INTERIM REPORT OF ATRIA PLC 1 January - 31 March, 2009
THE EARNINGS OF ATRIA FINLAND IMPROVED - PROFITABLITY IN OTHER BUSINESS AREAS
WAS POOR
- the Group's net sales grew by 2.4% and EBIT remained at zero level.
- the profitability of Atria Finland showed clear improvement over last year
- performance in other business areas was weak
- strong growth in Russia and the Baltic countries
- Atria is streamlining its operations in Scandinavia, Russia and the Baltic
countries
- Russia's performance is burdened by costs relating to the takeover of Campomos
and its integration
Atria Group:
Q1/ Q1/
EUR million 2009 2008 2008
----------------------------------------------------------
Net sales 310.7 303.4 1,356.9
EBIT -0.4 6.8 38.4
EBIT % -0.1 2.2 2.8
Profit before tax -5.5 3.5 16.7
Earnings per share, EUR -0.14 0.07 0.42
Review Q1/2009
Atria Group's year-on-year net sales increased by 2.4%. The weakening of the
Russian rouble and Swedish krona also slowed the growth of net sales. Calculated
with fixed currency rates, the Group's net sales showed a year-on-year increase
of 9.4%. Net sales increased particularly in Scandinavia, Russia and the Baltic
countries. The growth is mainly due to the acquisitions completed last year as
well as to increases in sales prices.
The Group's EBIT was EUR -0.4 million (EUR 6.8 million). As a result of the
restructuring measures undertaken last year as well as improved margins, the
profitability of Atria Finland improved significantly during the beginning of
the year.
Atria Scandinavia's result is burdened, in particular, by the high price level
of imported goods resulting from the weak krona. The development of
Scandinavia's earnings improved towards the end of the review period, when sales
price increases and the partial replacement of imported raw materials with
domestic raw material had a positive impact on the margins. Atria launched an
extensive efficiency improvement programme in Sweden and announced after the
review period that it would discontinue the loss-making salad and sandwich
business in Sweden.
Atria Russia's operating loss for the review period resulted from the Campomos
acquisition at the end of last year. The Q1 result is burdened by costs relating
to integration and takeover recorded during the review period.
Atria Finland 1.1 - 31.3.2009
Q1/ Q1/
EUR million 2009 2008 2008
----------------------------------------------------------
Net sales 181.9 180.9 797.9
EBIT 7.1 2.2 33.9
EBIT % 3.9 1.2 4.2
Atria Finland's Q1 net sales were at the same level as last year; EBIT showed a
clear year-on-year improvement. The decline in consumer demand caused by the
economic recession has not been significant in Atria's product groups. There
have been some signs of a shift towards less expensive products.
Profitability was improved by the restructuring measures undertaken during the
previous year, lower cost levels and increased margins. Sales prices to
retailers have risen, depending on the product group, by 1-8 per cent from
December 2008.
The market shares of Atria products in poultry, cooking sausages and
retail-packed meat have grown. The market shares in cold cuts and convenience
food have weakened somewhat. Good delivery reliability contributed to the
successful performance during Q1.
During the beginning of the year, there were only very few salmonella cases
found at the pig and poultry feed lots of Atria's contract manufacturers and
they did not weaken the raw material supply of Atria Finland.
Atria Scandinavia 1.1 - 31.3.2009
Q1/ Q1/
EUR million 2009 2008 2008
----------------------------------------------------------
Net sales 98.8 105.1 455.2
EBIT 1.2 5.8 14.4
EBIT % 1.2 5.5 3.2
Atria Scandinavia's comparable net sales were below the targeted level. The net
sales in the review period were weighed down, in particular, by the weakening of
the Swedish krona. Q1/2009 net sales in krona increased by 9.8% compared with
the previous year's comparative period.
EBIT for the beginning of the year was weaker than that in last year's
comparative period. The result was burdened by the weak Swedish krona and the
reduced sales volumes in certain product groups. In addition, the loss-making
salad and sandwich business (Lätta Måltider) weakened the EBIT for the review
period.
However, the development of earnings improved towards the end of the review
period, when sales prices were increased and the imported raw materials were
partially replaced with domestic raw material. Atria Scandinavia has launched an
extensive cost-saving programme that is expected to produce annual savings of
approximately EUR 7 million, and the number of employees will be reduced by
approximately 100 at different sites.
