Difficult conditions in Russian and Finnish meat markets weighed down Atria's results

Atria Plc  Company Announcement  6 May  2014 at 8.00 am

Review 1 January – 31 March 2014

Atria Group’s net sales for January–March amounted to EUR 327.0 million (EUR 328.4 million). Net sales fell by EUR -1.4 million year-on-year. EBIT came to EUR -2.5 million (EUR 3.2 million). EBIT includes EUR 0.8 million of non-recurring cost related to the takeover of the operations acquired from Saarioinen Oy. The EBIT for the comparative period contains EUR 1.1 million of non-recurring profit.

During the period under review, Atria acquired Saarioinen Oy's procurement, slaughtering and cutting operations for beef, pork and chicken. The purchase price was EUR 29.2 million. The deal consolidates Atria's position as a processing company of domestic meat and complements Atria's existing operations and product range. A long-term cooperation agreement for meat deliveries to Saarioinen will increase the efficiency of production operations. The acquisition raised the capacity of the growing poultry operations. The acquired operations were consolidated into Atria as of 1 February 2014. Investments during the period under review totalled EUR 37.5 million (EUR 8.8 million). The Group’s free cash flow for the period (operating cash flow - cash flow from investments) was EUR -23.5 million (EUR -3.8 million), and net liabilities were EUR 325.9 million (31 December 2013: EUR 305.9 million).

Atria lowered its EBIT forecast in April after the period under review. The company expects the 2014 EBIT without non-recurring items to be clearly smaller than the previous year’s EBIT of EUR 37.0 million. Net sales are expected to grow in 2014. According to Atria’s previous EBIT forecast for 2014, the Group’s EBIT was projected to be higher than the previous year's operative EBIT of EUR 37.0 million and net sales were expected to grow.

The EBIT forecast was adjusted due to the difficult conditions in the Finnish and Russian meat markets. A glut of pork and tougher competition have decreased sales prices both in Finland and elsewhere in the EU. As a result, Atria Finland's performance in the first quarter was not as expected. Russia's import ban on EU pork and the weakening of the rouble have raised the price of meat raw material in Russia by an average of 30 per cent from the beginning of the year. Because of the tight market situation, Atria Russia has not been able to pass on the rapidly increased raw material costs to sales prices.

Atria Finland’s net sales for January–March totalled EUR 216.9 million (EUR 205.1 million), up by EUR 11.8 million year-on-year. This increase was a result of higher sales volumes to retailers and Food Service customers, along with the consolidation of the operations acquired from Saarioinen into Atria as of February. The EUR 0.2 million EBIT (EUR 6.7 million) was EUR 6.5 million lower than in the comparative period. EBIT includes EUR 0.8 million of non-recurring cost related to the takeover of the operations acquired from Saarioinen Oy. The EBIT for the comparative period contains EUR 1.1 million of non-recurring profit. The results for the period under review were weighed down by a decrease in sales prices due to tougher competition and the glut of pork. Since consumers have less purchasing power, they buy more affordable products, which has resulted in fierce price competition across all customer accounts.

Atria Scandinavia's net sales for January–March totalled EUR 88.4 million (EUR 94.2 million). At comparable exchange rates, net sales fell by 2.4 per cent year-on-year. Net sales were weighed down by an increase in the market share of more inexpensive private label products in Sweden and the shift of the Easter season to the second quarter. EBIT amounted to EUR 0.9 million (EUR 0.1 million). EBIT improved due to the increased efficiency of production, better sales structure and more stable meat raw material prices.

Atria Russia’s net sales for January–March amounted to EUR 21.3 million (EUR 27.4 million), representing a drop of 22.1 per cent. At a comparable exchange rate, net sales fell by 3.3 per cent year-on-year. This decrease in comparable net sales was due to the discontinuation of primary production late last year. EBIT was EUR -2.2 million (EUR -3.1 million). EBIT was weighed down by an increase of almost 30 per cent in meat raw material prices during the first quarter.

Atria Baltic’s net sales for January–March totalled EUR 7.4 million (EUR 7.2 million), showing growth of EUR 0.2 million year-on-year. EBIT was EUR -0.2 million (EUR -0.4 million), up by EUR 0.2 million from the previous year.
 

Outlook for the future
The company expects the 2014 EBIT without non-recurring items to be clearly smaller than the previous year’s EBIT of EUR 37.0 million. Net sales are expected to grow in 2014.

Dividend distribution proposal
The Board of Directors proposes that a dividend of EUR 0.22 be paid for each share for the financial year 2013.

Publication procedure
Atria Plc complies with the publication procedure in accordance with standard 5.2b of the Financial Supervisory Authority and publishes its 1 JANUARY – 31 MARCH 2014 interim report release as an attachment to this company announcement. The full interim report is available on the company’s website at www.atriagroup.com.

For more information, please contact Juha Gröhn, CEO, Atria Plc, tel. +358 400 684 224.

Invitation to a press conference
A press conference conducted in Finnish will be arranged today 6 May 2014 at 9:30 am at Finlandia Hall, in the Terassi room. Entrance is through door M4 or K4. The presentation material will be available on the company’s website (www.atriagroup.com/en/investors/FinancialInformation/quarterlyreports) after the distribution of the interim report and as an attachment to this company announcement.


ATRIA PLC
Juha Gröhn
CEO


DISTRIBUTION
Nasdaq OMX Helsinki Ltd
Major media
www.atriagroup.com