Business risks

Atria as an investment

Business risks

Q1/2020

The coronavirus outbreak (COVID-19), which expanded into a pandemic in March 2020, and the measures taken to prevent its spread are the most significant risk event for Atria during the review period and also in the following quarter, with a wide impact on Atria's operations, the economies of countries in Atria's operating regions, and the food market.

During the pandemic, the role of domestic food production and the domestic food industry in safeguarding national security of supply is even more important than usual. The requirement for security of food supply is emphasised. The uninterrupted continuation of operations and maintaining the security of supply of products have been Atria's primary tasks in addition to safeguarding the health and working capacity of personnel. The situation has required agile adaptation to the changed conditions and rapid changes in demand. Eating at home has increased sales to retail stores, while restrictions on restaurant operations as well as remote working practices in public administration have reduced sales to customers in these sectors.

Atria has taken decisions on issues affecting production and the health and well-being of personnel, such as changes in capacity, the product selection, occupational safety, remote working, occupational health care, electronic communications and the introduction of mobile communications, regional precautions, travel restrictions, and changes in meeting and visitor practices.

Adapting to rapid changes is also a risk factor. The adjustment measures made in production, increasing capacity, overtime, maintaining occupational safety, wastage, and increased hygiene requirements have increased costs. Procurement has so far managed to purchase raw materials and other materials to ensure production. There have been some challenges in procuring personal protective equipment required in food processing.

The coronavirus pandemic has also realised other risks previously identified by Atria, such as significant changes in exchange rates and geopolitical decisions. The situation has not excluded 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 at all times, even in the midst of the coronavirus pandemic.

Growing risks of the pandemic in the near future include, in particular, credit losses of Food Service customers and the effect of consumer purchasing behaviour on sales structure and thus on profitability. Implementation schedules of business investments and various operational development projects also entail risks. The above risks occur in all of Atria's business areas, but their emphasis may vary depending on how sales have previously been targeted at different sales channels and how long and to what extent the restrictions of the coronavirus pandemic will be in force in each country.

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