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

Interim report of Atria Plc, 1 January–31 March 2024

Atria’s results were good in a difficult market environment – all business areas achieved a positive EBIT

January–March 2024

• Consolidated net sales totalled EUR 416.8 million (EUR 428.0 million). The decrease in net sales resulted from lower feed sales prices and the weakening of export and Foodservice sales volumes in Finland.
• Consolidated EBIT was EUR 8.0 million (EUR 10.9 million), or 1.9% (2.5%) of net sales. The decrease in EBIT was due to lower net sales in Finland, the start-up costs of the Nurmo poultry plant and general cost inflation.
• All business areas posted a positive EBIT during the review period. In Sweden, the efficiency programme measures and centralisation of production strengthened EBIT.
• The commissioning of the new Nurmo poultry plant and process optimisation continued as planned.
• Atria entered into an agreement to acquire the entire share capital of the Swedish convenience food company Gooh. The acquisition will be finalised in early May.
• Meelis Laande (MBA) was appointed as CEO of Atria Estonia and a member of the Atria Group’s Management Team as of 1 April 2024.
• The Board of Directors proposes to the Annual General Meeting that the company distribute a dividend of EUR 0.30 and a capital repayment of EUR 0.30 for 2023, totalling EUR 0.60 per share (EUR 0.70).
   

Kai Gyllström, CEO

“Net sales for January–March were EUR 416.8 million, which was EUR 11.2 million lower than in the same period last year. Operating profit was EUR 8.0 million.

However, the net sales and EBIT for the period were at a very good level. EBIT was positive in all business areas. A year ago, we posted record-breaking results in the first quarter, and growth was also stronger than usual. Considering the challenges in the market situation, we can be satisfied with our start in 2024.

In Finland, the market has been challenging. Net sales decreased compared to the previous year. Feed sales prices have come down as grain prices have fallen, which negatively affected the net sales of our feed business compared to the previous year. Similarly, Atria Finland’s exports and Foodservice sales were sluggish. Exports slowed down significantly for a few weeks due to strikes, and the downturn in Foodservice sales is attributed to weakened consumer purchasing power. Red meat is currently oversupplied on the market, which is putting downward pressure on meat prices. In addition to the decline in net sales, profits were weighed down by general cost inflation and the costs of commissioning the poultry plant. 

The closure of the Malmö plant in Sweden last year, the centralisation of production at the Sköllersta plant and the changes in organisational structure are now reflected in improved profitability. Atria’s strengthened market position in poultry products and Foodservice increased net sales during the review period. Performance in Sweden ended slightly positive.

Price competition in the retail sector is fierce in Denmark. However, we were able to increase exports, which led to improved net sales in Denmark. Results also improved due to the completion of efficiency improvement projects. In Estonia, Atria increased its market share in retail trade and further strengthened its position as market runner-up. Atria Estonia reported good results and increased net sales.

In March, Atria Sweden entered into an agreement to acquire the entire share capital of the Swedish convenience food company Gooh. Gooh fits perfectly into the Atria Group’s strategic goal of growing in the convenience food segment and improving Atria Sweden’s profitable growth. Gooh’s product range complements Atria’s existing convenience food offering. With a market share of around 25%, Gooh is the market leader in the fresh microwaveable meals segment of Swedish retail trade. Gooh products are sold in all major grocery chains and vending machines in Sweden. This acquisition gives us new opportunities for product innovation in the growing convenience food product group.

Atria Estonia invested in pork production in Estonia and acquired two pig farms in southern Estonia. Pork consumption in Estonia is stable, and with the acquisition, Atria also aims to ensure the supply of domestic pork in the future.

Atria has an ambitious sustainability target for a carbon-neutral food chain. The key to achieving this target is the consistent and continuous development of sustainability activities. It is important for us to promote the Scope 3 emissions reduction targets of the Science Based Target initiative. We have already started this work: we have launched numerous projects and developed calculation models that measure progress towards this target. One example of a significant sustainability project is the construction of a biogas plant near the Nurmo plant, in which Atria is a shareholder. For Atria’s value chain, implementing this project means progress towards the carbon neutrality target. Sustainability is at the heart of our strategy – and we will invest in it even more in the coming years.”

