2011-02-17 07:00:00 CET
2011-02-17 07:00:10 CET
REGULATED INFORMATION
Atria Oyj - Financial Statement Release
ATRIA PLC'S FINANCIAL STATEMENT RELEASE 1 JANUARY - 31 DECEMBER 2010
Atria Group's net sales at the previous year's level, EBIT decreased due to
Russia's weak performance and disputes relating to collective bargaining in
Finland
Atria Plc Financial Statement Release 17 February 2011 at 08.00am
- Net sales for the year were down by 1.1 per cent compared with the previous
year
- In local currencies, year-on-year net sales fell by 4.9 per cent
- The Group's EBIT came to EUR 9.8 million, which includes a total of EUR 11.8
million of non-recurring costs (EUR 13.1 million)
- The profitability of Atria Finland and Atria Scandinavia was satisfactory
- Atria Russia reported a loss
Atria Group:
Q4
-------------------------------
EUR million 2010 2009 2010 2009
-------------------------------------------------------
Net sales 346.7 340.4 1,300.9 1,316.0
EBIT 4.4 3.9 9.8 27.5
EBIT% 1.3 1.1 0.8 2.1
Profit before taxes 1.5 3.2 0.3 16.5
Earnings per share, EUR 0.01 -0.04 -0.18 0.25
Overview 1 January - 31 December 2010
The Group's net sales for 2010 were down by 1.1 per cent from the previous
year. In local currencies, the Group's net sales fell by 4.9 per cent. In
Finland, where sales volumes were weighed down in the spring by disputes
relating to collective bargaining in the food industry, net sales fell by 1.8
per cent. In Scandinavia, net sales in krona decreased, mainly as a result of
the discontinuation of consumer-packed meat production and the sale of the
salad and sandwich business. In Russia, however, net sales grew by 3.9 per cent
in the local currency. Growth was boosted by increased sales volumes and the
rise in sales prices.
Atria Group's EBIT for 2010 was EUR 9.8 million (EUR 27.5 million). EBIT
includes a total of EUR 11.8 million (EUR 13.1 million) of non-recurring costs.
The most significant non-recurring item was Atria Russia's goodwill impairment
recorded in Q3, totalling EUR 10.8 million.
Atria Finland's EBIT for the accounting period was EUR 30.7 million (EUR 42.9
million). The result was affected by decreased sales volumes and somewhat lower
margins. Atria Scandinavia's EBIT improved and amounted to EUR 13.9 million
(EUR 10.0 million). The result was boosted by an improved sales structure,
efficiency improvement measures and lower raw material prices, partly due to
the strengthening of the Swedish krona.
Atria Russia's EBIT came to EUR -27.9 million (-9.8 million). EBIT includes a
total of EUR 9.5 million (EUR 3.0 million) of non-recurring costs. The
significantly weaker operating result is due to the decline in overall demand
for meat products and its impact on the competitive situation, as well as a
significant increase in meat raw material prices, particularly during the
autumn. Atria Russia's performance was additionally weighed down by the
considerable increase in investments in marketing and the fixed costs of the
new plant located in Gorelovo. Atria Baltic's EBIT improved due to efficiency
improvement measures and was EUR -3.7 million (EUR -12.6 million). EBIT for
2009 in Atria Baltic included a total of EUR 7.2 million of non-recurring
costs.
The Group's free cash flow (operating cash flow - cash flow from investments)
in 2010 was slightly positive. Net debt increased to EUR 411 million (EUR 391
million). This was mainly due to the strengthening of the Swedish krona.
In January 2011, Atria announced its decision to invest approximately 26
million euros in building and renovating the Kauhajoki bovine slaughterhouse
and cutting plant. The company estimates that the investment will be completed
by the end of 2012 and that it will bring annual savings totalling
approximately EUR 6 million. The decision did not affect the earnings for the
period.
Work towards revamping the strategy was initiated during the accounting period.
In April, the Board of Directors approved the new strategy, which extends to
2013. The most important financial goal of the new strategy is to significantly
improve the profitability of Atria's international operations. The strategy
also aims to secure and strengthen Atria Finland's good profitability. Product
leadership is the strategic cornerstone. In practice this means that Atria
will, in the coming years, increasingly invest in product development and
marketing as well as in the development of new types of operating models.
