännen since April 1, 2022. The result in Lantmännen Biorefineries was slightly lower than the previous year.
The Food Sector’s result increased to 259 MSEK (135). The sector had a very weak first four-month period last year due to costs for raw materials and other inputs sharply rising, while cost-based price increases towards customers lagged behind. The sector’s result improvement in the first four months of 2023 was entirely due to a stronger result in the international operations. The result from the sector’s Swedish businesses, however, decreased by more than 30 percent and the operation faces continued challenges – primarily in the form of high market prices for raw materials, in part driven by the weak Swedish currency.
Swecon Business Area delivered a result of 256 MSEK (162). Sales have increased in all areas; net sales in the spare parts business was at historically high levels, and the demand for rental machinery has increased sharply. Several market indicators continue to point to a cooling market for construction machinery, and the order intake stabilized on a lower level than previously during the first four-month period.
The Real Estate Business Area’s result, excluding capital gains, amounted to 79 MSEK (98). The lower result was mainly due to the fact that Lantmännen Agrovärme, which was previously part of the business area, was divested in September of 2022.
”Lantmännen continues to invest for the future – for example in the Swedish infrastructure for grain, in production of plant-based proteins, and in a new bakery in Romania, which will strengthen our position in southeastern Europe. The great uncertainty and rapid changes in the world around us makes it difficult to predict the future, but Lantmännen’s strong financial position is reassuring and lets us parry the challenges we are facing,” says Magnus Kagevik.
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