The market shares of cold cuts and cooking sausages in retail trade improved
during the review period. In particular, Atria Scandinavia's own brands have
increased their market shares. The market shares of delicatessen products,
pastries and 3-Stjernet products have remained stable (source: AC Nielsen).
Atria Russia 1.1 - 31.3.2009
Q1/ Q1/
EUR million 2009 2008 2008
----------------------------------------------------------
Net sales 26.5 16.3 93.8
EBIT -7.0 0.5 -3.4
EBIT % -26.4 3.1 -3.6
Atria Russia's year-on-year sales increased significantly, which is mainly due
to the consolidation of Campomos, acquired last autumn, into Atria. However, the
weakening of the Russian rouble against the euro weighed down the growth of net
sales. The market share in the modern retail trade in the St Petersburg economic
area continued to grow.
The operating loss for the review period resulted from the Campomos acquisition
at the end of last year. The Q1/2009 earnings were impacted negatively by the
weakened rouble, which, however, stabilised during the period February to March.
Due to the weak rouble, prices of imported raw materials remained high. During
the review period, negotiations were carried out concerning sales price
increases of around 10 per cent, and they will take effect in April-May 2009.
During the review period, Atria Russia launched an efficiency improvement
programme aimed at improving the cost efficiency of the Russian operations. The
synergies of the St Petersburg and Moscow plants will be more effectively
utilized, and products and customers with poor profitability will be
discontinued. As a result of the efficiency improvement programme, personnel
will be laid off in both Moscow and St Petersburg, and the net reduction of
personnel will be about 180 persons by the end of June. Annual cost savings of
the reduction of personnel will be approximately EUR 4 million excluding
non-recurring redundancy related items. The Q1 result includes non-recurring
costs relating to integration and takeover in the amount of EUR 2.7 million.
The integration of Campomos and Pit-Product progressed as planned and operative
functions were merged. In the reorganisation of Atria Russia, Juha Ruohola was
appointed General Manager of OOO Campomos. He will also continue as Atria Group
Executive Vice President, Russia. Sergey Ivanchenko was appointed General
Manager of OOO Pit-Product and General Manager & Director, Atria Russia.
The start-up of the new production plant in Gorelovo, St Petersburg, is expected
to take place during 2009. The start-up has been postponed due to lack of water
and drain connections.
Atria Baltic 1.1 - 31.3.2009
Q1/ Q1/
EUR million 2009 2008 2008
----------------------------------------------------------
Net sales 8.8 5.5 32.3
EBIT -1.0 -1.0 -3.8
EBIT % -11.4 -18.2 -11.8
In Estonia, Atria's Q1 net sales showed a clear year-on-year increase due to the
acquisitions made in summer 2008. Atria's performance in Estonia remained at an
unsatisfactory level. This was due to the reduced demand resulting from the
general recession, as well as to the sales volumes decreasing in certain product
groups. In addition, the cost-savings generated by improvements in the
efficiency of production will, in the main, only materialize during the latter
part of the year.
Measured by volume, the market shares of cold cuts and cooking sausages have
remained stable. In cold cuts, Atria's market share is 24 percent, and in
cooking sausages, 25 percent (Source: AC Nielsen)
During the review period, Atria Baltic decided to centralise the production of
meat products from the Vastse-Kuuste plant to the Valga and Ahja production
plants. The transfer of production will improve operational efficiency and
create better preconditions for profitable business growth in the current,
economically challenging operating environment. In addition, Atria Baltic will
launch new types of product groups in the autumn, produced at the Vastse-Kuuste
plant. The reorganisation will affect some 100 Atria Baltic employees during the
current year. The reorganisation measures are expected to generate annual cost
savings of approximately EUR 1.4 million.
Notification of change in shareholding under the Finnish Securities Markets Act
During the review period, Atria Plc received a notification from Artio Global
Management LLC on a change in the company's holding.
