Half-year financial report of Atria Plc, 1 January–30 June 2024

Atria Plc, Half-year financial report, 18 July 2024, 8.00 am

Half-year financial report of Atria Plc, 1 January–30 June 2024

Atria’s good performance continued in April–June – the results of all business areas improved

April–June 2024

• Consolidated net sales totalled EUR 454.3 million (EUR 457.2 million). Atria Finland's net sales decreased due to reduced Foodservice and feed sales. The net sales of Atria Sweden and Atria Denmark & Estonia grew.
• Consolidated EBIT was EUR 18.4 million (EUR 10.0 million), or 4.0% (2.2%) of net sales. All business areas performed better than in the comparison period.
• Atria Finland's favourable sales structure, a good start to the summer season, and the implemented efficiency measures improved the result. Atria Sweden’s growth in net sales, centralisation of production and streamlining of the organisational structure strengthened the result. Atria Denmark & Estonia's performance improvement resulted from the positive development of sales and profitability in Estonia.  
• The commissioning and process optimisation of the new Nurmo poultry plant continued during the review period. The Sahalahti plant was closed, and production transferred in its entirety to the new plant in Nurmo.
• Atria's acquisition of the entire share capital of the Swedish convenience food company Gooh! was completed in May.
• Meelis Laande (MBA) started as the Executive Vice President of Atria Estonia and a member of Atria Group’s Management Team as of 1 April 2024.
• For 2023, Atria distributed a dividend of EUR 0.30 and a capital refund of EUR 0.30, totalling EUR 0.60 per share (EUR 0.70 per share).

January–June 2024

• Consolidated net sales totalled EUR 871.2 million (EUR 885.1 million). Net sales were lower than in the corresponding period of the previous year due to lower feed sales prices and the weakening of Foodservice sales volumes in Finland. Net sales in other business areas grew.
• The consolidated EBIT was EUR 26.4 million (EUR 20.9 million), or 3.0% (2.4%) of net sales. 
• All business areas posted a positive EBIT during the review period. A favourable sales structure, a good start to the summer season, and the improved efficiency of operations and the organisation had a positive impact on performance.
• The EBIT for the comparison period was weighed down by one-off items included in the salary settlements in Finland and the additional costs related to the commissioning of the Nurmo poultry plant and the closure of the Malmö plant.
• The commissioning of the new Nurmo poultry plant and the optimisation of production have continued as planned during the review period.

After the review period

• Atria raises its adjusted EBIT guideline for 2024 and estimates the adjusted EBIT to be higher than the previous year (EUR 49.6 million).

CEO, Kai Gyllström

“Net sales for January–June were EUR 871.2 million, which was EUR 14.0 million less than in the same period last year. The EBIT was EUR 26.4 million, which was EUR 5.5 million more than a year ago.

The good development of Atria’s result continued during the second quarter. The results of all business areas improved in April–June compared with the previous year. We increased the profit forecast for 2024 thanks to good profit development and successful implementation of investments.

Atria Finland's result in the second quarter was good. The reasons for the good development of results can be found in the efficiency of our industrial operations, a good start to the barbecue season, an improved sales structure, and our savings and efficiency programmes. However, Atria Finland’s result for the first year-half was weaker than in the previous year due to a reduction in net sales and the costs related to the commissioning of the new poultry plant, among other things. The development of Atria Finland's net sales since January has been weighed down by the downward trend in Foodservice and feed sales. Sales of red meat have also been weaker than in the previous year. The construction of the poultry plant has been a major investment for Atria and a massive project as a whole. We can be satisfied with the result: we now have a modern production plant that utilises the latest technology and expertise, which significantly improves our production efficiency. The commissioning of the plant has been successful, and it has not caused disruptions to customers' deliveries. 

The development of Atria Sweden’s net sales and result has been positive. The January–June result improved by more than EUR 7 million on the previous year, amounting to EUR 1.6 million. Sales to retail and Foodservice customers increased significantly, which strengthened the EBIT. The closure of the Malmö plant in Sweden last year, the centralisation of production at the Sköllersta plant and the changes in organisational structure are now reflected in improved profitability. The acquisition of Gooh! strengthened the net sales of Atria Sweden.

In Estonia, Atria has further strengthened its position: market shares continued to improve in a growing market, and we have been able to increase our sales to the retail trade. In Denmark, price competition remains fierce in the retail sector. Atria's sales volumes in the retail trade have decreased somewhat, which weighed on Atria Denmark’s result.

