Atria Plc, Interim report, 26 October 2022, 8.00 am
Interim report of Atria Plc, 1 January–30 September 2022
Atria’s net sales grew strongly – increased costs weighed down EBIT
July–September 2022
- Consolidated net sales totalled EUR 438.8 million (EUR 388.0 million).
- Consolidated adjusted EBIT was EUR 16.2 million (EUR 19.7 million), or 3.7 per cent (5.1%) of net sales.
- Consolidated EBIT was EUR 16.4 million (EUR 19.7 million), or 3.7 per cent (5.1%) of net sales.
- Consolidated net sales increased as a result of increased sales prices. Sales of Foodservice products also increased in volume.
- Increased costs weighed down EBIT in all business areas.
- The construction of a poultry plant in Nurmo, Finland and the expansion of the Sköllersta plant in Sweden are progressing according to plan.
- In September, Atria Finland launched a development programme to improve the competitiveness and profitability of its poultry business.
- Premium Atria beef was successful in the “World Steak Challenge” competition.
January–September 2022
- Consolidated net sales totalled EUR 1245.5 million (EUR 1136.6 million).
- Consolidated adjusted EBIT was EUR 32.3 million (EUR 38.9 million), or 2.6 per cent (3.4%) of net sales.
- Consolidated EBIT was EUR 34.6 million (EUR -6.2 million), or 2.8 per cent (-0.5%) of net sales.
- EBIT includes a total of EUR +13.0 million in adjustment items with an impact on cash flow. In addition, the consolidated EBIT includes a translation difference of EUR -10.7 million, which has no impact on cash flow. - The EBIT adjustment item in the comparison period consists of EUR -45.1 million in translation differences recognised in the income statement in connection with the divestment of a Russian subsidiary (OOO Pit-Product).
- Net sales grew thanks to good retail, Foodservice, and feed sales.
- Exports decreased compared to the previous year.
- Increased costs weighed down EBIT in all business areas.
- Free cash flow was negative due to large investments and an increase in working capital.
- As part of Atria Sweden’s efficiency improvement programme, Atria sold the Malmö industrial property in Sweden in April.
- In May, Atria withdrew from its business operations in Russia and sold its subsidiary engaged in the fast-food business there.
- In January 2022, Atria Finland received an export licence for poultry products to South Korea.
| Q3 | Q3 | Q1 - Q3 | Q1 - Q3 | |||
| EUR million | 2022 | 2021 | 2022 | 2021 | 2021 | |
| Net sales | ||||||
| Atria Finland | 327.2 | 274.6 | 920.9 | 812.5 | 1,105.7 | |
| Atria Sweden | 92.7 | 94.3 | 269.9 | 259.0 | 351.7 | |
| Atria Denmark & Estonia | 29.1 | 27.3 | 83.5 | 78.5 | 104.9 | |
| Unallocated* | 0.0 | 0.2 | 0.0 | 14.8 | 15.0 | |
| Eliminations | -10.1 | -8.3 | -28.9 | -28.2 | -37.1 | |
| Net sales, total | 438.8 | 388.0 | 1,245.5 | 1,136.6 | 1,540.2 | |
| EBIT before items affecting | ||||||
| comparability | ||||||
| Atria Finland | 12.7 | 16.4 | 29.2 | 37.5 | 48.1 | |
| Atria Sweden | 3.4 | 3.0 | 3.2 | 2.1 | 2.7 | |
| Atria Denmark & Estonia | 0.7 | 1.2 | 2.2 | 5.1 | 5.1 | |
| Unallocated* | -0.6 | -0.9 | -2.2 | -5.9 | -6.8 | |
| Adjusted EBIT | 16.2 | 19.7 | 32.3 | 38.9 | 49.2 | |
| Adjusted EBIT, % | 3.7 % | 5.1 % | 2.6 % | 3.4 % | 3.2 % | |
| Items affecting comparability | ||||||
| of EBIT: | ||||||
| Atria Sweden | ||||||
| Refund of employment pension contribution** | 0.3 | 0.0 | 1.3 | 0.0 | 2.3 | |
| Sale of real estate in Malmö** | -0.1 | 0.0 | 9.8 | 0.0 | 0.0 | |
| Unallocated | ||||||
| Effect of the sale of subsidiary, Sibylla Rus*** | 0.0 | 0.0 | -8.8 | 0.0 | 0.0 | |
| Effect of the sale of subsidiary, Pit-Product*** | 0.0 | 0.0 | 0.0 | -45.1 | -45.1 | |
| EBIT | 16.4 | 19.7 | 34.6 | -6.2 | 6.4 | |
| EBIT, % | 3.7 % | 5.1 % | 2.8 % | -0.5 % | 0.4 % | |
| Profit before taxes | 18.3 | 19.4 | 38.5 | -7.5 | 4.8 | |
| Earnings per share, EUR | 0.58 | 0.53 | 1.15 | -0.59 | -0.24 | |
| Adjusted earnings per share, EUR | 0.57 | 0.53 | 1.07 | 1.01 | 1.27 | |
| * "Unallocated" consists of Group costs and Net sales and EBIT of the sold subsidiary in 2021. | ||||||
| ** Included in other operating income. | ||||||
| *** Included in other operating expenses. | ||||||
Juha Gröhn, CEO
”Atria Group’s net sales continued to grow in July–September. Net sales now stand at around EUR 439 million, an increase of EUR 51 million on the third quarter of 2021. Since the beginning of the year, net sales have increased by EUR 109 million to EUR 1245 million in January–September.
