Interim report of Atria Plc, 1 January - 30 September 2024

Atria Plc, Interim report, 23 October 2024, 8.00 am


Interim report of Atria Plc, 1 January–30 September 2024

Strong improvement in Atria’s result in January–September – the EBIT of all business areas grew

July–September 2024

• The Group’s net sales increased to EUR 439.0 million (EUR 429.5 million) Atria Sweden’s net sales grew by EUR 14.5 million year-on-year. Atria Finland's net sales decreased by EUR 4.8 million, mainly due to lower feed sales prices.
• The consolidated adjusted EBIT was EUR 25.8 million (EUR 19.3 million), or 5.9% (4.5%) of net sales. The consolidated EBIT was EUR 26.8 million (EUR 19.3 million). Atria Finland and Atria Sweden improved their result from the comparison period.
• Atria Finland's adjusted EBIT increased due to a favourable sales structure, successful summer season sales and the implementation of efficiency measures.
• Atria Sweden’s EBIT increased significantly. The increase in EBIT was the result of higher sales, the centralisation of production and a more efficient organisational structure.
• In July, Atria raised its guidance for the 2024 adjusted EBIT and estimated the consolidated adjusted EBIT to be higher than in the previous year (EUR 49.6 million).
• Atria’s new poultry plant has been fully commissioned, and production from the Sahalahti plant has been transferred to Nurmo.

January–September 2024

• Consolidated net sales totalled EUR 1,310.1 million (EUR 1,314.6 million). Net sales decreased, which was due to a decline in the feed sales prices and Foodservice sales in Finland. The net sales of Atria Sweden increased by EUR 20.9 million. The net sales of Atria Denmark & Estonia increased by EUR 3.6 million.
• The consolidated adjusted EBIT was EUR 52.1 million (EUR 40.2 million), or 4.0% (3.1%) of net sales.
• All business areas improved their results in the January–September period. A favourable sales structure, a successful barbeque season, and the improved efficiency of both the operations and the organisation had a positive impact on result.
• In particular, Atria Sweden's EBIT and net sales grew significantly during the reporting period.
• EBIT for the comparison period was weighed down by additional costs related to the commissioning of the Nurmo poultry plant and the closure of the Malmö plant.
• Atria's acquisition of the entire share capital of the Swedish convenience food company Gooh! was completed in May.
• Consolidated free cash flow in the reporting period was EUR 23.1 million (EUR -34.4 million).

CEO, Kai Gyllström

“The adjusted EBIT for the January–September period was EUR 52.1 million. The improvement is significant and means that the adjusted EBIT for the last three quarters already exceeds the adjusted EBIT for the whole of last year. Atria Sweden has improved its result: in January–September, the improvement from the comparison period was EUR 9.4 million. The strong growth of Atria Sweden's net sales improved the EBIT. Major production restructuring and efficiency measures have also started to bear fruit. However, it should be noted that the result for the comparison period was negative and included costs related to the closure of the Malmö plant and the centralisation of production in Sköllersta.

Atria’s net sales for January–September were EUR 1310.1 million, which was 0.3 percent less than in the corresponding period last year. The net sales of Atria Sweden have developed particularly well. Atria Denmark & Estonia’s net sales were also on the rise. Atria Finland's net sales were weighed down by a significantly lower price level in feed sales than in the comparison period and modest sales to Foodservice customers.

The good performance of the Group as a whole continued during the July–September period. The consolidated adjusted EBIT margin rose to 5.9 per cent. Atria Finland and Atria Sweden both improved their result from the same period last year. Atria Denmark & Estonia underperformed slightly compared to the previous year.

Atria Finland's most important season of the year – the barbecue season – was a great success. In the summer period, Atria was the market leader in the retail market for barbecue products with a market share of 33%. The improved sales structure compared to the comparison period and the implemented savings and efficiency programmes also strengthened the EBIT. In August, we celebrated the opening of our new poultry plant, which is now fully operational. It is clear that the optimisation of production will continue for some time after the start-up. The new plant enables us to serve our customers and consumers even better. We now have a modern production plant that utilises the latest technology and expertise, which significantly improves our production efficiency.

