Atria Plc, financial statement release, company announcement February 22, 2023, 8.00 am
ATRIA PLC, FINANCIAL STATEMENT RELEASE, 1 JANUARY – 31 DECEMBER 2022
Strong growth and stable results for Atria
October–December 2022
January–December 2022
| Q4 | Q4 | Q1 - Q4 | Q1 - Q4 | |
| EUR million | 2022 | 2021 | 2022 | 2021 |
| Net sales | ||||
| Atria Finland | 344.4 | 293.2 | 1,265.3 | 1,105.7 |
| Atria Sweden | 86.3 | 92.7 | 356.2 | 351.7 |
| Atria Denmark & Estonia | 29.4 | 26.4 | 112.9 | 104.9 |
| Unallocated* | 0.0 | 0.2 | 0.0 | 15.0 |
| Eliminations | -8.9 | -8.9 | -37.7 | -37.1 |
| Net sales, total | 451.2 | 403.6 | 1,696.7 | 1,540.2 |
| EBIT before items affecting | ||||
| comparability | ||||
| Atria Finland | 20.3 | 10.6 | 49.4 | 48.1 |
| Atria Sweden | -0.9 | 0.6 | 2.3 | 2.7 |
| Atria Denmark & Estonia | -0.9 | 0.0 | 1.2 | 5.1 |
| Unallocated* | -1.8 | -0.9 | -4.0 | -6.8 |
| Adjusted EBIT | 16.7 | 10.3 | 49.0 | 49.2 |
| Adjusted EBIT, % | 3.7 % | 2.5 % | 2.9 % | 3.2 % |
| Items affecting comparability | ||||
| of EBIT: | ||||
| Atria Sweden | ||||
| Refund of employment pension contribution** | 0.0 | 2.3 | 1.3 | 2.3 |
| Sale of real estate in Malmö** | -0.1 | 0.0 | 9.7 | 0.0 |
| Impairment of goodwill and trademarks*** | -51.1 | 0.0 | -51.1 | 0.0 |
| Unallocated | ||||
| Effect of the sale of subsidiary, Sibylla Rus*** | 0.0 | 0.0 | -8.8 | 0.0 |
| Effect of the sale of subsidiary, Pit-Product*** | 0.0 | 0.0 | 0.0 | -45.1 |
| EBIT | -34.5 | 12.6 | 0.1 | 6.4 |
| EBIT, % | -7.6 % | 3.1 % | 0.0 % | 0.4 % |
| Profit before taxes | -36.8 | 12.3 | 1.7 | 4.8 |
| Earnings per share, EUR | -1.34 | 0.34 | -0.19 | -0.24 |
| Adjusted earnings per share, EUR | 0.36 | 0.26 | 1.43 | 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. |
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Juha Gröhn, CEO
”In 2022, Atria’s net sales increased by almost EUR 160 million compared to 2021. The net sales were now EUR 1696.7 million (EUR 1540.2 million). This growth was necessary to maintain profitability. The adjusted EBIT was EUR 49.0 million (EUR 49.2 million). We can be satisfied with both the growth and the result.
In the fourth quarter of 2022, net sales increased to EUR 451.2 million (EUR 403.6 million) and adjusted EBIT was EUR 16.7 million (EUR 10.3 million). High cost inflation has affected consumer purchasing behaviour with consumers now choosing more affordable products in their shopping baskets. Atria’s broad product range allows us to adapt well to changes in the shopping basket, and we have performed well with the current product portfolio in our various sales channels.
Cost increases have been exceptionally high, making it necessary to pass on the costs to selling prices. Atria and its customers reacted to the change in the market situation immediately after Russia invaded Ukraine. Previously agreed deals for the summer period were renegotiated and sales prices increased. If our customers had not agreed to the renegotiations and price increases, the situation would have become very difficult, especially for primary production. As sales prices rose, so did producer prices. Cost inflation will continue and a great deal of attention will be paid to cost and price management during the current year.
Measured in kilograms, the market for Atria’s product groups in the retail sector contracted by around 3%. Foodservice sales, on the other hand, have recovered to pre-pandemic levels more quickly than expected. Atria’s sales in kilograms to retail and Foodservice customers were at 2021 levels, which means that compared to the overall market development, we performed well. Fast food sales declined due to the divestment of Sibylla operations in Russia. Exports as a whole decreased due to a reduction in exports to China. In other export markets, trading was good. Sales volumes of the feed industry increased.
