ATRIA PLC INTERIM REPORT 28 APRIL 2010 AT 08:00 a.m.
INTERIM REPORT OF ATRIA PLC 1 January - 31 March 2010
ATRIA GROUP'S EBIT IMPROVED
- The Group's net sales decreased by 1.5% and EBIT improved by EUR 1.4 million
year-on-year.
- The decrease in net sales was mainly due to discontinued business operations
in Scandinavia.
- The Group's EBIT includes EUR 2.0 million of non-recurring costs (EUR 2.7
million) relating to the shutdown of the Årsta plant in Sweden.
- Atria Russia's EBIT improved significantly compared with Q1/2009.
Atria Group:
Q1/ Q1/
EUR million 2010 2009 2009
----------------------------------------------------------
Net sales 305.9 310.7 1,316.0
EBIT 1.0 -0.4 27.5
EBIT % 0.3 -0.1 2.1
Profit before taxes -1.8 -5.5 16.5
Earnings per share, EUR -0.07 -0.14 0.25
Review Q1/2010
Atria Group's Q1/2010 net sales fell slightly short of the previous year's
level. The discontinuation of the salad and sandwich business (Lätta Måltider)
in June 2009 and decreased sales of consumer-packed meat in Sweden were the most
important reasons for the slowing of the development of net sales. Despite the
effects of the recession, net sales in Finland were nearly at the previous
year's level. In Russia, net sales increased year-on-year, thanks to the
strengthened rouble. Calculated in local currency, Atria Russia's net sales were
at the previous year's level.
The Group's EBIT was EUR 1.0 million (EUR -0.4 million). Atria Finland posted
EBIT of EUR 4.9 million (EBIT % 2.7), and Atria Scandinavia's EBIT without
non-recurring items stood at EUR 2.6 million (EBIT % 2.7). These are
satisfactory figures, because the lower sales volume that is typical for Q1
weakens profitability. In addition, higher energy costs and lower sales prices
weighed down Atria's performance in Finland in Q1/2010.
Atria Scandinavia's result includes EUR 2.0 million of non-recurring costs
relating to the shutdown of the Årsta plant in Sweden. During the review period,
Atria Scandinavia launched an efficiency programme and decided to discontinue
the production of consumer-packed meat and close the Årsta production plant in
Stockholm.
Atria Russia's result developed as planned. The Q1/2010 EBIT, EUR -2.3 million,
was clearly better than the Q1/2009 EBIT, EUR -4.3 million without non-recurring
items. Atria Baltic's performance during the first part of the year was poor.
The Group's net debts increased in Q1 by EUR 22.9 million. This was partly due
to the strengthening of the Swedish krona and Russian rouble against the euro.
Atria Finland 1 January - 31 March 2010
Q1/ Q1/
EUR million 2010 2009 2009
----------------------------------------------------------
Net sales 179.1 181.9 781.9
EBIT 4.9 7.1 42.9
EBIT % 2.7 3.9 5.5
Atria Finland's Q1 net sales were nearly at the same level year-on-year. Because
of the recession, the consumption and production of meat continued to decrease
during the first months of the year (Source: Finland's TNS Gallup Agriculture
Unit, January-February 2010). Atria Finland's net sales have developed
satisfactorily in the declining market conditions.
EBIT for the first quarter of the year was lower compared with Q1/2009. The
decrease was caused by higher energy costs and salary increases carried out in
2009. In addition, decreases in sales prices have weighed down the performance.
Compared with Q1/2009, consumer prices of meat and meat products have fallen by
10 per cent on average. (Source: Finland's TNS Gallup Agriculture Unit, 2/2010).
In addition to the decline of demand, overall production of meat has been
restrained by the decrease in producer prices. The number of slaughtered pigs
has decreased by about 10 per cent year-on-year.
Atria has succeeded well in adapting its poultry production to the EU fresh meat
directive. Inventory levels are well-balanced in relation to sales.
If the industrial action initiated in April in the food sector continues for a
longer period, it will affect Atria Finland's sales and performance
significantly in the second quarter of the year.
