SITUATION IN GLOBAL MEAT MARKET HAMPERED ATRIA'S PERFORMANCE
ATRIA PLC COMPANY ANNOUNCEMENT 6 May 2008 at 9.00 am.
INTERIM REPORT OF ATRIA PLC 1 JANUARY - 31 MARCH 2008
SITUATION IN GLOBAL MEAT MARKET HAMPERED ATRIA'S PERFORMANCE
- The Group's net sales totalled EUR 303.4 million (EUR 276.0 million), growing
9.9%
- EBIT was EUR 6.8 million (EUR 11.5 million).
- Earnings per share were EUR 0.07 (EUR 0.23).
Atria Group:
Q1/ Q1/
EUR million 2008 2007 2007
---------------------------------------------------------
Net sales 303.4 276.0 1,272.2
EBIT 6.8 11.5 94.5
Operative EBIT* 6.8 11.5 61.4
Operative EBIT % 2.2 4.2 4.8
Profit before tax 3.5 7.6 80.6
Earnings per share 0.07 0.23 2.56
* Operative EBIT = EBIT excluding significant non-recurring items.
Review Q1/2008
Atria Group's year-on-year net sales grew by 9.9%. The increasing cost of raw
material across the food chain has hampered the Group's performance. The
profitability of Atria Finland has been affected particularly by the imbalance
in the price of pork between Finland and the rest of Europe.
The Annual General Meeting of Atria Group Plc decided to change the company's
trade name to Atria Oyj in Finnish, Atria Abp in Swedish and Atria Plc in
English.
Segment reporting was redefined from the beginning of 2008 onwards in such a
manner that each business area (Finland, Scandinavia, Russia and Baltic) form
their own segment. In addition, Group costs are now reported separately under
unallocated items. Group costs mainly consist of personnel and administration
costs as well as costs arising from the share-based incentive plan. Previously,
Group costs have been included in the figures reported for the segment Finland.
Comparative figures have been adjusted to correspond to the current segment
structure.
Atria Finland 1 January - 31 March 2008
Q1/ Q1/
EUR million 2008 2007 2007
--------------------------------------------------------
Net sales 180.9 169.5 749.6
EBIT 2.2 10.1 43.2
Operative EBIT 2.2 10.1 43.2
Operative EBIT % 1.2 6.0 5.8
Atria Finland's Q1 net sales increased by 6.7%. In Q1, the sales volume in the
retail market fell slightly short of the target due to weak sales in March.
Atria estimates that the market shares in different product groups in the retail
market remained stable. Atria Finland's Q1 EBIT fell considerably compared to
last year which was very good. The main reasons behind the weaker performance
were the strong increase in the price of raw materials and other materials and
supplies, as well as the difficult situation in the wholesale and export
markets. Furthermore, the realized increases in sale prices have not fully
covered the growth in costs.
During Q1, Atria Finland announced the launch of an extensive efficiency
improvement programme in order to restructure its operations. The measures are
expected to generate annual cost savings of approximately EUR 4 million. At the
same time, statutory employer-employee negotiations were initiated regarding the
restructuring of operations at Atria's Forssa production plant, Liha-Pouttu Oy's
industrial operations and procurement, and A-Farmers Ltd's and A-Rehu Oy's
operations. The ongoing employer-employee negotiations involve the reduction of
about 230 employees in the aforesaid operations. As a result of possible
arrangements, about 60 new jobs are expected to be created at Atria Finland's
other production plants, and the net reduction in personnel is expected to be
approximately 170. The possible non-recurring costs arising from the
restructuring will be recognized in the result of Q2/2008.
The performance of Atria Finland in Q2-Q4/2008 will be affected significantly by
changes in the global meat market.
Atria Scandinavia 1 January - 31 March 2008
Q1/ Q1/
EUR million 2008 2007 2007
--------------------------------------------------------
Net sales 105.1 92.3 457.8
EBIT 5.8 1.8 54.9
Operative EBIT 5.8 1.8 20.5
Operative EBIT % 5.5 2.0 4.5
In the Atria Scandinavia business area, sales and profit have developed as
expected during Q1. The comparative period Q1/2007 does not include figures for
AB Sardus (consolidated as of 1 April 2007), but does include figures for Svensk
Snabbmat for Storkök AB (consolidated until 31 May 2007). Net sales increased by
13.9% and operative EBIT over tripled year-on-year. As a result of price
increases and healthy sales, the increased raw material costs have not affected
performance significantly during Q1.
