ATRIA GROUP PLC'S INTERIM REPORT 1 JANUARY-31 MARCH 2007
ATRIA GROUP'S EARNINGS INCREASED SIGNIFICANTLY
* IN FINLAND, THE YEAR BEGAN WITH STRONG GROWTH
* IN SWEDEN, EARNINGS IMPROVED SIGNIFICANTLY
* IN RUSSIA, EARNINGS WERE CLEARLY IN THE BLACK
* IN THE BALTICS, EARNINGS WERE STILL UNSATISFACTORY
Atria Group Q1/2007:
- Turnover EUR 276.0 million (EUR 244.9 million), growth 12.7 per cent
- Operating profit EUR 11.5 million (EUR 4.5 million)
- Comparable operating profit EUR 11.5 million (EUR 4.5 million)
- Profit before tax EUR 7.6 million (EUR 3.8 million)
- Earnings per share 0.23 euro (0.13 euro).
Group
Atria Group's turnover and operating profit were significantly better than
during the corresponding period last year in all our market areas, with the
exception of the Baltic region.
Atria Finland's turnover for the first quarter increased by more than eight per
cent compared to the same period last year, amounting to EUR 169.5 million (EUR
156.8 million). The comparable operating profit more than doubled to EUR 9.4
million (EUR 4.5 million).
In Sweden, turnover for the first quarter was EUR 92.3 million (EUR 70.5
million). The comparable operating profit amounted to EUR 1.8 million (EUR 0.3
million).
In Russia, turnover and earnings developed positively during the review period
and the operating profit for the first quarter sextupled compared to the same
period last year, amounting to EUR 1.2 million (EUR 0.2 million).
In the Baltic region earnings were unsatisfactory. The turnover was on the same
level as last year and the operating profit was in the red EUR -0.9 million
(EUR -0.5 million).
During the review period Atria Group bought 57 per cent of the Swedish food
company Sardus AB and made a public cash offer for the rest of the shares. The
value of the offer was SEK 475 million and the total value of the Sardus
acquisition amounted to approximately SEK 1,162 million. In April 2007, after
the review period, Atria announced the completion of the acquisition of a total
of 10,016,138 shares and 297,750 share options in Sardus, which corresponds to
98.6 per cent of all Sardus shares and votes. In addition, Atria decided to
initiate expropriation proceedings to acquire the remaining Sardus shares. The
last trading day for Sardus shares will be 27 April 2007, after which the share
will be withdrawn from the stock exchange in Stockholm.
Business segments
Segment reporting was further specified from the beginning of 2007. Russia is
reported as a separate business segment and the data for the Baltic region are
included in the item “Others”. Pit-Product's parent company Atria-Invest Oy is
included in the Russian business segment. Comparison data have been
recalculated to correspond to the current business segment structure.
On 2 April 2007 the Swedish competition authorities approved Atria's
acquisition of the shares in Sardus AB. Sardus AB became a subsidiary of Atria
on 2 April 2007 and will be included in the data for the Atria Scandinavia
business segment. Sardus AB is not included in Atria's interim report for the
first quarter.
Finland
Atria Finland Q1/2007:
- turnover EUR 169.5 million (Q1/2006 EUR 156.8 million)
- operating profit EUR 9.4 million (Q1/2006 EUR 4.5 million)
- comparable operating profit EUR 9.4 million (EUR 4.5 million)
The earnings improved thanks to excellent sales, high utilisation rates at the
production plants and efficient cost management. Costs caused by the
implementation of the new pig slaughtering plant and increased energy costs
depressed earnings at the beginning of last year.
The development of the Atria brand has been strong in comparison with the
market. The total growth of the Atria brand was 10.5 per cent (industry growth
6.6 per cent) during the first three months of the year. Atria's supplier share
at the beginning of the year was 29 per cent. Atria is still clearly the market
leader in the food product groups that the company represents. Atria
consolidated its market leadership at the beginning of the year, especially in
cold cuts; the development of the Atria brand was 15 per cent in value compared
to last year. The Atria brand also significantly strengthened its share in the
food sausage and poultry product groups during the early part of the year. In
the convenience food product group, both of Atria's brands - Atria and Forssan
- developed in a positive direction compared to sales during last year.
