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Atria Plc Half-Year Financial Report 1 January – 30 June 2018: Atria Group's net sales stable, profits weakened

19.7.2018 07:45

Atria Plc, Half-year financial report, 19 July 2018 at 7:45 am

ATRIA PLC HALF-YEAR FINANCIAL REPORT 1 JANUARY – 30 JUNE 2018

Atria Group's net sales stable, profits weakened

April–June 2018

-
Consolidated net sales totalled EUR 359.1 million (EUR 368.4 million).
- Consolidated EBIT was EUR 5.4 million (EUR 10.0 million), or 1.5% (2.7%) of net sales.
- The weakened Swedish krona and Russian rouble brought down the Group’s net sales in the second quarter.
- Atria Plc lowered its EBIT and net sales forecast for 2018 after the end of the review period. The full-year EBIT of the Group is expected be lower than EBIT in 2017. Net sales are expected to remain at the 2017 level.

January–June 2018

-
Consolidated net sales totalled EUR 704.6 million (EUR 701.0 million).
- Consolidated EBIT was EUR 8.8 million (EUR 11.2 million), which is 1.3 per cent (1.6%) of net sales.
- The Group’s net sales were brought down by weakened exchange rates.
- Atria Finland's net sales and EBIT increased.
- Atria Sweden's weak EBIT reduced the Group's EBIT.

  Q2 Q2 H1 H1  
EUR million 2018 2017 2018 2017 2017
Net sales         
  Atria Finland 254.9 252.4 500.5 480.6 986.4
  Atria Sweden 71.7 78.4 141.3 151.0 307.2
  Atria Denmark&Estonia 24.3 25.2 47.4 48.6 98.9
  Atria Russia 18.5 22.9 35.8 41.6 85.7
  Eliminations -10.3 -10.5 -20.4 -20.8 -42.0
Total net sales 359.1 368.4 704.6 701.0 1,436.2
          
EBIT         
  Atria Finland 6.9 7.7 13.6 11.8 36.3
  Atria Sweden -1.8 0.9 -5.0 0.3 2.4
  Atria Denmark&Estonia 1.4 1.3 2.7 2.4 5.2
  Atria Russia -0.1 0.5 -0.7 -1.2 0.8
  Unallocated -1.0 -0.4 -1.7 -2.0 -3.7
EBIT, total 5.4 10.0 8.8 11.2 40.9
EBIT% 1.5 % 2.7 % 1.3 % 1.6 % 2.8 %
          
Profit before taxes 3.9 8.3 5.1 9.1 35.5
          
Earnings per share, EUR 0.15 0.23 0.16 0.21 0.92
          
Items affecting comparability         
of EBIT:         
Divestment of subsidiary - - - - 1.4
Adjusted EBIT 5.4 10.0 8.8 11.2 39.6


Juha Gröhn, CEO

"The sales of barbeque products went well, but this was not enough to increase our net sales. The profits for the second quarter fell short of expectations. All business areas are working hard to improve cost control. Measures to continuously improve productivity and to manage pricing have been intensified.

The half-year review indicates better profit level to Finland, although profits weakened slightly in the second quarter year-on-year.

The profits of the Denmark&Estonia business area were good. In Denmark, sales have been somewhat slow. Estonia's business has been stable in terms of performance, growth and operations.

In Russia, the competition on St Petersburg meat products market has intensified and the increase in raw material prices during the spring have squeezed our margins. The sales of Sibylla products is growing and profitability is good.

Sweden's profits were poor. Sales was short of target and high raw material costs weakened profitability. The machinery installations of the poultry plant investment programme are being finalised and the commissioning continues as planned. Early in the year, poultry operations were strained by a sluggish poultry market and the commissioning costs of the new technology. During the second quarter, the poultry market situation in Sweden began to improve and Atria's production processes of poultry became more effective."

April–June 2018

Atria Group’s
net sales for April–June totalled EUR 359.1 million (EUR 368.4 million). EBIT amounted to EUR 5.4 million (EUR 10.0 million). The net sales of Atria Finland grew by EUR 2.5 million from the previous year. Sales to retail and Food Service customers increased. Atria Sweden's net sales were reduced by the weak Swedish krona, the divestment of the Nordic Fast Food business operations in December 2017, and the decrease of sales to retail.  Similarly, the decrease in net sales of Atria Russia was caused by weakening exchange rates and decreased sales to retail.

The profits of Atria Finland, Sweden and Russia were burdened by increased costs. The profitability of Atria Sweden's poultry operations weakened due to the price pressure caused by the sluggishness in the market at the beginning of the year and an unfavourable sales structure.

Atria's Finnish grass-fed beef sirloin steak was selected world's best steak in the fourth annual World Steak Challenge competition held in London in July. Atria's Danish partner, JN Meat International, participated in the competition with Atria's beef products and won in as many as four categories out of six.

Atria Finland's net sales for April–June totalled EUR 254.9 million (EUR 252.4 million). Net sales increased by EUR 2.5 million. Sales to retail and Food Service customers increased. EBIT amounted to EUR 6.9 million (EUR 7.7 million). EBIT was brought down by increased costs.

Atria Sweden's net sales for April–June totalled EUR 71.7 million (EUR 78.4 million). EBIT was EUR
-1.8 million (EUR 0.9 million). Net sales were brought down by the weakened Swedish krona and decreased sales to retail. EBIT was reduced by increased raw material costs. The weakened Swedish krona increased especially costs of imported raw materials. The profitability of poultry operations weakened due to the price pressure caused by the sluggishness in the market at the beginning of the year and an unfavourable sales structure. The profits were also burdened by the commissioning costs of the new technology at the poultry plant.

