ATRIA GROUP PLC'S INTERIM REPORT, 1 JAN. - 30 SEPT. 2004
The Atria Group's operating profit in the review period amounted to EUR 29.5
million (EUR 24.0 million). The Group's profit before extraordinary items came in
at EUR 25.9 million (EUR 18.8 million). Turnover amounted to EUR 613.5 million
(EUR 572.9 million), earnings per share to EUR 0.88 (EUR 0.82) and equity per
share to EUR 11.11 (EUR 12.44).
PROFIT AND LOSS ACCOUNT GROUP
(EUR Million) 1-9/2004 1-9/2003 1-12/2003
TURNOVER 613.5 572.9 765.1
NET OPERATING PROFIT 29.5 24.0 30.9
PROFIT BEFORE EXTRAORDINARY ITEMS 25.9 18.8 23.6
PROFIT BEFORE TAXES 25.9 18.8 23.6
PROFIT 18.5 13.0 15.0
The taxes in the profit and loss
account are equivalent tax on
income
for the period under review.
The change in Finland's tax rate
has
also been taken into account in
taxes.
BALANCE SHEET, GROUP
(EUR Million)
ASSETS 30.9.2004 30.9.2003 31.12.2003
FIXED ASSETS
Intangible assets 44.4 48.8 47.5
Tangible assets 258.4 252.5 255.4
Financial assets 6.9 6.9 6.1
CURRENT ASSETS
Inventories 43.0 44.6 47.9
Receivables 99.1 85.0 89.7
Cash in hand and at bank 16.5 11.0 9.9
TOTAL 468.3 448.8 456.5
LIABILITIES
SHAREHOLDERS' EQUITY
Share capital and
other shareholders' equity 234.4 196.8 224.6
MINORITY INTEREST 1.8 1.4 1.6
CREDITORS
Long-term 92.1 113.0 104.3
Short-term 140.0 137.6 126.0
TOTAL 468.3 448.8 456.5
KEY FIGURES (EUR)
30.9.2004 30.9.2003 31.12.2003
Gross investments in
fixed assets 24.2 28.9 36.4
Gross investments
% of turnover 3.9 5.1 4.8
Personnel on average 3621 3481 3377
Earnings per share 0.88 0.82 0.83
Shareholders' equity per share 11.11 12.44 10.65
Equity ratio, % 50.5 44.2 49.6
Interest-bearing debt 123.4 156.3 129.4
CONSOLIDATED CASH
FLOW STATEMENT (EUR million) 1-9/2004 1-9/2003 1-12/2003
Cash flow from operations 58.8 43.8 54.5
Financing items and taxes -9.7 -9.0 -15.1
Cash flow from operating activities 49.0 34.8 39.4
Investing activities -24.2 -28.9 -36.4
Cash flow from investing activities -24.2 -28.9 -36.4
Issue of shares paid - - 26.4
Net change in loans -9.2 -4.6 -29.3
Dividends paid -9.0 -6.7 -6.7
Net cash from financing activities -18.2 -11.3 -9.5
Change in liquid funds 6.6 -5.4 -6.5
CONSOLIDATED LIABILITIES
(EUR million)
30.9.2004 30.9.2003 31.12.2003
DEBTS INVOLVING MORTGAGES OR
OTHER COLLATERAL AS SECURITY
Loans from financial institutions 71.4 98.4 86.2
Pension loans 6.0 5.4 5.3
Total 77.4 103.8 91.5
MORTGAGES AND OTHER COLLATERAL
GIVEN AS GENERAL SECURITY
Mortgages on real property 75.6 75.6 75.6
Mortgages on company assets 37.9 48.4 37.9
Other collateral 39.6 41.7 42.9
Total 153.1 165.7 156.4
MORGAGES AND OTHER COLLATERAL GIVEN
ON BEHALF OF GROUP COMPANIES
Guarantees 34.6 35.0 34.5
CONTINGENT LIABILITIES NOT
INCLUDED IN THE BALANCE SHEET
Limits not used 73.5 73.5 76.3
Guarantees 1.3 1.0 1.4
Leasing liabilities
Payable in the next
financial year 1.1 0.9 1.0
Payable later 3.8 1.4 1.5
Total 4.9 2.3 2.5
The figures are not audited.
