"The financial result in the quarter does not live up to its potential and has been negatively affected by a number of organizational and leadership shortcomings. I and the Board of Scandi Standard are confident that we will tackle the current challenges and create shareholder value in line with our potential over time."

Otto Drakenberg, Interim managing director and CEO

Growing net sales, unsatisfactory result

April – June 2021

Net sales amounted to MSEK 2,564 (2,448) in the second quarter 2021. At constant exchange rates net sales increased by 7 percent.
Operating income (EBIT) decreased by 28 percent to MSEK 75 (105), corresponding to a margin of 2.9 (4.3) percent. Adjusted operating income (adj. EBIT)1) decreased by 24 percent to MSEK 79 (105), corresponding to a margin of 3.1 (4.3) percent.
Income for the period amounted to MSEK 41 (73). Earnings per share amounted to SEK 0.61 (1.19).
Operating cash flow was MSEK 57 (166).

January – June 2021

Net sales amounted to MSEK 5,033 (4,926) in the first half of 2021. At constant exchange rates net sales increased by 5 percent.
Operating income (EBIT) decreased by 9 percent to MSEK 163 (179), corresponding to a margin of 3.2 (3.6) percent. Adjusted operating income (adj. EBIT)1) decreased by 7 percent to MSEK 167 (179), corresponding to a margin of 3.3 (3.6) percent.
Income for the period amounted to MSEK 95 (108). Earnings per share amounted to SEK 1.44 (1.70).
Operating cash flow was MSEK 166 (260).

Significant events in the quarter

During the second quarter, Johan Bygge was elected as new Chairman of the Board and Otto Drakenberg was appointed interim managing director and CEO of Scandi Standard.
Scandi Standard experienced deviations from company standards linked to animal welfare and food safety in the Swedish production facility in the second quarter, which contributed to reduced sales in June by 7% in Ready-to-cook Sweden. The main part of deviations identified in the Swedish operations have been rectified during the summer. A group-wide investigation is initiated with the intention of developing an action plan to prevent and handle deficiencies in our production and quality processes in all our markets.

Significant events after the close of the quarter

During August, an increasing number of cases of Covid-19 were registered in the production site in Ireland, which has led to significant disruptions in production. These are expected to continue throughout the third quarter. The health and safety of employees has the highest priority, and the management is implementing measures to reduce the extent of the infection and at the same time guarantee the highest possible animal welfare.
Disruptions in production and delivery as a result of the heat wave in Sweden during July caused reduced revenues within Ready-to-cook Sweden of 12 percent in July.

Key metrics

MSEK	Q2 2021	Q2 2020	Δ	H1 2021	H1 2020	Δ	R12M	2020
Net sales	2,564	2,448	5%	5,033	4,926	2%	10,048	9,940
EBITDA	167	192	-13%	348	351	-1%	695	699
Operating income (EBIT)	75	105	-28%	163	179	-9%	334	351
EBITDA margin %	6.5%	7.8%	-1.3ppt	6.9%	7.1%	-0.2ppt	6.9%	7.0%
EBIT margin %	2.9%	4.3%	-1.3ppt	3.2%	3.6%	-0.4ppt	3.3%	3.5%
Non-comparable items1)	-4	0	-	-4	0	-	-63	-59
Adjusted EBITDA1)	171	192	-11%	352	351	0%	756	756
Adjusted operating income (Adj. EBIT)1)	79	105	-24%	167	179	-7%	397	410
Adjusted EBITDA margin1) %	6.7%	7.8%	-1.2ppt	7.0%	7.1%	-0.1ppt	7.5%	7.6%
Adjusted EBIT margin1) %	3.1%	4.3%	-1.2ppt	3.3%	3.6%	-0.3ppt	4.0%	4.1%
Income after finance net	51	85	-40%	123	127	-3%	256	260
Income for the period	41	73	-44%	95	108	-12%	195	208
Earnings per share, SEK	0.61	1.19	-48%	1.44	1.70	-15%	2.90	3.16
Return on capital employed %	7.9%	9.3%	-0.5ppt	7.9%	9.3%	-1.4ppt	7.9%	8.4%
Return on equity %	10.1%	12.8%	-2.8ppt	10.1%	12.8%	-2.8ppt	10.1%	11.5%
Operating cash flow	57	166	-66%	166	260	-36%	383	476
Net interest-bearing debt	-1,967	-2,058	-4%	-1,967	-2,058	-4%	-1,967	-1,933
NIBD/Adj. EBITDA	-2.6	-2.8	-6%	-2.6	-2.8	-6%	-2.6	-2.6
Feed efficiency (kg feed/live weight)	1.52	1.52	0%	1.52	1.53	-1%	1.52	1.52
Lost time injuries per million hours worked (LTI)	39.5	32.5	22%	36.3	31.1	17%	34.6	31.0

1) Restated non-comparable items. see note 6 and 8.

