Interim report of Atria Plc, 1 January–31 March 2020: Atria's net sales and EBIT increased in an unstable business environment

Atria Plc, Interim report, 29 April 2020, 8:00 am

Interim report of Atria Plc, 1 January–31 March 2020

Atria's net sales and EBIT increased in an unstable business environment

January – March 2020


- Consolidated net sales totalled EUR 356.7 million (EUR 336.4 million).
- Consolidated EBIT was EUR 2.2 million (EUR -2.8 million), or 0.6% (-0.8%) of net sales.
-
Atria Finland's net sales developed positively and EBIT increased. Exports to China developed positively.
- Atria Sweden's sales increased, especially thanks to sales of poultry products. The operating loss was halved.
-
Atria Russia's operating loss decreased year-on-year.
- Atria Denmark & Estonia’s net sales increased by 20 per cent year-on-year.
- The coronavirus pandemic (COVID-19) affected Atria's business at the end of the review period, but delivery reliability was good and the financial position remained strong.
- The popularity of daily foods sold to retail rose sharply at the end of March due to preparing for exceptional circumstances. Sales volumes to Food Service customers decreased.
- The state of emergency caused by the coronavirus pandemic reduces business predictability.
- The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.42 (EUR 0.40) be paid per share.

 

Q1 Q1
EUR million 2020 2019 2019
Net sales  
   Atria Finland 252.6 241.0 1,033.8
   Atria Sweden 71.5 66.6 289.4
   Atria Denmark & Estonia 26.5 21.8 96.6
   Atria Russia 16.1 15.8 73.8
   Eliminations -10.0 -8.7 -42.3
Net sales, total 356.7 336.4 1 451.3
 
EBIT  
   Atria Finland 6.2 3.9 40.0
   Atria Sweden -2.1 -4.1 -6.1
   Atria Denmark & Estonia 0.3 0.6 4.4
   Atria Russia -1.3 -2.2 -4.0
   Unallocated -0.9 -1.0 -3.1
EBIT, total 2.2 -2.8 31.1
EBIT, % 0.6 % -0.8 % 2.1 %
 
Profit before taxes 1.1 -3.7 26.2
 
Earnings per share, EUR 0.01 -0.15 0.54
 

Juha Gröhn, CEO
 

'Atria's net sales in the first quarter of 2020 grew by 6 per cent compared to the corresponding period in the previous year. Roughly half of the increase is the result of higher sales in late March as people prepared for the exceptional situation caused by the coronavirus by increasing their food purchases. In this respect, consumer behaviour has been similar in all countries where Atria produces food.

The result improved from the previous year – naturally, the result level at the beginning of the year is typical for the period. A year ago, the beginning of the year was more sluggish than usual, and the comparison figures are weaker than usual. The impact of the corona pandemic on the overall result is neutral. Net sales did increase, but part of the increase was achieved through extensive overtime work and special arrangements. The transition to the state of emergency took place quickly.

In March, there was a major change in the emphasis of sales channels. Sales to retail increased and Food Service sales decreased. The partial or even complete closure of restaurants, public catering and staff restaurants has a very strong impact on Food Service net sales and Atria's entire product selection. Restaurant food ingredients do not fully find their place in home cooking – steaks are most often eaten in restaurants. Currently, the sales balance between retail and Food Service is not optimal.

In March, the Chinese economy also perked up as regards pork imports. Atria's deliveries to China specifically in March were the highest ever recorded monthly deliveries. January and February were fairly sluggish sales months. There is demand in China. The exceptional situation in world trade has affected maritime logistics. There is an occasional shortage of sea containers and container ship slots.

Atria's management of the state of emergency are to safeguard the health and working capacity of the personnel, to continue operations without interruption and to maintain the delivery reliability of products. Atria has also increased the amount of cash and cash equivalents above the normal level to keep the Group's liquidity good. This, however, is reflected in an increase in debt. The availability of funding has been good.

When the restrictions imposed due to the coronavirus pandemic are in force and they affect all activities, Atria also lives in a state of emergency. In the short term, the effects are changes in sales volumes in different sales channels and changes in product selection. In the longer term, the development of consumer purchasing power will also affect food purchases.

At the moment, we are focusing on the uninterrupted running of our factories, and so far, we have succeeded well.
'


January - March 2020

Atria Group’s net sales for January–March amounted to EUR 356.7 million (EUR 336.4 million). EBIT was EUR 2.2 million (EUR -2.8 million). Atria's net sales in Finland grew due to increased retail sales and exports. Especially exports of pork to China developed positively. EBIT improved as a result of increased net sales and better overall productivity.

In Sweden, net sales in the local currency grew by almost 10 per cent thanks to increased sales of poultry products. Sales of other product groups to retail also strengthened in Sweden. Atria Sweden's EBIT for the comparable period includes EUR 1.4 million of costs related to employee arrangements. Atria Denmark & Estonia’s net sales increased by over 20 per cent, which was due to increased sales volumes and higher prices.  Higher raw material costs brought down EBIT, especially in Denmark. Sales of Atria Russia's Food Service and Sibylla products increased, and sales to retail were somewhat lower year-on-year.

The exceptional circumstances caused by the coronavirus pandemic affected Atria's business environment at the end of the review period. National restrictions and recommendations related to restaurant operations and public food services had an impact on Atria's business. The popularity of daily foods sold to retail rose sharply at the end of March due to preparing for exceptional circumstances. Sales volumes to Food Service customers decreased.

