Nordic meat company Atria PLC has reported a near 6% increase in net sales for the first six months of this year, while cost pressures and investments in new facilities are constraining profitability.
For the quarter ended June 30, Finland-based meat company Atria PLC posted net sales of EUR457.2 million (US$506.5 million) — a year-on-year increase of more than 5.8%. This rise was attributed by the company to stable sales volumes, and to selling prices that were higher than in the comparative period.
However, continued investments in the group’s facilities in Finland and Sweden reduced overall profitability, combined with more expensive raw materials, supplies, and labor. As a result, Earnings Before Interest and Taxes (EBIT) for the April-June period was down by EUR3.8 million to EUR10.0 million. As a percentage of net sales, this metric fell from 3.2% to 2.2%.
Atria’s substantial investments have made significant progress during the quarter, however.
During this period, expansion of its plant in Sköllersta, Sweden, has been completed, and production from the former facility in Malmö has been successfully transferred there. In Finland, the company reports construction and installation of its new poultry processing plant in Nurmo are progressing as planned. Phased commissioning of the plant is underway.
In the report, Atria announces it is helping to develop the first model in Finland to verify the sustainability of pig farming. Working together with 35 contract producers in the Atria Pork Chain, the firm aims to build a model to measure, develop and report sustainability issues for the pig sector. Final verification is expected in 2025, after which the model will be rolled out across the pork chain.
Sales, profitability up for the half-year
“Net sales for January-June were EUR885.1 million,” said Atria PLC’s new CEO, Kai Gyllström, “an increase of almost EUR80 million compared to the same period last year.”
A year-on-year improvement in adjusted EBIT from EUR16.2 million to EUR20.9 million was attributed to a particularly strong result achieved by Atria Finland during the first quarter of 2023.
For the April-June period, Gyllström noted that energy prices were lower and sales held up well. However, profitability was curtailed by continued high costs for inputs and labor, as well as the costs associated with the new facilities in Finland and Sweden.
For the six-month period, Atria Finland achieved a 12.6% increase in net sales at EUR668.8 million. This was driven by higher selling prices across the board, and to growth in sales to the retail and food service sectors.
Results were also boosted by sales by its latest acquisition. At the end of 2022, Atria acquired 51% of the shares of Korv-Görans Kebab, a Finland-based company specializing in frozen meat products.
For Atria Sweden, net sales were down by EUR7.7 million at EUR177.3 million. This decline was linked to lost business arising from Atria’s sale of the Sibylla Russia business in May of 2022. Meanwhile, adjusted EBIT was down to a loss of EUR5.4 million for the latest half-year, as a result of sales price rises being insufficient to cover still-rising costs. In Sweden, inflation has reduced consumers’ purchasing power, and consequently, they are opting for cheaper products.
Trends for the group’s third subsidiary, Atria Denmark & Estonia, were mixed. Overall net sales were EUR5.2 million high year-on-year for the January-June period at EUR59.6 million. However, EBIT was reported at just EUR100,000 — down from EUR1.5 million at this point in 2022.
While the Estonian business achieved high sales, profitability by the Danish company was held back by lower sales and high production costs, including those associated with an efficiency program.
Prospects for Atria’s 2023 performance
Following the half-year results, CEO Kai Gyllström reports that the Atria PLC’s EBIT will be lower this year than in 2022, when it was reported at EUR49 million.
Profitability for the year is expected to be constrained by the ongoing costs of the new investments in Sweden and Finland. Furthermore, he said, high production costs, weak consumer demand, and global political uncertainty are likely to continue adversely impacting business for the rest of this year.
Despite these adverse trends, he expressed the view that Atria Group’s business will remain stable throughout 2023.
More on Atria PLC
With annual slaughterings of around 45 million chickens, Atria is among the top poultry companies in Europe, according to WATTPoultry.com’s Top Poultry Companies database.
Founded in 1903, Atria has expanded over the past 120 years to become one of the Nordic countries’ leading meat and food companies.
In 2022, net sales reached almost EUR1.697 billion, according to the group’s annual report for that year. At the time, it had just under 3,700 employees in Finland, Sweden, Denmark, and Estonia.
As well as domestic markets, Atria also exports its products widely. Last year, the total volume exported amounted to 39,000 metric tons (mt) to 33 different countries, including South Korea. China and Japan.
Finland accounted for 73% of the group’s overall sales last year. In 2022, the Finnish company processed 169,400mt of meat products. Of this total, around 38% comprised each of poultry and pork, and beef made up the remaining 24%.
In December of 2022, Atria announced that its long-time CEO Juha Gröhn planned to retire at the end of May this year. Kai Gyllström was selected by the company’s board to succeed Gröhn as the Group’s CEO.
