Interim report of Atria Plc, 1 January–30 September 2023

Atria Plc, Interim report, 24 October 2023, 8.00 am


Interim report of Atria Plc, 1 January–30 September 2023

Atria’s EBIT for July–September increased – net sales decreased slightly


July–September 2023

• Consolidated net sales totalled EUR 429.5 million (EUR 438.8 million).
• The Group’s adjusted EBIT was EUR 19.3 million (EUR 16.2 million), or 4.5% (3.7%) of net sales.
• The Group’s EBIT was EUR 19.3 million (EUR 16.4 million).
• Atria Finland’s net sales were weakened by a decline in feed sales and exports.
• Atria Sweden’s net sales were weighed down by weaker sales to retail customers. Consumers prefer less expensive products, and sales of private label products have increased significantly. In addition, the weaker Swedish krona weighed down sales.
• Atria Finland’s improved sales structure and higher sales prices strengthened EBIT.
• Atria Denmark & Estonia’s EBIT improved significantly.
• Atria raised its guidance for its adjusted EBIT for 2023. This resulted from the good performance of Atria Finland, which was mainly caused by the better-than-expected start-up of the new poultry plant. In addition, Atria Finland’s sales structure is better than in the previous year.
• Jennifer Paatelainen, M.Sc. (Econ.), was appointed Atria Group’s Executive Vice President of Human Resources as of 8 January 2024.

January–September 2023

• Consolidated net sales totalled EUR 1314.6 million (EUR 1245.5 million).
• The Group’s adjusted EBIT was EUR 40.2 million (EUR 32.3 million), or 3.1% (2.6%).
• The Group’s EBIT was EUR 40.2 million (EUR 34.6 million).
• Net sales grew by almost EUR 70 million year-on-year. The growth resulted from sales prices that were higher than in the comparison period and stable sales volumes for retail and Foodservice customers.
• The change in consumer behaviour resulting from the economic downturn has favoured the sales of Atria’s diverse product range, especially in the retail sector.
• The increase in EBIT was due to an improved sales structure and higher sales prices than in the corresponding period of the previous year. 
• In May, Atria acquired 100,000 of its own series A shares at an average price of EUR 10.81 per share. This corresponds to approximately 0.35% of the total number of shares in the company.
• The expansion of the Sköllersta plant was completed. The production lines were transferred from Malmö to Sköllersta, and the last day of production at the Malmö plant was in June.
• Kai Gyllström, M.Sc., MBA, joined the Group as CEO on 1 June 2023.

Kai Gyllström, CEO

“Net sales for January–September were EUR 1,314.6 million, an increase of almost EUR 70 million compared to the same period last year. EBIT increased from EUR 34.6 million to EUR 40.2 million.

As a result of the good performance in Finland and the successful start-up of the poultry plant, Atria raised its guidance for EBIT for the current year. We estimate that adjusted EBIT for 2023 will be higher than EUR 49.0 million.

Atria Finland delivered a strong result. Sales prices have been higher than in the same period last year, and the sales structure has improved. The most significant price increases were already made a year ago during the second and third quarters. In Finland, we have been able to increase our sales to retail and Foodservice customers. On the other hand, sales to feed, industrial and export customers decreased in the third quarter.

The investments in the new poultry plant in Nurmo and the expansion of the Sköllersta plant have progressed according to plan – the Sköllersta plant was completed in the autumn, and the construction and commissioning of the poultry plant in Nurmo is continuing. Both projects have incurred some additional costs, but these have remained at a relatively moderate level.

The development of Atria Sweden’s net sales and EBIT has been held back by strong inflation in food prices. Swedish consumers are now looking carefully at what they buy, and are shopping for low-priced products, mostly private label products. Production at the Malmö plant ended in June, with several products being discontinued. This had a negative impact on Atria Sweden’s net sales.

In Estonia, Atria has been able to increase its sales to retail customers. In the third quarter, Atria Estonia’s net sales increased by more than 20% compared to the same period last year. In Denmark, Atria’s sales performance has continued to be weak, but the profit level has been improved by efficiency measures.

