Atria Plc, Half-year financial report, 20 July 2023, 8.00 am
Interim report of Atria Plc, 1 January-30 June 2023
Atria Group's net sales continued to grow - result was strong
April-June 2023
- Consolidated net sales totalled EUR 457.2 million (EUR 431.9 million).
- Consolidated adjusted EBIT was EUR 10.0 million (EUR 13.8 million), or 2.2% (3.2%) of net sales.
- Consolidated net sales increased as a result of stable sales volumes and sales prices that were higher than in the comparison period.
- Additional costs related to the roll-out of Atria's investments in Finland and Sweden reduced EBIT. In addition, EBIT was weighed down by the increased cost of raw materials, supplies and external services, as well as increased wage costs.
- The expansion of the Sköllersta plant was completed during the reporting period. The production lines were transferred from Malmö to Sköllersta and the last production day of the Malmö plant was in June. The phased commissioning of the new poultry plant in Nurmo started during the reporting period. Construction and installation work are progressing according to plan.
- Kai Gyllström took over as Group CEO on 1 June 2023, following the retirement of long-time CEO Juha Gröhn at the end of May.
- Atria acquired 100,000 of its own series A shares at an average price of EUR 10.81 per share. This corresponds to approximately 0.35% of the total number of shares in the company.
- Atria distributed a dividend of EUR 0.70 per share (EUR 0.63 per share).
- Atria Finland launched a call for applications for the new 100 Young Producers training programme. The aim is to support young producers' entrepreneurship as producers of Finnish food and to help them succeed in a changing operating environment.
January-June 2023
- Consolidated net sales totalled EUR 885.1 million (EUR 806.7 million).
- Consolidated adjusted EBIT was EUR 20.9 million (EUR 16.2 million), or 2.4% (2.0%).
- Net sales grew by almost EUR 80 million year-on-year. The growth resulted from stable sales volumes and sales prices that were higher than in the comparison period.
- The increase in EBIT was the result of Atria Finland's good performance in the first quarter.
- The change in consumer behaviour resulting from the economic recession has favoured the sales of Atria's diverse product range, especially in the retail sector.

Q2 Q2 H1 H1
EUR million 2023 2022 2023 2022 2022

Net sales
   Atria Finland 345.4 319.5 668.8 593.8 1,265.3
   Atria Sweden 87.8 95.1 169.6 177.3 356.2
   Atria Denmark & 31.4 28.4 59.6 54.4 112.9
Estonia
   Eliminations -7.4 -11.1 -12.9 -18.7 -37.7
Net sales, total 457.2 431.9 885.1 806.7 1,696.7

EBIT before items
affecting
comparability
   Atria Finland 12.7 13.4 27.7 16.5 49.4
   Atria Sweden -2.1 0.7 -5.4 -0.2 2.3
   Atria Denmark & 0.6 0.7 0.1 1.5 1.2
Estonia
   Unallocated -1.3 -1.0 -1.5 -1.6 -4.0
Adjusted EBIT 10.0 13.8 20.9 16.2 49.0
Adjusted EBIT, % 2.2% 3.2% 2.4% 2.0% 2.9%

Items affecting
comparability
of EBIT:
Atria Sweden
  Refund of employment 0.0 1.0 0.0 1.0 1.3
pension contribution*
  Sale of real estate in 0.0 9.9 0.0 9.9 9.7
Malmö*
  Impairment of goodwill 0.0 0.0 0.0 0.0 -51.1
and trademarks**
Unallocated
  Effect of the sale of 0.0 -8.8 0.0 -8.8 -8.8
subsidiary, Sibylla
Rus**
EBIT 10.0 15.9 20.9 18.2 0.1
EBIT, % 2.2% 3.7% 2.4% 2.3% 0.0%

Profit before taxes 6.7 17.3 15.6 20.2 1.7

Earnings per share, EUR 0.13 0.49 0.36 0.57 -0.19
Adjusted earnings per 0.13 0.41 0.36 0.50 1.43
share, EUR

* Included in other
operating income.
** Included in other
operating expenses.