The growth in net sales results from price increases. The sales volumes in the Foodservice channel developed well following the lifting of COVID-19 restrictions. The development of retail sales has levelled off after strong growth during the COVID-19 pandemic, with some business lines and product groups showing a downward trend.
Sibylla sales will be lower than last year, as Atria’s Sibylla operations in Russia were sold in the spring of 2022. The feed business has grown. Export volumes are lower than a year ago, but the value of exports in the third quarter was about the same as last year.
Consolidated adjusted EBIT for the third quarter was EUR 16.2 million, down by around EUR 3.5 million compared to the same period a year ago. Profitability was weighed down by higher costs. The price of electricity has risen most sharply – despite price hedging. The prices paid by Atria to meat producers in the third quarter were more than 30 per cent higher than in the same period a year ago. Adjusted EBIT for January–September was EUR 32 million, compared with EUR 39 million a year ago. The company has adapted to the changing operating environment well.
The largest investments underway, i.e. the construction of a poultry plant in Nurmo and the expansion of the production plant in Sköllersta, Sweden, are progressing according to plan.
Consumer purchasing behaviour is changing. Inflation is eroding purchasing power and there is also a shift in food purchases to products with a lower unit price. Consumers may be eating out less often to save money.
Cost inflation has not stopped. In particular, rapidly fluctuating energy prices will be a major source of uncertainty next winter.
Free cash flow has been negative during the year due to large investments and an increase in working capital. However, the balance sheet has remained strong.
Atria’s success at the World Steak Challenge 2022 in Dublin continued. This time, Atria’s grass-fed steak, grown in Finland, received numerous honourable mentions in many competition categories. The success year after year is a testament to the high and consistent quality of Atria beef.
There has been a clear improvement in occupational safety in our factories and offices. Since 2017, the number of accidents at work has fallen by two-thirds. Such a change would not have been possible without the commitment of every Atria employee in occupational safety.”
July-September 2022
Atria Group’s net sales in July-September were EUR 438.8 million (EUR 388.0 million). Adjusted EBIT was EUR 16.2 million (EUR 19.7 million), or 3.7 per cent (5.1 %) of net sales. Consolidated EBIT was EUR 16.4 million (EUR 19.7 million) or 3.7 percent (5.1 %) of net sales. EBIT includes a refund of an employment pension contribution in the amount of EUR 0.3 million in Sweden.
The group's net sales increased mainly as a result of increases in sales prices. In the Foodservice channel, the volumes were also better than in the corresponding period of the previous year. Corona restrictions on restaurants were removed in the spring, which has strengthened sales to Foodservice customers. In Finland, sales to feed customers increased and exports were also better than the previous year. Sales to fast food customers were lower than the corresponding period of the previous year, because Atria withdrew from the fast-food business in Russia.
The adjusted EBIT was weaker than in the corresponding period of the previous year, which was a result of the increase in the prices of meat raw materials, raw materials, supplies, commodities and external services. Producer prices for meat were more than 30 percent higher than in the corresponding period of the previous year.
The construction of a poultry plant in Nurmo, Finland and the expansion of the Sköllersta plant in Sweden are progressing according to plan. The construction project in Nurmo is in progress with the laying of flooring, the construction of partition walls and the installation of building services. The project in Sköllersta has progressed to the building services and equipment installation phase, which is expected to be completed early next year.
In September, Atria Finland launched a development programme to improve the competitiveness and profitability of its poultry business. The programme will be implemented in phases. During the first phase, Atria will start negotiations on changes in the Sahalahti poultry unit in accordance with the Act on Co-operation within Undertakings. The possible closure of the Sahalahti plant will be discussed during the negotiations, which concern the entire workforce of the Sahalahti plant, approximately 130 people. Atria’s other production plants will not be affected by the first phase of the change negotiations. With the planned measures, Atria is aiming to achieve total annual savings of around EUR 5 million. The savings are expected to be realised from the end of 2024 onwards. During the second phase, negotiations will be launched in accordance with the Act on Co-operation within Undertakings in the Nurmo poultry unit. The aim of these negotiations is to prepare for the commissioning of a new poultry plant and to prepare for the renewal of work tasks and working practices.
