INTERIM REPORT OF ATRIA PLC 1 JANUARY– 30 SEPTEMBER 2016
Acquisitions support Atria’s growth strategy
- Consolidated net sales totalled EUR 339.1 million (EUR 337.1 million).
- Consolidated EBIT was EUR 13.2 million (EUR 15.1 million), which equates to 3.9% (4.5%) of net sales.
- The acquisition of the Lagerbergs poultry company provided Atria with growth.
- The Sibylla business showed strong growth in Russia; there are now more than 2,700 outlets.
- EBIT was held back by lower sales prices than in the comparison period, the costs related to commissioning a new pig cutting plant in Finland, and the costs of taking over Lagerbergs in Sweden.
- Consolidated net sales totalled EUR 994.9 million (EUR 989.2 million).
- Consolidated EBIT was EUR 21.0 million (EUR 24.2 million), which equates to 2.1% (2.4%) of net sales.
- The business operations of the Lagerbergs poultry company were transferred to Atria as of the beginning of May. Annual net sales are expected to grow by about EUR 30 million. In June, Atria decided to invest EUR 14 million in the poultry business in Sweden.
- Atria acquires a majority stake in Well-Beef Kaunismaa Ltd. The Finnish Competition and Consumer Authority approved the transaction in September and the acquisition was confirmed on 3 October 2016. Annual net sales are expected to grow by about EUR 40 million.
- Atria sold a pig farm in Estonia and real estate that it no longer needed in Estonia and Sweden.
- EBIT growth was slowed by decreased sales prices, the costs of commissioning the new pig cutting plant and the costs incurred in taking over new businesses.
|Total net sales||339.1||337.1||994.9||989.2||1,340.2|
|Profit before taxes||11.8||13.0||16.3||17.3||20.1|
|Earnings per share, EUR||0.32||0.27||0.42||0.38||0.49|
|EBIT includes items affecting comparability:|
|Pig farms sale||-||-||-1.0||1.9||1.9|
|Sale of the real estate company||-||-||1.4||-||-|
Juha Gröhn, CEO
“Price competition has been unusually fierce for the entire year and it has weakened Atria’s results in comparison with the previous year. Cost management is very important in the prevailing market environment. The cost level and activities of Atria’s standard operations are in good order. Actions related to company acquisitions and commissioning the Nurmo pig cutting plant have temporarily increased costs but, in time, these increases will turn into savings, growth and profit.
At the end of the third quarter, the price level began to rise in several of Atria’s key product groups. This influenced – and will continue to influence – the balancing of supply and demand on EU meat market. The balancing factor is the increase in exports from the EU to East Asia.
The decrease in sales prices has also affected Atria’s growth rate. An active approach to company acquisitions in line with the strategy has been a prerequisite for maintaining growth. This year, Atria has made 2 major acquisitions: the Lagerbergs poultry company in Sweden and Well-Beef Kaunismaa Ltd, a Finnish company that processes beef. The acquired companies have combined annual net sales of approximately EUR 70 million. Atria's financial position is strong and enables the implementation of its growth strategy.
However, it is essential that Atria is also able to grow organically within its current businesses. Everything is in place to enable this and several of the businesses have demonstrated their ability to grow this year. Expanding export opportunities to markets such as China will play a part in underpinning organic growth.”
Atria Group’s net sales for July–September totalled EUR 339.1 million (EUR 337.1 million). EBIT amounted to EUR 13.2 million (EUR 15.1 million). The increase in net sales was due to the acquisition of the Lagerbergs poultry company in Sweden and the increase in sales of Sibylla products in Russia. In Finland, net sales were held back by fierce price competition. EBIT was weakened by lower sales prices, the costs related to ramping up the new pig cutting plant, and the costs of taking over the poultry business that was acquired in Sweden.
On 12 September 2016, the Finnish Competition and Consumer Authority unconditionally approved Atria’s acquisition of a 70% stake in Well-Beef Kaunismaa Ltd. The purchase price is approximately EUR 16 million. The agreement between Atria and Well-Beef Kaunismaa to conclude the acquisition was confirmed on 3 October 2016, after the review period.
Well-Beef Kaunismaa’s product range complements Atria’s selections of beef products. The company’s customers are mainly fast-food chains and other Food Service customers. Well-Beef Kaunismaa holds a strong position in the Finnish market as a manufacturer of high-quality hamburger patties and kebab products. Atria’s annual net sales are expected to grow by about EUR 40 million. Well-Beef Kaunismaa has a production plant in Turku with approximately 50 employees.
The Sibylla concept has continued to show strong growth in Russia. The number of Sibylla sales outlets has increased to more than 2,700.
Atria Finland’s net sales for July–September totalled EUR 227.0 million (EUR 235.1 million). EBIT amounted to EUR 8.7 million (EUR 9.5 million). Atria did not take part in the intensified price competition in the retail and Food Service markets and, as a result, sales volumes decreased in comparison with the comparable period of last year. The costs of the transitional phase related to commissioning the new pig cutting plant had a negative effect on EBIT.
Atria Scandinavia’s net sales for July–September totalled EUR 90.6 million (EUR 81.3 million). EBIT amounted to EUR 3.5 million (EUR 5.2 million). The increase in net sales was mainly due to the Lagerbergs poultry company acquired in April 2016. EBIT was weighed down by increases in raw material prices, the sales structure and the costs incurred in taking over Lagerbergs.
Atria Russia’s net sales for July–September totalled EUR 19.5 million (EUR 19.1 million). In the local currency, net sales grew by 5.4%. EBIT amounted to EUR 0.5 million (EUR 0.5 million). The growth in net sales was accelerated by a revamped product selection, a growth in sales to retailers and good sales of Sibylla products.
