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2020-07-17

Atria Oyj: Half-year financial report of Atria Plc, 1 January-30 June 2020: Atria's EBIT and net sales remained stable in the second quarter

Atria Plc, half-year financial report, 17 July 2020, 8.00 am
Half-year financial report of Atria Plc, 1 January-30 June 2020
Atria's EBIT and net sales remained stable in the second quarter
April-June 2020
- Consolidated net sales totalled EUR 366.3 million (EUR 368.9 million).
- Consolidated EBIT was EUR 4.1 million (EUR 5.1 million), or 1.1 per cent (1.4%) of net sales.
- The coronavirus pandemic (COVID-19) affected Atria's business: sales to Food Service customers decreased in all business areas, but on the other hand, sales to retail grew.
- Atria Finland's improved operative efficiency strengthened EBIT, but net sales remained at the previous year's level.
- Atria Sweden's and Atria Russia's net sales and EBIT declined due to the reduced Food Service and fast food sales. Sales and EBIT improved at the end of the period under review.
- Atria Denmark & Estonia's net sales grew almost 15% due to increased sales to retail.
- Market conditions took a turn for the better in all of Atria's business areas in June.
January-June 2020
- Consolidated net sales totalled EUR 723.0 million (EUR 705.3 million).
- Consolidated EBIT was EUR 6.4 million (EUR 2.3 million), which is 0.9 per cent (0.3%) of net sales.
- Atria Finland's improved net sales and good operative efficiency strengthened EBIT.
- Atria Sweden's net sales grew by 3 per cent in the local currency, and operating loss decreased from the previous year. EBIT was weighed down by an unfavourable sales structure.
- Atria Denmark & Estonia's net sales improved due to increased sales volumes and higher prices.
- Atria Russia's EBIT was weighed down by exceptionally weak sales in April-May.
- Market disruption caused by the coronavirus pandemic reduces business predictability.
 

Q2 Q2 H1 H1
EUR million 2020 2019 2020 2019 2019
Net sales    
   Atria Finland 263.0 263.7 515.6 504.7 1,033.8
   Atria Sweden 71.7 74.4 143.2 141.0 289.4
   Atria Denmark & Estonia 26.9 23.5 53.3 45.3 96.6
   Atria Russia 13.3 18.5 29.4 34.2 73.8
   Eliminations -8.6 -11.2 -18.5 -19.9 -42.3
Net sales, total 366.3 368.9 723.0 705.3 1,451.3
   
EBIT    
   Atria Finland 7.3 6.4 13.5 10.3 40.0
   Atria Sweden -2.1 -1.5 -4.1 -5.6 -6.1
   Atria Denmark & Estonia 1.1 1.0 1.4 1.6 4.4
   Atria Russia -1.4 -0.3 -2.8 -2.5 -4.0
   Unallocated -0.7 -0.5 -1.7 -1.5 -3.1
EBIT, total 4.1 5.1 6.4 2.3 31.1
EBIT% 1.1 % 1.4 % 0.9 % 0.3 % 2.1 %
   