CEO Comments

Scandi Standard reports another quarter of growth as net sales increased by 5 percent to MSEK 2,564 (2,448), equivalent to 7 percent growth in local currency. Profitability is unsatisfactory, particularly due to negative result in our Ready-to-cook business in Denmark and continued effects from bird flu. Raw material prices for feed are at historic high levels in the whole Group. The general approach we have with clients to adjust product prices for changes in feed raw material prices forms a good hedge to the largest cyclical driver for our industry, although there are some phasing effects. In addition, costs relating to management changes impacted the result negatively. Adjusted operating income (adjusted EBIT) decreased to MSEK 79 (105), implying a margin of 3.1 (4.3) percent.

My assessment of Scandi Standard after the first weeks as interim managing director and CEO of Scandi Standard is that the company has strong growth potential, based on both external and internal factors. From an external perspective we experience a market which shows strong opportunities for development and our products match increasing preference for tasty, healthy, sustainable, and affordable products. Internally, the company possesses many of the prerequisites required to take full advantage of these opportunities, including financial resources and high industry competence within the organisation. The financial result in the quarter does not live up to its potential and has been negatively affected by a number of organizational and leadership shortcomings. We are now in the process of resolving these and I am confident that Scandi Standard will capitalize on the dynamic opportunities in our markets and therefore be able to deliver significant improvements in growth and profitability.

One of the challenges during the quarter is the deviations from company standards linked to animal welfare and food safety in the Swedish production facility. The public attention around these deviations, contributed to reduced sales in June by 7 percent within Ready-to-cook Sweden. The main part of deviations identified in the Swedish operations have been rectified during the summer. Our goal is for deviations from the company's standards to be at the lowest possible levels. This is a central part of our continuous improvement work. The deviations from the company's standards are a failure that we take very seriously. After having thoroughly investigated the deviations, I am confident that they never threatened consumers health and safety. Also, no increase in complaints has been recorded during the period.

A group-wide investigation was initiated in June with the intention to develop an action plan to prevent and handle deviations in production and quality processes in all our markets. Even if some of these measures may have a short-term impact on results, I am confident that this will put us in a better position for profitable growth in the longer term.

During August, an increasing number of cases of Covid-19 were registered in the production site in Ireland, which has led to significant disruptions in production. These are expected to continue throughout the third quarter. The health and safety of employees has the highest priority, and the management is working on an action plan to reduce the extent of the infection and at the same time guarantee the highest possible animal welfare. Further, the heat wave in Sweden during July caused disruptions in production and delivery, leading to reduced revenues within Ready-to-cook Sweden of 12 percent in July.

1) Pro forma including Manor Farm

2) Recalculated for IFRS16

I am confident that a structured and open approach to continuous improvements within sustainability will reinforce consumer confidence and form a competitive advantage for Scandi Standard over time.

The Ready-to-cook business in Denmark continued to struggle, largely due to increasing costs for purchase of live birds combined with stock clearance at low export prices in a difficult export market, The Ready-tocook business in Denmark reported a negative adjusted EBIT of MSEK - 35 (-23) in the quarter and a number of measures have been implemented to start restoring profitability.

I am pleased to see that our Ready-to-eat business reports a significant improvement in both sales and operating income. The improvement is mainly driven by increased sales within the Foodservice sales channel, as restrictions related to the Covid-19 pandemic have been eased.

Given the overall unsatisfactory financial performance, we are working hard at designing a broad, group wide improvement program aimed at creating shareholder value through profitable growth, improved efficiency, and returns. The ambition is to revert with details on the program including expected financial effects during the second half year of 2021. At this time, the Board will also come back to the question of a second dividend that was announced in the report for the first quarter of 2021.

Scandi Standard has a strong balance sheet, a solid financing, and significant available liquidity. Our capital investments amounted to MSEK 89 (78) for the quarter and our estimate for 2021 is MSEK 400. Focus for the 2021 investments are a combination of maintenance, efficiency, capacity and ESG investments.

I and the Board of Scandi Standard are confident that we will tackle the current challenges, and that the improvement program that is now taking shape and being implemented will create shareholder value in line with our potential over time. The strong competence inherent in our organisation, coupled with re-enforced clear leadership bodes well for successful execution of the actions and changes required over the coming months. Although our short-term focus will be directed on the current challenges, it is our clear ambition to reap the full potential we see in the market environment.

Stockholm, 25 August 2021

Otto Drakenberg, Interim managing director and CEO

Group results, financial position and cash flow April – June 2021

Net sales amounted to MSEK 2,564 (2,448). At constant exchange rates net sales increased by 7 percent. Net Sales to Retail sales channel continued to grow, albeit at a slower growth rate than before, while net sales to Food service increased strongly as previous year was strongly negatively affected by the Covid-19 pandemic.