Atria Baltic’s net sales for July–September amounted to EUR 8.7 million (EUR 8.4 million). EBIT amounted to EUR 0.5 million (EUR 0.0 million). Sales volumes were good. Sales of the new minced meat products launched at the beginning of the year increased rapidly, while sales of grill sausages were weaker than in the previous year. The price of pork began to rise during the review period, which boosted the profitability of the business.
Atria Group’s net sales for January–September totalled EUR 994.9 million (EUR 989.2 million). EBIT amounted to EUR 21.0 million (EUR 24.2 million). Adjusted EBIT was EUR 20.6 million (EUR 22.3 million). EBIT growth was slowed by decreased sales prices, the costs of ramping up the pig cutting plant and the costs incurred in taking over the poultry business acquired in Sweden.
Once completed, Atria Finland’s pig cutting plant will be one of Europe’s most modern cutting plants. The first phase of the cutting plant will be commissioned in 2016, after which the old cutting plant will be modernised. The entire project will be complete in 2017. The value of the investment is approximately EUR 36 million, and it is expected to generate annual cost savings of some EUR 8 million in the plant’s operations. These savings will be realised in full as of the beginning of 2018. Employer-employee negotiations concerning the project have been concluded. The cutting plant’s operations will be reorganised and, as a result of these arrangements, staffing will be reduced by 80 person-years by the end of 2016.
In April, the Swedish Competition Authority and Consumer Agency unconditionally approved Atria’s acquisition of the entire share capital of Lagerberg i Norjeby AB (Lagerbergs), a Swedish poultry company. The agreement between Atria and Lagerbergs was confirmed at the end of April and the business operations were transferred to Atria as of the start of May. The purchase price was EUR 18.7 million, and it was paid in cash. Atria’s annual net sales are expected to grow by about EUR 30 million. The transaction expands Atria’s business in Sweden into the poultry market.
In June, Atria’s Board of Directors approved a long-term investment programme worth EUR 14 million for the development of the poultry business in Sweden. The investments will be devoted to improving the entire production chain, from chicken rearing and industrial production to product marketing. The investments will take place in the period from 2016 to 2018.
Atria centralised its logistics operations in Sweden by moving them from Gothenburg to the Malmö plant. The logistics centre in Gothenburg was sold for a profit of EUR 1.4 million.
Atria sold the Linnamäe pig farm located in Northern Estonia. The sale of the Linnamäe pig farm gave rise to a sales loss of approximately EUR 1 million. The pig farm was transferred into new ownership as of 29 April 2016.
Atria centralised its industrial operations in Estonia at the Valga factory. Production of meat products was transferred from the Vastse-Kuuste factory to Valga and the real estate was sold. The sale had no impact on the company’s results. Production rearrangements were concluded by the end of the second quarter. The measures are expected to generate annual savings of approximately EUR 0.5 million.
Atria Finland’s net sales for January–September totalled EUR 685.7 million (EUR 681.0 million). Increased sales volumes at the beginning of the year enabled net sales to grow. EBIT amounted to EUR 13.4 million (EUR 16.1 million). A decline in sale prices and the costs of the transitional phase related to commissioning the new pig cutting plant had a negative effect on EBIT.
Atria Scandinavia’s net sales for January–September totalled EUR 255.1 million (EUR 246.7 million). EBIT amounted to EUR 7.7 million (EUR 9.6 million). Adjusted EBIT was EUR 6.2 million (EUR 9.6 million). The increase in net sales was mainly due to the acquired poultry business. EBIT was weighed down by the effects of the sales structure and the costs incurred in taking over Lagerbergs.
Atria Russia’s net sales for January–September totalled EUR 50.6 million (EUR 56.5 million). In the local currency, net sales grew by 2.8%. EBIT was EUR -0.1 million (EUR 0.2 million). Adjusted EBIT was EUR -0.1 million (EUR -1.7 million). Adjusted EBIT was boosted by increased sales of Sibylla products, stabilisation of raw material prices and increased sales to retailers.
Atria Baltic’s net sales for January–September totalled EUR 25.6 million (EUR 24.9 million). EBIT amounted to EUR 0.1 million (EUR 0.1 million). Adjusted EBIT was EUR 1.1 million (EUR 0.1 million). Atria’s retail sales volumes showed positive development in the first half of the year. Sales of minced meat products and fresh meat showed particularly strong improvement. Long-term work to increase cost efficiency has led to improved profitability.
|Equity ratio, %||46.3%||46.0%||47.4%|
|Net gearing, %||55.7%||55.8%||48.3%|
|Gross investments in fixed assets||54.0||39.0||56.9|
|Gross investments, % of net sales||5.4%||3.9%||4.2%|
|Average personnel (FTE)||4,291||4,304||4,271|
|The principles for calculating key indicators were presented in the 2015 annual financial statements.|
Outlook for the future
Consolidated EBIT was EUR 28.9 million in 2015. In 2016, EBIT is expected to be better than in 2015. In 2016, net sales are expected to grow.
Atria Plc complies with the disclosure procedure in accordance with standard 5.2b of the Financial Supervisory Authority and publishes its financial statement release for 1 January to 30 September 2016 as an attachment to this company announcement. The full release is available on the company’s website at www.atria.com.
For more information, please contact: Juha Gröhn, CEO, Atria Plc, tel. +358 400 684224.
Invitation to press conference
A press conference will be held in Finnish today, 27 October 2016, at 9:45 am at Atria Plc’s Helsinki office, Läkkisepäntie 23, Helsinki. The presentation material will be available on the company’s website (www.atria.com) after the publication of the financial statements and as an attachment to this company announcement.
Boad of Directors
Nasdaq Helsinki Ltd