Atria Group plc STOCK EXCHANGE RELEASE 18 August 2004 9.55 a.m. ATRIA GROUP PLC'S INTERIM REPORT, 1 January 30 June 2004 The Atria Group's operating profit for the review period was EUR 16.0 million (EUR 11.6 million). The Group's profit before extraordinary items was EUR 13.7 million (EUR 7.9 million). Turnover amounted to EUR 397.7 million (EUR 374.8 million), earnings per share to EUR 0.48 (EUR 0.35) and equity per share to EUR 10.70 (EUR 11.83). PROFIT AND LOSS ACCOUNT GROUP (EUR Million) 1-6/2004 1-6/2003 1-12/2003 TURNOVER 397.7 374.8 765.1 NET OPERATING PROFIT 16.0 11.6 30.9 PROFIT BEFORE EXTRAORDINARY 13.7 7.9 23.6 ITEMS PROFIT BEFORE TAXES 13.7 7.9 23.6 PROFIT 10.1 5.6 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 30.6.2004 30.6.2003 31.12.2003 FIXED ASSETS Intangible assets 45.6 47.8 47.5 Tangible assets 257.4 250.7 255.4 Financial assets 6.7 5.6 6.1 CURRENT ASSETS Inventories 43.7 45.7 47.9 Receivables 98.2 88.1 89.7 Cash in hand and at bank 11.7 11.7 9.9 TOTAL 463.3 449.6 456.5 LIABILITIES SHAREHOLDERS' EQUITY Share capital and other shareholders' equity 225.7 187.1 224.6 MINORITY INTEREST 1.6 1.2 1.6 CREDITORS Long-term 92.4 113.8 104.3 Short-term 143.6 147.5 126.0 TOTAL 463.3 449.6 456.5 KEY FIGURES (EUR) 30.6.2004 30.6.2003 31.12.2003 Gross investments in fixed assets 16.9 19.0 36.4 Gross investments % of turnover 4.3 5.1 4.8 Personnel on average 3615 3564 3377 Earnings per share 0.48 0.35 0.83 Shareholders' equity per share 10.70 11.83 10.65 Equity ratio, % 49.1 41.9 49.6 Interest-bearing debt 133.7 168.8 129.4 CONSOLIDATED CASH FLOW STATEMENT (EUR million) 1-6/2004 1-6/2003 1-12/2003 Cash flow from operations 23.6 14.4 54.5 Financing items and taxes -4.4 -5.7 -15.1 Cash flow from operating 19.2 8.7 39.4 activities Investing activities -16.9 -19.0 -36.4 Cash flow from investing -16.9 -19.0 -36.4 activities Issue of shares paid - - 26.4 Net change in loans 8.5 12.3 -29.2 Dividends paid -9.0 -6.7 -6.7 Net cash from financing -0.4 5.6 -9.6 activities Change in liquid funds 1.8 -4.7 -6.5 CONSOLIDATED LIABILITIES (EUR million) 30.6.2004 30.6.2003 31.12.2003 DEBTS INVOLVING MORTGAGES OR OTHER COLLATERAL AS SECURITY Loans from financial 69.1 99.5 86.2 institutions Pension loans 5.7 5.1 5.3 Total 74.8 104.6 91.5 MORTGAGES AND OTHER COLLATERAL GIVEN AS GENERAL SECURITY Mortgages on real property 75.5 75.4 75.6 Mortgages on company assets 37.9 48.0 37.9 Other collateral 45.4 47.1 42.9 Total 158.8 170.5 156.4 MORGAGES AND OTHER COLLATERAL GIVEN ON BEHALF OF GROUP COMPANIES Guarantees 34.4 34.3 34.5 CONTINGENT LIABILITIES NOT INCLUDED IN THE BALANCE SHEET Limits not used 76.3 77.7 76.3 Guarantees 1.4 0.9 1.4 Leasing liabilities Payable in the next financial year 0.8 0.9 1.0 Payable later 1.8 1.3 1.5 Total 2.6 2.2 2.5 The figures are not audited. ATRIA PERFORMS WELL IN THE FIRST HALF OF THE YEAR The firsthalf result of Atria Group plc, Finland's largest meat company and the biggest manufacturer of meat products in the Nordic and Baltic countries, improved substantially on the previous year. Profit before taxes was EUR 13.7 million (EUR 7.9 million in 2003), representing growth of 73.9%. In the second quarter in particular, which is the most important season for the industry, Atria performed well, generating net profit of EUR 9.7 million (EUR 5.8 million). Turnover in the first half of the year was EUR 397.7 million (EUR 374.8 million), an increase of 6.1%. Operations developed well in the first part of the year both in Finland and in Sweden. Earnings improved in all the main product groups. Despite the weak trend in selling prices, Atria succeeded in lifting its sales and profitability by means of increased operational efficiency across the organisation and through cost management. Buoyant summer sales despite rainy weather Atria racked up good sales in the most important season of the year. The mainline product of the grill season, Class-A Wilhelm grill sausage, strengthened further its market leader's position. Sales of cold cuts and retail-packed meat showed a good trend. Poultry sales also developed well, in step with successful product commercialisation and an improvement in overall competitiveness. The growth in Atria's retail sales in the first half of the year clearly outpaced the overall market growth. The outlook for the meat wholesaling and export business also improved during the spring, and inventory levels fell. Nonetheless, overall profitability in the meat industry is still unsatisfactory. Notably, producer prices for pigs have risen in the entire EU area. In Finland, prices have moved in lockstep with the price level in the nearest competitor countries, Sweden and Denmark, but are partly lower than in certain countries in continental Europe, where production is at a lower level than consumption. Lithells