Atria Denmark&Estonia's net sales for April–June totalled EUR 24.3 million (EUR 25.2 million). EBIT amounted to EUR 1.4 million (EUR 1.3 million). In Denmark, the sales of Aalbaek organic cold cuts has improved in all product categories. In Estonia, the sales of new products for the summer season has started well.

Atria Russia's net sales for April–June totalled EUR 18.5 million (EUR 22.9 million). EBIT was EUR -0.1 million (EUR 0.5 million). The decrease in net sales was caused by the weakening of the Russian rouble and decreased sales to retail. Sales of Sibylla and Food Service products increased year-on-year. EBIT was brought down by decreased sales volumes to retail and increased raw material prices.

January–June 2018

Atria Group’s net sales for January–June totalled EUR 704.6 million (EUR 701.0 million). EBIT amounted to EUR 8.8 million (EUR 11.2 million). The Group's net sales were strengthened by Atria Finland's increased sales at the beginning of the year. The weakened Swedish krona and Russian rouble brought down the Group’s net sales in January–June.

The Group’s EBIT weakened from the previous year. The EBIT of Atria Finland, Russia, and Denmark&Estonia improved. In Sweden, EBIT was weighed down by the poor profitability of poultry operations, the weakened krona, and increased raw material costs.

Atria Group's operational structure and financial reporting were altered as of the beginning of 2018. Atria Group’s reporting segments are as follows: Atria Finland, Atria Sweden, Atria Russia, and Atria Denmark&Estonia. Changes were made to Atria Plc's Management Team as of 1 January 2018. Composition of Atria Group’s Management Team:
- Juha Gröhn, CEO
- Tomas Back, CFO, Executive Vice President and Deputy CEO
- Mika Ala-Fossi, Executive Vice President, Atria Finland
- Jarmo Lindholm, Executive Vice President, Atria Sweden
- Ilari Hyyrynen, Executive Vice President, Atria Russia (as of 9 July 2018)
- Olle Horm, Executive Vice President, Atria Estonia
- Lars Ohlin, Executive Vice President Human Resources
- Pasi Luostarinen, Executive Vice President Marketing & Market Insight

Atria Group's corporate responsibility projects proceeded according to plan during the review period. The Atria Way of Leading training programme and the Safely Home From Atria occupational safety programme were implemented in all business areas. The construction of Atria Finland's solar power plant continued, and in February the company launched its antibiotic-free pork products.

Atria Finland’s net sales for January–June totalled EUR 500.5 million (EUR 480.6 million). Sales to retail and Food Service customers were up from the year before. EBIT amounted to EUR 13.6 million (EUR 11.8 million). The sales structure was better than during the corresponding period last year.

Atria Sweden’s net sales for January–June totalled EUR 141.3 million (EUR 151.0 million). EBIT was EUR -5.0 million (EUR 0.3 million). The decrease in net sales was caused by the weak Swedish krona and the divestment of Nordic Fast Food business operations in December 2017. Profits were brought down by increased raw material costs, the poor profitability of poultry operations, and employee arrangements at the beginning of the year.

Atria Denmark&Estonia's net sales for January–June totalled EUR 47.4 million (EUR 48.6 million). EBIT amounted to EUR 2.7 million (EUR 2.4 million). Atria Estonia's sales to retail increased throughout the first half of the year. In Denmark, sales have decreased slightly. EBIT increased slightly thanks to good cost management and a favourable sales structure.

Atria Russia’s net sales for January–June totalled EUR 35.8 million (EUR 41.6 million). EBIT was EUR -0.7 million (EUR -1.2 million). The decrease in net sales was caused by the weakening of the rouble and decreased sales to retail. EBIT was better than during the corresponding period last year thanks to improved sales structure and good cost efficiency.

Key indicators    
EUR million 30.6.18 30.6.17 31.12.17
      
Shareholders´ equity per share EUR 14.35 14.17 14.81
Interest-bearing liabilities 251.4 251.2 214.3
Equity ratio, % 45.4 % 45.0 % 47.5 %
Net gearing, % 59.7 % 59.6 % 49.0 %
Gross investments in fixed assets 24.1 24.9 53.9
% of net sales 3.4 % 3.6 % 3.8 %
Average FTE 4,500 4,505 4,449


Events after the period under review

Atria Plc lowered its EBIT and net sales forecast for 2018. The company predicts the full-year EBIT of the Group to be lower than EBIT in 2017. Net sales are expected to remain at the 2017 level.

According to Atria’s earlier forecast, "The Group’s EBIT was EUR 40.9 million in 2017. In 2018, EBIT is expected to be better than in 2017. In 2018, net sales are expected to grow."

The reason for the adjustment of the EBIT forecast is Atria's Sweden's profits during the beginning of the year, which were weaker than expected. The weakened Swedish krona and Russian rouble are weakening the Group’s net sales.

Outlook for the future

The consolidated EBIT in 2017 was EUR 40.9 million. In 2018, EBIT is expected to be lower than in 2017. In 2018, net sales are expected to remain at the 2017 level.

Disclosure

Atria Plc complies with the disclosure procedure in accordance with standard 5.2b of the Financial Supervisory Authority and publishes its half-year financial report for 1 January to 30 June 2018 as an attachment to this stock exchange release. 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, 19 July 2018, at 12:00 am at Scandic Hotel Simonkenttä, Simonkatu 9, conference room Mansku, 1st floor, Helsinki. The presentation material will be available on the company's website (www.atria.com) after the distribution of the interim report and as an attachment to this company announcement.

ATRIA PLC
Board of Directors

DISTRIBUTION
Nasdaq Helsinki Ltd
Major media
www.atria.com

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