ATRIA GROUP PLC'S INTERIM REPORT 1.1. - 30.6.2003
Atria Group's operating profit in the first quarter of 2003 was
EUR 11.6 million (EUR 9.5 million). The profit before
extraordinary items, was EUR 7.9 million (EUR 7.4 million). The
turnover was EUR 374.8 million (EUR 330.0 million), earnings per
share EUR 0.35 (EUR 0.32) and shareholders' equity per share was
EUR 11.83 (EUR 11.35).
PROFIT AND LOSS ACCOUNT GROUP
(EUR Million) 1-6/2003 1-6/2002 1-12/2002
TURNOVER 374.8 330.0 707.0
NET OPERATING PROFIT 11.6 9.5 25.6
PROFIT BEFORE
EXTRAORDINARY ITEMS 7.9 7.4 20.4
PROFIT BEFORE TAXES 7.9 7.4 20.4
PROFIT 5.6 5.1 14.1
The taxes in the profit and loss account are equivalent tax on
income
for the period under review.
BALANCE SHEET, GROUP
(EUR Million)
ASSETS 30.6.2003 30.6.2002 31.12.2002
FIXED ASSETS
Intangible assets 47.8 41.0 50.1
Tangible assets 250.7 217.5 243.8
Financial assets 5.6 7.5 5.0
CURRENT ASSETS
Inventories 45.7 40.2 46.1
Receivables 88.1 79.4 77.5
Cash in hand and at bank 11.7 9.5 16.5
TOTAL 449.6 395.1 439.0
LIABILITIES
SHAREHOLDERS' EQUITY
Share capital and
other shareholders´equity 187.1 179.6 188.6
MINORITY INTEREST 1.2 1.1 1.2
CREDITORS
Long-term 113.8 80.6 123.4
Short-term 147.5 133.8 125.8
TOTAL 449.6 395.1 439.0
KEY FIGURES (EUR)
30.6.2003 30.6.2002 31.12.2002
Gross investments in
fixed assets 19.0 19.9 66.0
Gross investments
% of turnover 5.1 6.0 9.3
Personnel on average 3564 3298 3300
Earnings per share 0.35 0.32 0.89
Shareholders' equity per share 11.83 11.35 11.92
Equity ratio, % 41.9 45.8 43.3
Interest-bearing debt 168.8 133.8 157.9
CONSOLIDATED CASH
FLOW STATEMENT (EUR million) 1-6/2003 1-6/2002 1-12/2002
Cash flow from operations 14.4 18.6 50.9
Financing items and taxes -5.7 -8.0 -14.9
Cash flow from operating 8.7 10.6 36.0
activities
Investing activities -19.0 -19.8 -66.1
Cash flow from investing -19.0 -19.8 -66.1
activities
Net change in loans 12.3 15.4 43.2
Dividends paid -6.7 -6.8 -6.8
Net cash from financing 5.6 8.6 36.4
activities
Change in liquid funds -4.7 -0.6 6.3
CONSOLIDATED LIABILITIES
(EUR million)
30.6.2003 30.6.2002 31.12.20
02
DEBTS INVOLVING MORTGAGES OR
OTHER COLLATERAL AS SECURITY
Loans from financial
institutions 99.5 79.7 95.0
Pension loans 5.1 5.7 5.4
Total 104.6 85.4 100.4
MORTGAGES AND OTHER COLLATERAL
GIVEN AS GENERAL SECURITY
Mortgages on real property 75.4 62.2 64.4
Mortgages on company assets 48.0 22.3 25.6
Other collateral 47.1 67.9 40.6
Total 170.5 152.4 130.6
MORGAGES AND OTHER COLLATERAL
GIVEN
ON BEHALF OF GROUP COMPANIES
Guarantees 34.3 - 21.8
CONTINGENT LIABILITIES NOT
INCLUDED IN THE BALANCE SHEET
Limits not used 77.7 55.8 82.3
Guarantees 0.9 0.8 1.0
Leasing liabilities
Payable in the next
financial year 0.9 0.6 1.0
Payable later 1.3 1.2 1.2
Total 2.2 1.8 2.2
The figures are not audited.