The strong growth in the value of the product groups where Atria operates has been remarkable during the current year. Sales value has increased by 10% in Finland, more than 5% in Sweden, 14% in Denmark and almost 14% in Estonia between January and August. Atria has kept up well with market development, especially in Finland and Estonia, where we have been able to steadily increase our market shares.

The cash flow from operating activities for the period under review is more than EUR 60 million higher than in the previous year as a result of the development of EBIT and working capital. The large investments made during the period resulted in a free cash flow of EUR -34.4 million.

The Atria 100 Young Producers training programme for future livestock farmers started in October 2023. Finnish food production will be on a strong footing when we can work with young farmers from all production sectors to tackle future challenges and find opportunities. The motivation shown by young producers further strengthens our belief in the future of domestic food production.

In the summer of 2023, Atria farmers, Atria employees, Atria Finland, and the producer cooperatives Itikka, Lihakunta and Pohjanmaan liha carried out a large-scale joint project to deliver canned pork to Ukraine, which is fighting a defensive war against Russia. The project raised a total of EUR 114,881. These funds were used to deliver 39,342 cans of Atria pork to Ukraine. The collection was carried out in cooperation with the Apua Ukrainaan ry association, which has a valid money collection licence. Over the last year and a half, the association has delivered more than 30 trucks and other vehicles to Ukraine, as well as about 15 truckloads of mostly hospital supplies.”

July-September 2023

Atria Group’s net sales in July–September were EUR 429.5 million (EUR 438.8 million). The Group’s adjusted EBIT was EUR 19.3 million (EUR 16.2 million), or 4.5% (3.7%). Consolidated EBIT was EUR 19.3 million (EUR 16.4 million), or 4.5% (3.7%) of net sales.

Atria Finland’s reduced sales to feed, industrial and export customers weakened net sales. Atria Sweden’s net sales were weighed down by weaker sales to retail customers and the weakened Swedish krona. In addition, Atria Sweden’s figures no longer include sales of products discontinued following the closure of the Malmö plant, which contributed to the decline in net sales in the third quarter. AB Korv-Görans Kebab Oy, acquired by Atria at the end of last year, increased net sales in Finland. The net sales of Atria Estonia showed strong development. Atria Denmark's net sales decreased, which was due to lower sales volumes to retail customers.

Year-on-year EBIT improved thanks to a more favourable structure of sales and higher sales prices. Costs of raw materials and external services, as well as payroll costs, were higher than in the comparison period. In Finland, producer prices for meat were higher than in the same period in the previous year. Energy prices were lower than in the comparison period.

The investment in Atria’s new poultry plant in Nurmo progressed as planned. The phased commissioning started in April. Construction and installation work have progressed according to plan. The commissioning of process equipment is continuing. Testing and commissioning of the slaughterhouse will start during the end of the year.

The Malmö plant ceased production in June. The expansion project at Atria’s Sköllersta plant in Sweden was completed in August. During the period under review, there have been challenges in operational efficiency due to the start-up of the production lines at the Sköllersta plant.

Atria raised its guidance for its adjusted EBIT for 2023 on 11^th of September 2023. This resulted from the good performance of Atria Finland, which was mainly caused by the better-than-expected start-up of the new poultry plant. In addition, Atria Finland’s sales structure is better than in the previous year.

Atria Finland’s net sales in July–September were EUR 323.6 million (EUR 327.2 million). The decrease in net sales was due to lower net sales to feed, industrial and export customers. Net sales to retail and Foodservice customers continued to grow. In addition, AB Korv-Görans Kebab Oy, acquired by Atria at the end of last year, increased net sales.

EBIT totalled EUR 19.0 million (EUR 12.7 million). This increase was due to an improved sales structure and higher sales prices than in the corresponding period of the previous year. The phased commissioning of the poultry plant went well during the reporting period.

Costs of raw materials and external services as well as payroll costs were higher than in the comparison period. Meat prices paid to producers were also higher than in the corresponding period in the previous year. Energy prices were lower than in the comparison period.