ATRIA'S FOREIGN OPERATIONS ACCOUNT FOR HALF OF CONSOLIDATED TURNOVER
The turnover of Atria Group plc, Finland's largest meat company and the biggest
manufacturer of meat products in the Nordic and Baltic countries, amounted to EUR
613.5 million at the end of September (EUR 572.9 million), up 7.1%. By the end of
September, the Group's profit before taxes had reached EUR 25.9 million (EUR 18.8
million), representing an earnings improvement of EUR 38.0%. The third-quarter
result was EUR 12.3 million (EUR 10.9 million), an earnings improvement of 12.1%.
The Group's success in its functions abroad, particularly in Sweden, has
facilitated the entire Atria Group's positive earnings trend during this period.
Atria's annual turnover amounts to about EUR 800 million and approximately half
of this is generated abroad. The most important foreign territory is Sweden,
where the Group's turnover is over EUR 300 million. The companies acquired in
Lithuania and Estonia during the past year and a bit, together with exports,
increase the share of consolidated turnover accounted for by the entire Group's
international operations to about half. As domestic functions have also performed
well - with positive development in both market share and result - the
consolidated result has improved significantly compared with the previous year.
Business functions in Finland
The subsidiaries Atria Oy and Liha ja Säilyke Oy are responsible for the Atria
Group's business functions in Finland. The trend in Atria Oy's operations
remained positive after the summer. The aggregate market share in the retail
sector saw growth. The best performance was achieved in sales of meat products
and poultry products. In addition, Atria further consolidated its market
leadership in cold cuts.
Sales of packed meat are growing buoyantly, with Atria's sales increase amounting
to 22.5%. However, this business is hindered by industry-wide poor profitability.
The good functionality of the order-delivery process has become a significant
factor in customer satisfaction. Atria's large-scale outlays on both its
logistics centre and the entire delivery process over many years are now evident
in the company's high delivery ability and reliability indicators.
The volumes of meat processed by Atria in Finland outpaced meat production in the
entire country. Pork was up 5.7% and poultry 6.0%. The volume of beef processed
by Atria declined by 0.7%. Beef production in Finland has declined by 3%, while
pork production has grown by 2% (Source: Food and Farm Facts/estimate: 1-9/2004).
Turkey production has encountered profitability problems in Finland and it has
been necessary to curtail production. Atria's turkey processing contracted by
20.3%. On the other hand, chicken consumption is still rising, and Atria's
chicken production grew by 14.1%.
The problem now facing the entire meat business is the industry's weak ability to
successfully raise selling prices, even though meat producer prices have been
registering strong growth in all of Europe, including Finland. At present, the
retail prices of many products are at a lower level than in 2001 in spite of the
fact that raw material prices and other costs have risen significantly. Atria has
in fact achieved its positive earnings trend thanks to its improved product
range, larger volume and well-developed cost level.
Liha ja Säilyke Oy's operations remain positive, especially in the Forssan salad
and cold cut groups. The breaking-in of the new dispatching centre has been
started up, and once this has been completed the company will be able to develop
additional production operations in the premises made available by the previous
dispatching functions.
Lithells AB
The turnover of Lithells AB, which operates in Sweden, amounted to EUR 229.4
million (EUR 223.5 million), representing an increase of 2.7%. Lithells AB's
operations are divided into Atria Lithells AB, which manufactures meat products
and convenience foods, Atria Concept AB, which is in the fast food business, and
Svensk Snabbmat AB, a local wholesaler. The operations and earnings trends of all
three companies have progressed as planned. The entire Lithells Group's result
has significantly exceeded last year's figure.
