ATRIA GROUP PLC?S INTERIM REPORT 1 JANUARY ? 30 JUNE 2006
Atria Group plc STOCK EXCHANGE RELEASE 26 July 2006
ATRIA GROUP PLCS INTERIM REPORT 1 JANUARY 30 JUNE 2006
* Group turnover was EUR 523.3 million (EUR 468.8 million), growth 11.6 per
cent.
* Operating profit was EUR 11.0 million (15.9 million) and profit before taxes
EUR 8.9 million (EUR 15.2 million).
* Earnings per share amounted to EUR 0.25 (EUR 0.51).
Review Q2/2006:
- GROUP TURNOVER CONTINUED ITS SUBSTANTIAL GROWTH
- IN FINLAND AND SWEDEN EARNINGS SAW A POSITIVE DEVELOPMENT TREND
- IN RUSSIA SALES CONTINUED TO GROW STEADILY, NON-RECURRING ITEMS TAXED
EARNINGS
Atria Groups second quarter turnover grew 12.7 per cent compared to the
corresponding period in the previous year (JanuaryJune 11.6 per cent).
Earnings for the review period were below the level of earnings during the
corresponding period in 2005.
Earnings in Finland saw a positive development trend compared to the first
quarter thanks to efficiency measures. Finnish operations account for 62.2 per
cent of all Group operations.
In Sweden, review period earnings were at the same level as during the
corresponding period in 2005 and took a turn for the better compared to the
first quarter.
In Russia, sales continued to grow steadily. The growth achieved during the
period JanuaryJune was 41 per cent. Earnings for the review period remained in
the red. Earnings were taxed by non-recurring costs related to the takeover
process and the steep increase in meat raw material prices.
Development of operations continued in the Baltic countries. Earnings were
unsatisfactory.
During the review period, Atria Group plc was reorganised. A management group
was established for Atria Group. The management group is responsible for the
management and monitoring of country-specific operations.
Group economic objectives
Atria Group plcs Board of Directors has confirmed the following economic
objectives:
- Equity ratio 40%
- Operating profit 5%
- Return on equity (ROE) 12%
- International operations 50% of turnover
- Distribution of dividends 50% of the profit of the period
Administration
The AGM confirmed the financial statements on 3 May 2006 and decided to
distribute a dividend of EUR 0.595 per share. On 27 June 2006, the Supervisory
Board elected Ms Leena Saarinen, M.Sc. (Food Sc.), President and CEO of Altia
Corporation, as a new member of Atria Groups Board of Directors.
Finland
In Finland, turnover amounted to EUR 176.0 million (JanuaryJune EUR 332.8
million), including growth of 8.8 per cent (JanuaryJune 8.6 per cent). During
the review period, measures were initiated to improve profitability. These
measures were evidenced in the upturn in earnings at the end of the second
quarter. In Finland, the increase in the price of energy and certain purchasing
services has affected the earnings potential. It has not been possible to
completely transfer the increase in production costs to sales prices.
The start-up of operations at the Nurmo pig slaughtering and cutting plant
caused still some non-recurring costs. The operations were stabilized by the
end of the second quarter.
The integration of Liha ja Säilyke Oys operations into Atrias meal solutions
business unit has progressed according to plan. Integration of the operations
will be completed by the end of the year. Liha ja Säilyke Oy will continue to
operate as a production unit, while commercial operations will be integrated
into Atrias corresponding operations.
In January 2006, Atria and HK Ruokatalo announced that they had embarked on a
feasibility study to work together to safeguard domestic turkey production.
Based on the study, the companies have decided to establish a joint turkey meat
production company, Länsi-Kalkkuna Oy, owned on a 50-50 basis. The aim of the
cooperation is to safeguard turkey farming and turkey meat processing in
Finland, as well as to provide consumers with competitive domestic turkey
products. The turkey meat production company is intended to be operative from
the beginning of 2007. The cooperation applies solely to primary production,
slaughtering and cutting.