In recent weeks, there have been reports of potential risks associated with food exports to China. Increasing tariffs on food imported to China from Europe or a total ban on food imports are now a threat to European food manufacturers. If the tariffs are implemented, they may have an impact on Atria Finland's pork exports and the European pork market. Because of this, there is uncertainty about the outlook for the rest of the year. In this situation, it is important to deepen our cooperation with our export customers and try to come up with solutions to any changes together.

A carbon-neutral food chain is the most important goal of Atria's sustainability work. We have also set goals related to the circular economy and social responsibility. The most important way to promote our goals is the consistent and continuous development of sustainability issues and measures. Our main goals in social responsibility are to improve occupational safety and product quality. It is particularly gratifying to see that we have been able to significantly reduce the number of accidents at work for many years now. We have also succeeded in improving product quality. One indicator of product quality is the number of product recalls, which we did not have during the review period.”

April–June 2024

Atria Group’s net sales in April–June were EUR 454.3 million (EUR 457.2 million). Consolidated EBIT was EUR 18.4 million (EUR 10.0 million), or 4.0% (2.2%) of net sales.

In April–June, Atria Finland’s net sales decreased, which was due to a decline in the feed business and Foodservice sales. The decrease in the net sales of the feed business resulted from lower sales prices than in the previous year. The sales volumes in Foodservice channel were lower than in the previous year. In Sweden, sales to retail and Foodservice customers increased significantly. The acquisition of Gooh! in Sweden in May also strengthened Atria Sweden’s net sales. Atria Denmark & Estonia’s net sales increased due to the good development in Estonia.

Consolidated EBIT was EUR 18.4 million (EUR 10.0 million). EBIT improved in all business areas in April–June. Atria Finland’s EBIT was EUR 4.3 million higher than in the corresponding period last year. A better sales structure in Atria Finland, a good start to the summer season and the efficiency programme implemented during the review period, as well as the closure of the Sahalahti plant, improved the result. The growth of Atria Sweden’s net sales, the centralisation of production at the Sköllersta plant last year and the streamlining of the organisational structure are reflected in improved profitability during the review period.

The profitability of Atria Estonia improved as a result of higher net sales and lower raw material prices. The result of Atria Denmark was weighed down by fierce competition in the retail channel.

Atria's acquisition of the entire share capital of the Swedish convenience food company Gooh! was completed in May. The Swedish authorities approved the acquisition. All 65 employees transferred to Atria. With a market share of around 25%, the company is the market leader in the fresh microwaveable meals segment of Swedish retail trade. Gooh!’s annual net sales are approximately EUR 16 million, and the company is profitable. Gooh! products are sold in all major grocery chains and vending machines in Sweden.

In April, Atria acquired 10% of the share capital of Kaivon Liha Kaunismaa Oy (Well Beef Ltd) and now owns 100% of its shares. In 2016, Atria acquired 70% of the shares in Kaivon Liha and 20% in 2021.

Meelis Laande (MBA) started as the Executive Vice President of Atria Estonia and a member of Atria Group’s Management Team as of 1 April 2024.

Atria Finland’s net sales in April–June were EUR 336.1 million (EUR 345.4 million). The reduction in net sales was due to a decrease in the feed business and Foodservice sales. The decrease in the net sales of the feed business resulted from lower sales prices than in the previous year. The sales volumes in Foodservice channel were lower than in the previous year. In the review period, exports improved on the previous year. The strike that halted port operations in March shifted export shipments to April–May. Atria's market share in retail has remained stable. Sales of barbecue products already started in May, driven by warm weather, which increased sales to retail customers. EBIT totalled EUR 17.1 million (EUR 12.7 million). It was EUR 4.3 million higher than in the corresponding period last year. Atria Finland's favourable sales structure, a good start to the summer season, savings and efficiency programmes implemented during the review period, and the closure of the Sahalahti plant improved the result. However, the depreciation of fixed assets and the energy and water costs were higher than in the comparison period. EBIT for the comparison period was weighed down by one-off items included in salary settlements and additional costs related to the commissioning of the poultry plant.