The beginning of the year has been excellent in Atria's food product market -
the total growth in value of the market has been 6.6 per cent. All product
groups in the industry have increased in value compared to last year. The
strong growth in the value of poultry products (21.4 per cent) during the first
three months of the year has been particularly positive.
Delivery reliability and utilisation rates at the plants are still good due to
the controlled development of volume. The logistics centre expansion was taken
into use in March and will provide approximately 30 per cent additional
logistics capacity for the coming summer season deliveries.
Special attention has been paid to continuous cost management, which is now at
a good level. Production plant efficiency has been increased with the
help of long-term investments and measures to improve efficiency.
Sweden
Atria Sweden Q1/2007:
- turnover EUR 92.3 million (Q1/2006 EUR 70.5 million)
- operating profit EUR 1.8 million (Q1/2006 EUR 0.3 million)
- comparable operating profit EUR 1.8 million (EUR 0.3 million)
The beginning of the year has been good in all Atria AB's business operations.
Turnover increased by 31 per cent and operating profit improved significantly
compared to the corresponding period last year. Profitability developed
positively during the first quarter due to both business growth and price
increases implemented at the end of last year.
The market share of the Lithells brand increased from 11.7 per cent in 2006 to
12.1 per cent at the beginning of the year (source AC Nielsen). A long-term
agreement with Coop Sverige regarding the delivery of retail-packed meat will
further consolidate Atria's market position.
Raw material prices have remained stable during the review period.
Sardus AB Q1/2007
Sardus' earnings for the beginning of the year improved significantly compared
to the corresponding period last year. The company's earnings and turnover
developed in a positive direction due to excellent sales and improved
profitability. Sales and cost management succeeded particularly well in the
units Chark & Deli and Foodpartner at the beginning of the year. A programme to
improve efficiency was initiated at Sardus last year and the effects of the
programme are now becoming evident in the form of improved earnings in various
units.
The integration of Sardus into Atria Group and mapping of the synergies
will be done in a large extent during the during the second quarter of 2007.
Sardus' operations will be consolidated into the Atria Group starting
from 2 April 2007.
Sardus briefly
1.1.-31.3.2007 1.1.-31.3.2006 1.1.-31.12.2006
Turnover 55.2 50.9 229.8
Operating profit 3.5 2.4 8.9
% of turnover 6.2 4.7 3.9
31.3.2007 31.3.2006 31.12.2006
Assets 160.7 155.7 160.1
Equity 42.0 41.8 40.0
Liabilities 118.7 113.9 120.1
Russia
Atria Russia Q1/2007:
- turnover EUR 16.0 million (Q1/2006 EUR 15.4 million)
- operating profit EUR 1.2 million (Q1/2006 EUR 0.2 million)
- comparable operating profit EUR 1.2 million (EUR 0.2 million)
Atria's strong growth continues in modern trade in the St. Petersburg economic
area. New customer relationships were established in the Moscow region and
other large cities during the review period, and deliveries will be initiated
during the second quarter. Pit-Product has further increased its market share
in highly processed products. At the beginning of the year the total market
share of modern retail trade in St. Petersburg was more than 25 per cent (AC
Nielsen).
Raw material prices remained stable during the review period.
Pit-Product decided to centre its production around the Sinyavino plant in the
St. Petersburg economic area. Production at the plant in the centre of St.
Petersburg will be discontinued and operations will be moved to Sinyavino in
May 2007.
The project to centre production around one production plant will improve the
operative efficiency of production, facilitate better management of production
processes and simplify internal logistics. The project will provide annual
savings of approximately EUR 1.5 million; EUR 700,000 will accumulate in 2007.
The personnel will be reduced by approximately 220 employees.
Pit-Product's investment programme for 2006-2008 includes many measures to
improve the efficiency of production, and investment in equipment at the
Sinyavino plant, as well as construction of a new production plant and
logistics centre in Gorelovo. The investments to be made in 2006-2007 at the
Sinyavino plant (totalling EUR 10 million) will increase the plant's capacity
by almost 50 per cent. The capacity of the plant in central St. Petersburg is
only one-fifth of the capacity at Sinyavino, and the plant is located on leased
premises.