Atria Sweden’s net sales in July–September were EUR 80.5 million (EUR 92.7 million). Net sales in euros decreased by approximately 13 percent. The decrease in net sales in local currencies was around 4%. Price inflation has had an impact on consumer behaviour, with consumers preferring less expensive products, and private label sales increasing significantly. The figures for the comparison period for net sales and result include sales of products previously produced at the Malmö plant, which have been discontinued or transferred to Atria’s Danish plant.

Adjusted EBIT was EUR 0.0 million (EUR 3.4 million). EBIT was EUR 0.0 million (EUR 3.7 million). EBIT for the comparison period includes a non-recurring refund of EUR 0.3 million of pension contributions. Changes in consumer behaviour and weaker sales reduced EBIT. Higher raw material prices, the weakening of the Swedish krona and costs related to the rearrangement of production also weighed on Atria Sweden’s result.

The Malmö plant ceased production in June. The expansion project at Atria's Sköllersta plant in Sweden was completed in August. During the period under review, there have been challenges in operational efficiency due to the start-up of the production lines at the Sköllersta plant.

Atria Denmark & Estonia’s net sales in July–September were EUR 32.0 million (EUR 29.1 million). EBIT totalled EUR 1.5 million (EUR 0.7 million).

During the review period, Atria Estonia’s net sales increased by more than 20% compared to the same period last year. The sales of cold cuts grew most, by almost 40%. Sales volumes to retailers also increased by almost 10%. Sales prices in Estonia were higher than in the comparison period, and cost levels were at the level of the comparison period, which strengthened Atria Estonia’s EBIT.

Atria Denmark’s net sales declined due to lower sales volumes to retail customers. Sales to Foodservice and export customers were stable. In Denmark, EBIT improved as a result of the efficiency measures launched in the spring.

January–September 2023

Atria Group’s net sales in January–September were EUR 1314.6 million (EUR 1245.5 million). Adjusted EBIT was EUR 40.2 million (EUR 32.3 million), or 3.1% (2.6%) of net sales. The Group’s EBIT was EUR 40.2 million (EUR 34.6 million), or 3.1% (2.8%). EBIT for the comparison period includes a total of EUR +2.3 million in adjustment items with an effect on comparability.

Net sales grew by almost EUR 70 million year-on-year. The growth resulted from sales volumes that were higher than in the comparison period and stable sales prices to retail and Foodservice customers. In addition, AB Korv-Görans Kebab Oy, acquired by Atria at the end of last year, increased net sales in Finland.

EBIT was higher than in the corresponding period last year. The increase in EBIT was the result of Atria Finland’s good performance in the first and third quarters. The good performance of Atria Finland resulted from a more favourable sales structure and higher sales prices than in the corresponding period last year. The second quarter was affected by additional costs related to the start-up of investments by Atria Finland and Sweden.

EBIT for the comparison period (January–September 2022) includes a non-recurring gain of EUR 9.8 million on the sale of a plant property in Malmö and a non-recurring refund of EUR 1.3 million of pension contributions. EBIT for the comparison period also includes a EUR 1.9 million sales gain recognised on the divestment 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 had no effect on the Group’s equity ratio or cash flow.

The expansion of the Sköllersta plant was completed. The production lines were transferred from Malmö to Sköllersta, and the last day of production at the Malmö plant was in June.

Operating cash flow amounted to EUR 41.3 million (EUR -20.2 million). Improved EBIT and lower working capital commitments improved the cash flow from operations. During the financial year, Atria has made major investments. The construction of the poultry plant will continue in 2023. The expansion of the Sköllersta plant was completed in June. Cash flow from investments was EUR -75.7 million (EUR -56.5 million).

Atria Finland’s cooperation negotiations initiated in March to restructure the pig slaughtering and cutting operations at the Atria Nurmo plant were concluded at the end of May. As a result of the negotiations, the number of temporary employment contracts was reduced, and positions were rearranged internally. The changes took effect at the end of September. In Denmark, the operational efficiency programme launched in March was completed. Production now takes place in two production plants, and the numbers of employees has been reduced.

