Business risks

Atria as an investment

Business risks

Q2/2020

The coronavirus pandemic (COVID-19) of the first half and the measures taken to prevent it were Atria's most significant risk event. The closures and restrictions implemented in different countries, the uncertainly about the duration of the pandemic, the geopolitical uncertainties, the effects on the national economy and market for food stuffs, and rapid changes in the financial markets showed themselves more clearly as risk factors in April-June. The instability of the business environment has required flexible operations from Atria to adjust to guidelines, closures and restrictions from the authorities in each business area.

At Atria the most significant coronavirus risks are related to the health of personnel and to Atria's sales, earnings and cash flow. In the period under review, Atria has focus on safeguarding the health and working capacity of personnel by using PPE and hand washing hygiene, information and guidance, recommending remote working, and promoting social distancing in all premises and situations. Visits and travelling have been limited.

Maintaining delivery reliability of products has been important in the entire Group. Production has been adjusted to demand, and new operation methods have always been adopted when needed. There are cost risks associated with the rapid adjustments made to production. Capacity adjustments, overtime, maintaining occupational safety, and increased hygiene requirements have increased costs. Risk evaluation of purchasing pipelines for procurement and stockpiling practices have prevented shortages in raw materials and supplies.

 The earnings risk associated with the sales structure was realised in the half when Food Service sales shrank in multiple business areas. Potential risks of a pandemic in the near future include credit losses for Food Service customers. Atria's financing position and cash flow have remained good in the review period. States have revitalised the economy by providing support and stimulus packages during the pandemic. For Atria, the most significant support package has been the 2.6 per cent reduction in the employer's pension contribution (TyEL) in Finland for the period covering 1 May to 31 December 2020. The key support model in Sweden has been the removal of the sick leave waiting period and the compensation paid by the state during sick leaves.

Uncertainty factors for the sales and earnings of the end of the year include travel restrictions, changes in domestic demand and the possible prolongation of this exceptional situation. Uncertainty factors in long term forecasting include the duration of the economic downturn and the unemployment level. The above risks occur in all of Atria's business areas, but their emphasis may vary depending on how sales have previously been distributed across different sales channels and how long and to what extent the restrictions of COVID-19 will be in force in each country.

The corona pandemic has not ruled out other usual risks in Atria's operations, such as a significant animal disease, product quality and safety or various hazard risks. These risks are managed and risk-related precautionary measures are taken, even in the midst of the crisis.

A more detailed description of the risks related to Atria's operations was provided in the 2019 annual report.