Operating income (EBIT) for the Group amounted to MSEK 75 (105), corresponding to an operating margin (EBIT margin) of 2.9 (4.3) percent. The operating income included MSEK -4 (0) of non-comparable items consisting of an adjustment of the earn-out debt attributable to the acquisition of Manor Farm. Adjusted operating income (adj. EBIT) amounted hereby to MSEK 79 (105), corresponding to an adjusted operating margin (adj. EBIT margin) of 3.1 (4.3) percent.

The decrease in results was mainly driven by lower results in Ready-tocook, partly due to Bird flu impacting export sales negatively as well as higher feed costs and one-off costs related to severance pay for senior management in Sweden and in Ireland.

Finance net for the Group of MSEK -24 (-19) refers to interest expenses for interest-bearing liabilities of MSEK -9 (-10), interest on leasing of MSEK -3 (-6) and currency/other items MSEK -12 (-3) whereof MSEK -8 (-) refers to a change in value of a share in a pension fund.

Tax expenses for the Group amounted to MSEK -10 (-12) corresponding to an effective tax rate of approximately 20 (15) percent. The increased tax rate was explained by Ireland which stood for a smaller share of the Groups income for the period compared to the corresponding quarter last year.

Income for the period for the Group decreased by 44 percent to MSEK 41 (73). Earnings per share was SEK 0.61 (1.19).

Net interest-bearing debt (NIBD) for the Group was MSEK 1,967, an increase by MSEK 34 from the 31st of December 2020. Operating cash flow decreased in the quarter to MSEK 57 (166) negatively affected by lower EBITDA, unchanged working capital compared to a positive change last year, and higher capital expenditure compared to last year, as the investment rate was reduced last year due to the Covid-19 pandemic. Total change in net interest-bearing debt during the quarter was MSEK -25 (76) driven by lower operating cash flow, dividend of MSEK 81 (-) and by higher tax payments compared to the corresponding quarter last year when the local authorities in some countries last year approved a deferral of certain tax payments to due to the Covid-19 pandemic.

Total equity attributable to the owners of the parent company as of 30 June 2021 amounted to MSEK 1,895 (1,837). The equity to assets ratio amounted to 29.2 (28.1) percent. Return on equity was 10.1 (12.8) percent.

The financial target for adjusted EBITDA margin is 10 percent. During the last twelve-month period, the company's ad sted D amounted to 7.5 percent, slightly below year 2020 and 2019 level, and below the o any's target.

The financial target for net interest-bearing debt in relation to adjusted EBITDA is 2.0-2.5x. As of June 30 2021, net interest-bearing debt in relation to adjusted EBITDA was 2.6, slightly above the target range.

Net Sales and Operating Income (EBIT)2)

MSEK	Q2 2021	Q2 2020	R12M	2020
Net sales	2,564	2,448	10,048	9,940
EBITDA	167	192	695	699
Depreciation	-80	-75	-314	-300
EBITA	88	117	381	398
Amortisation	-12	-13	-49	-50
EBIT2)	75	105	334	351
EBITDA margin, %	6.5%	7.8%	6.9%	7.0%
EBITA margin, %	3.4%	4.8%	3.8%	4.0%
EBIT margin, %	2.9%	4.3%	3.3%	3.5%
Non-comparable items1)	-4	0	-63	-59
Adj. EBITDA1)	171	192	756	756
Adj. EBIT1)	79	105	397	410
Adj. EBITDA margin, %1)	6.7%	7.8%	7.5%	7.6%
Adj. EBIT margin, %1)	3.1%	4.3%	4.0%	4.1%
Chicken processed (tonne lw) 3)	100,586	95,338	389,584	382,257

Adj. EBIT/kg 0.7 1.1 0.9 0.9

1) Restated non-comparable items. see note 6 and 8

2) Costs related to bird flu and severance packages have been recognized in the quarter with MSEK 27 (17), see note 7.