Atria Scandinavia 1 January - 31 March 2010
Q1/ Q1/
EUR million 2010 2009 2009
----------------------------------------------------------
Net sales 95.0 98.8 405.2
EBIT 0.6 1.2 10.0
EBIT % 0.6 1.2 2.5
Atria Scandinavia's net sales fell by 3.8%. This was mainly caused by the
discontinuation of the salad and sandwich business in June 2009 and decreased
sales of consumer-packed meat.
The Q1/2010 EBIT includes EUR 2.0 million of non-recurring costs relating to the
shutdown of the Årsta plant. EBIT without non-recurring costs is EUR 2.6 million
(EUR 1.2 million). The favourable development is the result of higher margins.
These in turn result from the strengthening of the Swedish krona and its effect
on the prices of imported raw materials. In addition, the efficiency programmes
initiated last year and a better sales mix have improved the performance.
During the review period, Atria Scandinavia launched an efficiency programme and
is now focusing on manufacturing further processed products. Atria Scandinavia
is discontinuing consumer-packed meat production and closing down the Årsta
plant in Stockholm. The loss-making business will be discontinued and the plant
closed by the end of October. The reorganisation will affect 49 employees at the
Årsta plant.
The discontinuation of consumer-packed meat production will cut Atria
Scandinavia's annual net sales by about EUR 45 million and improve its EBIT by
about EUR 0.5 million a year. The shutdown of the production plant will cause
non-recurrent costs of up to EUR 5 million in 2010, of which EUR 2 million are
included in the figures for Q1/2010. Of the total amount, about EUR 1.5 million
have an effect on cash flow. Atria Scandinavia will focus on its core business,
including the manufacturing of cooking sausages, cold cuts,
convenience foods and delicatessen products.
The market shares of cold cuts and cooking sausages have remained stable in the
retail trade. The size of the market in Food Service products has decreased.
Overall market growth has still been sluggish in Sweden.
Atria Russia 1 January - 31 March 2010
Q1/ Q1/
EUR million 2010 2009 2009
----------------------------------------------------------
Net sales 28.9 26.5 113.0
EBIT -2.3 -7.0 -9.8
EBIT % -8.0 -26.4 -8.7
Atria Russia's net sales increased in Q1 by 9.1% year-on-year. This was due to
the strengthening of the Russian rouble against the euro. In the local currency,
net sales were at the same level as in Q1/2009. The overall market began to
decline last year, due to weakened sales of meat products in the Russian retail
trade. The abovementioned market fell by about ten per cent in volume in 2009
both in St Petersburg and Moscow. In the first quarter of 2010, the market has
still declined by about ten per cent (Source: Business Analytica 1.-2.2010).
Atria's market share in the St Petersburg area retail trade remained at a good
level of about 20 per cent. The market share in Moscow was around two per cent
(Source: Business Analytica 1-2.2010). The sales and marketing efforts related
to Campomos products, initiated in 2009, have continued as planned. In Q2/2010,
Atria will be launching re-closable Campomos cold cut packages in Moscow.
EBIT for the period was negative, EUR -2.3 million (EUR -4.3 million without
non-recurring costs). This was the result of low sales volumes of Campomos
products, marketing efforts promoting the Campomos brand and start-up costs
relating to the Gorelovo plant.
If the rouble holds steady, there will be no significant pressure for raw
material prices to increase. Atria Russia is investing heavily in the
development of primary production. Atria and its Danish partners have started an
important project in Russia to ensure the availability of local pork.
Atria Plc has signed a shareholder agreement with the Danish Dan Invest A/S,
concerning pork production in Russia. Atria has a 26 per cent holding in the
Russian company OOO Dan Invest, owner of two pig farms: one in Krasnodar and one
in Tambov. The production will begin in 2010-2011, and the estimated annual
production volume is 180,000 slaughter pigs by 2013. The value of the project is
about EUR 40 million. Atria is investing EUR 3 million in the project now and a
further EUR 2 million when an agreed production volume has been achieved. In
order to guarantee the availability of locally produced pork, Atria has also
signed a delivery agreement with OOO Dan Invest. All the agreements relating to
the project were signed in March 2010.
The new Gorelovo production plant was inaugurated on 20 April 2010. Commercial
sales of products will begin in May 2010. The new plant is the most modern meat
product plant in Russia, and it will boost Atria Russia's competitiveness. The
start-up of the new plant will make it possible to make more efficient use of
the synergies of the St Petersburg and Moscow plants. The fixed costs of the new
plant amount to approximately EUR 4 million a year. The start-up of production
in the new plant will also cause some additional costs.