Sales and market shares developed in a positive manner in all product groups
represented by Atria. The market shares in retail-packed meat and poultry meat
as well as in the product group of sausages and bacon grew noticeably faster
than the market in total. Atrias growth in grilling sausage sales at the
beginning of the summer was also faster than the market in general. Atrias
market share of the early summer grilling sausage market (weeks 1827) was
approximately 45 per cent (source: AC Nielsen). Summer season deliveries were
completed without setbacks.
Atria Finlands (Atria Oy) management was reorganised during the review period.
Mr Juha Gröhn, M.Sc. (Food Sc.), was appointed General Manager of Atria Oy
effective 1 June 2006. At the same time, a management group was established for
operations in Finland.
Sweden
In Sweden, turnover amounted to EUR 82.1 million (JanuaryJune EUR 152.6
million), including growth of 1.4 per cent (JanuaryJune 1.5 per cent). Review
period earnings were at the same level as during the corresponding period in
2005.
In early 2006, investments to strengthen the Lithells brand and develop
marketing were initiated in Sweden. The meat industry market in Sweden is in a
state of ferment. The largest operator in the market has made a loss and is now
officially for sale. This provides other operators, such as Atria Lithells AB,
with an opportunity to improve their market shares.
Svensk Snabbmat ABs operations and earnings performed as expected. The biggest
operator in HoReCa wholesale outlets and Svensk Snabbmat ABs competitor ICA
Meny has changed owners.
Atria Concept ABs operations and earnings developed in a positive direction
during the review period.
Atria Swedens organisation was reorganised during the review period. Mr
Christer Åberg was appointed General Manager of Atria Sweden and the sales and
marketing organisation was confirmed.
Russia and the Baltic Countries
Turnover in Russia and the Baltic Countries during the review period amounted
to EUR 26.5 million (JanuaryJune EUR 48.7 million). Earnings remained in the
red.
During the review period, operations in the Baltic Countries were reorganised.
Mr Raimo Kirmanen was appointed head of Atria Baltic Countries. During the
review period, several development measures have been initiated in the Baltic
Countries. These measures are intended to improve the profitability of
operations.
Atria's sales have grown rapidly in Russia. Growth amounted to 41 per cent
during the period JanuaryJune compared to the corresponding period in the
previous year. Pit-Product's total market share in the St. Petersburg region
was 22 per cent during the period January-May. In the same time Pit-Product was
the market leader in the St. Petersburg area. (Source: AC Nielsen)
In Russia the earnings potential was temporarily weakened by meat raw material
price increase and non-recurring costs related to the takeover process. It has
not yet been possible to completely transfer the raw material price increase to
sales prices.
The takeover process has been completed and related reorganisation of
structures and organisation has been initiated. New production capacity is
being built, and plans for a new plant and logistics centre are being drawn up.
Mr Juha Ruohola, M.Sc. (Agr. & For.), was appointed head of the Russian and
Baltic operations, effective 1 June 2006.
Personnel
During the review period, the following appointments have been made within the
Group (effective 1 June 2006):
- Mr Matti Tikkakoski, President & CEO
- Mr Juha Gröhn, Primary Production, Executive Vice President & Deputy CEO
- Mr Pasi Luostarinen, Group Vice President Marketing & Product Development
- Ms Merja Leino, Group Vice President Quality & Product Safety
- Mr Christer Åberg, Group Vice President International Accounts
- Mr Jukka Mäntykivi, Group Vice President IT, Steering & Logistics
- Mr Erkki Roivas, Chief Financial Officer
- Mr Juha Ruohola, Group Vice President Purchasing & Investments
In early 2006, Atria Groups personnel numbered approximately 5,816 (4,296).
Investments
At the end of the review period, an important uncompleted investment was the
expansion of the logistics centre in Nurmo. The logistic centre investments
share of the investments during the first half of 2006 amounted to
approximately EUR 15.0 million.
In Russia, an approximately EUR 5 million expansion to increase production
capacity was initiated.
Financing
During the review period, a share issue directed at institutional investors was
launched. Due to the share issue the number of shares increased by 1.1 million
A Series shares. The share issue increased shareholders equity by a total of
EUR 20.9 million.