3). Live Weight, tonnes

Change in EBIT Q1 2020 – Q1 2021 (MSEK)

Finance net and tax expenses

MSEK	Q2 2021	Q2 2020	R12M	2020
Finance income	0	0	0	0
Finance expenses	-24	-20	-78	-91
Finance net	-24	-19	-78	-90
Income after finance net	51	85	256	260
Income tax expenses	-10	-12	-62	-52
Income tax expenses %	-20%	-15%	-24%	-20%
Income for the period	41	73	195	208
Earnings per share, SEK	0.61	1.19	2.90	3.16

Cash flow

MSEK	Q2 2021	Q2 2020	R12M	2020
Opening balance NIBD	-1,941	-2,134	-2,058	-2,200
EBITDA	167	192	695	699
Change in working capital	0	69	94	143
Net capital expenditure	-89	-78	-381	-355
Other operating items	-22	-17	-25	-10
Operating cash flow	57	166	383	476
Paid finance items, net	-17	-22	-70	-76
Paid tax	-27	-7	-73	-41
Dividend	-81	-	-81	-
Business combinations	-	-	-116	-104
1) Other items	43	-61	49	12
Change in NIBD	-25	76	91	267
Closing balance NIBD	-1,967	-2,058	-1,967	-1,933

1) Other items mainly consist of effects from changes in foreign exchange rates and net change of leasing assets

Financial targets 1)	Q2 2021	R12M	Target
Adj. EBITDA margin, %	6.7%	7.5%	10%
NIBD/Adj. EBITDA	2.6x	2.6x	2.0-2.5x

1) Target for Net sales and dividend is measured and evaluated on annual basis

Overview – segment consolidation and KPIs

	Ready-to-cook 1)		Ready-to-eat 2)		Other 3)			Total
MSEK unless stated otherwise	Q2 2021	Q2 2020	Q2 2021	Q2 2020	Q2 2021	Q2 2020	Q2 2021	Q2 2020
Net sales	1,943	1,912	536	426	85	110	2,564	2,448
EBITDA	142	170	47	21	-21	0	167	192
Depreciation	-64	-60	-12	-12	-4	-3	-80	-75
EBITA	77	111	35	9	-24	-3	88	117
Amortisation	-12	-13	0	0	0	0	-12	-13
EBIT	65	98	35	9	-24	-3	75	105
EBITDA margin, %	7.3%	8.9%	8.7%	5.0%	-24.6%	0.6%	6.5%	7.8%
EBITA margin, %	4.0%	5.8%	6.5%	2.2%	-28.7%	-2.2%	3.4%	4.8%
EBIT margin, %	3.3%	5.1%	6.5%	2.2%	-28.8%	-2.2%	2.9%	4.3%
Non-comparable items 4)	0	0	0	0	-4	0	-4	0
Adj. EBITDA4)	142	170	47	21	-17	0	171	192
Adj. EBIT4)	65	98	35	9	-20	-3	79	105
Adj. EBITDA margin, %4)	7.3%	8.9%	8.7%	5.0%	-19.9%	0.6%	6.7%	7.8%
Adj. EBIT margin, %4)	3.3%	5.1%	6.5%	2.2%	-24.0%	-2.2%	3.1%	4.3%
Capital employed							4,230	4,291
Return on capital employed							7.9%	9.3%
Chicken processed (LW) 5)							100,586	95,338
Net sales/kg							25.5	25.7
EBIT/kg							0.7	1.1
Net sales split
Sweden	535	519	115	93	14	17	664	630
Denmark	382	419	344	272	42	59	767	749
Norway	371	331	73	60	3	4	448	394
Ireland	507	509	1	0	20	23	527	532
Finland	148	135	4	2	6	7	158	143
Total Net sales per country	1,943	1,912	536	426	85	110	2,564	2,448
Retail	1,562	1,589	123	105	4	3	1,690	1,698
Export	121	136	47	33	10	28	178	198
Foodservice	139	95	340	272	2	2	481	369
Industry / Other	121	93	26	16	69	76	216	184
Total Net sales sales channel	1,943	1,912	536	426	85	110	2,564	2,448
Chilled	1,606	1,539
Frozen	337	374
Total Net sales sub segment	1,943	1,912
CO2 emissions 6)							71.9	83.5
Animal welfare indicator 7)	6.2	8.7					6.2	8.7
Use of antibiotics (% of flocks treated)	3.9	9.0					3.9	9.0
Feed efficiency 8)	1.52	1.52					1.52	1.52
LTI per million hours worked 9)	44.1	34.2	5.8	19.3			39.5	32.5
Critical complaints 10)	1	6	2	7	0	0	3	13

1) Includes feed in Ireland, hatching in Sweden, 100% consolidation of the 51% owned entity Rokkedahl in Denmark. Net sales for the segment Ready-to-cook includes the external net sales

2) Net sales for the segment Ready-to-eat includes the external net sales. Operative result for the segment includes the integrated result for the group without internal margins

3) Other consist of Ingredients business and group cost, see note 2 for definition of Other. Group cost was MSEK 24 (6) in the quarter

4) Restated non-comparable items. see note 6 and 8

5) Live Weight, tonnes

6) g CO2e/kg product. Location-based method used for calculations. Emission factors from DEFRA 2020 and IEA 2018-2020

7) Foot score; leading industry indicator for animal welfare. The score is measured according to industry standard, meaning assessing 100 feet per flock independent of flock size

