Swift reaction to operational changes is key for Atria

Atria Group achieved a 7.8% year-on-year increase in net sales to EUR806.7 million for the first half of fiscal year 2022.

(Courtesy Atria Group)
(Courtesy Atria Group)

For the first half of 2022, Atria Group achieved a 7.8% year-on-year increase in net sales to EUR806.7 million (US$827.5 million).

When adjusted for selected items, the group turned a loss of EUR26.0 million for the first half of 2021 into a profit of EUR18.2 million for the six months ended June 30, 2022. Profitability is reported as Earnings Before Interest and Taxes (EBIT). In percentage terms, EBIT improved by 5.8 percentage points to 2.3% for the period just ended.

Not only did Atria Group expand meat sales through both retail and fast-food channels compared to the same period of 2021, it also expanded sales of feed, and meat product exports, particularly to China. Furthermore, the firm made its first shipment of poultry products to South Korea in March of this year. 

In the report, the company commented on its increased costs for many raw materials, as well as services. For example, prices paid to its meat producers in Finland were 30% higher at the end of June this year than 12 months previously. 

Commenting on these results, CEO Juha Gröhn said “In addition to the quality of everyday operations, what is critically important at this moment is the ability to detect changes in the operating environment and promptly make the necessary adjustments to policies.”

Based in Finland, the company also has operations in Sweden, Denmark and Estonia. It processes poultry, pork and other meat products, and sells these through retail and food-service channels, as well as exports. 

Mixed fortunes for Atria’s operations

Atria’s largest operation continues to be at home in Finland. Net sales there were 10.4% higher year-on-year at almost EUR594 million.

Sales to both retail and food-service customers were increased, as were sales prices. As hospitality completely reopened in March, this sales channel also began to recover. However, exports to China were lower than in the same period of 2021, although larger volumes were shipped to other European countries.

Results for the home market in the first half of 2022 were constrained by weak profitability from the previous quarter. As a consequence, EBIT for the January-June period was down EUR4.6 million year-on-year at EUR16.5 million, and EBIT percentage fell from 3.9% to 2.8%.

In Sweden, Atria reports that sales developed favorably to retail and food-service customers generally. However, the sale of its Russian fast-food business earlier this year impacted overall sales through this channel. 

To its retail customers, a reduction in sales of sausages was balanced with increases of cold cuts and poultry products. A recent report puts Atria’s market share in Sweden at 20% for sausages, 13% for cold cuts, and 19% for fresh chicken products.

After adjustments for various external factors, the Swedish subsidiary improved its EBIT results for the first six months of 2022 compared with the same period of last year. Latest half-year EBIT was EUR10.7 million, and EBIT percentage was 6.0%.

For Atria’s smallest subsidiary covering Denmark and Estonia, record-high energy and raw material costs outweighed a 6.2% year-on-year increase in net sales to EUR54.4 million for the January-June period. 

Compared to the first half of 2021, EBIT for these operations were EUR2.5 million lower at EUR1.5 million, and EBIT percentage fell from 7.7% to 2.8%. 

Outlook: Atria adjusts full-year profit downwards

For its 2022 fiscal year, Atria Group is forecasting an EBIT below last year’s EUR49.2 million.

This it attributes mainly to the prospect of continuing rises in production costs, as well as the ongoing imbalance in global pork supply and demand. 

However, Atria sees its general business stability underpinned by a strong market position, brand investments, good relations with customers, and reliable industrial processes. 

Progress on sustainability

Among the strategies for Atria Group is to become a leader in sustainability.

On the packaging of its poultry products, the company now includes a label indicating the carbon footprint of the product based on the farm of origin. Earlier this year, for this innovation, Atria received the European Award for Cooperative Innovation from the region’s largest organization for farming cooperatives, Cogeca.

In Finland, Atria is involved with a partner to conduct the country’s first tests of a feed additive to reduce methane emissions from cows. The additive is Bovaer from DSM, and it has been shown to cut emissions of this greenhouse gas by 30%.

Furthermore, Atria began planning a wind power plant at its Nurmo facility in Finland, and installed a new biofuel boiler at one of its Swedish plants. This factory now uses no fossil fuels, and carbon dioxide emissions are greatly reduced. 

Last but not least, Atria says it has joined the United Nations’ Global Compact corporate sustainability initiative. As a result, the firm says, its development work in environmental and social responsibility is strengthened.

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.

Two months ago, Russia’s largest meat and poultry producer — Cherkizovo Group — completed its acquisition of Russian fast-food business Sibylla Rus LLC from the Atria Group. Sibylla Rus assets and business were passed to Cherkizovo subsidiary, Limited Liability Company Agricultural Complex Mikhailovsky.

In its report for the first quarter of the current fiscal year, Atria stated its profit was being squeezed by rising costs.

Previously in the second quarter, Atria sold its plant in Malmö, Sweden, to an unspecified buyer. However, Atria announced that it will continue to operate the facility throughout this year and into 2023.
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