January - March 2024

Atria Group’s net sales in January–March were EUR 416.8 million (EUR 428.0 million). Consolidated EBIT was EUR 8.0 million (EUR 10.9 million), or 1.9% (2.5%) of net sales.

Atria Finland’s net sales in January–March decreased, which was due to a decrease in the feed business, exports and Foodservice sales. The decrease in net sales in the feed business resulted from lower sales prices than in the previous year. A strike at the ports slowed down export shipments for several weeks, resulting in the revenue from Atria’s export trade being significantly lower than in the previous year. Foodservice sales in Finland weakened towards the end of the review period. Net sales increased in other business areas.

The Group’s EBIT was EUR 8.0 million (EUR 10.9 million). The lower EBIT in Finland than in the comparison period is affected by the weakened market situation for red meat, which is mainly due to reduced consumer purchasing power. The commissioning of the new poultry plant in Nurmo and process optimisation also resulted in additional costs. In addition, the costs of supplies, commodities, pay agreements and external services remained high and weighed on the profits.

Atria Sweden’s centralisation of production at the Sköllersta plant last year and the streamlining of the organisational structure are reflected in improved profitability during the review period. Atria’s market shares in retail trade strengthened in a growing market.

In Estonia, profitability improved as a result of higher net sales and lower prices for raw materials. In Denmark, increased exports and the efficiency measures implemented last year improved the results.

Atria Finland’s net sales for January–March were EUR 309.8 million (EUR 323.5 million). The decrease in net sales was due to a decrease in the feed business, exports and Foodservice sales. The decrease in net sales in the feed business resulted from lower sales prices than in the previous year. A strike at the ports slowed down export shipments for several weeks, resulting in the net sales from Atria’s export trade being significantly lower than in the previous year. Foodservice sales weakened towards the end of the review period. Sales to retail increased slightly compared to the same period last year. General cost inflation weakened consumer purchasing power. Consumers are saving on food purchases and choosing more affordable products. EBIT totalled EUR 7.2 million (EUR 14.9 million). In addition to the decline in net sales, profits were weighed down by the costs of commissioning the new poultry plant and general cost inflation. The costs of supplies, external services and salary settlements were higher in the review period than in the comparison period. The cost of energy was also higher than in the comparison period. The lower EBIT than in the comparison period is also affected by the weaker market situation for red meat, mainly due to reduced consumer purchasing power. The commissioning of the new poultry plant in Nurmo incurred costs during the review period. Performance optimisation of production processes continued as planned. The Sahalahti poultry plant will be closed during the spring.

Atria Sweden’s January-March net sales were EUR 82.1 million (EUR 81.8 million). Atria Sweden’s market shares in retail trade strengthened in a growing market. Sales increased in the Foodservice and fast-food channels. Net sales in the comparison period include sales of products manufactured at the Malmö plant. Some of the products were discontinued when the Malmö factory was closed in the spring of 2023. EBIT totalled EUR 0.0 million (EUR -3.3 million). The closure of the Malmö plant, the centralisation of production at the Sköllersta plant and the streamlining of the organisational structure are now reflected in improved profitability. Raw material prices have remained high during the review period. The weakened Swedish krona increased the cost of imported raw materials. Energy costs have decreased slightly compared to the same period last year.

Atria Sweden AB entered into an agreement in February to acquire the entire share capital of the Swedish convenience food company Gooh. The acquisition has received the required regulatory approval (Inspektionen för strategiska produkter) and will be finalised in early May.