Atria Finland’s net sales in July–September were EUR 327.2 million (EUR 274.6 million). Net sales increased in all sales channels, especially in the retail, feed and Foodservice channels. The increase in net sales in the retail channel was due to increases in sales prices. Exports also increased in value, although volumes declined slightly. Sales to Foodservice customers increased both in terms of value and volume. The coronavirus restrictions for restaurants that were imposed in spring 2020 were completely lifted at the beginning of March, which boosted Foodservice sales. EBIT totalled EUR 12.7 million (EUR 16.4 million). EBIT was lower than in the same period last year due to higher cost of raw materials, supplies, commodities and external services. Among commodities, energy costs in particular have increased. Logistics costs were also significantly higher than in the reference period. Meat producer prices were more than 30 per cent higher than in the same period in the previous year.
Atria Sweden’s net sales in July–September were EUR 92.7 million (EUR 94.3 million). In the local currency, net sales grew by 2.1 per cent year-on-year. Sales to the retail sector increased as a result of increased sales prices. Year-on-year sales to fast-food customers declined because of Atria’s withdrawal from the Russian fast-food business in May. Strong inflation reduced consumers’ purchasing power. Adjusted EBIT was EUR 3.4 million (EUR 3.0 million). EBIT was EUR 3.7 million (EUR 3.0 million). EBIT contains a refund of an employment pension contribution in the amount of EUR 0.3 million. The constantly high raw-material, transport and energy costs brought down EBIT during the review period.
Atria Denmark & Estonia’s net sales in July–September were EUR 29.1 million (EUR 27.3 million). EBIT totalled EUR 0.7 million (EUR 1.2 million). Atria’s net sales in Estonia grew by approximately 15 per cent year-on-year as a result of increases in sales prices. In Denmark, net sales were on a par with the previous year, exports increased slightly and retail sales contracted. EBIT was weighed down by a sharp increase in energy and raw material costs. Record-high inflation weakened consumer demand. Consumers are now clearly favouring products in lower price categories. Households’ purchasing power is being eroded by very high electricity and gas prices.
January–September 2022
Atria Group’s net sales in January–September were EUR 1245.5 million (EUR 1136.6 million). Adjusted EBIT was EUR 32.3 million (EUR 38.9 million), or 2.6 per cent (3.4%) of net sales. Consolidated EBIT was EUR 34.6 million (EUR -6.2 million), or 2.8 per cent (-0.5%) of net sales.
Atria Group’s net sales increased due to good retail, Foodservice and feed sales. Exports declined from the previous year. Since the spring, selling prices have strengthened in the retail and Foodservice channels in all business areas. The sales prices of feed were at a higher level than in the corresponding period last year.
The consolidated adjusted EBIT was weighed down by an increase in the costs of raw materials, supplies, commodities and external services. Among commodities, energy costs in particular have increased. Producer prices were higher than in the same period last year.
The EBIT includes a EUR 9.8 million non-recurring sales gain from an industrial property in Malmö and a EUR 1.3 million non-recurring refund of an employment pension contribution. The EBIT also includes a EUR 1.9 million sales gain recognised on the sale of the Sibylla Rus fast-food company, which operated in Russia, and a EUR -10.7 million translation difference loss incurred from the exchange rate differences between the Russian rouble and the euro. The translation difference was recognised in the income statement, but it has no effect on the Group’s equity ratio or cash flow.
The adjusted item in the EBIT of the comparison period consists of the EUR -45.1 million in translation differences recognised in the income statement in connection to the divestment of a Russian subsidiary (OOO Pit-Product).
Free cash flow was negative due to large investments and an increase in working capital.
As part of the efficiency programme initiated in 2020, Atria sold the industrial property in Malmö for EUR 21 million at the end of April. Atria will continue its industrial operations at the plant until the end of its production in the premises during 2023.
In May, Atria divested its subsidiary Sibylla Rus LLC, engaged in the fast-food business, to Limited Liability Company Agricultural Complex Mikhailovskiy, which is part of Cherkizovo Group. The purchase price was EUR 8.2 million. The transaction does not include the Sibylla brand. The net sales of the Russian fast-food company have accounted for approximately 2 per cent of Atria Group’s net sales, and the business has been profitable.
In January 2022, Atria Finland received a licence to export poultry products to South Korea. The first product batch to South Korea was delivered in March.