The Boards valid issue authorisations
The AGM authorised the Board of Directors to decide on increasing the companys
share capital by means of one or more subscription issues, so that the maximum
number of the companys A Series shares, with a nominal value of EUR 1.70,
should not exceed a total of 4,218,545 shares, thereby increasing the companys
share capital by a maximum of EUR 7,171,526.50.
The authorisation is valid for one year from the empowerment decision taken by
the AGM, until the AGM arranged for 3 May 2007.
A total of 1,100,000 of the authorised A Series shares have been used during
the review period.
Outlook for the rest of the year
Earnings in Finland saw a positive development trend thanks to efficiency
measures and price increases, which will continue for the rest of the year. Due
to the weak earnings early in the year, full year earnings will remain below
last years level in Finland.
Price increases will also be implemented in Sweden before the end of the year.
Full year earnings are expected to be at no less than last years level.
In Russia, sales continue to grow steadily. Full year earnings will remain
somewhat in the red due to non-recurring items implemented during the second
quarter.
In the Baltic Countries, efficiency measures will continue and full year
earnings are expected to remain at last years level.
KEY INDICATORS 1-6/2006 1-6/2005 1-12/2005
EUR million
Equity/share, 12.13 12.36 12.08
Interest-bearing liabilities 242.0 170.0 206.9
Interest-bearing assets 48.4 41.8 43.7
Equity ratio, % 42.9 46.3 43.0
Gross investments 37.8 42.3 107.3
Gross investments of turnover, % 7.2 9.0 11.0
Average personnel 5,816 4,296 4,433
Principles applied in preparing the interim report
This interim report has been prepared in accordance with the IAS 34 Interim
Financial Reporting standard. The firm has applied the same principles in
preparing this interim report as in preparing the 2005 annual financial
statements. This interim report is unaudited.
ATRIA GROUP PLC
CONSOLIDATED BALANCE SHEET
Assets
EUR million 30.6.06 30.6.05 31.12.05
Non-current assets
Property, plant and equipment 347.2 287.5 329.3
Goodwill 52.3 36.1 50.1
Other intangible assets 22.9 20.1 22.7
Loan assets and
other receivables 6.1 4.8 5.1
Other financial assets 6.7 6.4 5.8
Total 435.2 354.9 413.0
Current assets
Inventories 62.0 56.6 58.6
Trade and other receivables 168.0 145.5 151.0
Cash and cash equivalents 9.7 6.1 17.5
Total 239.7 208.2 227.1
Total assets 674.9 563.1 640.1
Equity and liabilities
EUR million 30.6.06 30.6.05 31.12.05
Equity belonging to parent companys
shareholders 269.3 241.0 254.8
Minority interests 20.2 19.7 20.2
Equity total 289.5 260.7 275.0
Long-term liabilities
Interest-bearing liabilities 126.8 87.5 115.5
Deferred tax liabilities 23.0 20.6 22.5
Pension obligations 0.3 0.4 0.4
Total 150.1 108.5 138.4
Current liabilities
Interest-bearing liabilities 115.2 82.5 91.4
Trade and other payables 120.1 111.4 135.3
Total 235.3 193.9 226.7
Total liabilities 385.4 302.4 365.1
Equity and liabilities total 674.9 563.1 640.1
CONSOLIDATED INCOME STATEMENT
EUR million 4-6/06 4-6/05 1-6/06 1-6/05 1-12/05
Turnover 278.3 247.1 523.3 468.8 976.9
Expenses -263.1 -229.5 -495.0 -436.9 -905.2
Depreciations -8.7 -8.0 -17.3 -16.0 -31.5
Operating profit 6.5 9.6 11.0 15.9 40.2
* of turnover 2.3 3.9 2.1 3.4 4.1
Income from associates 0.3 0.5 0.7 0.8 0.8
Financial income and
expenses -1.6 -0.7 -2.8 -1.5 -3.2
Profit before taxes 5.2 9.4 8.9 15.2 37.8
* of turnover 1.9 3.8 1.7 3.2 3.9
Income taxes -2.4 -2.5 -3.3 -4.1 -10.8
Profit for the period 2.8 6.9 5.6 11.1 27.0
* of turnover 1.0 2.8 1.1 2.4 2.8
Profit distribution for the period:
To parent company shareholders 2.6 6.6 5.4 10.8 26.2
To minority shares 0.2 0.3 0.2 0.3 0.8
Total 2.8 6.9 5.6 11.1 27.0
Basic earnings/share, 0.12 0.31 0.25 0.51 1.24
Diluted earnings/share, 0.12 0.31 0.25 0.51 1.24
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million Equity belonging to owners of Mino Equity
the parent company rity's total
interest
Share Share Trans Retained Total
equity premium lation earnings
diff.
