Sokolow's soaring profit bolsters confidence

Related tags Poland

A boost from EU exports and a solid home market performance have
helped Polish meat processing company Sokolów to achieve bumper net
profits for the first half of 2004, but this is all part of the
plan, according to a company quietly confident of establishing
itself further at home and abroad.

Sokolów has announced first half net profits of almost PLN 12.4 million (€2.8 million) compared to just PLN 220,000 (€51,000) for the first half of 2003, giving new majority owners Danish Crown and HK Ruokatalo a good base on which to launch their plans for expansion.

Total company revenue is also up, coming in at PLN 626.8 million (€145 million) compared to PLN 440.6 million (€102 million) in 2003. Chief executive officer of HK Ruokatalo, Simo Palakangas, told​ that Sokolów's sales were up 30 per cent, mainly due to a rise in exports following Poland's accession to the EU in May this year.

But Sokolów director Jerzy Majchrzak pointed out that the company had also performed well under difficult competitive conditions in Poland, consolidating and expanding its own retail network and continuing to supply a range of supermarkets, despite rising raw material prices and the danger of overcapacity in the Polish market.

Majchrzak said the company was pleased but not surprised by the figures. "We are growing according to the plan. We expect to announce good financial results for this year and further growth next year,"​ he said, adding that Sokolów was planning to use hypermarkets as one of its main channels to increase sales in Poland and across Europe.

And Majchrzak believes the company's EU exports, which already make up 95 per cent of total company exports, could rise by 10 to 12 per cent next year if the company can continue to provide quality products at a competitive price. This would fit the aims of Palokangas, who wants to increase Sokolów's exports to EU countries by 20 to 40 per cent over the next two to three years.

Palokangas said that Polish ex-pat communities would be the main target, citing a demand for traditional meats unique to Poland such as canned hams and speciality sausages. Large Polish communities exist in Britain and Germany, though there is potential to expand to the United States which houses 10 million Poles; easily the world's largest Polish ex-pat community.

Sokolów is also in a promising position at home as the only company in the Polish meat sector with complete national coverage, something which may help it to eat into the profits of arch rival Animex, which expects its 2004 turnover to double Sokolow's 2003 figure of PLN one billion (€233 million).

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