8) Feed conversion rate (kg feed/kg live weight). Includes only conventional chickens (approximately 85% of the Gro 's h ken he f res are based on far er's re orted f res n all o ntr es except in Sweden, where figures are country averages from Svensk Fågel

9) Injuries lead to absence at least the next day, per million hours worked

10) Includes recall from customers or consumers, presence of foreign objects in the product, allergens or incorrect content or sell by dates

Note, adjusted operating income in line with operating income as no noncomparable items was reported in the periods

Sustainability at Scandi Standard

Focus areas and progress

Our vision is Better Chicken for a Better Life - at Scandi Standard, we contribute to sustainable food production, by providing healthy, innovative chicken products that are produced in a responsible and resource-efficient way. We see that there is full alignment between meeting increasing ESG expectations and requirements, and operational and financial success for the Group – with the ambition to be a clear sustainability leader in the global poultry space.

Second quarter 2021

Lost Time Injuries (LTIs) per million hours worked have continued to increase in Q2 2021. The injury rate for the first half-year was higher than for the corresponding period in 2020. The increase was mainly driven by an increased injury rate in the Irish operations, but also the figures in Sweden and Finland are above the set target for 2021. During the second half year, we will increase efforts and initiate a project to follow up on injuries in a more systematic manner. The project work, including preventive measures, will also continue in 2022.
Foot pad condition or foot score is a standardized measure of animal welfare, a low score equates to good foot health, values below − are good in an international comparison. The result for Q2 2021 was very good; 6.2 points which can be compared to 8.7 points in Q2 2020. This means a result of 10.4 points for H1 2021, down 15% compared to the same period 2020 and, taking the seasonality of the foot score into consideration, well on the way towards the target for 2021 which is below 8 points. The positive figures are a result of targeted measures in Sweden and Ireland following the slightly higher Q1 results.
The use of antibiotics in Scandi Standard in the Nordic region is traditionally low, and Scandi Standard has successfully exported this practice also to its Irish operations. During the quarter, the antibiotics use in the Group continued to decrease and 3.9% treated flocks is a remarkable result in an international comparison. The improved performance is driven by improvements in Ireland.
Decreasing the climate impact of its own operations as well as across the value chain is a key priority for Scandi Standard. The work to measure and manage impact from the business is continuously being developed. With a result of 71.9 g CO2e / kg product in Q2 2021 (down 14% compared to Q2 2020), Scandi Standard has the possibility to reach its ambitious 2021 target.
Critical complaints remain on a very low level when comparing first half year 2021 with corresponding period in 2020; in total four critical complaints have been reported which is 79% down compared to 2020.

Deviations related to animal welfare and food safety in the Swedish operations

Scandi Standard experienced deviations from company standards linked to animal welfare and food safety in the Swedish production facility in the second quarter. The deviations were linked to the slaughtering process, as well as to the eviscerating and cleansing of the chicken, which led to occasional presence of contaminated carcasses. However, none of these deviations have led to animal suffering, or to jeopardizing the health and safety of consumers. Also, no increase in complaints has been recorded during the period. The deviations from the company's standards are something that was taken very seriously, and a detailed review was initiated to ensure good animal welfare and food safety.

Since the deviations were identified, intensive and systematic work has been done to rectify the deviations and close the action points and injunctions received from Swedish authorities, this has also involved ongoing investments to strengthen animal welfare. The goal has been to implement all items as soon as possible, at present we have resolved most of the items and are awaiting the a thor t es' a ro al. Together with the relevant authorities, work is now underway to close the remaining items as soon as possible, which is expected to take place during the autumn. In parallel with the action program in the Swedish operations, a group-wide investigation has been initiated, with the intention of developing an action plan to prevent and handle deficiencies in production and quality processes in all our markets. This is an issue that has a strong focus in our sustainability work. It is our conviction that a structured approach together with a high degree of transparency and reporting of KPIs to follow developments on these issues is the way forward.

Sustainability Overview	Q2 2021	Q2 2020	Δ	1H 2021	1H 2020	Δ	2021 Target
CO2 emissions (g CO2e/kg product)1)	71.9	83.5	-14%	76.8	85.5	-10%	72.9
Animal welfare indicator (foot score)2)	6.2	8.7	-29%	10.4	12.2	-15%	8.0
Use of antibiotics (% of flocks treated)	3.9	9.0	-56%	5.0	8.2	-39%	5.7
Feed efficiency (kg feed/live weight)3)	1.52	1.52	0%	1.52	1.53	-1%	1.50
LTI per million hours worked4)	39.5	32.5	22%	36.3	31.1	17%	27.6
Critical complaints5)	3	13	-77%	4	19	-79%	0