Shareholders'
equity 1.1.2005 35.8 104.4 0.5 103.7 244.4 19.5 263.9
Translation differences -1.7 -1.7 -0.1 -1.8
Profit for the period 10.8 10.8 0.3 11.1
Distribution
of dividends -12.5 -12.5 -12.5
Shareholders'
equity 30.6.2005 35.8 104.4 -1.2 102.0 241.0 19.7 260.7
Shareholders'
equity 1.1.2006 35.8 104.4 -0.9 115.5 254.8 20.2 275.0
Translation differences 0.6 0.6 -0.1 0.5
Profit for the period 5.6 5.6 0.1 5.7
Distribution
of dividends -12.6 -12.6 -12.6
Equity issue 1.9 19.0 20.9 20.9
Shareholders'
equity 30.6.2006 37.7 123.4 -0.3 108.5 269.3 20.2 289.5
CASH FLOW STATEMENT FOR THE GROUP
EUR million 1-6/06 1-6/05 1-12/05
Cash flow
from operations -4.4 4.1 59.3
Financial items
and taxes -5.7 -5.0 -12.4
Cash flow
from operations -10.1 -0.9 46.9
Investments
Investments in tangible
and intangible assets -37.4 -42.3 -98.3
Investments -3.9 -2.6 -3.5
Cash flow
from investments -41.3 -44.9 -101.8
Cash equity issue 20.9
Loans drawn down 48.4 61.4 91.4
Loans repaid -13.1 -9.6 -19.2
Dividends paid -12.5 -12.5 -12.7
Cash flow
from financing 43.7 39.3 59.5
Change in liquid funds -7.7 -6.5 4.6
SEGMENT INFORMATION
GEOGRAPHICAL
EUR million 4-6/06 4-6/05 1-6/06 1-6/05 1-12/05
Turnover
Finland 176.0 161.8 332.8 306.5 634.3
Sweden 82.1 81.0 152.6 155.0 314.0
Russia and Baltic 26.5 7.6 48.7 14.2 42.7
Eliminations -6.3 -3.3 -10.8 -6.9 -14.1
Total 278.3 247.1 523.3 468.8 976.9
Operating profit
Finland 7.1 8.1 11.1 13.9 31.6
Sweden 2.0 2.1 2.3 2.8 7.1
Russia and Baltic -2.6 -0.6 -2.4 -0.8 1.5
Total 6.5 9.6 11.0 15.9 40.2
LIABILITIES
EUR million 30.6.06 30.6.05 31.12.05
Debts for which collateral has been provided
in the form of mortgages and other securities
Loans from financial
institutions 93.8 84.3 79.8
Pension fund loans 6.5 5.9 6.2
Total 100.3 90.2 86.0
Mortgages and other securities given
as comprehensive security
Real-estate mortgages 77.8 77.3 78.7
Corporate mortgages 43.9 43.4 44.2
Other security 54.9 50.2 47.3
Total 176.6 170.9 170.2
Guarantee engagements
not included in the balance sheet
Unused limits 90.8 80.8 107.8
Guarantees 15.4 3.1 13.5
For additional information, please contact Mr Matti Tikkakoski, President &
CEO, tel. +358 50 2582.
ATRIA GROUP PLC
Matti Tikkakoski
President & CEO
DISTRIBUTION
Helsinki Stock Exchange
Principal media
www.atria.fi
The interim report will be mailed to you upon request and is also available on
our website at www.atria.fi.