ATRIAS RESULT IMPROVES SLIGHTLY ON THE PREVIOUS YEAR
The Atria Groups turnover in the first half of the year was up
13.6% to EUR 374.8 million (EUR 330.0 million in 2002). The bulk
of the growth came in Sweden, because the operations of Samfood
AB, which was acquired last autumn, were now included in the Group
figures for the whole first half of the year. Operations in Sweden
accounted for 38% of consolidated turnover.
Consolidated profit before extraordinary items in the report
period was EUR 7.9 million (EUR 7.4 million) and it was EUR 5.9
million in the second quarter (EUR 5.2 million). Operating profit
in the second quarter was EUR 7.8 million (EUR 6.4 million), up
21.9%, and half-year operating profit was EUR 11.6 million (EUR
9.5 million), up 22.1%. Earnings generated by the units showed
structural differences. Operations in Sweden and processed meat
production in Finland improved their earnings, whereas the result
for slaughterhouse operations in Finland weakened further. The
slaughterhouse industrys earnings have been hurt by the very low
level of pork prices due to heavy overproduction worldwide. The
business cycle is expected to improve during 2004. This will have
a major bearing on the earnings generated by the entire Group. All
in all, Atrias volume of meat procurements grew by 7.5 percentage
points.
From the beginning of 2003, the Atria Group went over to a new
corporate structure. The parent company is Atria Group plc, which
owns the shares in subsidiaries and the fixed assets. The
businesses in Finland are run by the subsidiaries Atria Oy and
Liha ja Säilyke Oy. The subsidiary Lithells AB is responsible for
operations in Sweden.
Following the Samfood acquisition, Atria Group plc is the largest
manufacturer of meat products in the Nordic countries and the
Baltic area.
Positive trend in retail sales
Atria Oys retail sales showed positive development in the major
product groups. The company strengthened further its position as
the market leader in cold cuts, and sales of poultry and retail-
packed meat developed favourably. Cold weather conditions weakened
grill-season sales in the early summer but, all things considered,
the Groups summer sales, delivery reliability and the summer
season as a whole held up well. Sales of cheap grill sausages
declined in step with the sharp fall in market prices, but within
A-class grill sausages, Wilhelm retained its strong position and
Atria was the market leader within the entire grill sausage
category.
Liha ja Säilyke Oy
The salads and cold cuts which Liha ja Säilyke Oy manufactures and
sells under the Forssan brand have sold well. Delivery reliability
in the summer season remained good and market share grew. The
company has trimmed its product assortment and concentrated on its
strong product groups. Turnover was EUR 20.1 million, growing by
2.8%.
The Lithells Group shows strong growth and a positive trend in
profitability
At present, the Lithells Group comprises Atria Lithells AB and
Samfood AB, which manufacture meat products and convenience foods,
the Atria Concept AB fast food business and Svensk Snabbmat AB,
which operates in the local wholesale trade.
Atria Lithells AB and Samfood AB, meat products and
convenience foods
Operations of the previously loss-making Samfood AB, which was
acquired in September 2002, have been restored to profitability
during the second quarter nearly in line with the planned
timetable. At the same time, the market share in Sweden of the
meat products manufactured by the Lithells Group rose to about a
quarter of Swedens total market. Integrating the Samfood business
into our operations in Sweden has largely been completed. The most
important changes, such as moving production from the Hamnen plant
in Malmö to the Fosie plant and the expiry of the Hamnen plants
lease agreement have for the most part taken place during the
second quarter and will be seen to completion during the third
quarter. Similarly, the consolidation of sausage production within
the Sköllersta plant has nearly been completed. The handling of
retail-packed meat has been centralised at Årsta near Stockholm.
Concurrently, an important long-term co-operation agreement on
retail-packed meat was signed with Coop Sverige AB.
Atria Concept AB, fast food business
Atria Concept, whose operations encompass fast food stands and the
Sibylla Inside business, increased its share of sales by fast food
stands through an acquisition. The Sibylla chain was rounded out
by the addition of the Fyrkanten and Sammys chains, doubling the
number of units in Sweden. At present, Atria Concept has a market
share of about 65% of the market in fast food stands in Sweden.