Artio Global Management LLC's holding in Atria Plc has fallen below the five (5)
per cent limit with a share transfer completed on 20 March 2009. According to
Artio Global Management LLC's notification, its holding in Atria Plc is
as follows:
Artio Global Management LLC's holding in total:
- Number of Atria's A-shares held: 1,409,752
- Ownership share: 4.99% of the share capital and 1.27% of the voting rights
Full name and business ID of the shareholder:
Artio Global Management LLC, company identification 43-2047412.
Events occurring after the period
After the review period, Atria initiated negotiations on discontinuing the
loss-making business operations of the Lätta Måltider unit, which manufactures
salads and sandwiches in Sweden. Last year, efficiency of the Lätta Måltider
unit was improved by cutting costs and concentrating production. These measures
did not, however, generate sufficient earnings improvement.
Atria will evaluate different options for discontinuing the Lätta Måltider
operations. Divestment of the business operations will also be investigated.
Atria will propose the discontinuance of the Lätta Måltider business operations
by the end of July at the latest. Employer-employee negotiations affecting the
unit's entire personnel were begun immediately.
Investments
The Group's investments during the period totalled EUR 8.6 million (EUR 16
million).
Personnel
The Group had an average of 6,532 (5,700)employees during the period.
Personnel by business area:
Atria Finland 2,181 (2,296)
Atria Scandinavia 1,635 (1,727)
Atria Russia 2,088 (1,276)
Atria Baltic 628 (401)
Atria Plc's Administration
Atria Plc's Supervisory Board elected Mr Harri Sivula as a new member of the
Board of Directors of Atria Plc on 20 March 2009. Harri Sivula (b. 1962), Master
of Administrative Sciences, has acted as the CEO of the Onninen Group since
2006.
Atria Plc's Board of Directors now has the following membership: Chairman of the
Board Martti Selin, Vice Chairman of the Board Timo Komulainen, members Tuomo
Heikkilä, Runar Lillandt, Harri Sivula, Matti Tikkakoski and Ilkka Yliluoma.
Financing
In January OOO Campomos paid off a bank loan of EUR 13 million, and in February
OOO Campofarm paid off a bank loan of EUR 3 million. The above-mentioned
companies financed the repayments of the loans with intra-group
rouble-denominated financing.
During the review period, compensation in the amount of EUR 1.5 million for the
delay of the meat product plant in Gorelovo, St Petersburg, has been recorded
under interest income.
Short-term Business Risks
No significant changes have occurred in Atria Group's short-term business risks
compared with the risks described in the financial statements of 2008. The most
significant short-term business risks are connected with the international price
development of meat raw material, fluctuation of currencies important to Atria,
as well as the timing of the Gorelovo plant's completion. Measures for improving
the profitability of Campomos have been initiated as planned.
Outlook for the Future
The recession will have some effect on sales volumes, particularly in the more
expensive product groups. Discontinuation of the salad and sandwich business in
Sweden and of the unprofitable customerships in Russia, as well as the weakened
Swedish krona and Russian rouble, will result in a decrease in the Group's net
sales in euros. The net sales of the entire Group in 2009 are therefore
forecasted to remain at the 2008 level.
Because of the international economic situation, there is considerable
uncertainty related to the result prognosis. Due to the loss-making Campomos and
the weakened rouble, Atria Russia's performance will remain significantly below
last year's level. The performance of the other business areas does not entirely
cover the Russian earnings development, and the Group's EBIT for the entire year
is expected to remain somewhat below last year's level.
Board Authorisations
The General Meeting held on 29 April 2008 resolved to authorise 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 authorisation is valid until the closing of the next Annual General
Meeting, or until 30 June 2009, whichever occurs first. The authorisation does
not repeal the Board's current authorisation to decide on a reserve increase.
The General Meeting has previously authorised the Board of Directors to decide
on one or several reserve increases, which may increase the company's share
capital by a maximum of EUR 850,000. The authorisation is valid for a maximum of
five years from the date of the General Meeting's decision.
Purchase and transfer of treasury shares and valid authorisations
The General Meeting held on 29 April 2008 authorised the Board of Directors to
decide on the purchase of up to 2,800,000 A shares of the company with the
company's unrestricted equity. The maximum amount of the Series A shares to be
acquired is less than 10 percent of all the Company's shares. The authorisation
is valid until the closing of the next Annual General Meeting, or until 30 June
2009, whichever occurs first.