The new plant and logistics centre (EUR 70 million) construction project in
Gorelovo has progressed according to plan.
Baltic
Atria Baltic Q1/2007:
- turnover EUR 6.7 million (Q1/2006 EUR 6.9 million)
- operating loss EUR 0.9 million (Q1/2006 EUR 0.5 million)
- comparable operating loss EUR 0.9 million (operating loss EUR 0.5 million)
The adaptation of operations and development of a new business model in the
Baltic region are progressing and new resources have been recruited to the
company's management.
During the review period Atria's Board of Directors approved an investment
programme valued at approximately EUR 8 million for the Estonian business
operations. Atria will invest EUR 6 million in the meat production in Estonia
by constructing and modernising pig farms. In addition, the production lines at
the Valga plant will be automated and new lines valued at approximately EUR 2
million will be built. New products will be launched in the Estonian market in
time for the summer season.
A reassessment process involving the Lithuanian business operations is
currently in progress. Decisions regarding operations in Lithuania will be made
during the second quarter.
Human Resources
Atria Group's personnel numbered approximately 5,418 (5,293) during the review
period.
Investments
The Nurmo logistics centre investment project progressed to the implementation
stage during the review period. The investment will be completed during the
autumn of 2007.
No new large-scale investments have been initiated in Finland during the review
period.
The construction of a new production plant and logistics centre has begun in
the Gorelovo region of St. Petersburg. The new plant will be completed by the
end of 2008. The value of the investment is approximately EUR 70 million.
An investment programme valued at approximately EUR 8 million was initiated in
Estonia, including investments in primary production and automation of the
Valga production plant.
Group investments during the first quarter totalled EUR 142.4 million, of which
the value of the shares in Sardus AB amounted to EUR 123.1 million.
Financing
Atria will assess the possibilities of strengthening the Group's equity
structure in order to flexibly complete current significant investment
programmes and corporate acquisitions. A primary option for acquiring financing
would be a share issue. The acquired assets will be used to finance the
corporate acquisition of Swedish Sardus AB, the construction of a new plant in
St. Petersburg and to increase the business in Russia by possible acquisitions.
Nordea acts as Atria's financial advisor in the assessment of potential share
issue.
Interest-bearing liabilities increased by EUR 131.6 million during the review
period.
The Board's valid issue authorisations
On 3 May 2006 the AGM authorised the Board of Directors to decide on increasing
the company's share capital by means of one or more subscription issues, so
that the maximum number of the company's series A shares, with a nominal value
of EUR 1.70, should not exceed a total of 4,218,545 shares, thereby increasing
the company's 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 of 2007.
A total of 2,000,000 authorised series A shares have been used.
Events occurring after the review period
In April 2007, after the review period, Atria announced the completion of the
acquisition of a total of 10,016,138 shares and 297,750 share options in
Sardus, which corresponds to 98.6 per cent of all Sardus shares and votes. In
addition, Atria decided to initiate expropriation proceedings to acquire the
remaining Sardus shares. The last trading day for Sardus shares will be 27
April 2007, after which the share will be withdrawn from the stock exchange in
Stockholm.
Efficiency at Atria Sweden AB's production plants in Årsta and Sköllersta will
be improved with the help of investment in new automation. These measures will
improve profitability and secure competitiveness in the future. The arrangement
will affect approximately 70 employees. Negotiations with the trade unions were
initiated in April.
Atria sold its holding in the Swedish subsidiary Svensk Snabbmat för Storkök AB
to Euro Cater A/S on 26 April 2007.
Future prospects
Atria Group has excellent prerequisites for profitable growth in all its
business areas in 2007.
Finland:
The summer season selection decisions in the retail trade were positive from
Atria's point of view, which means that Atria is well positioned for the
upcoming summer season. Preparations have been partly made for the
effects on costs of the collective agreement, but they require strict
management of prices and productivity towards the end of the year. We estimate
that earnings for the second quarter in Finland will be better than during the
same period last year.