in Sweden shows a good earnings trend Good earnings were reported by all the companies of the Lithells Group: 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 Lithells Group will report a substantial improvement in full-year earnings because this year is the first full year after downsizing of the Samfood business operations that were acquired in 2002. Keen competition poses a tough challenge for the organisation to keep up its positive earnings trend in coming years as well. Lithells AB had first-half turnover of EUR 145.8 million. All the businesses in Sweden accounted for 38.0% of Atria's consolidated turnover. Liha ja Säilyke Oy invests in a dispatching centre Liha ja Säilyke Oy is a specialised company whose operations continued on a positive trend. Turnover amounted to EUR 20.4 million (EUR 20.1 million). Because the company has partially exited the mass-market products business and specialised even further, turnover growth has been fairly small, but the measures have had a positive impact on the entire companys earnings trend in recent years. The dispatching centre functions will move into new premises this autumn, with the breaking-in process getting under way in August 2004. The premises which the previous dispatching functions will make available are to be used for developing and growing production operations. Baltic countries The new plant of Lithuania-based UAB Vilniaus Mesa has been placed in operation stage by stage since May. The company's entire production will move into the new plant during August. The company is seeking to develop further its present market position in Lithuania and Latvia. Over the long term, Atria is striving to increase its operations throughout the Baltic area. Russia Since last autumn, Atria Group plc has been making an assessment of the possibility of setting up operations in Russia. This effort has included a market study and an extensive exploration of the operating environment and companies in the meat-processing industry. Atria has decided to proceed by way of an acquisition, and the exploratory work is continuing on this basis. The process has taken more time than anticipated because the aim is to carry out the study and inquiries as thoroughly as possible in order to reduce risks. Investments The Atria Group's investments in the first-half of the year came to EUR 16.9 million. Lithells has an annual capital expenditure level of about ten million euros. Atria Oy in Finland has decided to centralise its pig slaughtering in Nurmo, for which purpose the building of a new line has been started at an estimated cost of EUR 21 million. The investment will be carried out during 2004- 2006. In order to cope with the needs brought by product development and capacity bottlenecks and to keep overall competitiveness at a continuing high level, Atria has decided on a programme aiming at moving forward by one year the meat products production investment in Nurmo that was planned for 2006. The programme will cost just over EUR 10 million and comprise new machine lines and production-improving investments. The investments in Finland will not crimp Atria's possibilities of moving ahead with its planned internationalisation programme. Outlook for the future Major changes are not expected to take place in Atria's present market position in Finland and Sweden in the latter part of the year. On the other hand, competition in the market will remain tough, nor has the level of selling prices risen significantly, despite the rise in raw material prices, for example. Atria is nevertheless expecting full-year earnings to improve markedly on the figure reported last year. Of Finland's meat industry companies, Atria has the biggest share of operations outside Finland. Although the Finnish market is of course very important for the company, Atria is still targeting an increase in the volume of operations abroad by strengthening the company's position not only in Sweden, but above all in the Baltic countries and in Russia. Atria's profitability has improved thanks to successful processed meat production and good performance in Sweden. The upswing in profitability will support the company's ability to meet the increasingly tough competition brought by globally expanding trade. This means that Atria must have the ability to make further inputs into developing functions both within Finland and beyond its borders. Only then will Atria be in a position to ensure the companys competitiveness and the viability of the entire meat production chain in coming years as in the past. ATRIA GROUP PLC Seppo Paatelainen President DISTRIBUTION Helsinki Exchanges Principal media Interim reports are mailed upon request and are available on our Internet site, www.atria.fi
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