With integration benefits, good sales trend in the beginning of the year and new
product launches in the second half of the year, profitability is expected to
develop favourably despite the continuing rise in raw material costs projected
for Q2 and Q3.
Atria Russia 1 January - 31 March 2008
Q1/ Q1/
EUR million 2008 2007 2007
-------------------------------------------------------
Net sales 16.3 16.0 65.6
EBIT 0.5 1.2 4.3
Operative EBIT 0.5 1.2 4.3
Operative EBIT % 3.1 7.5 6.5
The sales volume of Atria Russia began to increase in the second half of Q1.
During the period under review, Atria increased its market share in modern
retail trade to 21.5% in the St. Petersburg region. Nevertheless, net sales
remained at the year-on-year level due to weak sales in January and the weakened
exchange rate of the Russian rouble. EBIT decreased compared to last year as a
result of rising raw material costs.
The logistics functions of the new production plant in Gorelovo will be
operational in June, and the rest of the production departments will be
completed by the end of the year. The expansion of operations outside St.
Petersburg is still being investigated.
Raw material prices are expected to increase further in 2008 also in Russia.
Sale prices will be increased during Q2, but the impact of this measure will not
be felt fully until the beginning of Q3. The aim is to improve cost efficiency,
but the opening of the new logistics centre and production plant may result in
additional start-up costs.
Atria Baltic 1 January - 31 March 2008
Q1/ Q1/
EUR million 2008 2007 2007
-------------------------------------------------------
Net sales 5.5 6.7 26.7
EBIT -1.0 -0.9 -4.4
Operative EBIT -1.0 -0.9 -3.1
Operative EBIT % -18.2 -13.4 -11.6
Atria's net sales increased slightly year-on-year in Estonia. The comparative
figures include UAB Vilniaus Mesa, which was discontinued in summer 2007. EBIT
failed to develop as planned and fell year-on-year as a result of rising primary
production costs.
The price of animal feed is currently record high in Estonia, which weakens the
profitability of primary production in particular. Sales volumes are expected to
increase towards the end of the year, but profitability will be affected
significantly by changes in the global meat market.
Financing
In the period under review, the Group recognized profit from the sale of
securities in the amount of EUR 1.7 million.
Investments
The construction of a new production plant and logistics centre is underway in
the Gorelovo area of St. Petersburg. The logistics functions of the new plant
will be operational in June, and the plant will be completed by the end of 2008.
The total value of the investment is approximately EUR 70 million.
The Group's investments in Q1 totalled EUR 16.0 million.
Personnel
The Group had an average of 5,700 employees (5,418) during the period under
review.
Personnel by business area:
Atria Finland 2,296 (2,159)
Atria Scandinavia 1,727 (1,355)
Atria Russia 1,276 (1,339)
Atria Baltic 401 (565)
Atria Plc's Administration
The Annual General Meeting of Atria Group Plc decided to change the company's
trade name to Atria Oyj in Finnish, Atria Abp in Swedish and Atria Plc in
English.
The Annual General Meeting re-elected the following outgoing members of the
Supervisory Board: Pasi Ingalsuo, Veli Koivisto, Olavi Kuja-Lipasti, Teuvo
Mutanen and Timo Tuhkasaari. In addition, Pekka Parikka was elected to replace
the outgoing Supervisory Board member Juhani Savolainen, and Ari Pirkola was
elected to replace the resigning member Sinikka Ouramo.
Short-term Business Risks
Atria's most significant short-term risk involves the global development of raw
material prices that affects the entire food chain. The rising material and raw
material costs will affect the Group's profitability, because it takes time,
depending on the market situation, to transfer the costs to sales prices.
Particularly the imbalance in the price of pork between Finland and the rest of
Europe will increase uncertainty for performance in Finland in the remaining
part of 2008.
The successful start-up of the new plant and logistics centre pose a
considerable risk for operations in Russia.