The General Meeting held on 29 April 2008 authorised the Board of Directors to
decide on the transfer of treasury shares held by the company in one or more
batches, so that a maximum total of 2,800,000 Series A shares are subject to the
authorisation. The authorisation is valid until the closing of the next Annual
General Meeting, or until 30 June 2009, whichever occurs first.
Based on the authorisation of the AGM on 29 April 2008, Atria Plc's Board of
Directors decided to purchase up to 300,000 A shares of the company. In
accordance with the authorisation, the shares to be purchased are intended to be
used as consideration in possible company acquisitions or other arrangements
relating to the company's business, for the financing of investments, for the
implementation of the company's incentive programme, for improvement of the
company's capital structure, or to be kept by the company, otherwise assigned or
cancelled.
As of 31 March 2009, Atria Plc held a total of 109,842 treasury shares.
Key indicators
EUR million 1-3/09 1-3/08 1-12/08
Shareholders' equity
per share, EUR 14.86 16.76 15.34
Interest-bearing
liabilities 453.8 327.9 448.4
Equity ratio, % 39.1 47.9 38.4
Gearing, % 107.6 68.9 103.1
Net gearing, % 103.2 63.8 94.6
Gross investments to fixed assets 8.6 16.0 152.6
% of Net sales 2.8 5.3 11.2
Average FTE 6 532 5 700 6 135
Accounting Principles
This interim report has been compiled in accordance with the IAS 34 Interim
Financial Reporting standard. Atria has applied the same principles in preparing
this interim report as in preparing the 2008 annual financial statements.
However, as of 1 January 2009, the Group has adopted the following standards
published by the IASB, included in the accounting principles of the annual
financial statements of 2008:
- IAS 1, Presentation of Financial Statements. The aim of the revision is to
improve the ability of users to analyse and compare the data provided in
financial statements by separating changes in equity related to transactions
with company owners from other changes in equity. The revision will also lead to
comprehensive modifications to the terminology used in other standards and to
changes in the titles of some financial statements.
- IFRS 8, Segment Reporting. The standard replaces IAS 14. The standard requires
segment information to be presented using the 'management approach', which means
that data is presented in the same way as in internal reporting. The new
standard will not affect the segments to be reported, nor will it significantly
affect the information provided on segments, since the segment information
previously published by the Group has been based on internal reporting.
- The other standards published by the IASB, included in the accounting
principles of the annual financial statements 2008 and adopted as of 1 January
2009, have not had a significant effect on the figures presented for the review
period.
The figures given in the interim report are unaudited.
Function-specific income statement
As of 1 January 2009, Atria has adopted in its external reporting the
function-specific income statement model that is also used in the company's
internal reporting.
Figures for 2008 have been adjusted to correspond to the current
function-specific income statement model. Attached are the function-specific