Atria Russia's full-year business result is not expected to be profitable yet in
2010.
Atria Baltic 1 January - 31 March 2010
Q1/ Q1/
EUR million 2010 2009 2009
----------------------------------------------------------
Net sales 7.6 8.8 37.5
EBIT -1.2 -1.0 -12.6
EBIT % -15.8 -11.4 -33.6
Atria's net sales in Estonia fell slightly short year-on-year. The development
of net sales was weighed down by continually declining overall demand in Estonia
during the first quarter. The decline of the Estonian overall market is expected
to end during the first half of the year, and the purchasing power of consumers
is expected to revive in the consumer goods retail sector in the latter half of
the year. The performance of the Estonian operations was unsatisfactory. The
losses resulted from weak sales and costs associated with efficiency improvement
programmes.
Consumer-packed meat has considerably increased its market share, but Atria has
lost some of its market share in meat products (Source: AC Nielsen).
In January 2010, Atria announced that it is launching an efficiency improvement
programme in Estonia, seeking to achieve annual savings of approximately EUR 1
million in its cost structure. In order to achieve the savings, Atria is closing
the Ahja plant and centralising the production to the Valga and Vastse-Kuuste
production plants. Approximately 40 employees will be laid off from the Ahja
plant. The measures relating to the centralisation of operations will be
completed in May. Impairments of EUR 0.8 million for fixed assets were recorded
for Q4/2009 relating to the shutdown of the Ahja plant.
In addition, an efficiency improvement programme was launched in Estonia that
concerns the entire business process and aims for better cost-efficiency in all
operations.
Rauno Väisänen was appointed Managing Director of Atria Estonia effective 1
February 2010.
Events occurring after the period
Atria Russia's new factory in Gorelovo was inaugurated on 20 April 2010.
Investments
The Group's investments during the period totalled EUR 15.9 million (EUR 8.6
million). Most of the investments are related to the completion of the new
Gorelovo production plant.
Personnel
The Group had an average of 5,853 (6,532) employees during the period.
Personnel by business area:
Atria Finland 2,123 (2,181)
Atria Scandinavia 1,255 (1,635)
Atria Russia 2,000 (2,088)
Atria Baltic 475 (628)
Atria Plc's administration
Atria Plc's Board of Directors now has the following membership: Chairman Martti
Selin; Vice Chairman Timo Komulainen; members Tuomo Heikkilä, Esa Kaarto, Runar
Lillandt, Harri Sivula and Matti Tikkakoski.
Financing
The Group's financial position has continued to be strong. On 31 March 2010, the
amount of undrawn committed credit facilities stood at EUR 147 million.
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 for 2009.
If the industrial action in the Finnish food industry continues for a longer
period, it can hamper deliveries and sales development of early summer season
products.
Outlook for the future
Market conditions are expected to remain challenging in 2010. The industrial
action in the Finnish food sector will affect Atria Finland's sales and
performance in the second quarter of the year. In addition, the company's
decision to discontinue production of consumer-packed meat in Sweden will cut
Atria Scandinavia's annual net sales in the second half of the year. The Group's
net sales in 2010 are therefore forecast to remain at the 2009 level. EBIT is
expected to increase in 2010.
Board Authorisations
The General Meeting of 29 April 2009 authorised the Board of Directors to
decide, on one or several occasions, on an issue of, at maximum, 12,800,000 new
A shares or A shares that may be held by the company, through a share issue
and/or by granting option rights or other special rights entitling one to shares
as referred to in Chapter 10, Section 1 of the Companies Act. The authorisation
shall supersede all valid share issue authorisations, including authorisation
for a reserve increase, and be valid until the closing of the next Annual
General Meeting, but no later than until 30 June 2010.
Purchase and transfer of treasury shares and valid authorisations
The General Meeting of 29 April 2009 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 per cent of all the Company's shares. The authorisation shall be
valid until the closing of the next Annual General Meeting, but no later than
until 30 June 2010.
In 2008, based on the authorisation issued by the General Meeting of 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 were 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. The acquisition of treasury shares
began on 29 September 2008 and ended on 3 February 2009.