Kai Gyllström, CEO
"Net sales for January-June were EUR 885.1 million, an increase of almost EUR 80 million compared to the same period last year. Adjusted EBIT improved from EUR 16.2 million to EUR 20.9 million.
The increase in EBIT was achieved in the first quarter, when Atria Finland posted a strong result, which is now reflected in the improved half-year results. The April-June period was good for sales and operations but affected by additional costs related to the commissioning of the new Nurmo poultry plant and the expansion of the Sköllersta plant, as well as non-recurring items related to wage settlements. Prices of raw materials and other inputs remain high. On the positive side, energy prices took a downturn in the second quarter.
Atria Finland's performance throughout the first half of the year has been convincing. Net sales have grown steadily, thanks to both higher sales prices than in the comparison period and stable sales volumes. Atria Estonia also increased its sales and strengthened its market shares. In Sweden, the implementation of price increases has been challenging, and the growth of sales volume has also been slow in Sweden and Denmark.
In Finland, the commissioning phase of the new poultry plant in Nurmo has started. Production equipment is being tested and adjusted for commissioning. The commissioning has caused additional costs, but these have remained reasonable given the scale of the investment. The investment is estimated to total around EUR 160 million.
In Sweden, the transfer of production from the Malmö plant to the Sköllersta plant was completed. The last day of production at the Malmö plant was at the end of June. In Sweden, in addition to the costs related to the expansion of the Sköllersta plant, performance has been affected by rising raw material prices throughout the first half of the year. The implementation of price increases in Sweden has been challenging. Household purchasing power is weak due to price inflation, and consumer purchasing behaviour has changed. This has a negative impact on the profitability of the whole food market.
Atria Estonia has worked consistently to increase sales and market shares, and we can be satisfied with the results. During the spring, Atria Estonia consolidated its second position in the market. The Maks&Moorits brand is the most popular meat brand in Estonia, according to a survey conducted in June. In Denmark, sales were below target, and we also lost some of the market share. Atria's efficiency programme to improve profitability in Denmark was completed during the reporting period. This resulted in some additional costs, while the savings will be reflected in the result of the rest of the year. At the beginning of June, Lise Ostergaard was appointed General Manager of Atria Denmark, as Svend Schou Borch moved to another employer.
Cash flow from operations was much better than last year. Improved EBIT and lower working capital commitments increased cash flow. However, large investments made free cash flow negative.
Atria continues to work for a carbon-neutral food chain in a consistent manner. Together with the producers in the Atria Pork chain, we are the first in Finland to build an operating model for verifying responsibility efforts. Our aim is to build a verification model for responsibility that facilitates the measurement, development and reporting of responsibility issues.
We want to be involved in securing the future of Finnish food production and will launch the 100 Young Producers training programme in the autumn. The training is for Atria's young producers in primary production and aims to support young producers' entrepreneurship as producers of Finnish food and help them succeed in a changing operating environment." 
April-June 2023
Atria Group's net sales in April-June were EUR 457.2 million (EUR 431.9 million). Consolidated adjusted EBIT was EUR 10.0 million (EUR 13.8 million), or 2.2% (3.2%). Consolidated EBIT was EUR 10.0 million (EUR 15.9 million), or 2.2% (3.7%) of net sales.
The increase in net sales was the result of higher sales prices in all business areas. Compared to the same period last year, sales volumes to retail customers remained stable. In addition, the acquisition of Ab Korv-Görans Kebab Oy at the end of last year increased net sales in Finland.
EBIT was weighed down by the costs of implementing the investments of Atria Finland and Sweden. EBIT was also impacted by increased costs of raw materials, supplies and external services, as well as increased wage costs. Energy prices took a downturn during the period under review.
The EBIT for the comparison period (April-June 2022) includes a non-recurring gain of EUR 9.9 million on the sale of the factory property in Malmö and a non-recurring refund of EUR 1.0 million of pension contributions. The EBIT for the comparison period also includes a EUR 1.9 million sales gain recognised on the divestment of the Sibylla Rus fast-food company, which operated in Russia, and a EUR 10.7 million translation difference loss incurred from the exchange rate differences between the Russian rouble and the euro. The translation difference was recognised in the income statement, but it had no effect on the Group's equity ratio or cash flow.
Atria's ongoing investments are proceeding as planned. The phased commissioning of the new poultry plant of Atria Finland started during the reporting period. Construction and installation work are progressing according to plan. Installations will continue, process equipment is being tested and the commissioning of both the process and the building services will continue in phases. The expansion of the Sköllersta plant was completed during the reporting period. The production lines were transferred from Malmö to Sköllersta and the last production day of the Malmö plant was in June.
Atria Finland's cooperation negotiations initiated in March to restructure the pig slaughtering and cutting operations at the Atria Nurmo plant were concluded at the end of May. As a result of the negotiations, the number of temporary employment contracts was reduced and internal transfers were carried out. The changes will take effect at the end of September. In Denmark, the operational efficiency programme launched in March was completed. Production was centralised in two production sites and the number of personnel was reduced.
Atria acquired 100,000 of its own series A shares at an average price of EUR 10.81 per share. This corresponds to approximately 0.35% of the total number of shares in the company, which is 28,267,728. The acquired shares will be used for payments under Atria Plc's share-based incentive plans. The shares were acquired in public trading on Nasdaq Helsinki at the market price at the time of acquisition. After the acquisitions, the company holds a total of 111,102 of its own series A shares.
Juha Gröhn, CEO of Atria Group, retired on 31 May 2023, and Kai Gyllström took over as the Group's new CEO on 1 June 2023.