The positive development of Atria Sweden’s net sales and result continued in the third quarter. Sales to retail and Foodservice customers increased. The integration of the Gooh! convenience food business into Atria Sweden’s operations has proceeded swiftly and was completed at the end of September. 

In Estonia, Atria has been able to grow by strengthening its market shares in a stable market. In Denmark, the market for Atria’s product groups continues to be campaign-driven, which has led to intense price competition. Atria's sales volumes in the Danish retail trade have decreased somewhat. Atria is investing in a new production line in Denmark, and the July–September result includes additional depreciation of fixed assets.

Consolidated free cash flow amounted to EUR 23.1 million. A decrease in employed working capital items, improved profitability and smaller investment expenditure increased the free cash flow.

A carbon-neutral food chain is the most important goal of Atria's sustainability work. Food production is closely linked to the environment and natural resources. During the reporting period, Nurmon Bioenergia, owned by Atria and Suomen Lantakaasu, decided to invest in building production capacity for renewable biofuel near Atria's Nurmo production plant. The biogas plant will create new opportunities to develop the business of farms in the region and thereby improve their profitability. For Atria’s value chain, the implementation of this project means progress towards the carbon neutrality target.”

July-September 2024

Atria Group’s net sales in July–September were EUR 439.0 million (EUR 429.5 million). The consolidated adjusted EBIT was EUR 25.8 million (EUR 19.3 million), or 5.9% (4.5%) of net sales.

In Sweden, sales to retail and Foodservice customers increased during the reporting period. The acquisition of Gooh! in May also strengthened Atria Sweden’s net sales. Atria Finland's net sales decreased in July–September, mainly due to the lower feed sales prices than in the previous year. The Foodservice market continued to be subdued, and sales volumes were lower than in the previous year. Atria Denmark & Estonia’s net sales increased due to the good development in Estonia.

Consolidated adjusted EBIT was EUR 25.8 million (EUR 19.3 million). The consolidated EBIT was EUR 26.8 million (EUR 19.3 million). EBIT includes a non-recurring gain of EUR 1.0 million from the sale of fixed assets related to the closure of the Sahalahti plant and the reversal of a provision. Atria Finland and Atria Sweden improved their result from the comparison period. Atria Finland’s adjusted EBIT was EUR 4.3 million higher than in the corresponding period last year. Atria Finland's improved sales structure, and a very successful summer season strengthened EBIT. EBIT for the comparison period was weighed down by additional costs related to the commissioning of the poultry plant. Atria Sweden's EBIT was EUR 2.4 million higher than in the comparison period, which was the result of increased net sales, production restructuring and an improved organisational structure. Atria Estonia's profitability improved as a result of higher net sales. The weakening of sales volumes of Atria Denmark to the retail trade weighed on net sales. Atria is investing in a new production line in Denmark, and the July–September result includes additional depreciation of fixed assets.

Atria’s new poultry plant has been fully commissioned, and production from the Sahalahti plant has been transferred to Nurmo.

Atria Finland’s net sales in July–September were EUR 318.8 million (EUR 323.6 million). The reduction in net sales was mainly due to the lower feed sales prices than in the previous year. The Foodservice market was subdued, and sales volumes were lower than in the previous year. In the reporting period, exports improved on the previous year. Atria's market share in retail trade has remained stable. Sales of barbecue products were good in the reporting period, and Atria was the market leader in the sale of barbecue products to the retail sector in the summer period, with a market share of 33%.