Atria Sweden’s net sales in April–June were EUR 93.8 million (EUR 87.8 million). Sales to retail and Foodservice customers increased considerably during the review period. In May, Atria completed the acquisition of Gooh!, which also strengthened Atria Sweden’s net sales during the review period. Atria’s supplier shares in its product groups in retail remained stable. Atria’s market share in the Foodservice product groups strengthened faster than the market. EBIT totalled EUR 1.6 million (EUR -2.1 million). In addition to the increase in net sales, the closure of the Malmö plant, the concentration of production at the Sköllersta plant and the streamlining of the organisational structure have improved the result. Raw material prices remained stable during the review period. In addition, the EBIT for the comparison period includes costs related to the closure of the Malmö plant and the concentration of production at the Sköllersta plant.

Atria Denmark & Estonia’s net sales in April–June were EUR 32.1 million (EUR 31.4 million). EBIT totalled EUR 1.5 million (EUR 0.6 million). Atria Estonia's sales to retail customers grew, and Atria strengthened its market shares in the Estonian retail market. Sales grew in all product categories during the review period. In the second quarter, sales volumes of cold cuts increased most, by 28%, and those of sausages by 12%. Atria Estonia’s results improved, driven by increased net sales and lower raw material prices. In Denmark, the retail market situation and price competition continued to be intense during the review period. The weakening of sales volumes to the retail trade weighed on net sales. Sales to export customers were better than in the corresponding period of the previous year. The development of the cold cuts market in the Danish retail trade took a positive direction, and the market for branded products has also strengthened. The market is still affected by inflation, and consumer purchasing power has weakened.

January–June 2024

Atria Group’s net sales in January–June were EUR 871.2 million (EUR 885.1 million). Consolidated EBIT was EUR 26.4 million (EUR 20.9 million), or 3.0% (2.4%).

Net sales decreased by nearly EUR 14 million from the previous year. Atria Finland’s net sales decreased, which was mainly due to a decrease in the feed business and Foodservice sales. Atria Sweden’s sales to retail and Foodservice customers grew. The acquisition of Gooh! also strengthened the net sales of Atria Sweden. Net sales of Atria Denmark & Estonia increased.

EBIT was EUR 5.5 million higher than in the corresponding period last year. Atria Sweden’s EBIT increased by EUR 7 million from the corresponding period last year to EUR 1.6 million. Atria Sweden’s centralisation of production at the Sköllersta plant last year and the streamlining of the organisational structure contributed to improved profitability during the review period. Atria Finland's result improved in April–June, but EBIT for the first half-year was EUR 3.4 million less than in the comparison period. Atria Finland's EBIT was weighed down by a decrease in net sales, general cost inflation and the commissioning costs of the new poultry plant in the first quarter. In the second quarter, the favourable sales structure, a good start to the summer season and the efficiency measures implemented during the review period improved the result. Atria Denmark & Estonia’s EBIT was EUR 2.8 million higher than in the comparison period. The good performance of Atria Estonia strengthened the consolidated EBIT.

The EBIT for the comparison period was weighed down by one-off items included in the salary settlements in Finland and the additional costs related to the commissioning of the Nurmo poultry plant and the closure of the Malmö plant.

In January, Atria sold 70% of its shares in its subsidiary Best-In Oy to SaVe Logistiikka Oy. Best-In Oy manufactures pet food, and its annual net sales are roughly EUR 5 million. Best-In Oy’s production facility is located in Kelloniemi, Kuopio, and the company has 17 employees. Pet food production is not one of Atria’s strategic priorities.

Lise Østergaard (BSc Economics and Business Administration) was appointed as a member of Atria Group’s Management Team as of 1 January 2024.

Jennifer Paatelainen, MSc (Econ.), was appointed as Atria Group’s EVP Human Resources as of 8 January 2024 and as a member of the Atria Group's management team from January 8, 2024.

Atria Finland’s net sales January–June were EUR 645.9 million (EUR 668.8 million). The reduction in net sales was due to a decrease in the feed business and Foodservice sales. 

EBIT totalled EUR 24.2 million (EUR 27.7 million). In addition to the decrease in net sales, the result was weighed down by general cost inflation and the commissioning costs of the new poultry plant in the first quarter. The depreciation of fixed assets, energy and water costs were higher than in the comparison period. In the second quarter, the favourable sales structure and the savings and efficiency measures implemented during the review period improved the result. The lower EBIT than in the comparison period is also affected by the weaker market situation for red meat, mainly due to reduced consumer purchasing power.