Becoming more innovative is one of the key objectives of the product leadership
strategy.
Atria Finland 1 January - 31 December 2010
Q4
---------------------------
EUR million 2010 2009 2010 2009
---------------------------------------
Net sales 213.9 207.5 767.8 781.9
EBIT 7.8 11.2 30.7 42.9
EBIT% 3.6 5.4 4.0 5.5
Atria Finland's net sales were EUR 767.8 million (EUR 781.9 million), down 1.8
per cent year-on-year. The food industry strike and related lock-out in
April-May directly and indirectly weakened Atria Finland's volume and earnings
development. The labour dispute that concerned the majority of Finland's food
industry stopped Atria Finland's production operations for 10 days in
Kauhajoki, Kuopio and Nurmo, with the exception of the poultry unit.
In the first half of 2010, net sales decreased by EUR 25.6 million, which was
6.7 per cent less compared to the corresponding period the year before. Sales
volumes approached their targets only in the last quarter, when net sales grew
by approximately three per cent year-on-year.
The company's EBIT decreased by EUR 12.2 million to EUR 30.7 million.
Profitability weakened, especially during the early summer season when Atria's
sales structure was unfavourable, for production reasons. The decreased average
price of the product range also reduced profitability.
The production break caused by the industrial dispute overloaded pig and bovine
slaughtering, which caused a significant increase in stock levels. The clearing
of frozen stocks was slowed down by a significant increase in the amount of
imported meat. Even though the amount of meat imported into Finland remained
relatively low towards the end of the year, the increase compared to the
previous year was significant. Pork imports increased by 21% to approximately
28.4 million kilos and beef imports by 14% to 17 million kilos.
The market share of imported meat in the consumption of beef increased by two
percentage points to 18 per cent (Source: TNS Gallup, 2011). In addition to
cheap imported meat, the increase in feed prices along with the sweeping rise
in the price of cereals and raw material for protein increased cost pressure on
Atria Finland and its meat producers. For example, the price of feed barley
almost doubled year-on-year.
During the summer season, Atria was particularly successful within the poultry
product group. Good preparation for the change in the fresh poultry marketing
directive and good new products boosted Atria's market share to record heights.
In other product groups, recovery from the strike to normal levels will take
longer. The market for Food Service products is recovering from the recession,
and sales took a turn for the better during the accounting period. Christmas
season sales, especially sales of ham, were brisk.
The export ban imposed by the Russian authorities interrupted Atria Finland's
exporting of pork to Russia during the period between February and December.
The share of Russian exports in Atria Finland's net sales is quite small, and
the export ban did not have a significant impact on net sales.
In October, Atria Finland published its plan to improve the efficiency of its
bovine slaughtering operations. According to the plan, bovine slaughtering and
cutting will be centralised at the Kauhajoki facility. According to the
published plan, modern slaughterhouse and cutting capacity will be constructed
in Kauhajoki, to be completed by the end of 2012. Employer-employee
negotiations relating to the plan were initiated with the personnel. The annual
cost savings from the efficiency improvement programme are estimated at EUR 6
million. The Board of Directors made a decision to implement the plan in
January 2011. The decision did not affect the earnings for the period.
Atria Scandinavia 1 January - 31 December 2010
Q4
-------------------------
EUR million 2010 2009 2010 2009
-------------------------------------
Net sales 98.0 98.8 391.6 405.2
EBIT 5.6 3.4 13.9 10.0
EBIT% 5.7 3.4 3.5 2.5
Atria Scandinavia's 2010 net sales declined by 3.4 per cent year-on-year to EUR
391.6 million. Net sales in krona fell by 12.3 per cent. Net sales decreased
mainly as a result of the discontinuation of the production of consumer-packed
meat in summer 2010 and the sale of the salad and sandwich business in summer
2009. The annual volumes of these two businesses were significant. Net sales of
the consumer packed meat operation amounted to about EUR 45 million, and net
sales of the sandwich business stood at approximately EUR 25 million.
