ATRIA GROUP PLC?S INTERIM REPORT 1 JANUARY ? 30 SEPTEMBER 2006
Atria Group plc STOCK EXCHANGE RELEASE 25 October 2006
ATRIA GROUP PLCS INTERIM REPORT 1 JANUARY 30 SEPTEMBER 2006
* Group turnover was EUR 805.0 million (EUR 717.0 million), growth +12.3 per
cent.
* Operating profit was EUR 23.7 million (EUR 29.8 million) and profit before
taxes EUR 19.6 million (EUR 28.9 million).
* Earnings per share amounted to EUR 0.58 (EUR 0.96).
Review Q3/2006:
- IN FINLAND, STRONG EARNINGS DEVELOPMENT PROCEEDED
- IN RUSSIA, EARNINGS TURNED POSITIVE
- IN THE BALTIC COUNTRIES, COSTS RELATED TO THE TAKEOVER PROCESS DEPRESSED
EARNINGS
Atria Group's third quarter turnover was EUR 281.7 million, which represents an
increase of 13.5% compared to the corresponding period last year (January-
September 12.3%). The operating profit amounted to EUR 12.7 million (EUR 13.9
million).
Operating profit for Finnish operations reached last years level in the period
under review and amounted to EUR 11.3 million. Good domestic turnover and
earnings boosted positive development throughout the entire group.
In Sweden, operating profit for the period was EUR 3.4 million, with growth at
30.8% compared to the corresponding period last year.
In Russia, sales and earnings developed positively during the period. Earnings
turned positive during the period under review.
In the Baltic region, development of operations and reorganisation continued and
non-recurring items related to the takeover process depressed earnings.
Finland
In Finland, turnover amounted to EUR 173.4 million (JanuarySeptember EUR 506.2
million), including growth of 7.0 per cent (JanuarySeptember 8.0 per cent).
Operating profit for the period was EUR 11.3 million (JanuarySeptember, EUR
22.4 million).
Sales and market share developed in a positive manner in all product groups
represented by Atria. The overall market share in Finland for the first nine
months was nearly 30 per cent. Summer sales exceeded expectations and Atrias
market share in the important grill sausage segment was 45 per cent (weeks 18-
45). Sales of other grill products like skewers and retail-packed meat was also
excellent. In particular, sales for the Atria brand has increased heavily:
during the first nine months of the year, the success of the Atria brand has
been nearly triple compared to the overall market (Source: AC Nielsen)
The Nurmo pig slaughterhouse has been fully implemented and the slaughtering
capacity has been stabilised at around 3,500 pigs per day.
The construction of the Nurmo logistics centre expansion is progressing
according to plan. Implementation will start in January 2007. By June, the
expansion will operate at 40 per cent capacity and the project will be completed
in September 2007. The expansion of the logistics centre is the last step in
Atrias extensive investment programme in Finland. Over the next few years,
investments will decrease considerably and the aim is to improve the operations
of existing production plants.
The integration of Liha ja Säilyke Oys operations and Atrias meal solutions
business unit progressed according to plan. Liha ja Säilyke Oys dismissal
negotiations were completed in September. Sausage production will be transferred
from Forssa to Nurmo during 2007. Logistics, technical running, financial
administration and personnel management operations as well as sales and
marketing operations will be integrated into Atrias corresponding operations.
The integration will lead to approximately two million euro in annual cost
savings. The number of dismissed employees was 51 of which 15 were clerical
employees.
Price increases were carried out in all product groups in September.
Sweden
In Sweden, turnover amounted to EUR 87.8 million (JanuarySeptember EUR 240.4
million), including growth of 5.9 per cent (JanuarySeptember 1.1 per cent).
Operating profit for the period was EUR 3.4 million (JanuarySeptember, EUR 5.7
million).
In Sweden, sales for the period were a success. The sales of the Lithells brand
in the retail sector grew 11 per cent during the period compared to sales in the
previous quarter. Sales of all brands increased 5 per cent (Source: AC Nielsen).
The operating profit of Atria Sweden was 30,8 per cent higher than the operating
profit in the corresponding period of the previous year. During the period,
price increases were implemented in Sweden, which will become visible as
positive earnings development during the remainder of the year.
Svensk Snabbmat för Storkök AB, which specialises in local wholesale operations
strengthened its position in the Swedish market. Svensk Snabbmat för Storkök AB
and Matgruppen för Storkök i Norr AB signed an agreement on company
reorganisation, the result of which was the transfer of Matgruppen i Norr ABs
stores to the ownership of Svensk Snabbmat för Storkök AB. At the same time, the
current store owners became shareholders in Svensk Snabbmat. Atria continues as
a majority shareholder in the company.
The combined 2005 turnover of the retail stores to be owned by Svensk Snabbmat
was in excess of SEK 500 million. As a result of the business deal, the annual
turnover of Svensk Snabbmat will increase to almost two billion kronas.
Following the re-organisation, Svensk Snabbmat will have a total of 18 offices
covering all of Sweden. The acquired companies will be consolidated into the
Atria Group from 1 November 2006.
Atria Concept ABs operations and earnings developed in a positive direction in
all market areas.