The Sibylla Inside business registered fast organic growth,
increasing the number of new units in the chain by more than 40%.
Sibylla Inside has about 930 outlets in Sweden, 250 in Finland and
over 100 in Denmark as well as a total of more than 300 in Poland
and the three Baltic countries.
According to a consumer survey carried out by the ISI Wissing
consumer research institute, the Sibylla brand ranks highest among
customers as a fast food brand. This survey covered all the fast
food chains in the Swedish market.
Svensk Snabbmat AB, local wholesale business
The Svensk Snabbmat AB local wholesale trade, which is a non-core
business of Lithells AB, retained its position despite the
weakening in consumer demand in the catering products market.
Svensk Snabbmat AB has maintained its profitability at the
previous years level.
Atria stakes out a position in Lithuania
On 8 July 2003, Atria Group plc signed an agreement on acquiring
the Lithuanian company UAB Saltuva. Via the deal, the company will
become a wholly-owned subsidiary of Atria. UAB Saltuva will pass
into Atrias ownership on 28 August 2003.
UAB Saltuva has just started building a meat processing plant in
Vilnius. The company has obtained a significant investment grant
for this purpose. The intention is for the company to have its
products custom-produced until the new companys plant has been
completed. Thereafter, the custom manufacturer will wind up meat
processing operations at the old plant because its technology does
not meet the EUs requirements now that Lithuania will become a
member of the EU in spring 2004. The companys present management
will stay on, and its well-known brands and marketing channels
will similarly be retained in line with operations up to now. The
company also exports products to Latvia.
UAB Saltuva presently has turnover of EUR 10 million and its
market share of meat products in Lithuania is estimated at about
10%.
Atrias objective is to move ahead step by step on its way to
becoming a strong player in the largest markets in the Baltic
area. At present, no other western-owned companies in the meat
processing industry are operating in Lithuania, and following
Lithuanias accession to membership of the EU, structural changes
are expected to take place in the industry.
Atria is also currently exploring the conditions and potential for
starting operations in western Russia. If the preconditions for
starting operations are felt to be adequate, the objective will be
to launch a step-by-step entry into the market either alone or
together with an appropriate partner in co-operation, depending on
the extent and objective of the operations.
Group investments
During spring, Atria Oy placed in use the extension - built at a
cost of about 20 million euros - to its poultry processing plant.
The start-up has gone according to plans. The extension and the
operational changes it brings will be fully integrated into
operations during the third quarter. In other respects, Atrias
investments in operations in Finland have consisted mainly of
replacement investments.
In the autumn Liha ja Säilyke Oy will begin building facilities
intended for the product dispatching functions. Plans have been
laid in good co-operation with the town of Forssa and, when
completed, the facilities will also make it possible to expand
production operations because the previous premises will be
available for these usage purposes.
The investments made by the Lithells Group went primarily for
reorganising operations and partly for modernising production
lines. The objective is to keep investments at a level where they
can be financed from the cash flow generated in Sweden.
Outlook for the future
The Atria Groups operations showed positive development within
the processed meat industry. By contrast, the profitability of
slaughterhouse operations was weak.
A significant factor underlying earnings is that Atria has been
able to make strong cost adjustments in all areas of operations.
Despite this, it is still very difficult to forecast profits going
forward owing to the situation in the meat markets and
particularly in the pork market. The sharp downswing that has
persisted for a year and a half may come to a halt, but a cyclical
rebound in this sector is not likely to take place until some time
next year. Furthermore, the strengthening in the euro against the
US dollar has weakened the profitability of pork meat sales both
in Finland and across Europe.
After the downsizing costs in the first months of the year,
operations in Sweden have had good profitability and it is
believed that the current momentum will continue ahead. Because
within operations in Finland there has also been a positive trend
in the profitability of the meat products and poultry business,
the entire Groups earnings trend will depend crucially on the
major changes unfolding within the slaughtering industry.
ATRIA GROUP PLC
Seppo Paatelainen
President
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