Atria Scandinavia's profitability developed very positively. The company's EBIT
grew by 39 per cent to EUR 13.9 million. Despite the decrease in net sales,
EBIT during the beginning of the year remained at the previous year's level.
Year-on-year performance improved clearly in the latter half of the year. In
Q4/2010, the company reached 5.7 per cent EBIT with the same net sales as
during the corresponding period of the previous year.
The improvement in profitability was supported by the strengthening of the
Swedish krona by more than 10 per cent against the euro. Due to this
development, the prices of imported raw materials declined, which in turn
improved sales margins. However, the improved performance was decisively
boosted by the reorganisation of production that the company used to slim down
its cost structure and improve its cost-efficiency.
Atria Scandinavia's business environment in Sweden remained very challenging
despite the slight recuperation of the economy. The overall growth of the
consumer goods market remained at 2.5 per cent. In terms of value, the growth
of meat product sales was even lower than this: only 1.1 per cent (Source:
Handelns Utredningsinstitut). The low demand for meat products resulted in
tightened market share competition in the consumer goods retail trade, where
hard discount stores increased their share.
Despite the weak overall demand for fresh food products and increased domestic
and international competition, Atria Scandinavia's overall market position in
Sweden remained almost unchanged and in Denmark it strengthened.
Atria Foodservice's sales to the HoReCa business picked up during the latter
part of the year. At the same time, it was able to strengthen its position with
new delivery agreements, the effects of which will be evident in the 2011
sales.
The sales of Ridderheims and Falbygdens products in Sweden declined slightly
due to low overall demand. However, Atria Deli's position as the market leader
in fresh delicatessen products remained strong. In Denmark, the position of the
3-Stjernet brand as the second largest player in the cold cut market
strengthened due to increased sales.
International growth of the Sibylla fast food concept continued to be
particularly strong in Eastern European countries. In Poland, for example,
Atria Concept delivered 240 new Sibylla sales outlets to service stations,
which raised the number of Sibylla sales outlets in the country to a total of
560. In Russia, 200 new Sibylla sales outlets were opened during 2010. Russia
had a total of 390 Sibylla sales outlets at the end of the year.
Right at the beginning of the year, Atria Scandinavia announced the
discontinuation of the production of consumer-packed meat, and it shut down the
Årsta production plant in Stockholm during the summer. Atria Scandinavia's
result includes EUR 2.3 million of non-recurring costs relating to the shutdown
of the Årsta plant in Sweden. The Tyresö plant located in the Stockholm region
was also shut down and production was transferred to the Skene plant. The
production of delicatessen products was also transferred there from Gothenburg.
The Gothenburg plant was turned into a distribution centre for delicatessen
products. As part of the rationalisation of operations, co-operation in meat
cutting was launched between the Malmö production plant and KLS Ugglarps, a
subsidiary of Danish Crown.
Atria Russia 1 January - 31 December 2010
Q4
--------------------------
EUR million 2010 2009 2010 2009
--------------------------------------
Net sales 32.2 29.8 129.2 113.0
EBIT -7.6 -0.4 -27.9 -9.8
EBIT% -23.6 -1.3 -21.6 -8.7
Atria Russia's net sales increased by 14.3 per cent to EUR 129.2 million.
Growth was boosted by increased sales, strengthening of the Russian rouble and
price increases implemented at the end of the year. In the local currency, the
growth was 3.9 per cent.
Atria Russia's profitability was weak and the result was very much in the red.
The impacts of the economic recession on the food business weakened the
earnings potential decisively. Overall demand for meat products declined by
approximately 10 per cent (Source: Business Analytica, 2010) and demand shifted
towards lower-cost product groups and products. The contraction of markets also
materially increased price competition. The steep rise in the price of meat raw
material that started during the second half of the year eroded Atria Russia's
profitability and its competitiveness. The price rose from its starting level
at the beginning of the year by approximately 26 per cent. Almost 90 per cent
of the meat raw material used by Atria Russia is imported meat. Atria was able
to pass on only part of the increased raw material costs to sales prices during
the latter part of the year. The aim is to pass on the rise of raw material
prices to the prices of end products, which may have a negative impact on net
sales development in the first half of 2011.