Atria Finland’s net sales in January–September were EUR 920.9 million (EUR 812.5 million). The increase in net sales was due to an increase in retail, Foodservice and feed sales. The sales prices of feed were at a higher level than in the corresponding period the year before. The growth in Foodservice sales was a result of the coronavirus restrictions on restaurants being lifted from the beginning of March. Exports declined from the previous year. Since spring, sales prices to retail and foodservice customers have been higher than in the same period last year. EBIT totalled EUR 29.2 million (EUR 37.5 million). EBIT was weighed down by the increase in the costs of raw materials, supplies, commodities and external services. Meat producer prices were higher year-on-year.
Atria Sweden’s net sales in January–September were EUR 269.9 million (EUR 259.0 million). Net sales in local currency were some 7.8 per cent higher than in the previous year. The net sales were strengthened by increases in retail sales prices. The sales of Foodservice products have increased in step with the lifting of the COVID-19 restrictions. Adjusted EBIT was EUR 3.2 million (EUR 2.1 million). EBIT was EUR 14.3 million (EUR 2.1 million). The EBIT includes a EUR 9.8 million non-recurring sales gain from an industrial property located in Malmö and a EUR 1.3 million non-recurring refund of an employment pension contribution. EBIT was weighed down by higher costs and weaker consumer purchasing power resulting from inflation. Consumers are now favouring products in lower price categories.
Net sales in January–September were EUR 83.5 million (EUR 78.5 million). EBIT totalled EUR 2.2 million (EUR 5.1 million). The increase in net sales resulted from higher sales prices in both Estonia and Denmark. EBIT was weighed down by record-high raw material and commodity costs.
| Key indicators | |||
| EUR million | 30.9.2022 | 30.9.2021 | 31.12.2021 |
| Shareholders´ equity per share EUR | 17.75 | 15.72 | 16.08 |
| Interest-bearing liabilities | 256.2 | 191.0 | 209.9 |
| Equity ratio, % | 48.9 % | 49.6 % | 48.7 % |
| Net gearing, % | 49.5 % | 38.6 % | 32.6 % |
| Gross investments | 85.0 | 33.4 | 55.6 |
| % of net sales | 6.8 % | 2.9 % | 3.6 % |
| Average FTE | 3,697 | 3,690 | 3,711 |
News on responsibility: Premium Atria beef is a success in the “World Steak Challenge” competition
Atria’s Finnish grass-fed beef was again successful in the World Steak Challenge 2022 in Dublin, Ireland. The competition rates the taste and quality of steak meat of various producers and awards the best steak meat in the world. Atria’s Danish partner JN Meat International entered the competition with Atria’s beef products and achieved gold levels in several categories:
- Gold medal level in the category of grass-fed beef fillet
- Gold medal level in the category of grass-fed beef rib-eye (entrecôte)
- Gold medal level in the category of grass-fed beef sirloin
Atria’s first chicken products that are traceable to individual farms arrived in stores 10 years ago. At the same time, this historic label on the package was launched on meat products for the first time in the world. Atria has been working systematically on traceability for a long time. Responsible, fully transparent meat production, where the final product can be traced back to family farms, indicates both product safety and origin. It is also a guarantee of animal welfare. Traceability has also given Atria a competitive advantage. Farm-specific traceability has provided the basis for the carbon footprint labelling of Atria’s food products and also for reducing its carbon footprint.
Atria has consistently developed and improved its occupational safety. “Safely home from Atria” is an occupational safety programme launched in 2017. The programme has achieved excellent results: two thirds of accidents have been eliminated over five years. The number of accidents has steadily decreased since 2017
Outlook for the future
In 2022, Atria Group's adjusted EBIT is estimated to be lower than in the previous year (EUR 49.2 million).
The significant and rapid rise in costs and the imbalance between global pork demand and supply will create uncertainty in the business environment in 2022. However, Atria's strong market position, long-term investment in its own brands, as well as good customer relationships and reliable industrial processes provide the preconditions for business stability even in these market situations.
Disclosure
Atria Plc complies with the disclosure procedure in accordance with standard 5.2b of the Financial Supervisory Authority and publishes its interim report for 1 January to 30 September 2022 as an attachment to this stock exchange release. The full release is available on the company's website at www.atria.com.
Publication of the interim report
Atria Plc's CEO Juha Gröhn will present the company's interim report in a webcast today, October 26, at 10:00 - 11:00 am. The webcast is available on Atria's website at www.atria.fi/konserni/sijoittajat/ in Finnish language. During the webcast, you can ask questions in writing via chat. The recording of the press conference and the presentation material of the event will be available during the same day at www.atria.fi/konserni/sijoittajat/taloustieto/osavuosikatsaukset/.
ATRIA PLC
Board of Directors
For more information, please contact: Juha Gröhn, CEO, Atria Plc, tel. +358 400 684224.
DISTRIBUTION
Nasdaq Helsinki Ltd
Major media
www.atria.com
The interim report is available on our website at www.atria.com.