No other significant changes have occurred in Atria's business risks during Q1
when compared to the risks described in the Financial Statements 2007.
Outlook for the Future
Atria Group's net sales are expected to grow in 2008, but the operative EBIT is
expected to remain under the result of 2007. Changes in the international meat
market create uncertainty in all of the Group's business areas.
Board Authorizations
The Annual General Meeting authorizes the Board of Directors to decide, on one
or several occasions, on a share issue involving a maximum of 10,000,000 new
Series A shares at the nominal value of EUR 1.70 per share.
The Board is also authorized to decide on all terms and conditions of the share
issue. The authorization thus also includes the right to issue shares in
deviation from the proportion of the shares held by the shareholders under the
conditions provided in law, as well as the right to decide on a share issue to
the company itself without payment, subject to the provisions of the Finnish
Companies Act regarding the maximum number of treasury shares held by a company.
The authorization is intended to be used for the financing or execution of any
acquisitions or other arrangements or investments relating to the company's
business, for the implementation of the company's incentive plan or for other
purposes subject to the Board's decision.
The authorization is valid until the closing of the next Annual General Meeting,
or until 30 June 2009, whichever occurs first. The authorization does not repeal
the Board's current authorization to decide on a reserve increase.
The Annual General Meeting of 3 May 2007 authorized the Board of Directors to
decide, on one or several occasions, on a reserve increase, which may increase
the company's share capital by a maximum of EUR 850,000. The authorization is
valid for a maximum of five years from the date of the Annual General Meeting's
decision.
KEY FIGURES
EUR million 1-3/08 1-3/07 1-12/07
Shareholders' equity/share (EUR) 16.76 13.44 16.77
Interest-bearing liabilities 327.9 375.8 321.9
Interest-bearing receivables 45.8 49.4 45.4
Equity ratio (%) 47.9 36.7 47.6
Gross investments 16.0 142.4 284.1
Gross investments,
% of net sales 5.3 51.6 22.3
Average number of personnel 5,700 5,418 5,947
Accounting Principles
This interim report has been compiled in accordance with the IAS 34 Interim
Financial Reporting standard. In producing this interim report, the company has
applied the same accounting principles as in its Financial Statements 2007. The
figures given in the interim report are unaudited.
ATRIA PLC
CONSOLIDATED BALANCE SHEET
Assets
mill. EUR 31-3-08 31-3-07 31-12-07
Non-current assets
Property, plant and equipment 458.8 370.2 455.6
Goodwill 151.9 57.3 151.8
Other intangible assets 64.1 32.3 64.3
Loan and
other receivables 45.1 43.1 43.6
Investments 6.9 130.1 8.7
Total 726.8 633.0 724.0
Current assets
Inventories 96.5 77.5 87.3
Trade and
other receivables 145.6 125.0 153.8
Cash in hand
and at bank 24.7 27.3 35.6
Total 266.8 229.8 276.7
Total assets 993.6 862.8 1 000.7
Equity and liabilities
mill. EUR 31-3-08 31-3-07 31-12-07
Equity
Shareholders´ equity 473.7 310.3 474.1
Minority interest 1.9 5.9 1.9
Equity, total 475.6 316.2 476.0
Non-current liabilities
Interest-bearing
liabilities 179.6 219.6 194.1
Deferred tax liabilities 42.7 26.8 42.8
Other non-interest-bearing
liabilities 0.8 0.3 0.3
Total 223.1 246.7 237.2
Current liabilities
Interest-bearing
liabilities 148.3 156.2 127.8
Trade and
other payables 146.6 143.7 159.7
Total 294.9 299.9 287.5
Liabilities, total 518.0 546.6 524.7
Total equity and liabilities 993.6 862.8 1 000.7
CONSOLIDATED INCOME STATEMENT
mill. EUR 1-3/08 1-3/07 1-12/07
Net sales 303.4 276.0 1 272.2
Expenses -284.6 -254.0 -1 133.2
Depreciations -12.0 -10.5 -44.5
EBIT 6.8 11.5 94.5
* % of net sales 2.2 4.2 7.4
Financial income and
expenses -3.3 -3.9 -14.3
Income from associates 0.4
Profit before tax 3.5 7.6 80.6
* % of net sales 1.2 2.8 6.3
Income taxes -1.4 -2.1 -13.0
Profit for the period 2.1 5.5 67.6
* % of net sales 0.7 2.0 5.3
Profit distribution for
the accounting period:
To parent company´s
shareholders 2.1 5.5 66.7
To the minority -0.2 0.9
Total 2.1 5.3 67.6
Basic earnings/share, € 0.07 0.23 2.56
Diluted
earnings/share, € 0.07 0.23 2.56
CALCULATION OF CHANGES IN SHAREHOLDERS' EQUITY
mill. EUR Equity belonging to the shareholders of the parent Mino- Share-
company rity holders'
inte- equity
Share Share Fair Inv. Trans- Retained Total rest in total
capital premium value non- lation earnings
fond rest. diff.