The price level rose by the end of the year, but not sufficiently to compensate
for the rise in raw material prices and the general 9 per cent inflation
(Source: Bank of Finland, BOFIT, 2010).
Atria Russia's performance was also significantly impacted by increased
marketing costs. Atria invested heavily in marketing, especially in Moscow,
which increased marketing costs by approximately EUR 3 million. The start-up of
the new production plant in Gorelovo also increased fixed costs and
depreciation by approximately EUR 3 million.
As a result of goodwill impairment testing in Atria Russia, the company decided
to record an impairment totalling EUR 10.8 million allocated to goodwill. This
non-recurring costs did not have an effect on cash flow.
Atria Russia's EBIT also includes non-recurring items relating to the Campomos
acquisition and real estate in Moscow. The company reached an agreement with
the seller concerning the conditional purchase price for the Campomos
acquisition. The positive net effect of these items was EUR 1.3 million.
The market share of the CampoMos brand in Moscow's consumer goods retail trade
rose to approximately four per cent (Source: Atria's own estimate). For example
the sales of CampoMos cold cuts sold in re-closable packages increased
significantly. Thanks to advertising campaigns, brand recognition increased in
the Moscow region to as high as 95 per cent.
Atria's market position in the St Petersburg region remained strong. In terms
of value, its market share in St Petersburg's entire consumer goods retail
trade rose to over 20 per cent, making it the clear market leader in its
product groups (Source: Business Analytica). Sales and marketing of cooked
minced meat products started in St Petersburg at the end of the year.
Meatballs, minced meat patties and kebabs are new type of fresh food products
in the Russian market.
Part of Atria Russia's investments in primary production progressed to
production phase. According to the shareholder agreement signed in 2009, Atria
owns 26 per cent of the Russian company OOO Dan Invest, which invests
approximately EUR 40 million in two piggeries. The investment progressed
according to plan, and the estimated production volume of the piggeries is to
grow in stages to 188,000 slaughter pigs by 2013. The Campofarm piggery, fully
owned by Atria, was completed a little earlier, and the piggery operated at
full capacity in 2010. The annual volume of the piggery is 55,000 slaughter
pigs. With its investments in primary production, Atria Russia will reach 90
per cent self-sufficiency in pork.
Atria Russia's investment of approximately EUR 70 million in a logistics centre
and production plant was finalised when the new meat product plant was taken
into use in early summer in Gorelovo, St Petersburg. The logistics centre has
been operating since 2008. The production capacity of the Sinyavino plant
located in St Petersburg was also increased in the important product segment of
cured sausages.
To improve its cost-efficiency, Atria Russia decided at the end of the year to
centralise the production of meat products of the Moscow and Sinyavino plants
to the new Gorelovo plant in St Petersburg. The arrangement enables Atria to
increase the productivity of its entire production structure and make maximum
use of the efficient western process technology at the new Gorelovo factory.
The measures to improve efficiency will reduce the number of Atria's personnel
by about 300. The annual cost savings are estimated at EUR 6 million, which
will materialise fully by spring 2012.
After these measures, logistics operations, meat cutting operations and pizza
production will remain in Moscow. If the food market recovers and it leads to
increased demand, the production of meat products at the Moscow plant can be
re-commissioned to increase production capacity.
Atria Baltic 1 January - 31 December 2010
Q4
---------------------------
EUR million 2010 2009 2010 2009
---------------------------------------
Net sales 8.7 9.0 35.0 37.5
EBIT -0.7 -9.1 -3.7 -12.6
EBIT% -8.0 -101.1 -10.5 -33.6
Atria Baltic's net sales fell by 6.7 per cent to EUR 35.0 million, which was
mainly due to weakened overall demand and a decrease in the market share of
meat products. The continued weakening of consumers' purchasing power in
Estonia decreased overall demand for the product groups represented by Atria
Baltic. For example, sales of meal sausages in the consumer goods retail trade
fell by almost 10 per cent and cold cuts by approximately 5 per cent (Source:
AC Nielsen 2010).