In value terms, the market for the products in which Atria is involved grew by around 6% in the retail sector, with stronger growth taking place in the second half of the year. The product group whose value grew the most is poultry products, but the sales of convenience food, meat and meat products also increased in euro terms. Our market position in Finland, Sweden and Estonia strengthened. In Denmark, we lost some market share.
The market situation and consumer behaviour are similar in all the countries where Atria operates. In the last quarter of the year, sales in October and November were in line with expectations, but Christmas sales were lower than in 2021. Rapid sales fluctuations are typical when households’ confidence in their own economic situation is lower than usual.
Free cash flow in 2022 was negative, as expected, due to gross investments of more than EUR 130 million. Investments have progressed as planned. In Sweden, the logistics section of the Sköllersta plant in Örebro was completed at the turn of the year and is being commissioned. The investment in the Nurmo poultry plant is in the equipment installation phase. Due to the impact of cost inflation, almost EUR 40 million more money is committed to working capital than at the end of 2021.
The operating environment was challenging in the past year. Just as the coronavirus restrictions were being lifted, Russia started a war. In this context of recurrent crises, Atria’s personnel have remained focused on their work and performed well. The same approach will be required in the year ahead.”
October–December 2022
Atria Group’s net sales for the October–December period were EUR 451.2 million (EUR 403.6 million). Consolidated adjusted EBIT was EUR 16.7 million (EUR 10.3 million), or 3.7% (2.5%) of net sales. Consolidated EBIT was EUR -34.5 million (EUR 12.6 million). Operating profit includes EUR 51.1 million of impairment losses recognised in Sweden, with no cash flow impact.
Group net sales increased due to stable retail and Foodservice sales volumes and sales price increases. Sales to Foodservice customers increased and the sales during the period under review were well above the pre-pandemic level. High cost inflation affected consumer behaviour, increasing the demand for more affordable products. The change in consumer behaviour has favoured the sales of Atria’s diverse product range, especially in the retail sector.
Adjusted EBIT was better than in the corresponding period last year. The increase in EBIT resulted from higher net sales, which strengthened EBIT especially in Finland. The costs of raw materials, supplies, energy and external services were significantly higher than in the comparison period.
Atria recorded total impairment of EUR 51.1 million in Sweden. High inflation affecting consumer behaviour, the discontinuation of fast-food operations in Russia and higher market interest rates have reduced the present value of Atria Sweden’s cash flow projections. Atria Sweden’s cash flow projections have previously included Sibylla Rus LLC, which operated in Russia. The market interest rates included in the discount rate used to calculate the present value of the projected cash flows have increased by approximately 2 percentage points. Due to the above reasons, Atria recorded goodwill impairment allocated to Atria Sweden by approximately EUR 35 million. In addition, Atria Sweden, in line with its strategy, has decided to streamline the use of its brands. It is discontinuing four brands (Charkdelikatesser, Pastejköket, Onsala, Lagerbergs) and transferring most of the products from these brands to the growing Lönneberga and Lithells brands. As a result of the decision, Atria wrote down the value of its brands by approximately EUR 16 million. The write-offs have no impact on cash flow or adjusted EBIT.
Atria’s change negotiations initiated on 19 September 2022 in accordance with the Act on Co-operation within Undertakings regarding the improvement of the competitiveness of the poultry business at the Sahalahti plant were completed. In the changed operating environment and competitive and market situation, Atria aims to improve the competitiveness and profitability of its poultry business and increase the efficiency of its industrial operations. As a result of the negotiations, Atria will centralise its poultry production at the Nurmo plant and the Sahalahti plant will be closed in 2024. The negotiations concern the entire workforce of the Sahalahti plant, approximately 130 people. All those made redundant have been offered the opportunity to transfer to work at Atria’s other plants in Finland. With these 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. The negotiations in accordance with the Act on Co-operation within Undertakings regarding the changes at the Nurmo poultry unit are still ongoing. The aim of these negotiations is to prepare for the commissioning of a new poultry plant and to prepare for the renewal of tasks and working practices.
Atria Finland Ltd acquired 51% of the shares in Ab Korv-Görans Kebab Oy. Korv-Görans Kebab makes frozen meat products and is Atria’s longstanding partner as a contract manufacturer of kebab slices, cooked chicken products and other meat products made from Finnish raw materials. The acquisition is not estimated to have major impact on Atria’s financial position or result.
In December, Atria received a licence to export beef to Japan. Atria has established customer relationships in Japan and exports are expected to start in summer 2023.
Juha Gröhn, Atria’s long-time CEO, will retire on 31 May 2023. Atria Plc’s Board of Directors has appointed Kai Gyllström, MSc (Econ.), MBA, as the new CEO of Atria Group as of 1 June 2023. Juha Gröhn will continue as CEO until his retirement.