1) g CO2e/kg product. Location-based method used for calculations. Emission factors from DEFRA 2020 and IEA 2018-2020

2) Foot score; leading industry indicator for animal welfare. The score is measured according to industry standard, meaning assessing 100 feet per flock independent of flock size 3) Feed conversion rate (kg feed/kg live weight). Includes only con ent onal h kens a rox ately of the Gro 's h ken he f res are based on far er's re orted f res n all

countries except in Sweden, where figures are country averages from Svensk Fågel 4) Injuries lead to absence at least the next day, per million hours worked

5) Includes recall from customers or consumers, presence of foreign objects in the product, allergens or incorrect content or sell by dates

Segment: Ready-to-cook

MSEK	Q2 2021 Q2 2020		Δ	R12M	2020
Net sales	1,943	1,912	2%	7,689	7,622
EBITDA	142	170	-17%	596	615
Depreciation	-64	-60	8%	-252	-239
EBITA	77	111	-30%	344	376
Amortisation	-12	-13	-2%	-49	-49
EBIT	65	98	-34%	295	326
EBITDA margin, %	7.3%		8.9% -1.6ppt	7.7%	8.1%
EBITA margin, %	4.0%		5.8% -1.8ppt	4.5%	4.9%
EBIT margin, %	3.3%		5.1% -1.8ppt	3.8%	4.3%
Non-comparable items1)	-	-	-	-7	-7
Adj. EBITDA1)	142	170	-17%	603	622
Adj. EBIT1)	65	98	-34%	302	333
Adj. EBITDA margin, %1)	7.3%		8.9% -1.6ppt	7.8%	8.2%
Adj. EBIT margin, %1)	3.3%		5.1% -1.8ppt	3.9%	4.4%

Animal welfare indicator2)	6.2	8.7	-29%	9.3	10.2
LTI per million hours worked3)	44.1	34.2	29%	37.9	34.9
Critical complaints4)	1	6	-83%	3	9

1) Restated non-comparable items. see note 6 and 8

2) Foot score; leading industry indicator for animal welfare 3) Injuries lead to absence at least the next day, per million hours worked

4) Includes recall from customers or consumers, presence of foreign objects in the product, allergen or incorrect content or sell by dates

Net sales within the segment Ready-to-cook (RTC) increased by 2 percent from MSEK 1,912 to MSEK 1,943. In fixed currency the growth in net sales was 3 percent. Finland delivering 16 percent net sales growth in local currency, Norway grew 8 percent, Sweden 6 percent and Ireland 4 percent while Denmark decreased with 5 percent in local currency.

Chilled products increased net sales with 4 percent and constituted 83 percent of net sales for RTC. Frozen sales declined with 10 percent driven by lower export prices and constituted 17 percent of net sales for RTC.

Sales to Retail decreased with 2 percent and now represents 80 percent of total net sales for RTC. The development deviates from the consumer trend that has been noted the last year as we now compare versus strong growth during the beginning of the Covid-19 pandemic last year.

Contrary to Retail, the Food service sales channel is showing strong growth by 47 percent and constituted 7 percent of net sales for RTC. This compared to the very weak quarter last year strongly affected by the Covid-19 pandemic in all countries.

Deviations from company standards linked to animal welfare and food safety in the Swedish production facility and the public attention around these deviations contributed to reduced sales in June by 7 percent within Ready-to-cook Sweden after strong growth at the start of the quarter.

Net sales for the Export sales channel declined with 11 percent, now representing 6 percent of total RTC net sales. Prices in the global export markets continues to be impacted negatively by the Covid-19 pandemic and Bird flu. Further prevalence of Bird flu in Denmark, Sweden and Ireland has led to reduced market access to some of the core export markets in Asia and Africa which has further worsened the pricing situation also for Europe. Pricing in the export markets has hence been at historic low levels although some strengthening has been detected in the second half of the quarter. Export restrictions related to the Bird flu is expected to be partially lifted as of end of the third quarter.

Ready-to-cook: Change in EBIT Q2 2020 – Q2 2021 (MSEK)

Operating income (EBIT) for RTC decreased by MSEK 33 to MSEK 65 (98) corresponding to an operating income margin (EBIT margin) of 3.3 (5.1) percent.

The segment result was positively affected by positive mix effects predominantly in Norway but also in Sweden, Ireland and Finland.

The positive mix effect was partly offset by the negative effect on the business due to bird flu. The negative effect is estimated at MSEK 14, primarily driven by lower export prices and thus reduced sales but also some inventory write-downs.

At the same time cost of goods sold (COGS) developed negatively and the cost increase exceeded the positive mix effect. The costs were driven by increased production cost and waste in Sweden related to correcting deviations from the o any's standards but also increased feed prices in Ireland where the price increase has not yet been transferred to customers to the same extent as in other markets, increased insurance cost and cost for severance packages related to restructuring of the Irish operations.