As of 31 March 2010, Atria Plc held a total of 113,712 treasury shares.
KEY INDICATORS
EUR million 1-3/10 1-3/09 1-12/09
Shareholders´ equity
per share, EUR 15.60 14.86 15.39
Interest-bearing
liabilities 430.2 453.8 425.8
Equity ratio, % 40.2 39.1 39.7
Gearing, % 97.1 107.6 97.5
Net gearing, % 93.3 103.2 89.4
Gross investments to
fixed assets 15.9 8.6 33.0
% of Net sales 5.2 2.8 2.5
Average FTE 5 853 6 532 6 214
Accounting principles
This interim report was prepared in accordance with the IAS 34 Interim Financial
Reporting standard. In preparing this interim report, Atria has applied the same
principles as in preparing the 2009 annual financial statements. However, as of
January 2010, the Group has adopted the new and revised standards published by
the IASB that are included in the accounting principles for the 2009 annual
financial statements and have not had any material impact on the figures
presented for the period.
The principles and formulae for the calculation of key indicators have not
changed, and they are presented in the 2009 annual financial statements.
The figures given in the interim report are unaudited.
ATRIA PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
EUR million 31-3-10 31-3-09 31-12-09
Non-current assets
Property, plant and
equipment 482.2 479.5 469.1
Goodwill 165.0 150.4 157.8
Other intangible
assets 72.6 69.0 70.0
Investments in joint ventures
and associates 10.1 6.3 7.4
Other financial
assets 2.3 2.3 2.3
Loans and other
receivables 20.7 15.1 14.5
Deferred tax assets 7.5 4.8 6.7
Total 760.4 727.4 727.8
Current assets
Inventories 108.9 114.9 115.6
Trade and other
receivables 207.2 207.8 212.6
Cash and cash
equivalents 16.8 18.9 35.3
Total 332.9 341.6 363.5
Non-current assets
held for sale 10.2 11.1 10.0
Total assets 1 103.5 1 080.1 1 101.3
Equity and liabilities
EUR million 31-3-10 31-3-09 31-12-09
Equity 443.0 421.6 436.9
Non-current liabilities
Interest-bearing financial
liabilities 316.6 338.1 318.9
Deferred tax
liabilities 42.3 41.6 41.2
Other non-interest-bearing
liabilities 1.8 0.5 1.3
Total 360.7 380.2 361.4
Current liabilities
Interest-bearing financial
liabilities 113.6 115.6 106.9
Trade and
other payables 186.2 162.7 196.1
Total 299.8 278.3 303.0
Total liabilities 660.5 658.5 664.4
Total equity and
liabilities 1 103.5 1 080.1 1 101.3
CONSOLIDATED INCOME STATEMENT
EUR million 1-3/10 1-3/09 1-12/09
Net sales 305.9 310.7 1 316.0
Cost of goods sold -271.8 -279.0 -1 151.0
Gross profit 34.1 31.7 165.0
* of Net sales 11.1 10.2 12.5
Sales and
marketing costs -18.6 -17.1 -77.7
Administration costs -12.3 -13.9 -47.7
Other income 0.8 1.0 4.6
Other expenses -3.0 -2.1 -16.7
EBIT 1.0 -0.4 27.5
* of Net sales 0.3 -0.1 2.1
Finance income and costs -3.4 -5.3 -12.4
Share of the result of
associates 0.6 0.2 1.4
Profit before tax -1.8 -5.5 16.5
* of Net sales -0.6 -1.8 1.3
Income tax expense 1.5 -9.1
Profit
for the period -1.8 -4.0 7.4
* of Net sales -0.6 -1.3 0.6
Profit attributable to:
Owners of the parent -2.0 -4.1 7.0
Non-controlling interests 0.2 0.1 0.4
Total -1.8 -4.0 7.4
Basic earnings/
share, EUR -0.07 -0.14 0.25
Diluted earnings/
share, EUR -0.07 -0.14 0.25
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million 1-3/10 1-3/09 1-12/09
