HKFoods: Slaughter capacity is reduced as market volumes decline

Translation: Original published in Finnish on 03/10/2025 at 07:00 am EEST
HKFoods decided to streamline its production network by closing down the Paimio slaughterhouse, which has slaughtered both cattle and sows. The unit’s operations will be outsourced and the aim is to achieve annual savings of around 1 MEUR, which should provide some support for the company’s profitability development in 2025-26. However, we do not feel the news warrants forecast changes. The reason for the change is that, in the big picture, declining pork and beef slaughter volumes put pressure on streamlining the production network in Finland.
Paimio's slaughterhouse is closing down
HKFoods announced on Friday that it will close its slaughterhouse in Paimio. Cattle and sows that, due to their large size, are not suitable for a conventional slaughterhouse for fattening pigs have been slaughtered in Paimio The slaughter operations will be outsourced to Liha Hietanen Oy operating in Sastamala. HKFoods aims for annual efficiency gains of 1 MEUR through production arrangements, which will begin to accrue from the second quarter of this year. Paimio employs 21 people and HKFoods seeks to provide employment for them in other units of the company. The company will still maintain a pig slaughterhouse in Forssa and a cattle slaughterhouse in Outokumpu.
The announced efficiency measure could support earnings growth, but the impact is fairly moderate in scale and does not warrant forecast changes in our opinion. HKFoods guidance is that comparable EBIT will increase in 2025 from 2024 (27.7 MEUR). We expect a moderate EBIT improvement to 28.8 MEUR.
Declining volumes are putting pressure on capacity closures
The company justifies the closure of the Paimio slaughterhouse by the decline in the number of cattle in Finland in recent years. Especially the number of dairy cows has fallen significantly. This trend is expected to continue in the future. Meat production and processing in Finland has concentrated in more efficient units in recent decades, while pig and cattle slaughter volumes have decreased along with consumption. Both HKFoods and Atria have had two cattle slaughtering units (HKFoods in Paimio and Outokumpu, Atria in Kauhajoki and Jyväskylä). Running two slaughterhouses has served regional needs to support local meat procurement and avoid long transport distances. As volumes decline, excess capacity is occasionally removed from the market as companies streamline their operations.