In Sweden, Atria will continue investing in strengthening the Lithells and
Sibylla brands and on increasing the cost structure efficiency of core
operations.
Russia and the Baltic Countries
Turnover in Russia and the Baltic Countries during the review period amounted to
EUR 28.2 million (JanuarySeptember EUR 76.9 million). Operating profit for the
period was EUR -2.0 million (JanuarySeptember, EUR -4.4 million). In Russia,
earnings in August-September were already positive as non-recurring costs
related to the takeover process were only directed at July.
Atrias sales have continued growing heavily in Russia. Pit-Products overall
market share in the St. Petersburg area was 25.7 per cent in June-August. Since
the beginning of the year, Pit-Products overall market share has increased
seven percentage points and Pit-Product has further strengthened its position as
the market leader in the St. Petersburg region. (Source: AC Nielsen)
Price increases were implemented during the period, which will have a positive
effect on the result during the rest of the year.
Operational reorganisation continued in the Baltic Countries during the review
period. The primary aim of the reform is to seek business operation growth as
well as to rapidly improved profitability for Atrias operations in the Baltics.
Another aim is to seek synergy in our Baltic business operations, as well as
creating closer co-operation with Atria Group. The new operating method aims at
a radical improvement in business thinking, implementation of reforms and
particularly at cost efficiency. Non-recurring costs from the reorganisation
depressed earnings in the Baltic countries and the result was unprofitable
during the review period.
Atria integrated the business operations of AS Valga Lihatööstus (Estonia) and
UAB Vilniaus Mesa (Lithuania) into a joint business in the Baltics starting 5
September 2006.
Raimo Kirmanen, director in charge of Atrias Baltic operations, is in charge of
Atria's organisation in the region. He is also the Managing Director of AS Valga
Lihatööstus and UAB Vilniaus Mesa.
Human Resources
In early 2006, Atria Groups personnel numbered approximately 5,659 (4,238).
Investments
The investment in Nurmos logistics centre that will be completed in the spring
of 2007 continued during the period. No new large investments were initiated in
Finland during the period.
Group investments during the first nine months of the year were EUR 53.1 million
and during the review period EUR 15.3 million.
Financing
The company issued a EUR 40 million bond to institutional investors during the
review period. The loan was used to replace short-term financing.
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 reconvenes year 2007.
A total of 1,100,000 of authorised A Series shares have been used.
Events occurring after the review period
The Board of Directors of Atria Group plc has accepted an extensive investment
programme to build a new logistics centre and meat production plant in Russia.
The new production plants will be built in the St. Petersburg area and will be
completed by the end of 2008. The value of the investment is approximately EUR
70 million.
In October 2006 the pig cutting operations in Nurmo started to work a double-
shift.
Mr Juha Ruohola (MSc (Agr. & For.), eMBA) has been appointed General Manager of
Pit-Product as of 1 November 2006. Mr Gennady Emelianov will remain General
Manager until 31 October 2006, after which date he will serve as a member on the
Board of Directors of Pit-Product and as Atria's advisor in Russia.
Seija Pietilä was appointed as the Group Vice-President of Human Resources in
the Atria Group, effective from 11 December 2006. She is responsible for human
resources management coordination, personnel development and consistent human
resources management practices at all Atria premises in Finland, Sweden, the
Baltic countries and Russia.
Outlook for the rest of the year
In Finland, Atrias development during the rest of the year will continue to be
steady. Due to weak earnings early in the year, Atria Finlands full-year
earnings are likely to remain below last years level.
In Sweden, Atrias positive earnings development will also continue throughout
the year. Full-year operating profit is expected to be slightly better than last
year.
Atrias sales will continue growing heavily in Russia. Earnings for the last
three months of the year will be positive. Full-year earnings are expected to
remain in the red mainly due to non-recurring items implemented during the
second quarter.
Reorganisation continues in the Baltic countries. Due to non-recurring costs,
turnover will be negative and weaker than last year.