Atria Finland’s net sales during the October-December period were EUR 344.4 million (EUR 293.2 million). Net sales grew in all sales channels except exports, where they were at last year’s level. The impact of cost inflation on consumer behaviour has favoured the sales of Atria’s diverse product range, especially in the retail sector, and sales price increases in all channels strengthened net sales. Sales to Foodservice customers increased and the sales during the period under review were well above the pre-pandemic level. EBIT totalled EUR 20.3 million (EUR 10.6 million). EBIT was significantly higher than in the corresponding period last year, thanks to higher net sales, an improved sales structure and improved efficiency. The costs of raw materials, supplies, commodities and external services were significantly higher than in the comparison period. Among commodities, energy costs in particular increased. Meat producer prices were significantly higher than in the same period in the previous year.
Atria Sweden’s October–December net sales were EUR 86.3 million (EUR 92.7 million). The development of net sales was affected by Atria’s decision to withdraw from the fast-food business in Russia in May 2022. The business was reported in the Atria Sweden segment. The growth of net sales in local currencies, excluding the Russian fast-food business, was 12.5%. Sales price increases increased net sales. Adjusted EBIT was EUR -0.9 million (EUR 0.6 million). The constantly high raw-material, transport and energy costs brought down EBIT during the review period, and the increases in selling prices were not high enough to cover the increased costs. EBIT was EUR -52.1 million (EUR 2.9 million). EBIT includes a total impairment of EUR -51.1 million: goodwill write-down of EUR 35.0 million and a brand write-down of EUR 16.1 million.
Atria Denmark & Estonia’s net sales in October–December were EUR 29.4 million (EUR 26.4 million). EBIT totalled EUR -0.9 million (EUR 0.0 million). Atria’s net sales in Estonia grew by approximately 24% year-on-year as a result of increases in sales prices and sales volumes. In Denmark, net sales strengthened slightly, driven by sales price increases. EBIT was weighed down by a sharp increase in energy and raw material costs. The sales price increases have not been sufficient to cover the rapidly rising costs. Consumers are now clearly favouring products in lower price categories due to record high inflation. Households’ purchasing power is being eroded by very high electricity and gas prices. The transfer of cold cuts production from Malmö to the Horsens plant in Denmark in October resulted in additional costs.
January–December 2022
Atria Group’s full-year net sales were EUR 1696.7 million (EUR 1540.2 million). Adjusted EBIT was EUR 49.0 million (EUR 49.2 million), or 2.9% (3.2%) of net sales. Consolidated EBIT was EUR 0.1 million (EUR 6.4 million).
Atria Group’s net sales increased thanks to stable retail, Foodservice and feed sales volumes and sales price increases. Since the spring, sales prices have strengthened in all business areas.
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 increased. Producer prices were significantly higher than in the same period last year.
The EBIT includes a EUR 9.7 million sales gain from an industrial property located in Malmö and a EUR 1.3 million 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. At the end of 2022, Atria Sweden recorded impairments totalling EUR 51.1 million. This has no impact on cash flow.
Adjustments to EBIT for the comparison period total EUR -42.8 million and consist of accumulated translation differences recognised in the income statement in connection with the sale of the Russian subsidiary (OOO Pit-Product) EUR -45.1 million and the refund of EUR 2.3 million of employment pension contributions in Sweden.
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 approximately 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, which was engaged in the fast-food business, to Limited Liability Company Agricultural Complex Mikhailovskiy, which is part of Cherkizovo Group. The sales price was EUR 8.2 million. The transaction does not include the Sibylla brand. The net sales of the fast-food company operating in Russia accounted for approximately 2% of Atria Group’s net sales, and the business was 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 January–December net sales amounted to EUR 1265.3 million (EUR 1105.7 million). The increase in net sales was driven by stable retail, Foodservice and feed sales volumes and sales price increases. The growth of Foodservice sales was boosted by the lifting of the COVID-19 restrictions on restaurants from the beginning of March. EBIT totalled EUR 49.4 million (EUR 48.1 million). Taking into account the changes in the operating environment, EBIT was stable. The increase in net sales strengthened EBIT. Costs for raw materials, consumables, energy and external services were significantly higher than in the previous year. Producer prices for meat were markedly higher year-on-year. Atria’s organisation has shown an excellent ability to adapt to rapid changes and recover from disruptions during the period under review, resulting in cost-efficient and undisrupted operations.