Atria Baltic improved its profitability significantly during 2010. The
operating loss (excluding impairment losses for goodwill) decreased by 31.5 per
cent to EUR 3.7 million. In order to improve its competitiveness and
profitability, Atria Baltic carried out an efficiency improvement programme,
which slimmed down the company's cost structure and measurably improved
operational cost-efficiency. The most significant actions were the shutdown of
the Ahja plant and the centralisation of production to the Valga and
Vastse-Kuuste plants. Additionally, the company launched a programme with the
aim to considerably reduce costs and increase cost-efficiency in all areas of
its business process.
However, Atria Baltic's profitability is not yet on a satisfactory level. The
main reason for the weak profitability was the decreased price level. The price
level was weighed down by the decreased overall demand and the resulting stiff
price competition between companies in the meat sector and store chains. The
decline in the price level was also fuelled by increased imports of inexpensive
meat and meat products. For example, average prices of meal sausages in the
consumer goods retail trade fell by 6 per cent and cold cuts by 4 per cent.
Atria's preconditions for profit-making were also weakened by the rise in the
price of cereals and feed, which raised producer prices of beef and pork, as
well as costs in Atria's own farms.
Market shares of Atria Baltic's key product groups narrowed slightly in the
declining market. Atria retained its market position as the second largest
player in the important cold cuts market with a share of just under 20 per
cent. In the first part of the year, Atria lost some market share in meal
sausages, although sales growth in the latter part of the year compensated for
the loss. Atria is the market leader in grill sausages with a share of over 30
percent. Sales of consumer-packed meat continued to grow compared with the
previous year.
Financing, cash flow and investments
After two challenging years, the functioning of financial markets normalised to
some extent during the accounting period. Bank credits shifted toward long-term
maturities and the availability of credit improved. The decline in market
interest rate changed into an upward trend in spring 2010, but market rates
remained low by historical standards and loan margins decreased somewhat below
last year's level. Therefore, the Group's financial expenses fell slightly
year-on-year. Atria Plc refinanced a considerable portion of its committed
credit limits and made active use of commercial papers to acquire short-term
financing.
In order to concentrate external financing in the parent company, Atria
Scandinavia AB paid off a loan of approximately EUR 18 million in June and
Atria Plc raised a seven-year loan of EUR 15 million. In September, Atria Plc
refinanced four old credit limits totalling EUR 190 million with three new
credit limits totalling EUR 150 million. The maturities of the new committed
credit limits are five years (EUR 100 million) and seven years (EUR 50
million). In addition to these, an eight-year TyEl loan in the amount of EUR 14
million was drawn. In November, an additional five-year committed credit
facility of EUR 50 million was agreed upon. These arrangements lengthened the
average maturity of the Group's loan portfolio and decreased the refinancing
risk of the loan portfolio. In September, Atria also concluded a new interest
rate swap to the amount of SEK 370 million. At the end of the accounting period
on 31 December 2010, the portion of the Group's debt with fixed interest rates
of the entire loan portfolio was 39.7% (33.0%).
The Group's cash flow was strongly positive during the last quarter of the year
and, owing to this, the free cash flow for the entire year (operating cash flow
- cash flow from investments) amounted to EUR 4.4 million (EUR 27.6 million).
The Group's net debt increased by EUR 20.9 million. This was mainly due to the
strengthening of the Swedish krona. Approximately 40% of the Group's debt is
denominated in Swedish krona.
The Group's investments in 2010 totalled EUR 46.2 million (EUR 33.0 million)
and in Q4/2010 investments were EUR 12.0 million (EUR 11.4 million).
Taxes
Due to the weak results, the Group's income tax expense remained low, totalling
EUR 4.5 million (EUR 9.1 million). The ratio of the amount of income tax to
earnings before taxes is high. The reason for this is that no tax effect was
recognised for Atria Russia's goodwill impairment nor for the loss in the
Baltic countries.