Key Indicators
EUR million 1-9/06 1-9/05 1-12/05
Equity/share, 12,47 12,77 12,08
Interest-bearing liabilities 238,7 191,1 206,9
Interest-bearing assets 43,8 40,4 43,7
Equity ratio, % 44,0 45,5 43,0
Gross investments 53,1 68,1 107,3
Gross investments of turnover, % 6,6 9,5 11,0
Average personnel 5 659 4 238 4 433
ATRIA GROUP PLC
CONSOLIDATED BALANCE SHEET
Assets
EUR million 30.9.06 30.9.05 31.12.05
Non-current assets
Property, plant and equipment 353.9 302.6 329.3
Goodwill 53.2 36.5 50.1
Other intangible assets 22.4 21.5 22.7
Loan assets and
other receivables 6.4 5.0 5.1
Other financial assets 6.6 6.3 5.8
Total 442.5 371.9 413.0
Current assets
Inventories 61.8 55.6 58.6
Trade and other receivables 157.4 141.2 151.0
Cash and cash equivalents 14.0 23.6 17.5
Total 233.2 220.4 227.1
Total assets 675.7 592.3 640.1
Equity and liabilities
EUR million 30.9.06 30.9.05 31.12.05
Equity
Equity belonging to parent companys
shareholders 276.7 249.4 254.8
Minority interests 20.4 20.0 20.2
Equity, total 297.1 269.4 275.0
Long-term liabilities
Interest-bearing liabilities 166.2 82.1 115.5
Deferred tax liabilities 23.0 21.0 22.5
Pension obligations 0.3 0.4 0.4
Total 189.5 103.5 138.4
Current liabilities
Interest-bearing liabilities 72.5 109.0 91.4
Trade and other payables 116.6 110.4 135.3
Total 189.1 219.4 226.7
Total liabilities 378.6 322.9 365.1
Equity and liabilities, total 675.7 592.3 640.1
CONSOLIDATED INCOME STATEMENT
EUR million 7-9/06 7-9/05 1-9/06 1-9/05 1-12/05
Turnover 281.7 248.2 805.0 717.0 976.9
Expenses -260.2 -226.3 -755.2 -663.3 -905.2
Depreciations -8.8 -8.0 -26.1 -23.9 -31.5
Operating profit 12.7 13.9 23.7 29.8 40.2
* of turnover 4.5 5.6 2.9 4.2 4.1
Income from associates 0.8 0.8 0.8
Financial income and
expenses -2.1 -0.2 -4.9 -1.7 -3.2
Profit before taxes 10.6 13.7 19.6 28.9 37.8
* of turnover 3.8 5.5 2.4 4.0 3.9
Income taxes -2.9 -3.8 -6.3 -7.9 -10.8
Profit for the period 7.7 9.9 13.3 21.0 27.0
* of turnover 2.7 4.0 1.7 2.9 2.8
Profit distribution for the period:
To parent company shareholders 7.2 9.6 12.7 20.3 26.2
To minority shares 0.5 0.3 0.6 0.7 0.8
Total 7.7 9.9 13.3 21.0 27.0
Basic earnings/share, 0.33 0.45 0.58 0.96 1.24
Diluted earnings/share, 0.33 0.45 0.58 0.96 1.24
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY
EUR million
Equity belonging to the owners Mino- Equity,
of 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 19.3 263.9
Translation differences -2.7 -2.7 -2.7
Profit for the period 20.3 20.3 0.7 21.0
Distribution
of dividends -12.6 -12.6 -12.6
Shareholders'
equity 30.9.2005 35.8 104.4 -2.2 111.4 249.4 20.0 269.4
Shareholders'
equity 1.1.2006 35.8 104.4 -0.9 115.5 254.8 20.2 275.0
Translation differences 0.9 0.9 -0.4 0.5
Profit for the period 12.7 12.7 0.6 13.3
Distribution
of dividends -12.6 -12.6 -12.6
Equity issue 1.9 19.0 20.9 20.9
Shareholders'
equity 30.9.2006 37.7 123.4 0.0 115.6 276.7 20.4 297.1
CASH FLOW STATEMENT FOR THE GROUP
EUR million 1-9/06 1-9/05 1-12/05
Operations
Cash flow
from operations 20.0 26.6 59.3
Financial items
and taxes -8.9 -6.3 -12.5
Cash flow
from operations 11.1 20.3 46.8
Investments
Investments in tangible
and intangible assets -53.2 -65.4 -98.3
Investments -1.2 -2.7 -3.5
Cash flow
from investments -54.4 -68.1 -101.8
Financing
Cash equity issue 20.9
Loans drawn down 94.2 86.4 91.4
Loans repaid -62.6 -15.0 -19.2
Dividends paid -12.6 -12.6 -12.7
Cash flow
from financing 39.9 58.8 59.5
Change in liquid funds -3.4 11.0 4.5
SEGMENT INFORMATION
GEOGRAPHICAL
EUR million 7-9/06 7-9/05 1-9/06 1-9/05 1-12/05
Turnover
Finland 173.4 162.1 506.2 468.6 634.3
Sweden 87.8 82.9 240.4 237.9 314.0
Russia and Baltic 28.2 6.9 76.9 21.1 42.7
Eliminations -7.7 -3.7 -18.5 -10.6 -14.1
Total 281.7 248.2 805.0 717.0 976.9
Operating profit
Finland 11.3 11.2 22.4 25.1 31.6
Sweden 3.4 2.6 5.7 5.4 7.1
Russia and Baltic -2.0 0.1 -4.4 -0.7 1.5
Total 12.7 13.9 23.7 29.8 40.2
LIABILITIES
EUR million 30.9.06 30.9.05 31.12.05
Debts for which collateral has been provided
in the form of mortgages and other securities
Loans from financial
institutions 81.1 88.3 79.8
Pension fund loans 6.7 6.1 6.2
Total 87.8 94.4 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 46.2 45.5 47.3
Total 167.9 166.2 170.2
Guarantee engagements
not included in the balance sheet
Unused limits 102.6 81.4 107.8
Guarantees 19.8 3.1 13.5
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
Board of Directors
For additional information, please contact Mr Matti Tikkakoski, President and
CEO, tel. +358 50 2582.
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
