Atria Plc, Interim report, 3 May 2022, 8.00 am

Interim report of Atria Plc, 1 January–31 March 2022

Atria's net sales grew in all business areas – EBIT was brought down by increased costs

January–March 2022
- Consolidated net sales totalled EUR 374.8 million (EUR 361.3 million).
- Consolidated EBIT was EUR 2.3 million (EUR 6.6 million), or 0.6 per cent (1.8%) of net sales.
- Consolidated net sales grew, which was due to increased sales to feed and Foodservice customers.
- Sales prices increased slightly in the retail and Foodservice channels.
- Increased costs weakened EBIT.
- In January 2022, Atria Finland received an export licence for poultry products to South Korea. The first product batch to South Korea was delivered in March.
- Atria made the decision to exit the fast food business in Russia.
- The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.63 (EUR 0.50) be paid per share for the 2021 financial period.

After the review period
- Atria divested the Malmö plant in Sweden, one-off impact on result approximately EUR 10 million.
 

Juha Gröhn, CEO

“The beginning of 2022 has been exceptional in many ways. The cost increase that started last year has continued. Russia's invasion of Ukraine continued to spur the rise in costs, and the pricing of many commodities is no longer based on the traditional market economy, but we are experiencing the pricing of exceptional circumstances. The omicron variant of the coronavirus has proved to be highly contagious, and even in Atria's personnel, absences due to illnesses have roughly doubled compared to the normal situation. Although the supply chain has been unstable, Atria's performance has remained good and there have been no significant deviations in the production and delivery of products.

Net sales during the first quarter totalled EUR 375 million. The year-on-year growth is approximately EUR 13 million. The growth is partly due to price increases, which were not sufficient in relation to cost increases, as EBIT weakened from EUR 6.6 million to EUR 2.3 million. Of the sales channels, the strongest performance has been in the Foodservice sector, which is recovering from the coronavirus, and in the feed trade.

The cost increase affects the entire food system across the world, so it touches all of Atria's functions. Compared to the beginning of last year, EBIT weakened in all business areas except Sweden. In particular, the cost of raw materials has increased in all business areas. The good news is that our commercial position has remained strong and we have even been able to strengthen it. Attention has now been focused on margin management and pricing.

After Russia invaded Ukraine, Atria made the decision to exit the fast food business in Russia. The measures to implement the decision are ongoing and are estimated to be completed during the second quarter. Atria has not had any industrial operations in Russia since spring 2021, when Pit-Product was sold.

Major investments in the Nurmo poultry plant and the Sköllersta meat product plant in Sweden are proceeding on schedule. The Nurmo investment is still estimated to remain at the EUR 155 million level. The investment in Sweden was estimated at EUR 30 million, but due to the increase in material costs, the investment will be somewhat higher than budgeted.

The price of food has risen all over the world and the rise continues. There will be no turnaround to falling prices in the near future. Atria's growth and profitability are greatly influenced by consumers' purchasing behaviour, i.e. what, where and when people buy their food. The setting of consumer prices is carried out by Atria's customers, but it is assumed that the cost inflation will also be reflected in consumer prices, and price changes will always have an impact on consumer decisions.”

January - March 2022

Atria Group’s net sales for January–March amounted to EUR 374.8 million (EUR 361.3 million). Consolidated EBIT was EUR 2.3 million (EUR 6.6 million), or 0.6 per cent (1.8%) of net sales. Consolidated net sales grew due to increased sales to Foodservice, resulting from the removal of coronavirus restrictions on restaurants. Sales to feed customers grew in Finland. Feed prices were higher year-on-year, which was the result of an increase in the cost of feed raw materials. Sales to retail in Finland and Sweden were on level with the corresponding period of the previous year, in Estonia and Denmark sales to retail grew. Easter sales fall in the second quarter this year.

EBIT was lower than in the corresponding period of the previous year due to higher prices for meat raw materials, materials, supplies, commodities and external services in all business areas. Meat producer prices were higher year-on-year. During the first quarter, there have been a large number of personnel absences related to the coronavirus, and the costs incurred were higher than those incurred during the comparison period.

In January, Atria Finland received an export licence for poultry products to South Korea. The first product batch was delivered in March. South Korea is one of Atria's longest-standing export destinations, where pork has been exported since the 1990s.

In March, Atria made the decision to exit the fast food business in Russia. It is estimated that the exit will be taken place during the second quarter.