Sweden:
Atria AB will continue to invest in the Lithells and Sibylla brands. The
Sibylla brand will be used to launch new product ranges in the retail trade. In
Sweden, Sardus will be integrated into Atria Group and the synergy benefits
mapped during the second quarter of 2007. We estimate that the operative
indicators for the second quarter will be better than the indicators for the
corresponding period last year.
Russia:
We expect the turnover to increase in Russia, particularly when the deliveries
will be started to Moscow and other big cities. The closure of our plant in St.
Petersburg city centre will improve our efficiency starting from the second
quarter. During the second quarter we will launch many new products in Russian
market. Pit-Product will be the first company in Russia to launch resealable
cold cut packages, which will be our most important novelty. We expect the
second quarter in Russia to be profitable and clearly better than the second
quarter last year.
Baltic region:
The summer season in Estonia will see new products, which are expected to
improve sales. A reassessment process involving the Lithuanian business
operations is currently in progress. Decisions regarding operations in
Lithuania will be made during the second quarter. The second quarter will not
bring significant improvement in earnings in the Baltic region, although the
operating loss is expected to decrease compared to the first quarter. The
Baltic business operations are expected to turn into a profit during
the third quarter of 2007.
Atria Group Plc's turnover and operating profit for the second quarter of 2007
are estimated to be stronger than during the corresponding period last year.
Corporate Governance
Our Corporate Governance Code, any exceptions to it and the associated
personnel data are published on our website, www.atria.fi.
Principles applied in preparing the interim report
This interim report has been prepared in accordance with IAS 34 Interim
Financial Reporting. The firm has applied the same principles in preparing this
interim report as in preparing the 2006 annual financial statements. This
interim report is unaudited.
KEY INDICATORS
mill. EUR 1-3/07 1-3/06 1-12/06
Basic earnings/share, € 0.23 0.13 1.15
Diluted
earnings/share, € 0.23 0.13 1.15
Equity/share, € 13.44 12.21 13.28
Interest-bearing
liabilities 375.8 223.6 244.2
Interest-bearing assets 49.4 48.8 44.6
Equity ratio, % 36.7 43.4 42.8
Gross investments 142.4 13.9 89.0
Gross investments
of turnover, % 51.6 5.7 8.1
Average personnel 5 418 5 293 5 740
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 2006 annual financial
statements. This interim report is unaudited.
ATRIA GROUP PLC
CONSOLIDATED BALANCE SHEET
Assets
mill. EUR 31.3.07 31.3.06 31.12.06
Non-current assets
Property, plant
and equipment 370.2 332.7 362.8
Goodwill 57.3 52.0 57.7
Other intangible assets 32.3 22.7 33.3
Loan assets and
other receivables 7.6 5.6 6.9
Investments 130.1 6.3 6.3
Total 597.5 419.3 467.0
Current assets
Inventories 77.5 64.5 63.4
Trade and
other receivables 160.5 143.8 165.8
Cash in hand
and at bank 27.3 13.2 35.4
Total 265.3 221.5 264.6
Total assets 862.8 640.8 731.6
Equity and liabilities
mill. EUR 31.3.07 31.3.06 31.12.06
Equity
Shareholders´equity 310.3 257.5 306.6
Minority interests 5.9 20.3 5.8
Equity, total 316.2 277.8 312.4
Long-term liabilities
Interest-bearing
liabilites 219.6 125.2 165.4
Deferred tax liabilites 26.8 22.9 26.9
Pension obligations 0.3 0.4 0.3
Total 246.7 148.5 192.6
Short-term liabilities
Interest-bearing
liabilities 156.2 98.4 78.8
Trade and
other payables 143.7 116.1 147.8
Total 299.9 214.5 226.6
Liabilities, total 546.6 363.0 419.2
Total equity and
liabilities 862.8 640.8 731.6
CONSOLIDATED PROFIT AND LOSS ACCOUNT
mill. EUR 1-3/07 1-3/06 1-12/06
Turnover 276.0 244.9 1 103.3
Expenses -254.0 -231.8 -1 024.0
Depreciations -10.5 -8.6 -37.8
Operating profit 11.5 4.5 41.5
* % of turnover 4.2 1.8 3.8
Income from associates 0.5 0.4
Financial income and
expenses -3.9 -1.2 -7.3
Profit before tax 7.6 3.8 34.6
* % of turnover 2.8 1.6 3.1
Income taxes -2.1 -1.0 -8.6
Profit for the period 5.5 2.8 26.0
* % of turnover 2.0 1.1 2.4
Profit distribution for
the accounting period:
To parent company
shareholders 5.5 2.8 25.1
To minority shares -0.2 0.9
Total 5.3 2.8 26.0
Basic earnings/share, € 0.23 0.13 1.15
Diluted
earnings/share, € 0.23 0.13 1.15
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY
mill. EUR Equity belonging to the owners of Mino Share
the parent company rity holders'
share equity
in total
Share Share Trans Retained Total
capital premium lation earnings
diff.