Atria Finland's net sales in April-June were EUR 345.4 million (EUR 319.5 million). The increase in net sales was the result of higher sales prices in all sales channels. Compared to the same period last year, sales volumes to retail customers also grew. In addition, AB Korv-Görans Kebab Oy acquired by Atria at the end of 2022 increased net sales.
EBIT totalled EUR 12.7 million (EUR 13.4 million). EBIT was weighed down by non-recurring items related to wage settlements implemented during the reporting period and additional costs related to the commissioning of the new poultry plant. The phased commissioning of the poultry plant started during the reporting period.
During the reporting period, the costs of raw materials, supplies, and external services continued to be significantly higher than in the comparison period. Meat producer prices were also significantly higher than in the corresponding period in the previous year. Energy prices took a downturn during the period under review.
Atria Sweden's net sales in April-June were EUR 87.8 million (EUR 95.1 million). The net sales and EBIT for the comparison period include the Sibylla Russia business, which was sold in May 2022. The growth of net sales in local currencies, excluding the Russian fast-food business, was almost 5%.
Adjusted EBIT was EUR -2.1 million (EUR 0.7 million). The EBIT was EUR -2.1 million (EUR 11.6 million). Raw material prices continued to rise in April-June. Atria Sweden purchases the pork and beef used in its products from Sweden or elsewhere in the EU. Higher raw material prices, the weakening of the Swedish krona and costs related to the Sköllersta expansion project weighed on Atria Sweden's result. Sales volumes remained stable, but it has not been possible to pass on price increases sufficiently to customers in a tight market environment. The EBIT for the comparison period includes a non-recurring gain of EUR 9.9 million on the sale of the factory property in Malmö and a non-recurring recovery of EUR 1.0 million in pension contributions.
The expansion of the Sköllersta plant was completed during the reporting period. The production lines were transferred from Malmö to Sköllersta, and the last day of production at the Malmö plant was in June.
Atria Denmark & Estonia's net sales in April-June were EUR 31.4 million (EUR 28.4 million). EBIT was EUR 0.6 million (EUR 0.7 million).
In Estonia, net sales and market shares grew as a result of growth in sales volumes and sales prices. Increased sales also strengthened EBIT. Prices of energy and some other materials have fallen, but pork prices have remained high.
The decline in Atria Denmark's net sales was due to a decline in market shares and sales volumes. In Denmark, EBIT was weighed down by lower sales volumes and high meat raw material prices.
Svend Schou Borch, General Manager of Atria Denmark, moved to another employer and Lise Ostergaard was appointed General Manager of Atria Denmark as of 1 June 2023.
January-June 2023
Atria Group's net sales in January-June were EUR 885.1 million (EUR 806.7 million). Adjusted EBIT was EUR 20.9 million (EUR 16.2 million), or 2.4% (2.0%) of net sales. Consolidated EBIT was EUR 20.9 million (EUR 18.2 million), or 2.4% (2.3%). The EBIT for the comparison period includes a total of EUR +2.1 million in adjustment items with an effect on comparability.
The net sales of Atria Group increased as a result of stable sales volumes and sales prices that were higher than in the reference period. In addition, AB Korv-Görans Kebab Oy acquired by Atria at the end of last year increased net sales.
Adjusted EBIT was better than in the corresponding period last year. The increase in EBIT was the result of Atria Finland's good performance in the first quarter. The second quarter was affected by additional costs related to the implementation of the investments in Atria Finland and Sweden. The costs of raw materials, supplies, and external services continued to be significantly higher than in the comparison period. Additional wage costs were also incurred by the implementation of Atria Denmark's efficiency programme.
Operating cash flow amounted to EUR 31.2 million (EUR -12.6 million). The EBIT that was better than in the comparison period, and lower commitment of working capital items improved the cash flow from operations. The large poultry plant construction and Sköllersta expansion projects continue in 2023. The cash flow from investments was EUR -53.7 million (EUR -23.6 million).
A new logistics centre was inaugurated at the Sköllersta plant, Sweden, in January.
Lars Ohlin, Executive Vice President, Human Resources, and member of the Group's Management Team retired as of 1 March 2023.
Atria Finland's net sales in January-June were EUR 668.8 million (EUR 593.8 million). The increase in net sales was driven by higher selling prices than in the comparison period in all sales channels and higher sales volumes to retail and Foodservice customers. In addition, AB Korv-Görans Kebab Oy acquired by Atria at the end of 2022 increased net sales.
EBIT totalled EUR 27.7 million (EUR 16.5 million). The increase in EBIT resulted from Atria Finland's good performance in the first quarter. The costs of raw materials, supplies, energy and external services were significantly higher than in the previous year during the January-June period. Producer prices for meat were markedly higher year-on-year. The second quarter was affected by additional costs related to the commissioning of the new poultry plant and cost items related to wage settlements.
Atria Sweden's net sales in January-June were EUR 169.6 million (EUR 177.3 million). The net sales and EBIT for the comparison period include the Sibylla Russia business, which was sold in May 2022. The growth of net sales in local currencies, excluding the Russian fast-food business, was almost 10%. Sales price increases strengthened net sales. Adjusted EBIT was EUR -5.4 million (EUR -0.2 million). EBIT was weighed down by higher costs and weaker consumer purchasing power resulting from inflation. Consumers prefer products in the lower price range. The sales price increases have not been sufficient to cover rapidly rising costs.
The EBIT was EUR -5.4 million (EUR 10.7 million). The EBIT includes a EUR 9.9 million non-recurring sales gain from an industrial property located in Malmö and a EUR 1.0 million non-recurring refund of an employment pension contribution. Raw material prices remained high, weighing on the EBIT.
Atria Denmark & Estonia's net sales in January-June were EUR 59.6 million (EUR 54.4 million). EBIT totalled EUR 0.1 million (EUR 1.5 million). The increase in net sales resulted from higher sales prices in both Estonia and Denmark. Atria Estonia's EBIT was strengthened by good sales performance, while Atria Denmark's EBIT was weighed down by weaker sales volumes and high raw material prices. In Denmark, the result was also weighed down by additional costs resulting from the efficiency programme.
 