income statements for 2008 by quarter and total figures for 2008.
Consolidated income statement
EUR million 1-3/08 4-6/08 7-9/08 10-12/08 1-12/08
Net sales 303.4 334.7 357.7 361.1 1 356.9
Cost of goods sold -268.6 -293.9 -310.5 -325.3 -1 198.4
Gross profit 34.8 40.8 47.2 35.8 158.5
* of Net sales 11.5 12.2 13.2 9.9 11.7
Sales and
marketing costs -16.9 -19.3 -18.2 -18.9 -73.6
Administration costs -11.6 -11.7 -10.4 -14.0 -47.3
Other income 0.7 0.9 0.8 1.4 3.7
Other expenses -0.2 -0.1 -2.2 -0.5 -2.9
EBIT 6.8 10.6 17.2 3.8 38.4
* of Net sales 2.2 3.2 4.8 1.1 2.8
Finance income 2.7 2.4 6.6 32.7 44.4
Finance costs -6.0 -5.5 -10.3 -44.9 -66.7
Share of profit/loss of
associates 0.2 0.5 -0.1 0.6
Profit before tax 3.5 7.7 14.0 -8.4 16.7
* of Net sales 1.2 2.3 3.9 -2.3 1.2
Income tax expense -1.4 -2.6 -3.5 2.2 -5.3
Profit
for the period 2.1 5.1 10.5 -6.2 11.4
* of Net sales 0.7 1.5 2.9 -3.5 0.8
Profit attributable to:
Owners of the parent 2.1 5.1 10.5 -5.8 11.8
Minority interest -0.4 -0.4
Total 2.1 5.1 10.5 -6.2 11.4
Basic earnings/
share, EUR 0.07 0.18 0.37 -0.21 0.42
Diluted earnings/
share, EUR 0.07 0.18 0.37 -0.21 0.42
STATEMENT OF FINANCIAL POSITION
Assets
EUR million 31-3-09 31-3-08 31-12-08
Non-current assets
Property, plant and
equipment 479.5 458.8 493.5
Goodwill 150.4 151.9 151.1
Other intangible
assets 69.0 64.1 70.5
Investments in joint ventures
and associates 6.3 5.7 6.1
Other financial
assets 2.3 1.2 2.1
Loan assets and other
receivables 15.1 10.0 15.5
Deferred tax assets 4.8 0.6 2.2
Total 727.4 692.3 741.0
Current assets
Inventories 114.9 96.5 113.3
Trade and other
receivables 207.8 180.1 231.8
Cash and cash
equivalents 18.9 24.7 37.1
Total 341.6 301.3 382.2
Non-current assets
held for sale 11.1 11.3
Total assets 1 080.1 993.6 1 134.5
Equity and liabilities
EUR million 31-3-09 31-3-08 31-12-08
Equity
Equity belonging to
the shareholders of the
parent company 420.1 473.7 433.5
Minority interest 1.5 1.9 1.4
Total equity 421.6 475.6 434.9
Non-current liabilities
Interest-bearing financial
liabilities 338.1 179.6 320.8
Deferred tax
liabilities 41.6 42.7 42.4
Other non-interest-bearing
liabilities 0.5 0.8 0.2
Total 380.2 223.1 363.4
Current liabilities
Interest-bearing financial
liabilities 115.6 148.3 127.6
Trade and
other payables 162.7 146.6 208.6
Total 278.3 294.9 336.2
Total liabilities 658.5 518.0 699.6
Total equity and
liabilities 1 080.1 993.6 1 134.5
CONSOLIDATED INCOME STATEMENT
EUR million 1-3/09 1-3/08 1-12/08
Net sales 310.7 303.4 1 356.9
Cost of goods sold -279.0 -268.6 -1 198.4
Gross profit 31.7 34.8 158.5
* of Net sales 10.2 11.5 11.7
Sales and
marketing costs -17.1 -16.9 -73.6
Administration costs -13.9 -11.6 -47.3
Other income 1.0 0.7 3.7
Other expenses -2.1 -0.2 -2.9
EBIT -0.4 6.8 38.4
* of Net sales -0.1 2.2 2.8
Finance income 11.8 2.7 44.4
Finance costs -17.1 -6.0 -66.7
Share of profit/loss of
associates 0.2 0.6
Profit before tax -5.5 3.5 16.7
* of Net sales -1.8 1.2 1.2
Income tax expense 1.5 -1.4 -5.3
Profit
for the period -4.0 2.1 11.4
* of Net sales -1.3 0.7 0.8
Profit attributable to:
Owners of the parent -4.1 2.1 11.8
Minority interest 0.1 -0.4
Total -4.0 2.1 11.4
Basic earnings/
share, EUR -0.14 0.07 0.42
Diluted earnings/
share, EUR -0.14 0.07 0.42
STATEMENT OF COMPREHENSIVE INCOME
EUR million 1-3/09 1-3/08 1-12/08
Profit
for the period -4.0 2.1 11.4
