INTERIM REPORT OF ATRIA PLC 1 JANUARY – 30 SEPTEMBER 2011
Atria Group's performance improved toward the end of the review period
- Net sales increased by 0.9% compared with the previous year
- The operating profit for the period amounted to EUR 3.8 million (EUR 5.3 million).
- The EBIT for Q3 came to EUR 9.0 million (EUR -0.4 million), which shows a clear improvement on the previous two quarters
- The Group's equity ratio is at the target level: 39.8% (40.1%)
- Tight cost control in all business areas strengthened the Group's performance
- The international meat market stabilised, resulting in an increase in sales prices for pork, which had a positive effect on the performance of Atria Finland
- Atria Russia's loss for Q3 decreased compared to Q1 and Q2
|Profit before taxes||5.4||-3.0||-5.5||-1.3||0.3|
|Earnings per share, EUR||0.13||-0.22||-0.21||-0.19||-0.18|
Atria Group's net sales for the first three quarters were EUR 963.1 million (EUR 954.2 million) with a growth of 0.9%. Calculated in fixed currencies, net sales were at the same level as last year. Atria Finland’s net sales increased by 5.9%. During the comparative period, there were some breaks in production in Finland due to industrial action. The decline of 5.6% in Atria Scandinavia’s net sales is mainly due to the discontinuation of consumer packed meat production in the summer of 2010, as well as slightly decreased sales volumes. Atria Russia’s net sales decreased by 5.4%. This was due to a decrease in sales in Moscow. In St Petersburg, sales volumes have remained stable. Atria Baltic’s net sales were at the same level as last year.
Atria Group’s EBIT for the first three quarters was EUR 3.8 million (EUR 5.3 million). The EBIT for Q3 came to EUR 9.0 million (EUR -0.4 million), which shows a clear improvement on the previous two quarters (Q1/2011 = EUR -4.2 million and Q2/2011= EUR -0.9 million).
Atria Finland's EBIT for the first three quarters of EUR 12.2 million (EUR 22,9 million) weakened significantly on the previous year. The EBIT for Q3 of EUR 9.0 million (EUR 11.9 million) shows a clear improvement on the previous two quarters (Q1/2011 = EUR 0.6 million and Q2/2011= EUR 2.6 million). The international meat market stabilised and the price of meat increased at the end of Q3. In particular, the demand for and supply of pork on global markets has balanced out compared with the early part of the year. It was possible to transfer some of the accrued cost rises to sales prices at the end of the review period.
Atria Russia's EBIT for the first three quarters showed a loss of EUR -14.5 million. However, this was an improvement on the previous year (EUR -20.3 million). The earnings for the comparative period include a total of EUR 9.1 million of non-recurring costs. The EBIT of EUR -3.3 million for Q3 was better than the previous two quarters (Q1/2011 = EUR -5.6 million and Q2/2011= EUR -5.6 million).
Atria Scandinavia’s EBIT for the first three quarters was EUR 9.7 million (EUR 8.3 million). The figure for the comparison year included a non-recurring cost item of EUR 2.3 million. The EBIT of EUR 4.7 million for Q3 was better than the previous two quarters (Q1/2011 = EUR 2.3 million and Q2/2011= EUR 2.7 million).
Atria Baltic’s EBIT for the first three quarters was EUR -0.4 million (EUR -3.0 million). The EBIT for the first three quarters includes a total of EUR 0.9 million of non-recurring sales gains.
Operating cash flow stood at EUR 28.6 million (EUR 4.5 million) and cash flow from investments at EUR -29.2 million (EUR -34.8 million). The Group's free cash flow amounted to EUR -0.6 million (EUR -30.3 million). Net interest-bearing liabilities amounted to EUR 414.7 million, an increase of EUR 3.3 million since the year-end. Atria Scandinavia concluded an agreement with Nordea Finans Sverige AB concerning the sale of trade receivables. The agreement decreased the company’s trade receivables by a total of EUR 16.7 million at the end of the review period.
In January 2011, Atria Plc made a decision to invest approximately EUR 26 million in building and renovation work on the Kauhajoki bovine slaughterhouse and cutting plant. Atria Plc also bought the shares of Kauhajoen Teurastamokiinteistöt Oy from Itikka Co-operative. The final purchase price was EUR 6.1 million.
During the first three quarters of the year, Atria Finland launched programmes to increase the efficiency of bovine slaughtering and to improve the Nurmo production plant. The total annual cost savings from these measures will amount to approximately EUR 10 million. The savings will start to materialise during 2011 and will be fully materialised by the beginning of 2013.
Atria Russia began reorganising its production in 2010, and the project is progressing according to plan. Production of meat products will be transferred from the Moscow and Sinyavino plants to the new Gorelovo plant in St Petersburg. Personnel reductions will be bigger than previously reported, and the estimated annual cost savings will amount to approximately EUR 7.5 million. The savings will begin to materialise already during 2011, and they will be fully materialised by the beginning of 2013.
During the review period, Atria Scandinavia continued to enhance its operational efficiency by automating the production process for black pudding. The production of black pudding will be transferred from the Saltsjö-Boo plant in Stockholm to Tranås during the remainder of the year. The efficiency improvement programme is expected to generate an annual cost saving of approximately EUR 1.0 million. The saving will be fully realised as of the beginning of 2012.
The implementation of the product leadership strategy progressed according to plan. The elements emphasised in the product leadership strategy are strengthening the product brands represented by Atria, ensuring the competitiveness of the existing products, and developing new, innovative products.
| Key indicators |
|Shareholders' equity per share, EUR||14.74||15.41||15.68|
|Equity ratio, %||39.8||40.1||40.2|
|Net gearing, %||98.9||100.7||92.2|
|Gross investments in fixed assets||36.9||34.2||46.2|
|Gross investments of net sales, %||3.8||3.6||3.5|
|Average number of personnel (FTE)||5,550||5,811||5,812|
Outlook for the future
The company expects full-year EBIT to be significantly lower than 2010 EBIT excluding non-recurring items (EUR 21.6 million). Net sales are expected to grow somewhat in 2011.
The key source for uncertainty in terms of reaching the growth target in net sales is the weakening of currency exchange rates during the latter part of the year. Tougher competition may also slow down sales growth.
The development of Atria Finland’s earnings is significant when evaluating the whole Group's prospects of results. Stabilisation in the meat market and increasing meat prices improve Atria Finland's outlook for the remainder of the year. The price development for raw materials in other business areas will also be a significant factor for the Group’s performance in the latter part of the year.
The meat raw material market will continue to stabilise during the remainder of the year. However, there is still pressure to raise meat raw material prices due to high feed and energy costs. Consequently, the wholesale and export prices of meat can be expected to rise during the remainder of the year.
In the first three quarters, the economic development in Russia was steady. However, if the uncertainty in the global economy continues, market growth in terms of value will be more uncertain than previously.
Atria has initiated profitability improvement measures in various business areas in 2010 and 2011. These measures will generate annual cost savings totalling EUR 18.5 million. The savings will begin to materialise during 2011 and will be fully materialised by 2013.
Atria Plc complies with the publication procedure in accordance with standard 5.2b of the Financial Supervisory Authority and publishes its 1 JANUARY – 30 SEPTEMBER 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 27 October 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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