Key indicators

EUR million 30.6.2023 30.6.2022 31.12.2022

Shareholders' equity per share EUR 14.82 17.05 15.90
Interest-bearing liabilities 304.3 217.2 265.7
Equity ratio, % 42.4% 49.4% 44.8%
Net gearing, % 64.2% 43.1% 50.5%
Free cash flow -22.4 * -36.2 * -47.7 **
Gross investments 57.6 * 53.9 * 131.4 **
% of net sales 6.5% 6.7% 7.7%
Average FTE 3,997 3,744 3,698
* 1 Jan - 30 Jun
** 1 Jan - 31 Dec

News on sustainability: Atria the first in Finland to build a model for verifying the sustainability of meat farms
Atria, together with its contracted producers in the Atria Pork chain, is building the first model in Finland to verify the sustainability of pig farm activities. A total of 35 contract producers are participating in the construction of the model. The aim is to build a verification model for sustainability work that facilitates the measurement, development and reporting of sustainability issues. During 2025, the final verification model developed by the pilot group will be extended to the whole pork chain. A similar model will also be created for other branches of production, taking into account the specificities of each chain.
Atria Finland launched a call for applications for the new 100 Young Producers training programme. The training will start in autumn 2023. The new training programme supports young producers' entrepreneurship as producers of Finnish food and helps them succeed in a changing operating environment. Atria 100 Young Producers is a training programme for Atria's young producers in primary production. It is one of the projects to celebrate Atria's 120 years in business and follows the idea of the Atria 100 Young Chefs training programme, which was launched in Atria's 100th anniversary year.
Atria Plc donated EUR 50,000 to the Finnish Olympic Fund, which has been raising funds to support goal-oriented sports for children and young people since 2020. The aim of the Olympic Fund is to give promising young athletes a genuine opportunity to develop in their sport and to create the conditions for international success.
Outlook for the future
Atria Group's adjusted EBIT in 2023 is expected to be smaller than in the previous year (EUR 49.0 million).
During 2023, the company will commission a major expansion at its Sköllersta plant in Sweden, and the phased start-up and testing of the new poultry plant in Nurmo will begin. These measures will result in additional costs in 2023.
In addition, high costs, weakened consumer purchasing power and global political uncertainty will continue to affect the business environment in 2023. Atria's strong market position and strong brands, good customer relationships and reliable industrial processes will enable stable business also in 2023.
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 30 June 2023 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, 20 July, at 10:00 - 11:00 am. The webcast is available on Atria's website at www2.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 www2.atria.fi/konserni/sijoittajat/taloustieto/osavuosikatsaukset/.
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 half-year financial report is available on our website at www.atria.com.