Other comprehensive income after tax:
Available-for-sale
financial assets -1.8 -1.8
Translation
differences -8.8 -0.9 -30.0
Total comprehensive income
for the period -12.8 -0.6 -20.4
Total comprehensive income attributable to:
Owners of the
parent -12.9 -0.6 -20.0
Minority interest 0.1 -0.4
Total -12.8 -0.6 -20.4
STATEMENT OF CHANGES IN EQUITY
EUR million Equity belonging to the shareholders of the Mino- Share
parent company rity holders
Share Share Fair Inv. Own Trans- Retain Total
ca- premium value non- shares lation ed
pit- fond rest. diff. earn
al equity ings
fond
Equity
1-1-2008 48.1 138.5 1.9 110.5 -3.3 178.5 474.2 1.9 476.1
Periods comprehensive
income -1.8 -0.9 2.1 -0.6 -0.6
Share-based
payment 0.1 0.1 0.1
Equity
31-3-2008 48.1 138.5 0.1 110.6 -4.2 180.6 473.7 1.9 475.6
Equity
1-1-2009 48.1 138.5 0.1 110.3 -0.5 -33.5 170.5 433.5 1.4 434.9
Periods comprehensive
income -8.8 -4.1 -12.9 0.1 -12.8
Share-based
payment 0.2 0.2 0.2
Acquired
treasure shares -0,7 -0,7 -0,7
Equity
31-3-2009 48.1 138.5 0.1 110.5 -1.2 -42.3 166.4 420.1 1.5 421.6
CASH FLOW STATEMENT
EUR million 1-3/09 1-3/08 1-12/08
Cash flow from operating activities
Operating
activities -8.7 5.5 69.9
Financial items
and taxes -7.0 -7.3 -32.3
Net cash flow from operating
activities -15.7 -1.8 37.6
Cash flow from investing activities
Tangible and intangible
assets -8.5 -14.3 -65.5
Investments -1.7 -0.5 3.6
Bought shares in
subsidiaries -41.3
Net cash used in investing
activities -10.2 -14.8 -103.2
Cash flow from financing activities
Loans drawn down 27.3 53.0 171.7
Loans repaid -19.0 -47.3 -86.0
Dividends paid -19.8
Acquired treasury
shares -0.7 -0.9
Net cash used in financing
activities 7.6 5.7 65.0
Change in liquid
funds -18.3 -10.9 -0.6
OPERATING SEGMENTS
EUR million 1-3/09 1-3/08 1-12/08
Net sales
Finland 181.9 180.9 797.9
Scandinavia 98.8 105.1 455.2
Russia 26.5 16.3 93.8
Baltics 8.8 5.5 32.3
Eliminations -5.3 -4.4 -22.3
Total 310.7 303.4 1 356.9
EBIT
Finland 7.1 2.2 33.9
Scandinavia 1.2 5.8 14.4
Russia -7.0 0.5 -3.4
Baltics -1.0 -1.0 -3.8
Unallocated -0.7 -0.7 -2.7
Total -0.4 6.8 38.4
ROCE *
Finland 8.9 % 8.2 % 7.9 %
Scandinavia 3.7 % 9.2 % 5.4 %
Russia -9.1 % 6.2 % -3.3 %
Baltics -8.2 % -15.5 % -9.1 %
Group 3.6 % 6.9 % 4.5 %
* ROCE =
EBIT, 12mr / Capital employed, 12mr avg * 100
Investments
Finland 2.9 4.7 23.8
Scandinavia 1.2 1.1 41.8
Russia 3.9 9.5 68.6
Baltics 0.6 0.7 18.4
Total 8.6 16.0 152.6
Depreciations
Finland 7.5 7.6 29.8
Scandinavia 2.6 3.1 11.7
Russia 1.6 0.7 3.2
Baltics 0.8 0.6 2.8
Total 12.5 12.0 47.5
CONTINGENT LIABILITIES
EUR million 31-3-09 31-3-08 31-12-08
Debts with mortgages or other collateral
given as security
Loans from financial
institutions 8.0 4.9 9.6
Pension fund loans 3.9 4.8 3.9
Total 11.9 9.7 13.5
Mortgages and other securities given as
comprehensive security
Real estate
mortgages 6.7 12.0 6.7
Corporate mortgages 4.6 2.1 7.9
Total 11.3 14.1 14.6
Guarantee engagements not included
in the balance sheet
Guarantees 12.9 3.4 0.9
ATRIA PLC
Board of Directors
For further information, please contact Matti Tikkakoski, President and CEO,
tel. +358 50 2582.
DISTRIBUTION
Nasdaq OMX Helsinki Ltd
Principal media
www.atria.fi
The interim report will be mailed to you upon request and is also available on
our website at www.atria.fi/konserni.
Stock exchange releases | 28.4.2009