Events occurring after the review period
In January 2011, Atria announced its decision to invest approximately 26
million euros in building and renovating the Kauhajoki bovine slaughterhouse
and cutting plant. New production facilities will be built in Kauhajoki, and
the existing production facilities will be renovated and automated using the
latest production technology. Atria will also buy the shares of Kauhajoen
Teurastamokiinteistöt Oy from Itikka Co-operative. The purchase price is
approximately EUR 7 million.
At the same time, the company launched an efficiency improvement programme to
increase the efficiency of bovine slaughtering and cutting operations and bring
down the excess capacity in slaughtering. Bovine slaughtering and cutting at
the Kuopio facility will be transferred to the Kauhajoki slaughterhouse by the
end of 2012. Carrying out the efficiency improvement programme means the
reduction of approximately 120 man-years in Kuopio by the end of 2012. The
annual cost savings from the efficiency improvement programme are estimated at
EUR 6 million. The decision did not affect the earnings for the period.
Atria also announced the co-operation agreement with Saarioinen Oy on the
slaughtering of cattle located in Eastern Finland at Saarioinen's Jyväskylä
slaughterhouse.
Mika Ala-Fossi was appointed Managing Director of Atria Finland Ltd and he
became a member of the management team on 1 February 2011. The members of the
Group's Management Team and their areas of responsibility on 1 February 2011
are as follows:
- Matti Tikkakoski, President and CEO, Atria Plc
- Mika Ala-Fossi, Director of the Atria Finland business area
- Juha Gröhn, Director of the Atria Scandinavia business area, meat raw
material procurement and Atria Concept
- Juha Ruohola, Director of the Atria Russia business area, primary production
- Tomas Back, Director of the Atria Baltic business area, finance and
administration
- Merja Leino, quality, product safety and sustainability
- Jarmo Lindholm, product leadership
- Pasi Luostarinen, strategy process
- Jukka Mäntykivi, IT
- Kirsi Matero, Group Vice President of Human Resources
In February 2011, Atria Scandinavia announced a plan of an extensive efficiency
improvement programme aimed at streamlining and automating the production
process of black pudding. Atria would invest approximately EUR 2.2 million in
new production equipment for the Tranås plant. At the same time, the production
of black pudding would be transferred from the Saltsjö-Boo plant in Stockholm
to Tranås. Significant synergy benefits would be achieved from moving the
production to Tranås. The efficiency improvement programme is expected to
generate annual cost savings of approximately one million euros.
Personnel
The Group had an average of 5,812 employees (6,214) during the period under
review.
Personnel by business area 2010 2009
----------------------------------------
Atria Finland 2,089 2,222
Atria Scandinavia 1,205 1,394
Atria Russia 2,048 2,003
Atria Baltic 470 595
Total 5,812 6,214
Administration
In its organisation meeting following the General Meeting, Atria Plc's
Supervisory Board elected Maisa Romanainen, MSc (Econ.), in place of retiring
member Runar Lillandt. The Supervisory Board re-elected retiring member Timo
Komulainen. Ari Pirkola was reappointed Chairman of the Supervisory Board and
Seppo Paavola as Vice Chairman of the Supervisory Board. Martti Selin, Chairman
of the Board of Directors, was reappointed.
Atria Plc's Board of Directors now has the following membership: Chairman of
the Board Martti Selin; Vice Chairman Timo Komulainen; members Tuomo Heikkilä,
Esa Kaarto, Maisa Romanainen, Harri Sivula and Matti Tikkakoski.
Short-term business risks
The profitability of Atria's business is greatly affected by the global-level
risk associated with changes in the market price of meat raw material. Price
risk in cereals is also connected to Atria's own primary production. Atria aims
to protect itself against unfavourable fluctuations in production costs by
adjusting production where necessary and tries to anticipate changes through
the pricing of end products. The Group applies a uniform currency risk policy
to hedge against currency risks relating to raw material procurement. The Group
makes active use of currency derivatives, particularly in order to hedge
foreign-currency-denominated material purchases in Sweden against currency
risks.
In Atria Russia's operations, changing restrictions and import duties related
to the import of meat, as well as other authority regulations, constitute a
special characteristic of the market. Atria aims to secure availability and
quality of locally produced pork by investing in local pig production in
Russia. Atria and its Danish partners have launched an extensive project in
Russia concerning two pig farms.