The adjusted EBIT was EUR 23.3 million (EUR 19.0 million). It was EUR 4.3 million higher than in the corresponding period last year. EBIT includes a non-recurring gain of EUR 1.0 million from the sale of fixed assets related to the closure of the Sahalahti plant and the reversal of a provision. Atria’s favourable sales structure and successful sales during the summer barbecue season strengthened the EBIT. The depreciation of fixed assets and energy and water costs were higher than in the comparison period. EBIT for the comparison period was weighed down by additional costs related to the commissioning of the poultry plant.

Atria Sweden’s net sales in July–September were EUR 95.0 million (EUR 80.5 million). Net sales grew by EUR 14.5 million year-on-year. Sales to retail and Foodservice customers increased during the reporting period. The acquisition of Gooh! in May also strengthened Atria Sweden’s net sales during the reporting 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 2.4 million (EUR 0.0 million). EBIT improved as a result of higher net sales, production restructuring and a more efficient organisational structure. EBIT for the comparison period includes costs related to the closure of the Malmö plant and the concentration of production at the Sköllersta plant. The integration of the Gooh! convenience food business into Atria Sweden was completed during the reporting period.

Atria Denmark & Estonia’s net sales in July–September were EUR 32.4 million (EUR 32.0 million). EBIT totalled EUR 1.2 million (EUR 1.5 million). Atria Estonia’s net sales improved slightly. Sales to retail customers increased by almost 5% from the previous year. Sales grew in all product categories during the reporting period. Atria Estonia’s results improved, driven by increased net sales and lower raw material prices. Profitability in primary production also increased due to better production results.

The weakening of sales volumes of Atria Denmark to the retail trade weighed on net sales. The export business developed positively, driven by export customers in the UK. The market is increasingly campaign-driven. Atria is investing in a new production line in Denmark, and the July–September result includes additional depreciation of fixed assets.

January–September 2024

Atria Group’s net sales in January–September were EUR 1310.1 million (EUR 1314.6 million). Consolidated adjusted EBIT was EUR 52.1 million (EUR 40.2 million), i.e. 4.0% (3.1%). Consolidated EBIT was EUR 53.1 million (EUR 40.2 million).

Net sales fell by EUR 4.5 million year-on-year. Atria Finland’s net sales decreased by 27.7 million, which was due to a decline in the feed sales prices and Foodservice sales. The net sales of Atria Sweden increased by EUR 20.9 million. Atria Sweden’s sales to retail and Foodservice customers grew. The acquisition of Gooh! also strengthened the net sales of Atria Sweden. The net sales of Atria Denmark & Estonia increased by EUR 3.6 million, driven by good sales development in Atria Estonia.

The consolidated adjusted EBIT was EUR 11.9 million higher than in the corresponding period last year. Atria Sweden’s EBIT increased by EUR 9.4 million from the corresponding period last year. The growth in net sales strengthened Atria Sweden's result. The centralisation of Atria Sweden’s production at the Sköllersta plant last year and the streamlining of the organisational structure contributed to improved profitability. Atria Finland’s adjusted EBIT improved by EUR 4.3 million in July–September, and the full-year adjusted EBIT was EUR 0.9 million higher than the comparison period. The improvement in Atria Finland’s adjusted EBIT is the result of a good sales structure in the second and third quarters and the savings and efficiency measures implemented during the reporting period, as well as the closure of the Sahalahti plant. Start-up costs for the new poultry plant occurred in the first quarter. EBIT of Atria Denmark & Estonia was EUR 2.5 million higher than in the comparison period.

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%, Gooh! 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 business is profitable. Gooh! products are sold in all major grocery chains and vending machines in Sweden. The integration of the Gooh! convenience food business into Atria Sweden’s operations was completed at the end of September. 

In April, Atria acquired 10% 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.

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 and member of Atria Group’s Management Team as of 8 January 2024.

