|Profit before taxes||-4.4||3.5||-10.9||1.7||0.3|
|Earnings per share, EUR||-0.15||0.10||-0.34||0.03||-0.18|
Atria Group's H1 net sales came to EUR 637.6 million (EUR 622.9 million), with growth of 2.4%. Calculated in fixed currencies, the net sales were at the same level as last year. Atria Finland’s net sales increased by 8.7%. Production breaks caused by industrial action took place in Finland during the comparative Q2 period of 2010. The decline of 5.7% in Atria Scandinavia’s net sales is mainly because of the discontinuation of consumer-packed meat production in the summer of 2010 and slightly lower sales volumes. Atria Russia’s net sales fell by 3.9%. This was due to the decrease in sales in Moscow. In St Petersburg, the sales volumes have remained stable. Atria Baltic’s net sales were at the same level as last year.
Atria Group's EBIT fell to a negative EUR 5.2 million (from EUR 5.7 million to the positive), which was due to the weakened profitability of Atria Finland and Atria Russia. During the review period, Atria issued a profit warning and announced an amendment to its 2011 EBIT forecast. The company expects the full-year EBIT to be significantly lower than the 2010 EBIT excluding non-recurring items (which was EUR 21.6 million). According to an earlier forecast, the 2011 EBIT would have been higher than EUR 21.6 million. The company’s net sales forecast remains unchanged. Net sales are expected to grow somewhat in 2011.
Atria Finland's EUR 3.2 million EBIT (EUR 10.9 million) was decreased by raw material prices that remained high and weakened sales structure. It was not possible to transfer the raw material price increase in full to sales prices. Exports now account for a greater proportion of total sales than in the previous year.
Atria Russia’s EBIT, -11.1 million euros (-4.9 million euros), was weakened by the rapid increase in meat raw material prices at the end of last year as well as the slow recovery of the demand for meat products. Performance during the period was also burdened by the costs of the new plant completed last summer in St Petersburg as well as the costs from the restructuring of operations.
Atria Scandinavia's EBIT was EUR 5.0 million (EUR 4.0 million). The figure for the comparison year included a non-recurring cost item of EUR 2.0 million.
Atria Baltic's EBIT in Q2/2011 turned positive, and performance over the first half of the year was narrowly profitable (H1/2010: EUR -2.1 million). The positive development in earnings was due to the improvement in cost-efficiency and sales structure during the review period as well as the non-recurring sales gains achieved. The Q2/2011 EBIT includes EUR 0.6 million of non-recurring sales gains. The EBIT for the first half of the year includes, in total, EUR 0.9 million in non-recurring sales gains.
The operating cash flow stood at EUR 8.8 million (EUR 3.6 million) and cash flow from investments at EUR ‑17.5 million (EUR -28.8 million). The Group’s free cash flow was EUR -8.7 million (EUR -25.2 million). Net interest-bearing liabilities came to EUR 424.4 million, with growth of EUR 13.0 million from year end. Atria Scandinavia concluded an agreement with Nordea Finans Sverige AB concerning sale of trade receivables. This decreased the company’s trade receivables by, in total, EUR 15.0 million at the end of the review period.
In January, Atria Plc made a decision to invest approximately EUR 26 million in building and renovating the Kauhajoki bovine slaughterhouse and cutting plant. Atria Plc also bought the shares of Kauhajoen Teurastamokiinteistöt Oy held by Itikka Co‑operative. The final purchase price was EUR 6.1 million.
In the first half of the year, Atria Finland launched two efficiency improvement programmes: for efficiency improvements in bovine slaughtering and Nurmo production plant development. The total annual cost savings from these measures amount to approximately EUR 10 million and will start materialising during 2011, to be fully materialised no later than the beginning of 2013.
The reorganisation of production started by Atria Russia in 2010 is progressing according to plan. Meat product production will be centralised, moving from the Moscow and Sinyavino plants to the new Gorelovo plant, in St Petersburg. The annual cost savings are projected to be EUR 6 million and should begin to materialise during 2012. The savings will be fully realised as of the beginning of 2013.
During the review period, Atria Scandinavia continued to enhance its operations’ efficiency by automating the production process for black pudding. Production of black pudding is to be transferred from the Saltsjö-Boo plant, in Stockholm, to Tranås. The efficiency improvement programme is expected to generate annual cost savings of approximately EUR 1.0 million. The savings will be fully realised as of the beginning of 2012.
| Key indicators |
|Shareholders' equity per share, EUR||15.02||15.90||15.68|
|Equity ratio, %||40.0||40.4||40.2|
|Net gearing, %||99.3||95.8||92.2|
|Gross investments in fixed assets||24.4||27.1||46.2|
|Gross investments, % of net sales||3.8||4.4||3.5|
|Average number of employees (FTE)||5,642||5,812||5,81|
Outlook for the future
Atria Plc announced an amendment to its 2011 EBIT forecast during the period under review. The company expects the full-year EBIT to be significantly lower than the 2010 EBIT excluding non-recurring items (which came to EUR 21.6 million). According to an earlier forecast, the 2011 EBIT figure would have been higher than EUR 21.6 million. The company’s net sales forecast remains unchanged, with net sales expected to grow somewhat in 2011.
The key source of uncertainty in terms of growth in net sales is the difficult market situation in Russia. Tightening competition may also slow down sales growth.
Atria Finland's unexpectedly weak performance hampers the performance of the whole Group. Atria Finland’s performance has been weakened by the sharp rise in prices of key raw materials in meat production as well as the market situation for pork remaining difficult. The price development for raw materials will be significant for the Group’s performance in the latter part of the year also in other business areas.
The meat raw material market should stabilise in 2011 from the situation in 2010. However, there is still pressure to raise meat raw material prices, e.g. due to the increased costs of energy and animal feed. Consequently, prices of end products can be expected to rise throughout the remainder of the year in all of Atria’s business areas. Consumption of food is expected to grow slightly in Finland, Sweden, Denmark, and Estonia. Atria estimates that total Russian demand for food products has started to grow moderately and will continue to be slow in 2011.
Implementation of the product leadership strategy is progressing according to plan. Highly visible launch campaigns will be carried out in various fields of business in 2011.
Atria has initiated profitability improvement measures in various business areas in 2010 and 2011. These measures will generate annual cost savings totalling EUR 17 million. The savings will begin to materialise during 2011 and will have fully materialised in 2013 at the latest.
Atria Plc complies with the publication procedure in accordance with standard 5.2b of the Financial Supervisory Authority and publishes its 1 JANUARY – 30 JUNE 2011 interim report as an attachment to this company announcement. The full interim report is available on the company’s website at www.atriagroup.com.
For more information, please contact: Juha Gröhn, CEO, Atria Plc, tel. +358 400 684 224.
Invitation to a press conference
A press conference conducted in Finnish will be arranged today 28 July 2011 at 9:30 am at Atria offices in Helsinki, address Läkkisepäntie 23, Helsinki. The presentation material will be available on the company’s website (www.atriagroup.com/en/investors/FinancialInformation/quarterlyreports) after the distribution of the interim report and as an attachment to this company announcement.
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