Atria Sweden’s net sales in January–June were EUR 175.9 million (EUR 169.6 million). Sales to retail and Foodservice customers increased. The completion of the Gooh! acquisition in May also strengthened net sales. EBIT totalled EUR 1.6 million (EUR -5.4 million). The centralisation of production at the Sköllersta plant, the closure of the Malmö plant, and the streamlining of the organisational structure are now reflected in improved profitability. In addition, the result was strengthened by an increase in net sales. Raw material prices stabilised towards the end of the review period. The EBIT for the comparison period includes costs related to the closure of the Malmö plant and the concentration of production at the Sköllersta plant.

Atria Denmark & Estonia’s net sales in January–June were EUR 62.8 million (EUR 59.6 million). EBIT totalled EUR 2.9 million (EUR 0.1 million). The increase in net sales was the result of the continued good development of Atria Estonia’s sales volumes. The improvement of EBIT resulted from the good development of Atria Estonia’s net sales. Atria Denmark's EBIT was impacted by weakened sales volumes in the retail trade.

Sustainability: towards a carbon-neutral food chain

A carbon-neutral food chain is Atria’s most important sustainability goal. The Science Based Targets Initiative (SBTi) has officially approved Atria’s emissions reduction targets. The targets are based on the Paris Climate Agreement and aim to limit global warming to 1.5 degrees Celsius globally. In the targets approved by SBTi, Atria commits to reducing greenhouse gas emissions from its own operations (Scopes 1 and 2) by 42% by 2030 from 2020 levels. The reduction target for Scope 3 emissions is 20% per tonne of processed meat by 2030. During the review period, these targets were contributed to by several projects, especially focusing on the carbon footprint of our own industrial production and the circular economy. Development work related to the carbon footprint calculation of farms and the sustainability index also played a significant role. 

Measures aimed at reducing the carbon footprint of Atria’s industrial production were implemented consistently during the review period. Atria Finland's solar park in Nurmo produces about 9,000 MWh of solar electricity annually. Atria Finland has signed a material efficiency commitment aimed at reducing the environmental impacts of food production, distribution and consumption. In its commitment, Atria has defined tangible material efficiency measures that focus on developing the material efficiency of production processes and product and packaging solutions.

In June, Atria Sweden replaced the oil boiler in Tranås with a biofuel boiler. Combined with the new electric boiler to be installed in September, it will reduce CO₂ emissions by about 1,000 tonnes per year.

Clean water is essential in food production, where processes require a high level of hygiene and clean production facilities. During the review period, a materiality analysis of industrial production was carried out within Atria Group. The analysis has identified the risks and opportunities related to water use at Atria's production plants. The analysis shows that Atria's operations are located in areas where no significant environmental risks related to water use have been identified, such as the sufficiency of groundwater. Sustainable water use is promoted in close cooperation with local water utilities and treatment plants.

In the area of social responsibility, the occupational safety of employees is Atria's key priority. Continuous safety work has paid off, and accidents at work have decreased. 

Product safety is Atria's most important area of social responsibility in relation to consumers. Product safety is measured by the number of product recalls, for example. There were no recalls during the review period.

Future outlook and guidance

Atria Group’s adjusted EBIT in 2024 is expected to be higher than in the previous year (EUR 49.6 million).

The favorable sales structure and the efficiency of operations have a positive effect on earnings development. The new poultry factory has been put into operation successfully and it enables business expansion and cost-effective production in the future.

The purchasing power of consumers and the structure of sales in the second half of 2024 are uncertain. However, Atria's good market position, strong brands and good customer relations as well as reliably functioning industrial processes create the conditions for business stability.

In addition, a possible increase in customs duties on foodstuffs imported from Europe to China or a ban on imports, if implemented, would affect Atria's Finnish pork exports and the European pork market. Atria has established customer relations in China, which creates good conditions for the continuation and development of exports.

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 2024 as an attachment to this stock exchange release. The full release is available on the company's website at www.atria.com.

Publication of the half-year financial report

Atria Plc's CEO Kai Gyllström will present the company's half-year financial report in a webcast today, 18 July, 2024 at 10:00 - 11:00 am. The webcast is available on Atria's website at www.atria.com/sijoittajat/ in Finnish language. During the webcast, you can ask questions in writing via chat. The recording of the press conference and the presentation material of the event will be available during the same day at www.atria.com/sijoittajat/taloustieto/osavuosikatsaus/.


ATRIA PLC
Board of Directors

For more information, please contact: Kai Gyllström, CEO, Atria Plc. Contacts and interview requests via Communications Manager Marja Latvatalo, e-mail: marja.latvatalo@atria.com, tel. +358 400 777 874.

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www.atria.com 

The half-year financial report is available on our website at www.atria.com.