equity
cap.
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
31-3-2007 39.3 138.5 -0.9 133.4 310.3 5.9 316.2
Shareholders'
equity
1-1-2008 48.1 138.5 1.9 110.5 -3.4 178.5 474.1 1.9 476.0
Translation
differences -0.8 -0.8 -0.8
Other changes -1.8 0.1 -1.7 -1.7
Profit for
the period 2.1 2.1 2.1
Shareholders'
equity
31-3-2008 48.1 138.5 0.1 110.6 -4.2 180.6 473.7 1.9 475.6
CASH FLOW STATEMENT FOR GROUP
mill. EUR 1-3/08 1-3/07 1-12/07
Cash flow from operating activities
Operating activities 5.5 -12.2 92.3
Financial items and taxes -7.3 -5.6 -28.4
Cash flow from operating activities,
total -1.8 -17.8 63.9
Cash flow from investing activities
Tangible and intangible assets -14.3 -20.3 -92.1
Investments -0.5 -0.1 -1.4
Disposals of subsidiaries 39.1
Acquisitions of subsidiaries -103.2 -124.6
Cash flow from investing activities,
total -14.8 -123.6 -179.0
Cash flow from financing activities
Cash share issue 116.5
Loans drawn down 53.0 146.5 304.1
Loans repaid -47.3 -13.5 -292.1
Dividends paid -13.7
Cash flow from financing, total 5.7 133.0 114.8
Change in liquid funds -10.9 -8.4 -0.3
SEGMENT-SPECIFIC INFORMATION
GEOGRAPHICAL
mill. EUR 1-3/08 1-3/07 1-12/07
Net sales
Finland 180.9 169.5 749.6
Scandinavia 105.1 92.3 457.8
Russia 16.3 16.0 65.6
Baltic 5.5 6.7 26.7
Eliminations -4.4 -8.5 -27.5
Total 303.4 276.0 1 272.2
EBIT
Finland 2.2 10.1 43.2
Scandinavia 5.8 1.8 54.9
Russia 0.5 1.2 4.3
Baltic -1.0 -0.9 -4.4
Unallocated -0.7 -0.7 -3.5
Total 6.8 11.5 94.5
Operative EBIT
Finland 2.2 10.1 43.2
Scandinavia 5.8 1.8 20.5
Russia 0.5 1.2 4.3
Baltic -1.0 -0.9 -3.1
Unallocated -0.7 -0.7 -3.5
Total 6.8 11.5 61.4
CONTINGET LIABILITIES
mill. EUR 31.3.08 31.3.07 31.12.07
Debts with mortgages or other
collateral given as security
Loans from financial
institutions 4.9 98.5 13.5
Pension fund loans 4.8 7.0 4.6
Total 9.7 105.5 18.1
Mortgages and other securities given
as comprehensive security
Real estate mortgages 12.0 87.5 22.0
Corporate mortgages 2.1 45.8 2.2
Other securities 40.0 53.0 45.4
Total 54.1 186.3 69.6
Guarantee engagements not included
in the balance sheet
Unused limits 30.2 44.3 30.2
Guarantees 3.4 3.8 3.6
ATRIA PLC
Board of Directors
For further information, please contact Mr Matti Tikkakoski, President and CEO,
tel. +358 50 2582.
DISTRIBUTION
Helsinki Exchanges
Main media
www.atria.fi
The interim report is available via mail upon request and online at
www.atria.fi/konserni.