Atria Denmark & Estonia’s net sales in January–March were EUR 30.7 million (EUR 28.2 million). EBIT totalled EUR 1.4 million (EUR -0.5 million). Price competition in the retail sector is fierce in Denmark. Atria lost some of its market share in cold cuts. The market for private label products in Denmark has continued to grow. Export sales grew compared to the same period last year, improving Atria Denmark’s net sales. The efficiency programme implemented last year improved the results. Atria Estonia further strengthened its market position in the Estonian retail market. Sales of all product groups increased during the review period, and Atria was able to increase its market share in the growing market. Atria Estonia’s results strengthened, driven by increased net sales and lower raw material prices. In particular, feed prices are below those of the previous year due to the decline in cereal prices.

Sustainability: towards a carbon-neutral food chain

A carbon-neutral food chain is Atria’s most important sustainability target. Atria’s emissions targets are officially approved by the Science Based Targets initiative. Several projects contributed to progress towards this target during the review period.

Atria has achieved a “B-” management-level rating for its climate efforts in the annual ranking of the global non-profit organisation CDP. The rating rose by three grades from the 2022 assessment. The increase in this rating is a reflection of Atria’s systematic work and commitment to climate action.

There was progress in the systematic measurement of the carbon footprint of cattle farms. Together with Valio, Atria has created the Carbo® environmental calculator for beef and suckler cow farms. At the beginning of the year, the Carbo® calculator was made available to all of Atria’s contractual production facilities. With this calculator, Atria’s more than 1,200 contract farms specialising in beef production can calculate their farm’s environmental impacts and explore the most efficient ways to reduce them. Atria began working with Valio and the Natural Resources Institute Finland to develop a national model for calculating the carbon footprint of cattle farms in 2022. During 2023, the environmental impact of beef production was calculated at 70 of Atria’s contract farms, which increased the coverage of carbon footprint data for beef. 

Nurmon Bioenergia Oy is preparing to build an industrial-scale liquefied biogas production plant near Atria’s production plant in Nurmo. Atria is a minority shareholder in the company. The project will boost the agricultural biogas business and generate vitality and income for domestic agriculture. For Atria’s value chain, implementing this project means progress towards the carbon neutrality target. Tuoretie Oy, which manages Atria’s transports, will gradually switch to biogas-powered fleets for food transport. New biogas vehicles will be added at a rate of 3–4 vehicles annually as the refuelling network and maintenance services expand. The goal is to achieve a reduction of about 10 million kilograms in carbon dioxide emissions by 2030 by gradually switching to biogas. When complete, the plant will be one of the largest liquefied biogas production plants in Finland. The biogas plant under construction in Nurmo will produce renewable domestic energy and various biofertilisers from manure and agricultural by-products from farms in the area. The new biogas plant is expected to be ready in 2026. The project has a valid environmental permit and has been granted an investment grant from the Ministry of Economic Affairs and Employment. The liquefied biogas plant to be built in Nurmo will have a production capacity of 117-gigawatt hours per year. This amount would reduce the annual need for fossil diesel by 11.7 million litres, which, in turn, would result in a reduction of about 40,000 tonnes in carbon dioxide emissions from transport.

Future outlook and earnings guidance

Atria Group’s adjusted EBIT in 2024 is expected to be smaller than in the previous year (EUR 49.6 million).

The operating environment is expected to remain challenging in 2024, particularly in terms of consumer behaviour. The construction and installation work of the new poultry plant in Nurmo have proceeded according to schedule and the plant is fully operational. Its performance will be optimised during 2024.

The challenging market situation and the achievement of the efficiency targets set for the new poultry plant will have an impact on the year’s result. Atria’s good market position, strong brands and good customer relationships, as well as its reliable industrial processes, will nevertheless enable stable business, also in 2024.

Proposal by the Board of Directors for dividend and capital repayment for 2023

The Board of Directors proposes that the company distribute a dividend of EUR 0.30 per share for 2023 and a capital repayment of EUR 0.30 per share totalling EUR 0.60 per share (EUR 0.70 per share).

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 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 report in a webcast today, 23 April, 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 https://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.