Profit before taxes 3.6 3.5 4.7 -0.3 26.2
   
Earnings per share, EUR 0.07 0.07 0.08 -0.08 0.54
 

Juha Gröhn, CEO
"The Atria Group's net sales during the second quarter of this year totalled EUR 366.3 million and EBIT totalled EUR 4.1 million. Taking account of the exceptional situation caused by the coronavirus, we can be moderately satisfied with sales and profitability in the second quarter. Operationally, the period went smoothly - very few employees have been ill with the coronavirus, and plants have continued operations. Our measures to prevent the spread of the virus have been shown to be effective.
Sales in the second quarter were unusual. Households stocked up supplies at the end of March, and sales of basic products for preparing food at home were particularly brisk. Demand levelled off quickly in April with sales over Easter, for example, being lower than normal. Sales in May were also sluggish. In June, the easing of restrictions put in place due to the coronavirus increased demand in all of Atria's business areas and sales were also good. The warm weather also drove sales in June.
The coronavirus restrictions have had the biggest effect on Food Service sales. Business areas where the Food Service share in net sales is large have suffered the worst impact both in net sales and in earnings. Russia and Sweden experienced the biggest decrease in sales, but the effects in Finland were also significant. Sibylla's sales decreased everywhere - particularly in Russia where Sibylla's drop in April was severe, as 70 per cent of the net sales disappeared. Sibylla's sales returned to a normal level at the end of the period under review and even partly rose above that of the same period of the previous year.
Sales to retail have grown in all of Atria's business areas, but the growth was not sufficient to make up for losses in Food Service sales. The Finnish retail market for the product groups represented by Atria has grown by 9 per cent in terms of value. The waning in Food Service sales has made the sales of fillets and roasts, among other things, difficult. Certain product groups of convenience food have also suffered from corona. For example, the consumption of snacks decreased. Demand for meat products have been rising and the development of poultry is still growing.
Pork exports to China have gone smoothly with the volume being even better than expected, but the price level in the Chinese markets decreased. Swings in price levels in China are large and rapid.
News about corona in Atria's home markets has been encouraging in recent weeks as the spread of the disease has been brought under control. People now can and dare to move about and also consume - as shown by the good sales numbers for June. However, there is reason to prepare for swings in sales volume. Everyday life at Atria has gone well, so the ability to operate as the market dictates is good."
April-June 2020
Atria Group's net sales for April-June totalled EUR 366.3 million (EUR 368.9 million). EBIT amounted to EUR 4.1 million (EUR 5.1 million). Atria Finland's net sales remained roughly at the same level year-on-year: sales to retail and for export grew, but on the other hand, sales to Food Service customers decreased. Atria Sweden's and Atria Russia's net sales decreased due to reduced restaurant and fast food sales. Atria Denmark & Estonia's net sales grew almost 15 per cent due to increased sales volumes and higher prices.
Atria Finland's net sales grew, which was due to good operative efficiency and managing the seasons. Atria Sweden's and Atria Russia's the sharp weakening of sales to Food Service and fast food customers weighed down earnings in April-May. Atria Denmark & Estonia's EBIT improved with the growth in net sales. Increased meat raw material costs and an unfavourable sales structure at the beginning of the year weakened the earnings improvement.
The effects of the coronavirus pandemic on Atria's business were at their worst in April-May. The pandemic restrictions began to ease in June and sales volumes took a turn for the better. The export volumes of pork from Finland to China were at a good level, but the fall in sales prices in May weighed down on profitability.
Atria Finland's net sales for April-June totalled EUR 263.0 million (EUR 263.7 million). Sales to retail and for export grew year-on-year, but on the other hand, sales to Food Service customers declined. With the gradual easing of corona restrictions, Food Service sales began to revive towards the end of June. Pork exports to China increased, but the price level decreased in accordance with global price changes. EBIT amounted to EUR 7.3 million (EUR 6.4 million). Good operative efficiency in industrial operations and good management of seasons strengthened EBIT. The corona pandemic weakened the sales structure and caused additional costs, but their impact on earnings was mitigated by pension contribution reductions granted by the state.
Atria Sweden's net sales for April-June totalled EUR 71.7 million (EUR 74.4 million). In the local currency, net sales decreased by 3 per cent. Net sales were weighed down by the weakening of sales to Food Service and fast food customers, which was due to restrictions and recommendations set to prevent the spread of the corona pandemic. Poultry product sales to retail continued to grow during the second quarter. EBIT was EUR -2.1 million (EUR -1.5 million). The drop in earnings was a result of the reduction in net sales and unfavourable sales structures in retail. The sales of private labels increased in the period under review. The sharp weakening of sales to Food Service and fast food customers weighed down earnings in April-May. Sales volumes and performance took a turn for the better in June. The corona pandemic weakened the sales structure and caused additional costs, but their impact on earnings was mitigated by state compensation for sick leaves.
Atria Denmark & Estonia's net sales for April-June totalled EUR 26.9 million (EUR 23.5 million). EBIT amounted to EUR 1.1 million (EUR 1.0 million). Net sales grew almost 15% due to increased sales to retail. The share of Food Service sales of total sales in Estonia and Denmark is small, which is why the corona pandemic did not have much of a negative effect on the net sales of the business area. EBIT grew with the growth in net sales. Drastically increased meat raw material costs and an unfavourable sales structure at the beginning of the year weakened the earnings improvement in Denmark.
Atria Russia's net sales for April-June totalled EUR 13.3 million (EUR 18.5 million). EBIT was EUR -1.4 million (EUR -0.3 million). Sales to retail increased, with Casademont sales in particular being strong. Sales to Food Service and fast food customers decreased significantly in April, but began to recover at the end of May. In June sales of Sibylla products were already considerably better year-on-year. The drop in earnings was a result of weakening sales and unfavourable sales structures. Measures taken to prevent the spread of corona infections at production facilities caused some additional costs.
January-June 2020
Atria Group's net sales for January-June totalled EUR 723.0 million (EUR 705.3 million). EBIT amounted to EUR 6.4 million (EUR 2.3 million). Atria's net sales in Finland grew due to increased sales to retail and for exports at the beginning of the year. Export volumes of pork to China in particular were quite good. Atria Finland's increased net sales and good operative efficiency strengthened EBIT.
Atria Sweden's net sales grew by 3 per cent in the local currency from the previous year and earnings were better than the previous year. Atria Sweden's EBIT for the comparable period includes EUR 1.4 million of costs related to employee arrangements. Atria Denmark & Estonia's net sales grew by approximately 18 per cent, which was due to increased sales volumes to retail and higher prices. Sales of Atria Russia's Food Service and Sibylla products increased at the beginning of the year, but sales fell sharply in April-May.
The exceptional circumstances caused by the coronavirus pandemic affected Atria's business environment starting from the end of the first quarter. National restrictions and recommendations related to restaurant operations and public food services had an impact on Atria's business. Restaurant opening hours and the number of customers were restricted. The reductions in travel and leaving the house has reduced food sales in both fast food restaurants and service stations.
The popularity of daily foods sold to retail rose sharply at the end of March...

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