In addition, Denmark has continued to have high cost of production and costs for the purchase of birds that has not been optimized as well as sales at low export prices, which impacts cost of gods sold (COGS) negatively. In total RTC Denmark operating income for the period was MSEK -35 (-23).

The operating expenses increased with MSEK 11 driven by bad dept expense in Sweden related to Export customers and increased marketing costs compared with low marketing costs last year because of the Covid-19 pandemic.

Depreciation increased by MSEK 6 due to high investment level in previous years, and currency impacted positively by MSEK 3. Adjusted operating income was in line with operating income as no noncomparable items were reported in the quarter.

Lost time injuries (LTI) for the RTC business were increasing in the second quarter, 44.1 per million hours worked compared to 34.2 in the second quarter 2020. The target for the group is to decrease injuries with 10 percent during 2021 and measures to reach this ambitious target has been implemented. Only one critical complaint was reported for RTC during the second quarter, an improvement compared with the same quarter previous year.

Segment Ready-to-cook (RTC): s the Gro 's lar est rod t ate ory and ons sts of products that are either chilled or frozen, that have not been cooked. These include whole birds, cuts of meat, deboned and seasoned, or marinated products. Products are made available mainly via Retail and Foodservice to both domestic and export markets. The segment comprises RTC processing plants in all five countries, the feed business in Ireland, egg production in Norway, and the hatching business in Sweden. Net sales for the segment consists of the external net sales.

Segment: Ready-to-eat

MSEK		Q2 2021 Q2 2020	Δ	R12M	2020
Net sales	536	426	26%	1,989	1,911
EBITDA	47	21	120%	179	141
Depreciation	-12	-12	1%	-47	-47
EBITA	35	9	273%	132	94
Amortisation	-	-	-	1	1
EBIT	35	9	273%	134	95
EBITDA margin, %	8.7%		5.0% 3.7ppt	9.0%	7.4%
EBITA margin, %	6.5%		2.2% 4.3ppt	6.7%	4.9%
EBIT margin, %	6.5%		2.2% 4.3ppt	6.7%	5.0%
Non-comparable items1)	-	-	-	0	0
Adj. EBITDA1)	47	21	120%	179	141
Adj. EBIT1)	35	9	273%	134	95
Adj. EBITDA margin, %1)	8.7%		5.0% 3.7ppt	9.0%	7.4%
Adj. EBIT margin, %1)	6.5%		2.2% 4.3ppt	6.7%	5.0%
LTI per million hours
worked2)	5.8	19.3	-70%	11.4	11.5
Critical complaints3)	2	7	-71%	8	17

1) Restated non-comparable items. see note 6 and 8

2) Injuries lead to absence at least the next day, per million hours worked

3) includes recall from customers or consumers, presence of foreign objects in the product, allergens or incorrect content or sell by dates

Net sales within the segment Ready-to-eat (RTE) increased by 26 percent from MSEK 426 to MSEK 536. In fixed currency the increase was 29 percent.

Net sales grew double digit in percent in all markets. Denmark remains the largest market and represents 64 percent of the total net sales for Ready-to-eat. A large part of the sales is to QSR (quick service restaurants) in Nordic and Europe.

The Foodservice sales channel increased with 25 percent and now represent 63 percent of net sales for RTE. The increase is driven by the same quarter last year being negatively affected by Covid-19 pandemic.

Retail sales channel continued to grow and increased its net sales by 18 percent. The Retail sales channel now constituted 23 percent of total RTE net sales.

The Export sales channel increased in net sales with 42 percent, and now represent 9 percent of net sales for RTE. The increase is mainly driven by the market in the UK reopening in the second quarter, compared to being completely closed in the same quarter previous year. The export business within RTE does not deal in surplus sales in the same way as is the case for RTC and has not been negatively impacted by the declining export prices in the same way as RTC.

Operating income (EBIT) for RTE increased significantly by MSEK 26 to MSEK 35 (9) corresponding to an operating margin (EBIT margin) of 6.5 (2.2) percent. The same quarter previous year was very negatively affected by the Covid-19 pandemic.

The period showed a positive volume effect mainly driven by the strong volume growth in Denmark.

The segment also showed a positive price/mix effect in all countries, primarily driven by better average prices in Retail and Export compared with a challenging second quarter last during due to the Covid-19 pandemic.

Production costs was in second quarter 2020 negatively impacted by temporary closure of production lines due to Covid-19 pandemic impact on sales.

The operating expenses increased by MSEK 2 driven by increased labor costs.

Depreciation increased slightly driven by investments in the Swedish production and currency impacted the result negatively by MSEK 1.