Atria Lithells AB's Sköllersta plant is the largest meat product plant in Sweden
and the company holds a 25% share in Swedish sausage production. Its brand in the
retail sector and catering products is Lithells. Atria Concept AB has about 1,700
Sibylla Inside outlets in Sweden, Finland, Poland and the Baltic countries and
about 200 Sibylla fast food stands that work on a franchising principle in
Sweden. In addition, Atria Concept AB has about 150 Fyrkanten and Grillköket fast
food stands.
Sibylla Inside operations are still growing well and the company intends to
further step up its operations outside Sweden's borders, too. All in all, over 50
million Sibylla sausages are sold annually, most of which are consumed as
individual hot dog type portions.
Svensk Snabbmat AB is the leader in the wholesale fast food market. Since 1998,
when it entered Atria's ownership, it has steadily improved both its turnover and
earnings. Even though its operations are a non-core business function, its
moderately good profits mean that the owner is not willing to divest itself of
this growing and profitable business.
Lithuania and Estonia
Atria's entry into the Baltic market occurred at a rather late stage. The reason
for this was that, outside Finland's borders, the main thrust of Atria's
operations has been on Sweden. In fact, Atria's Swedish functions are larger than
the international operations of the entire Finnish meat industry. Atria made its
first acquisition in the Baltic countries in 2003 with the purchase of UAB
Vilniaus Mesa in Lithuania. Some time ago, Atria signed a letter of intent to
acquire an Estonian meat company.
This summer, a new plant was completed for UAB Vilniaus Mesa, which was acquired
last year. The plant has a surface area of about 8000 m2 and has been constructed
to meet the latest EU regulations. Vilniaus Mesa holds a market share of about
10% in Lithuania. Its competitors are locally owned. In the long term, Atria
seeks to strengthen its position in Lithuania both via organic growth and a
possible acquisition. Vilniaus Mesa's annual turnover is about EUR 10 million.
The letter of intent signed by Atria concerns the acquisition of AS Valga
Lihatööstus, Estonia's second-largest red meat company. The company's
slaughterhouse and meat product manufacture are reasonably modern. Its brand,
Maks & Moorits, is well-known in Estonia. Valga is located on the border of
Estonia and Latvia. In association with Vilniaus Mesa, it is well-poised to
achieve a good market share in the Latvian market as well.
Atria's operations in Russia
For quite some time, Atria has sought a model for setting up operations in the
Russian market. As entry into that market entails higher risks than those
encountered in western countries, progress with decision-making in the matter has
turned out to be slower than expected. However, thorough market studies and
corporate assessments strengthen the view that this is the right time to devote
resources to the Russian market. Atria will continue with its studies of the
market field. The timeframe for making decisions on when to go ahead is still
open.
Investments
Ordinary replacement investments are carried out in the entire Group. In
addition, dispatching premises with a pricetag of about EUR 6 million are nearing
completion for Liha ja Säilyke Oy. Atria Oy has started up a pig slaughterhouse
extension in Nurmo at a cost of slightly over EUR 20 million; this extension,
which will be completed in spring 2006, will raise pork slaughtering capacity
from slightly under 300 to 600 pigs per hour. Upon the winding up of pig
slaughtering in Kuopio, the new automated line will impart significant cost-
savings and improvements in quality.
Outlook for the future
Major market changes are not expected to take place in the latter part of the
year. The meat producer price is still on the rise and it has not been possible
to implement a full-scale increase in product selling prices to offset this.
However, thanks to the Group's strong market position, substantial changes are
not foreseen in the earnings trend and the Group's full-year earnings will
improve markedly on the figure reported last year.
ATRIA GROUP PLC
Seppo Paatelainen
President
DISTRIBUTION
Helsinki Stock Exchange
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www.atria.fi
Interim reports are mailed upon request
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