Atria acquired 100,000 of its own series A shares at an average price of EUR 10.81 per share. This corresponds to approximately 0.35% of the total number of shares in the company, which is 28,267,728. The acquired shares will be used for payments under Atria Plc’s share-based incentive plans. The shares were acquired in public trading on Nasdaq Helsinki at the market price at the time of acquisition. After the acquisitions, the company holds a total of 111,102 of its own series A shares.

Atria Finland’s net sales in January–September were EUR 992.4 million (EUR 920.9 million). The increase in net sales was the result of higher sales prices in all sales channels. Sales volumes to retail and Foodservice customers also increased. In addition, AB Korv-Görans Kebab Oy acquired by Atria at the end of 2022 increased net sales.

EBIT totalled EUR 46.6 million (EUR 29.2 million). The increase in EBIT is explained by the good result of the first and third quarters, driven by an improved sales structure and higher sales prices. The costs of raw materials, supplies and external services were higher than in the previous year during the January–September period. Energy prices started to fall. Producer prices for meat were markedly higher year-on-year. The start-up of the poultry plant and salary settlements resulted in costs during the reporting period.

Atria Sweden’s net sales in January–September were EUR 250.0 million (EUR 269.9 million). The growth of net sales in local currencies, excluding the Russian fast-food business, was almost 5%. The net sales and EBIT for the comparison period include the Sibylla Russia business, which was sold in May 2022. In addition, the figures for the comparison period include sales of products previously produced at the Malmö plant, which have been discontinued, or whose production has been moved to Atria’s Danish plant. Sales price increases strengthened net sales.

Adjusted EBIT was EUR -5.4 million (EUR 3.2 million). EBIT was EUR -5.4 million (EUR 14.3 million). The expansion of the Sköllersta plant was completed in late August. The production lines were transferred from Malmö to Sköllersta, and the last day of production at the Malmö plant was in June. The transfer of production from Malmö to Sköllersta has resulted in additional costs. Raw material prices remained high, weighing on EBIT. EBIT was reduced by higher costs and weaker consumer purchasing power resulting from inflation. Consumers prefer products in the lower price range.

EBIT for the comparison period includes a non-recurring gain of EUR 9.8 million on the sale of the plant property in Malmö and a non-recurring refund of EUR 1.3 million in pension contributions.

Atria Denmark & Estonia’s net sales in January–September were EUR 91.6 million (EUR 83.5 million). EBIT totalled EUR 1.6 million (EUR 2.2 million). The increase in net sales resulted from higher sales prices in both Estonia and Denmark. Atria Estonia’s EBIT was strengthened by the good development of sales to retail customers. Atria Denmark’s EBIT was weighed down by weaker sales volumes and high raw material prices. In Denmark, the result was also weighed down by additional costs resulting from the efficiency programme.

Sustainability

Atria has sustainability goals in the new credit facility of 25 million euros and the loan of 50 million euros. The responsibility goals are to reduce carbon dioxide emissions and work accidents and to improve energy efficiency.

Interest in the Atria 100 Young Producers training programme exceeded expectations. The first group of young producers from pig, cattle and poultry farms started the 100 Young Producers training programme in October 2023. The training programme aims to support young producers’ entrepreneurship as producers of Finnish food and helps them succeed in a changing operating environment. Implemented for the first time, the programme received many applications, and 40 students were selected.

Outlook for the future

On September 11, 2023, Atria raised its 2023 adjusted operating profit guidance. Updated guidance below.

Atria Group’s adjusted EBIT in 2023 is expected to be higher 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.

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 2023 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 Kai Gyllström will present the company's interim report in a webcast today, October 24, 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: Kai Gyllström, CEO, Atria Plc. Contacts and interview requests via Communications Manager Marja Latvatalo, e-mail: marja.latvatalo@atria.com, tel. +358 400 777 874.

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www.atria.com

The interim report is available on our website at www.atria.com.