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

Atria Finland’s net sales in January–September were EUR 964.8 million (EUR 992.4 million). The reduction in net sales was due to a decrease in the feed sales prices and Foodservice sales. Adjusted EBIT was EUR 47.5 million (EUR 46.6 million). In the second and third quarter, the result was improved by the favourable sales structure, with the savings and efficiency measures implemented during the reporting period, as well as the closure of the Sahalahti plant. Start-up costs for the new poultry plant occurred in the first quarter. The depreciation of fixed assets and energy and water costs were higher than in the comparison period.

Atria Sweden’s net sales in January–September were EUR 270.9 million (EUR 250.0 million). Net sales grew by EUR 20.9 million year-on-year. Sales to retail and Foodservice customers increased. The completion of the Gooh! acquisition in May also increased net sales. EBIT totalled EUR 4.0 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. The growth in net sales strengthened the result. 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–September were EUR 95.2 million (EUR 91.6 million). EBIT totalled EUR 4.1 million (EUR 1.6 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. In Estonia, Atria’s sales have increased, and Atria has strengthened its market share in the retail sector. Atria Denmark’s EBIT was impacted by weakened sales volumes to retail customers. Raw material prices have remained stable in Denmark.

Sustainability: aiming for a carbon-neutral food chain

A carbon-neutral food chain is the most important goal of Atria's sustainability work. 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 reporting period, Nurmon Bioenergia Oy, jointly owned by Atria Finland Ltd and Suomen Lantakaasu Oy, made an investment decision to build a biogas plant in Nurmo. Nurmon Bioenergia Oy has decided to invest more than EUR 60 million in the construction of a 100 GWh renewable biofuel production facility. Atria is a minority shareholder of Nurmon Bioenergia Oy with a share of approximately 13 percent. The first large-scale liquefied biogas production plant in Finland will be built in Nurmo, close to the Atria production plant, and it is expected the plant will be completed during 2026. Tuoretie Oy, Atria’s associated company which provides transport services to Atria, will gradually switch to biogas-powered vehicles in food transport. The aim is to add new biogas vehicles to the fleet at a rate of 3–4 vehicles annually as the refuelling network and maintenance services expand. The biogas plant will also create new opportunities to develop the business of farms in the region and thereby improve their profitability. For Atria’s value chain, the implementation of this project means progress towards the carbon neutrality target.

Animal welfare is important for Atria. Atria's animal welfare policy was created to promote the welfare of contract farm animals. Proactive measures are taken in the production chain every day. Extensive care and good hygiene ensure animal health. Good practices are advanced throughout the production chain. Finland also has proactive animal health systems (e.g. Naseva, Sikava) to ensure the best possible conditions and care for animals. During the reporting period, monitoring the biosecurity level of pig farms continued in cooperation with an external operator. The monitoring focuses on the biosecurity level of the farms and identifies any measures that need to be taken.

Regarding social responsibility, employees’ health and safety at work, equality, inclusion and issues related to the predictability of the employment relationship are positive factors for well-being at work. Our continuous safety work has paid off, and accidents at work have decreased over the long term.

Atria's new innovation programme Atria Growth Engine (AGE) has brought together 26 Atria employees to innovate the business of the future. Through cooperation between Atria employees, the AGE programme addresses the company’s core strategy issues and produces new perspectives to support Atria’s development. The AGE Innovation Programme also aims to encourage innovative new thinking among Atria experts and increase cross-border cooperation with colleagues.

Product safety is Atria's most important area of social responsibility in relation to consumers. Pathogens, foreign objects and allergens are serious product safety risks. This is why product safety is always monitored and ensured throughout the production process. Product safety is measured by the number of product recalls, for example. There was one product recall during the reporting 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 favourable 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 last quarter 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 interim report for 1 January to 30 September 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 interim report

Atria Plc's CEO Kai Gyllström will present the company's interim financial report in a webcast today, 23^rd of October, 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.

DISTRIBUTION

• Nasdaq Helsinki Ltd
• Major media
• www.atria.com 

The interim report is available on our website at www.atria.com.