Profit for the period -1,8 -4,0 7,4
Other comprehensive income after tax:
Cash flow hedging -0.6 -1.4
Equity hedging -0.3
Translation
differences 8.5 -8.8 2.5
Total comprehensive income
for the period 6.1 -12.8 8.2
Total comprehensive income attributable to:
Owners of the
parent 5.9 -12.9 7.8
Non-controlling interests 0.2 0.1 0.4
Total 6.1 -12.8 8.2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR million Equity belonging to the shareholders of the Non- Equity
parent company cont total
roll
Share Share Other Inv- Own Trans Retain Total ling
ca premium reser non- shares lation ed inte
pit ves rest- diff- earn rests
al equity ings
fund
Equity
1-1-2009 48.1 138.5 0.1 110.3 -0.5 -33.4 170.5 433.5 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
Equity
1-1-2010 48.1 138.5 -1.7 110.6 -1.3 -31.0 171.9 435.1 1.8 436.9
Periods comprehensive
income -0.6 8.5 -2.0 5.9 0.2 6.1
Equity
31-3-2010 48.1 138.5 -2.3 110.6 -1.3 -22.5 169.9 441.0 2.0 443.0
CONSOLIDATED CASH FLOW STATEMENT
EUR million 1-3/10 1-3/09 1-12/09
Cash flow from operating activities
Operating activities 2.7 -8.7 92.7
Financial items
and taxes -6.8 -7.0 -31.0
Net cash flow from operating
activities -4.1 -15.7 61.7
Cash flow from investing activities
Tangible and intangible
assets -12.4 -8.5 -32.3
Investments -1.2 -1.7 -1.8
Net cash used in investing
activities -13.6 -10.2 -34.1
Cash flow from financing activities
Loans drawn down 2.7 27.3 41.8
Loans repaid -3.5 -19.0 -64.8
Dividends paid -5.7
Acquired treasury
shares -0.7 -0.7
Net cash used in financing
activities -0.8 7.6 -29.4
Change in liquid funds -18.5 -18.3 -1.8
OPERATING SEGMENTS
EUR million 1-3/10 1-3/09 1-12/09
Net sales
Finland 179.1 181.9 781.9
Scandinavia 95.0 98.8 405.2
Russia 28.9 26.5 113.0
Baltics 7.6 8.8 37.5
Eliminations -4.7 -5.3 -21.6
Total 305.9 310.7 1 316.0
EBIT
Finland 4.9 7.1 42.9
Scandinavia 0.6 1.2 10.0
Russia -2.3 -7.0 -9.8
Baltics -1.2 -1.0 -12.6
Unallocated -1.0 -0.7 -3.0
Total 1.0 -0.4 27.5
ROCE *
Finland 9.9 % 8.9 % 10.2 %
Scandinavia 3.7 % 3.7 % 4.0 %
Russia -3.5 % -9.1 % -6.9 %
Baltics -28.5 % -8.2 % -26.5 %
Group 3.3 % 3.6 % 3.1 %
* ROCE % =
EBIT, 12mr / Capital employed, 12 mr avg *100
Investments
Finland 2.2 2.9 14.2
Scandinavia 1.8 1.2 5.3
Russia 11.8 3.9 11.9
Baltics 0.1 0.6 1.6
Total 15.9 8.6 33.0
Depreciations
Finland 7.3 7.5 29.7
Scandinavia 2.9 2.6 12.0
Russia 1.7 1.6 6.4
Baltics 0.8 0.8 10.5
Total 12.7 12.5 58.6
CONTINGENT LIABILITIES
EUR million 31-3-10 31-3-09 31-12-09
Debts with mortgages or other collateral
given as security
Loans from financial
institutions 5.5 8.0 6.0
Pension fund loans 4.5 3.9 4.2
Total 10.0 11.9 10.2
Mortgages and other securities given as
comprehensive security
Real estate
mortgages 6.7 6.7 6.7
Corporate mortgages 1.2 4.6 3.1
Total 7.9 11.3 9.8
Guarantee engagements not included
in the balance sheet
Guarantees 0.8 12.9 0.8
ATRIA PLC
Board of Directors
For further information, please contact Matti Tikkakoski, President and CEO,
tel. +358 50 2582.
DISTRIBUTION
Nasdaq OMX Helsinki Ltd
Major media
www.atriagroup.com
The Interim Report will be mailed to you upon request and is also available on
our website at www.atriagroup.com.