Shareholders'
equity 1.1.2006 35.8 104.4 -0.9 115.5 254.8 20.2 275.0
Translation differences -0.1 -0.1 0.1
Profit for the period 2.8 2.8 2.8
Shareholders'
equity 31.12.2006 35.8 104.4 -1.0 118.3 257.5 20.3 277.8
Shareholders'
equity 1.1.2007 39.3 138.5 0.7 128.1 306.6 5.8 312.4
Translation differences -1.6 -1.6 -0.1 -1.7
Profit for the period 5.3 5.3 0.2 5.5
Shareholders'
equity 31.12.2007 39.3 138.5 -0.9 133.4 310.3 5.9 316.2
CASH FLOW STATEMENT FOR GROUP
mill. EUR 1-3/07 1-3/06 1-12/06
Cash flow from operating activities
Operating activities -12.2 -5.6 62.2
Financial items
and taxes -5.6 -1.0 -14.5
Cash flow from operating activities,
total -17.8 -6.6 47.7
Cash flow from investing activities
Tangible and
intangible assets -123.5 -14.0 -68.9
Investments -0.1 -0.6 -2.1
Cash flow from investing activities,
total -123.6 -14.6 -71.0
Cash flow from financing activities
Cash share issue 20,9
Loans drawn down 146.5 28.8 99.7
Loans repaid -13.5 -11.9 -66.0
Dividends paid -13.0
Cash flow from financing,
total 133.0 16.9 41.6
Change in liquid funds -8.4 -4.3 18.3
SEGMENT-SPECIFIC INFORMATION
GEOGRAPHICAL
mill. EUR 1-3/07 1-3/06 1-12/06
Turnover
Finland 169.5 156.8 686.1
Sweden 92.3 70.5 336.4
Russia 16.0 15.4 74.1
Others 6.7 6.9 30.5
Eliminations -8.5 -4.7 -23.8
Total 276.0 244.9 1 103.3
Operating profit
Finland 9.4 4.5 34.0
Sweden 1.8 0.3 15.1
Russia 1.2 0.2 -2.7
Others -0.9 -0.5 -4.9
Total 11.5 4.5 41.5
Comparable operating profit
Finland 9.4 4.5 32.2
Sweden 1.8 0.3 7.4
Russia 1.2 0.2 -2.7
Others -0.9 -0.5 -3.4
Total 11.5 4.5 33.5
LIABILITIES
mill. EUR 31.3.07 31.3.06 31.12.06
Debts with mortgages or other collateral
given as security
Loans from financial
institutions 98.5 86.4 90.4
Pension fund loans 7.0 6.3 7.0
Total 105.5 92.7 97.4
Mortgages and other securities given
as comprehensive security
Real estate mortgages 87.5 77.6 83.6
Corporate mortgages 45.8 44.5 44.2
Other securities 53.0 42.7 52.6
Total 186.3 164.8 180.4
Guarantee engagements not included
in the balance sheet
Unused limits 44.3 97.6 104.7
Guarantees 28.0 13.7 27.8
For additional information, please contact Mr Matti Tikkakoski, President &
CEO, tel. +358 50 2582.
ATRIA GROUP PLC
Matti Tikkakoski
President and CEO
DISTRIBUTION
Helsinki Stock Exchange
Principal media
www.atria.fi
The interim report will be mailed to you upon request and are also available on
our website at www.atria.fi.
