FINLAND: Atria reports "difficult" Q1
- Q1 operating loss increases to EUR2.5m
- Q1 sales dip
- Confirms reduced outlook
Atria EBIT falls in Q1
Meat group Atria today (6 May) booked a first-quarter operating loss and reiterated the profit warning it issued last month.
Operating earnings in the three months to the end of March fell from EUR3.2m (US$4.45m) last year to a loss of EUR2.5m. Sales dipped to EUR327m, compared to EUR328.4m last year.
The Finland-based company said last month its annual EBIT is expected to fall "clearly short" of last year's EUR37m.
"The EBIT forecast was adjusted due to the difficult conditions in the Finnish and Russian meat markets. A glut of pork and tougher competition have decreased sales prices both in Finland and elsewhere in the EU," Atria added today.
Full-year net sales are, however, expected to be up on last year's level.
Difficult conditions in Russian and Finnish meat markets weighed down Atria's results
INTERIM REPORT OF ATRIA PLC 1 JANUARY – 31 MARCH 2014
Difficult conditions in Russian and Finnish meat markets weighed down Atria's results
Consolidated net sales totalled EUR 327.0 million (EUR 328.4 million)
Consolidated EBIT was EUR -2.5 million (EUR 3.2 million)
Atria Finland's net sales grew by EUR 11.8 million, totalling EUR 216.9 million (EUR 205.1 million)
Atria Finland's EBIT came to EUR 0.2 million (EUR 6.7 million), down by EUR 6.5 million from the previous year
Atria Scandinavia’s EBIT was EUR 0.9 million (EUR 0.1 million)
Atria Russia’s EBIT was EUR -2.2 million (EUR -3.1 million)
Atria Baltic's EBIT was EUR -0.2 million (EUR -0.4 million)
The Group's equity ratio stood at 40.6 per cent (31 December 2013: 42.2%)
Atria lowered its EBIT forecast: the 2014 EBIT are expected to fall clearly short of the previous year's operative EBIT of EUR 37.0 million
EUR Million Q1/2014 Q1/2013 2013 Net sales 327.0 328.4 1,411.0 EBIT -2.5 3.2 19.7 EBIT, % -0.8 1.0 1.4 Profit before taxes -5.7 0.7 6.9 Earnings per share, EUR -0.19 -0.03 -0.15 Non-recurring items* -0.8 1.1 -17.3
*Non-recurring items are included in the reported figures.
Review 1 January – 31 March 2014
Atria Group’s net sales for January–March amounted to EUR 327.0 million (EUR 328.4 million). Net sales fell by EUR -1.4 million year-on-year. EBIT came to EUR -2.5 million (EUR 3.2 million). EBIT includes EUR 0.8 million of non-recurring cost related to the takeover of the operations acquired from Saarioinen Oy. The EBIT for the comparative period contains EUR 1.1 million of non-recurring profit.
During the period under review, Atria acquired Saarioinen Oy's procurement, slaughtering and cutting operations for beef, pork and chicken. The purchase price was EUR 29.2 million. The deal consolidates Atria's position as a processing company of domestic meat and complements Atria's existing operations and product range. A long-term cooperation agreement for meat deliveries to Saarioinen will increase the efficiency of production operations. The acquisition raised the capacity of the growing poultry operations. The acquired operations were consolidated into Atria as of 1 February 2014. Investments during the period under review totalled EUR 37.5 million (EUR 8.8 million). The Group’s free cash flow for the period (operating cash flow - cash flow from investments) was EUR -23.5 million (EUR -3.8 million), and net liabilities were EUR 325.9 million (31 December 2013: EUR 305.9 million).
Atria lowered its EBIT forecast in April after the period under review. The company expects the 2014 EBIT without non-recurring items to be clearly smaller than the previous year’s EBIT of EUR 37.0 million. Net sales are expected to grow in 2014. According to Atria’s previous EBIT forecast for 2014, the Group’s EBIT was projected to be higher than the previous year's operative EBIT of EUR 37.0 million and net sales were expected to grow.
The EBIT forecast was adjusted due to the difficult conditions in the Finnish and Russian meat markets. A glut of pork and tougher competition have decreased sales prices both in Finland and elsewhere in the EU. As a result, Atria Finland's performance in the first quarter was not as expected. Russia's import ban on EU pork and the weakening of the rouble have raised the price of meat raw material in Russia by an average of 30 per cent from the beginning of the year. Because of the tight market situation, Atria Russia has not been able to pass on the rapidly increased raw material costs to sales prices.
Atria Finland’s net sales for January–March totalled EUR 216.9 million (EUR 205.1 million), up by EUR 11.8 million year-on-year. This increase was a result of higher sales volumes to retailers and Food Service customers, along with the consolidation of the operations acquired from Saarioinen into Atria as of February. The EUR 0.2 million EBIT (EUR 6.7 million) was EUR 6.5 million lower than in the comparative period. EBIT includes EUR 0.8 million of non-recurring cost related to the takeover of the operations acquired from Saarioinen Oy. The EBIT for the comparative period contains EUR 1.1 million of non-recurring profit. The results for the period under review were weighed down by a decrease in sales prices due to tougher competition and the glut of pork. Since consumers have less purchasing power, they buy more affordable products, which has resulted in fierce price competition across all customer accounts.
Atria Scandinavia's net sales for January–March totalled EUR 88.4 million (EUR 94.2 million). At comparable exchange rates, net sales fell by 2.4 per cent year-on-year. Net sales were weighed down by an increase in the market share of more inexpensive private label products in Sweden and the shift of the Easter season to the second quarter. EBIT amounted to EUR 0.9 million (EUR 0.1 million). EBIT improved due to the increased efficiency of production, better sales structure and more stable meat raw material prices.
Atria Russia’s net sales for January–March amounted to EUR 21.3 million (EUR 27.4 million), representing a drop of 22.1 per cent. At a comparable exchange rate, net sales fell by 3.3 per cent year-on-year. This decrease in comparable net sales was due to the discontinuation of primary production late last year. EBIT was EUR -2.2 million (EUR -3.1 million). EBIT was weighed down by an increase of almost 30 per cent in meat raw material prices during the first quarter.
Atria Baltic’s net sales for January–March totalled EUR 7.4 million (EUR 7.2 million), showing growth of EUR 0.2 million year-on-year. EBIT was EUR -0.2 million (EUR -0.4 million), up by EUR 0.2 million from the previous year.
EUR million 31.3.14 31.3.13 31.12.13
Shareholders´ equity per share EUR 14.07 15.24 14.45 Interest-bearing liabilities 336.5 379.7 334.7 Equity ratio, % 40.6 41.5 42.2 Gearing, % 83.9 87.4 81.3 Net gearing, % 81.3 85.7 74.3 Gross investments in fixed assets 37.5 8.8 41.1 % of net sales 11.5 2.7 2.9 Average FTE 4,707 4,670 4,669
Outlook for the future The company expects the 2014 EBIT without non-recurring items to be clearly smaller than the previous year’s EBIT of EUR 37.0 million. Net sales are expected to grow in 2014.
Dividend distribution proposal The Board of Directors proposes that a dividend of EUR 0.22 be paid for each share for the financial year 2013.
Original source: Atria
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