Atria Sweden’s January–December net sales amounted to EUR 356.2 million (EUR 351.7 million). The development of net sales was affected by Atria’s decision to withdraw from the fast food business in Russia in May 2022. The business was reported in the Atria Sweden segment. The growth of net sales in local currencies, excluding the Russian fast-food business, was 15.4%. Sales price increases increased net sales. The sales of Foodservice products have increased in step with the lifting of the COVID-19 restrictions. Adjusted EBIT was EUR 2.3 million (EUR 2.7 million). EBIT was weighed down by higher costs and weaker consumer purchasing power resulting from inflation. Consumers prefer products in the lower price range. The sales price increases have not been sufficient to cover rapidly rising costs. EBIT was EUR -37.8 million (EUR 5.0 million), The EBIT includes a EUR 9.7 million non-recurring sales gain from an industrial property located in Malmö, a EUR 1.3 million non-recurring refund of an employment pension contribution and EUR -51.1 million of impairment. EBIT of the comparative period includes a EUR 2.3 million refund of an employment pension contribution.
Atria Denmark & Estonia’s January–December net sales amounted to EUR 112.9 million (104.9 million). EBIT totalled EUR 1.2 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, commodity costs and additional cost caused by the transfer of the production lines.
| Key indicators | ||
| EUR million | 31.12.2022 | 31.12.2021 |
| Shareholders´ equity per share EUR | 15.90 | 16.08 |
| Interest-bearing liabilities | 265.7 | 209.9 |
| Equity ratio, % | 44.8 % | 48.7 % |
| Net gearing, % | 50.5 % | 32.6 % |
| Gross investments | 131.4 | 55.5 |
| % of net sales | 7.7 % | 3.6 % |
| Average FTE | 3,698 | 3,711 |
News on sustainability: Atria’s climate targets officially approved by Science Based Targets
The Science Based Targets Initiative (SBTi) has officially approved Atria’s emission reduction targets. The targets are based on the Paris Climate Agreement and aim to limit global warming to 1.5 degrees Celsius globally. In the targets approved by SBTi, Atria commits to reducing the greenhouse gas emissions from its own operations (Scopes 1 and 2) by 42% by 2030 from 2020 levels. The target for Scope 3 emissions includes emissions related to purchased goods, raw materials and services. The reduction target for Scope 3 emissions is 20% per tonne of meat processed by 2030.
The Atria feed plant in Koskenkorva, Ilmajoki, is investing in new technology for drying barley feed. The investment will bring energy savings of more than 85% compared to the previous equipment. The savings are based on the recovery and utilisation of heat and steam at the A-Rehu plant.
Atria was one of the first companies to join the food industry’s material efficiency commitment in 2019 and is continuing its commitment in the new operating period 2022–2026. The material efficiency commitment aims to reduce the environmental impact of food production, distribution and consumption. Supporting the joint goals of the industry through the commitment, Atria has specified practical measures to further improve material efficiency in production processes, in addition to developing product and packaging solutions. Atria’s aim is to improve its already high level of raw material utilisation and reduce material and food waste at all stages of each product’s life cycle. In addition, Atria is committed to promoting consumer awareness of ways to reduce food waste.
Events after the period under review
Lars Ohlin, Executive Vice President, Human Resources, and member of Atria Group’s Management Team will retire as of 1 March 2023.
Outlook for the future
Atria Group’s adjusted EBIT in 2023 is expected to be smaller than in the previous year (EUR 49.0 million).
During 2023, the company will commission a major expansion at its Sköllersta plant in Sweden, and the phased start-up and testing of the new poultry plant in Nurmo will begin. These measures will result in additional costs in 2023.
In addition, high costs, weakened consumer purchasing power and global political uncertainty will continue to affect the business environment in 2023. Atria’s strong market position and strong brands, good customer relationships and reliable industrial processes will enable stable business also in 2023.
Board of Directors’ proposal for profit distribution for 2022
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.70 (EUR 0.63) be paid for each share for the 2022 financial period.
Disclosure
Atria Plc complies with the disclosure procedure in accordance with standard 5.2b of the Financial Supervisory Authority and publishes its financial statement release for 1 January to 31 December 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 financial statement release
Atria Plc's CEO Juha Gröhn will present the company's financial statement release 2022 in a webcast today, February 22, 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 in Finnish during the same day at www.atria.fi/konserni/sijoittajat/taloustieto/osavuosikatsaukset/.
For more information, please contact: Juha Gröhn, CEO, Atria Plc, tel. +358 400 684224.
ATRIA PLC
Board of Directors
DISTRIBUTION