Atria Finland’s net sales for January–March totalled EUR 274.3 million (EUR 260.2 million). The growth in net sales is due to increased sales of feed and Foodservice products. Feed sales prices were higher year-on-year, which was the result of an increase in the cost of feed raw materials. The growth in Foodservice sales was a result of the removal of coronavirus restrictions on restaurants. Sales to retail were level with the corresponding period of the previous year. Easter sales fall in the second quarter this year. Exports were lower than the previous year’s figures. Sales prices increased slightly in the retail and Foodservice channels, but not correspondingly to the cost increases. EBIT was EUR 3.0 million (EUR 9.8 million). EBIT was lower than in the corresponding period of the previous year due to higher costs for raw materials, supplies, commodities and external services. Meat producer prices were higher year-on-year. During the first quarter, there have been a large number of personnel absences related to the coronavirus, and the costs incurred were higher than those incurred during the comparison period.

Atria Sweden's net sales for January–March amounted to EUR 82.1 million (EUR 76.7 million). In the local currency, net sales grew by 11.2 per cent year-on-year. With the removal of coronavirus restrictions, sales of Foodservice and Sibylla products in Sweden were clearly better year-on-year. Sales to retail were level with the corresponding period of the previous year. EBIT was EUR -0.9 million (EUR -1.2 million). Increased raw-material, transport and energy costs brought down EBIT during the review period. The increase in costs was partly compensated for by price increases and improved production efficiency.

Atria Denmark & Estonia’s net sales for January–March amounted to EUR 26.0 million (EUR 24.5 million). EBIT amounted to EUR 0.8 million (EUR 1.9 million). Atria’s year-on-year net sales in Estonia increased by over 8 per cent. The increase in net sales was due to the strengthening of Atria's market share, especially in consumer-packed meat. In Denmark, sales to retail, Foodservice and export customers increased year-on-year. In Denmark, sales prices were higher than in the previous year. During the review period, EBIT was weighed down by rising costs of meat raw materials, materials, supplies, energy and external services. Absences due to illness caused by the coronavirus and the resulting higher production costs weakened the result.

Atria reduces its carbon footprint with concrete projects

Atria aims to reduce methane emissions from cows with the help of the Bovaer^® feed additive. In the early part of the year, Atria, together with Valio, has been the first in Finland to test the Bovaer^® feed additive manufactured by the Dutch company DSM, which has been proven to reduce methane emissions from cows by 30 per cent. The tested additive has produced promising test results in Europe and North America. During the test period, 400 cows were fed for several weeks with feed containing the Bovaer^® feed additive. Bovaer^® has recently been granted marketing authorisation in the EU. A-Rehu aims to start producing feed containing the Bovaer^® feed additive during this year.

Atria is participating in the project in which the design of a wind farm in Nurmo was started in 2021. The project took a significant step forward in March 2022, when the Seinäjoki City Board approved the zoning initiative of the project company Lakeuden Taivaanraapija Oy. In the zoning initiative, Lakeuden Taivaanraapija proposes the location of up to seven power plants in the immediate vicinity of Atria's Nurmo plant. The aim is for the zoning plan to be approved by the end of 2023. The construction of the wind farm will take approximately two years and, if realised, will be a nationally unique project to integrate solar and wind farms with significant industrial production. The project contributes to Atria's goal of carbon-neutral food production and the current improvement of energy self-sufficiency and security of supply.

A new biofuel boiler was installed at the Atria Borås plant in Sweden in March. The energy consumption of the plant is now completely fossil-free, and carbon dioxide emissions are reduced by 580 tonnes per year.

Events after the review period

In April 2022, Atria came to an agreement on selling its Malmö industrial property in Sweden. Atria launched an efficiency improvement programme in Sweden in 2020 and decided in 2021 to concentrate production from the Malmö plant to Sköllersta in Örebro. As part of the efficiency improvement programme, Atria has decided to sell the Malmö industrial property for approximately EUR 22 million. Atria will continue to run industrial operations on the premises until the end of 2023. The transaction was completed on 26 April 2022. The divestment of the factory will result a non-recurring sales profit of approximately EUR 10 million on the consolidated EBIT. In the balance sheet on March 31, 2022, the factory property is presented as Held for sale assets.

Outlook for the future

In 2022, Atria Group's adjusted EBIT is estimated to be lower than in the previous year (EUR 49.2 million).

The significant and rapid rise in costs and the imbalance between global pork demand and supply will create uncertainty in the business environment in 2022. However, Atria's strong market position, long-term investment in its own brands, as well as good customer relationships and reliable industrial processes provide the preconditions for business stability even in these market situations.

Board of Directors’ proposal for profit distribution for 2021

The Board of Directors proposes that a dividend of EUR 0.63 (EUR 0.50) be paid for each share for the 2021 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 2022 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 interim report in a webcast today, May 3, at 10:00 - 11:00 am. 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/sijoittajat/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.