Rising costs squeeze Atria Group’s quarterly profit

Profitability was constrained by rising costs for Atria Group, but despite that, sales grew in all areas.

(Courtesy Atria Group)
(Courtesy Atria Group)

While sales grew in all areas of operation, profitability was constrained by rising costs for Atria Group.

Following an increasingly familiar trend in recent fiscal reporting by a range of businesses, these are among the key highlights of the group's results recently published for the first quarter (January-March 2022).

At almost EUR375 million (US$394 million), the company achieved an overall 3.7% year-on-year increase in net sales for the last three-month period. Average sales prices were up marginally for both retail and food-service channels. 

However, Atria’s profitability was greatly curtailed by sharply rising costs of production. These were driven by the challenging global economic situation. From EUR6.6 million one year previously, the Group reported consolidated Earnings Before Interest and Taxes (EBIT) for the last quarter of EUR2.3 million. As a percentage of net sales, this amounted to just 0.6% — down from 1.8% for the first quarter of 2021. 

Atria Group’s CEO Juha Gröhn described the start of 2022 as “exceptional in many ways.”

“The cost increase that started last year has continued,” he said. “Russia’s invasion of Ukraine continued to spur the rise in costs, and the pricing of many commodities is no longer based on the traditional market economy. We are experiencing the pricing of exceptional circumstances.”

Furthermore, he said, the ongoing coronavirus (COVID-19) situation continues to cause worker absences. These are currently around double pre-COVID levels. However, despite staffing issues and an unstable supply chain, Gröhn reported that there had been no significant deviations in the production and delivery of Atria’s products.

In a positive development for the Group, Atria has been granted a license to export to South Korea. During the month of March, its first shipment was delivered to that destination. 

Performance in northern European markets

For Atria Group’s regional operations in Finland, Sweden, and Denmark/Estonia, net sales amounted to EUR274.3 million, EUR82.1 million, and EUR26.0 million, respectively, for the first quarter of 2022. These figures represent year-on-year improvements of 5.4%, 7.0%, and 6.1%, respectively.

At EUR3.0 million and EUR800,000, EBIT for the Finland and Denmark/Estonia operations were down from 12 months previously, but remained in surplus. Meanwhile, EBIT from Swedish unit eased by EUR300,000 to a negative EUR900,000 for the latest reporting period. A number of factors affected the comparability of the reported figures between fiscal periods, the firm noted. 

Uncertain market outlook

No reverse in the current global trend of rising prices is expected soon, according to Gröhn.

He said that the group’s growth and profitability depend heavily on consumer behavior. As a result, the group’s prospects for the coming months will be impacted to a large extent by pricing decisions made by Atria’s customers. 

For the 2022 fiscal year, adjusted EBIT is forecast to be below the level of last year. In 2021, this was EUR49.2 million.

Uncertainty in global pork markets is likely to continue, said the CEO, until supply and demand come back into balance. However, Atria Group’s business prospects looking ahead are seen as relatively stable, despite these market uncertainties. Gröhn highlighted the company’s strong market position, long-term investment plan, good customer relations, and reliable industrial processes.

In the face of these business challenges, Atria is proceeding with previously announced investments at its Nurmo poultry plant in Finland, and the Sköllersta meat product factory in Sweden. 

More on Atria

With annual slaughterings of 43 million birds, Atria Group is among Europe’s leading poultry producers, according to the WATTPoultry.com Top Poultry Companies survey.

Atria is a leading food company in northern Europe, processing and selling other meats and meat products, as well as poultry meat. From its home base in Finland, the company also has operations in Sweden, Denmark and Estonia, and has strong export sales.

In recent months, Atria severed its ties with Russia. It doing so, it joined a growing number of companies taking similar actions following the Russian invasion of Ukraine.

At the end of last month, the firm sold its processing facility in Malmö in Sweden. Atria will continue operations at the site until 2023. At that stage, the Group will shift production to its Sköllersta plant, where has been investing in new equipment.

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