The transition to exceptional circumstances in Atria's operations was carried out quickly in order to maintain the company's operational capacity. The uninterrupted continuation of operations and maintaining the security of supply of products were Atria's primary tasks in addition to safeguarding the health and working capacity of personnel. New practices were introduced at production plants to prevent the possible spread of the virus infection. The use of personal protective equipment was increased, new instructions were given on safety distances and hand hygiene, and office employees were given a recommendation to work remotely. The special arrangements entailed additional expenses.

Atria Finland’s net sales for January–March totalled EUR 252.6 million (EUR 241.0 million). The increase in net sales was due to increased sales to retail and to export customers. Exports of pork to China developed positively, especially at the end of the review period. Sales of Food Service products decreased slightly year-on-year. EBIT rose to EUR 6.2 million (EUR 3.9 million) as a result of increased net sales and better overall productivity.

Atria Sweden's net sales for January–March amounted to EUR 71.5 million (EUR 66.6 million). In the local currency, net sales improved by nearly 10 per cent year-on-year. Net sales were boosted by strong sales of poultry products. Sales of other product groups to retail also increased year-on-year. Sales of Food Service products decreased somewhat. EBIT was EUR -2.1 million (EUR -4.1 million). The result was brought down by the weakened Swedish krona and higher raw material prices. EBIT for the comparable period includes EUR 1.4 million in costs related to employee arrangements.

Atria Denmark & Estonia’s net sales for January–March amounted to EUR 26.5 million (EUR 21.8 million). EBIT was EUR 0.3 million (EUR 0.6 million). In Denmark, sales to retail increased by over 20 per cent, but higher raw material costs brought down EBIT. In Estonia, Atria's sales to retail increased by as much as 22 per cent, for example, sales of minced meat doubled year-on-year.  

Atria Russia’s net sales for January–March amounted to EUR 16.1 million (EUR 15.8 million). In the local currency, net sales grew by 0,7 per cent. EBIT was EUR -1.3 million (EUR -2.2 million). The increase in net sales was due to higher sales of Food Service and Sibylla products year-on-year. Year-on-year sales to retail were slightly lower. Sales of Casademont products have remained at a good level throughout the review period. Sales of Pit-Product products also improved at the end of the review period. EBIT was brought down by low sales volumes to retail.


Atria is one step closer to carbon-neutral food production

Atria's subsidiary A-Rehu's new poultry feed production line was commissioned at the Koskenkorva feed plant. The new feed plant provides more capacity to the production of domestic protein feeds. Atria aims for a carbon-neutral food chain, and animal feed can have a significant effect on the carbon footprint of meat. The newly commissioned production line enables the processing of domestic protein feeds for chickens and pigs. As a result, all fattening piggeries in Atria's pork chain will be able to obtain completely soya-free feed for their pigs in the future. Atria's goal is to replace soya in chicken and pork feeds with domestic alternatives, and thus further reduce the carbon footprint of chicken and pork meat by up to 15 per cent.
 

Key indicators
 
EUR million 31.3.2020 31.3.2019 31.12.2019
Shareholders´ equity per share EUR 14.24 14.57 14.85
Interest-bearing liabilities 291.4 278.2 228.3
Equity ratio, % 43.0 % 44.6 % 46.9 %
Net gearing, % 60.9 % 65.3 % 51.6 %
Gross investments 11.9 10.3 40.1
% of net sales 3.3 % 3.1 % 2.8 %
Average FTE 4,486 4,430 4,454
 

Outlook for the future

In 2020, Atria Group's EBIT is estimated to be higher than in 2019 (EUR 31.1 million).

Atria operates mainly in the retail and Food Service markets in Finland and Sweden. The strong and rapid changes in the global meat market will have a greater impact on the company's development and reduce predictability.

Consumption of poultry meat is expected to continue to increase, while consumption of red meat is expected to decline slightly. Atria has increased its meat exports, and pork exports to China, for example, are expected to increase during 2020.

The coronavirus pandemic that began in early 2020 has caused the above strong and rapid changes in the business environment in the food industry. This has further hindered the predictability of the company’s development. Immediate effects related to Atria's business include national restrictions on restaurant operations and public food services, which reduce sales to Food Service customers. During the coronavirus epidemic, the importance of daily food is expected to strengthen.

The possible weakening of consumer purchasing power will also affect food purchases and may shift the sales structure of Atria's products into an unfavourable direction.


Board of Directors’ proposal for profit distribution 2019

The Board of Directors proposes that a dividend of EUR 0.42 (EUR 0.40) be paid for each share for the 2019 financial period.

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 31 March 2020 as an attachment to this stock exchange release. The full release is available on the company's website at www.atria.com.

For more information, please contact: Juha Gröhn, CEO, Atria Plc, tel. +358 400 684224. 


Publication of the interim report

Atria Plc's CEO Juha Gröhn will present the company's Q1 interim report in a webcast today, April 29. 10:00 to 11:00 The webcast is available on Atria's website at www.atria.fi/konserni/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.fi/konserni/sijoitustajat/taloustieto/osavuosikatsaukset/.

ATRIA PLC
Board of Directors



DISTRIBUTION
Nasdaq Helsinki Ltd
Major media
www.atria.com


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