Adjusted operating income was in line with operating income as no noncomparable items was reported.

5.8 lost time injuries per million hours worked were reported for the RTE business in the second quarter 2021. This is a clear improvement versus 2020. Generally, the injury frequency is lower in the RTE segment than for RTC, but measures are continuously being implemented to further improve performance.

The number of critical complains decreased to 2 in the second quarter compared to 7 in the second quarter 2020, which is historically low levels for the RTE business.

Net Sales per Country and sales channel. Change versus corresponding quarter previous year in brackets ()

Segment Ready-to-eat (RTE): consists of products that have been cooked during processing and are ready to be consumed, either directly or after being heated up. Products range from grilled and pre-sliced chicken fillets with different seasoning to chicken nuggets. Sales are mainly to Retail and Foodservice sales channels, and part of the production is exported. The segment comprises RTE processing plants in Sweden, Denmark and Norway, combined with third-party production. Net sales for the segment consists of the external net sales. The operational result includes the integrated result for the group without internal margins.

Segment: Other/ Ingredients and group cost

Ingredients

Net sales decreased to MSEK 85 (110) with an operating income (EBIT) of MSEK -1 (4). The decrease in operating income (EBIT) was driven by reduced prices in fur animal feed.

Group cost

Group costs of MSEK 24 (6) were recognised in the Group operating income (EBIT). The increase was primarily driven by costs for severance pay for former CEO (8 MSEK) and non-comparable items consisting of an adjustment of the earn-out debt attributable to the acquisition of Manor Farm (MSEK 4).

Other

Personnel

The average number of fulltime employees in the second quarter 2021 was 3,275 (3,254) and 3,223 (3,271) in the first half of the year.

Government support

During the second quarter 2021 an amount of MSEK 2 of governmental support has been recognized in profit. The received government support refers to compensation for increased sick leave.

Average exchange rates

	2021-06	2020-06
DKK/SEK	1.36	1.43
NOK/SEK	1.00	0.99
EUR/SEK	10.13	10.66

Group results, financial position and cash flow January – June 2021

Net sales amounted to MSEK 5,033 (4,926). At constant exchange rates net sales increased by 5 percent. During the first quarter net sales to Retail sales channel increased while net sales to Food service decreased. During the second quarter net sales to Retail remained flat versus the same period previous year while net sales to Foodservice began to grow again.

Operating income (EBIT) for the Group amounted to MSEK 163 (179), corresponding to an operating margin (EBIT margin) of 3.2 (3.6) percent. The operating income included MSEK -4 (0) of non-comparable items consisting of an adjustment of the earn-out debt attributable to the acquisition of Manor Farm. Adjusted operating income (adj. EBIT) for the Group amounted hereby to MSEK 167 (179), corresponding to an adjusted operating margin (adj. EBIT margin) of 3.3 (3.6) percent.

The decrease in operating income is mainly driven by lower results in Ready-to-cook, while Ready-to-eat has improved its results. The operating income was also affected by one-off costs during the period related to severance and legal costs.

Finance net for the Group amounted to MSEK -40 (-53), which is an improvement compared with the same period previous year. The improvement refers to lower interest expenses for interest-bearing liabilities of MSEK -19 (-22), lower interest on leasing of MSEK -6 (-10) and currency/other items of MSEK - 16 (-21).

Tax expenses for the Group amounted to MSEK 27 (18) corresponding to an effective tax rate of approximately 22 (16) percent. The increased tax rate was explained by a ne at e ad st ent of the re o s year's tax expense in Ireland.

Income for the period for the Group decreased by 12 percent to MSEK 95 (108). Earnings per share was SEK 1.44 (1.70).

Net interest-bearing debt (NIBD) for the Group was MSEK 1,967, an increase by MSEK 34 from the 31st of December 2020. The operating cash flow for the first half year decreased to MSEK 166 (260) negatively affected by lower positive change of working capital and higher capital expenditure as the Group reduced the investment rate during the beginning of the Covid-19 pandemic last year. Total change in net interest-bearing debt during the first half year was MSEK -33 (142) driven by low operating cash flow, dividend of MSEK 81 (-), repurchase of own shares of MSEK 32 (-) for the long-term incentive programs (LTIP) which is included in other items, and by higher tax payments compared to the corresponding period previous year when local authorities in some countries last year approved a deferral of certain tax payments due to the Covid-19 pandemic.

The financial target for adjusted EBITDA margin is 10 percent. During the last twelve- onth er od the o any's ad sted D amounted to 7,5 percent, slightly below 2020 and 2019 level, and below target.

The financial target for net interest-bearing debt in relation to adjusted EBITDA is 2.0-2.5x. As of June 30 2021, net interest-bearing debt in relation to adjusted EBITDA was 2,6, slightly above the target range.