Being a food manufacturing company, it is of primary importance for Atria to
see to the high quality and safety of raw materials and products throughout the
production chain. Atria has modern methods in place for ensuring the safety of
production processes and for eliminating various microbiological, chemical and
physical hazards. An animal disease discovered at a critical point in Atria's
production chain could interrupt production in the unit concerned and disturb
the entire chain's operations. Through internal monitoring involving multiple
stages, Atria aims to detect potential hazards as early as possible.
Outlook for the future
Market conditions are expected to remain challenging in 2011. Consumption of
food is expected to grow slightly in Finland, Sweden, Denmark and Estonia. In
Russia, overall demand for meat products has decreased in 2010 and, according
to Atria's estimate, increase in demand will be slow during 2011. Atria Group's
net sales are expected to grow somewhat in 2011. The growth of net sales is
weighed down particularly by the difficult market situation in Russia and the
discontinuation of consumer-packed meat production in Sweden.
The Group's EBIT excluding non-recurring costs stood at EUR 21.6 million in
2010. In 2011, the Group's EBIT is expected to be higher than this. The key
sources for uncertainty in terms of earnings development are the rising prices
of cereal, feed and other raw materials as well as Russia's difficult market
situation. Rising cereal and feed prices cause pressure to increase meat
prices.
Valid authorisations and authorisation to grant special rights and purchase of
treasury shares
The General Meeting authorised the Board of Directors to decide, on one or
several occasions, on an issue of a maximum of 12,800,000 new A shares or on an
issue of any A shares held by the company through a share issue and/or by
granting option rights or other special rights entitling holders to shares as
referred to in Chapter 10, section 1 of the Limited Liability Companies Act -
Finland. The authorisation will be exercised for the financing or execution of
any acquisitions or other arrangements or investments related to the company's
business, for the implementation of the company's incentive programme or for
other purposes subject to the Board's decision.
The Board is also authorised to decide on all terms and conditions of the share
issue and of the granting of special rights as referred to in Chapter 10,
section 1 of the Limited Liability Companies Act. The authorisation thus also
includes the right to issue shares in a proportion other than that of the
shareholders' current shareholdings in the Company under the conditions
provided by law, the right to issue shares against payment or without charge
and the right to decide on a share issue without payment to the Company itself,
subject to the provisions of the Limited Liability Companies Act on the maximum
number of treasury shares.
The authorisation shall supersede the share issue authorisation granted by the
Annual General Meeting on 29 April 2009 to the Board of Directors, and be valid
until the closing of the next Annual General Meeting or until 30 June 2011,
whichever is first.
The General Meeting authorised the Board of Directors to decide, on one or
several occasions, on the acquisition of a maximum of 2,800,000 of the
Company's own Series A shares with funds belonging to the Company's
unrestricted equity, subject to the provisions of the Limited Liability
Companies Act regarding the maximum number of treasury shares to be held by a
company. The Company's own Series A shares may be acquired for use as
consideration in any acquisitions or other arrangements relating to the
Company's business, to finance investments, as part of the Company's incentive
scheme, to develop the Company's capital structure, to be otherwise further
transferred, to be retained by the Company or to be cancelled.
The shares shall be acquired in a proportion other than that of the
shareholders' current shareholdings in the Company in public trading arranged
by NASDAQ OMX Helsinki Ltd at the trading market price of the moment of
acquisition. The shares shall be acquired and paid for in accordance with the
rules of NASDAQ OMX Helsinki Ltd and Euroclear Finland Oy. The Board of
Directors was authorised to decide on the acquisition of the company's own
shares in all other respects.
The authorisation shall supersede the authorisation granted by the Annual
General Meeting on 29 April 2009 to the Board of Directors to decide on the
acquisition of the company's own shares and be valid until the closing of the
next Annual General Meeting or until 30 June 2011, whichever is first.
Amendment of the Articles of Association
The AGM held on 29 April 2010 approved the Board of Directors' proposals for
amendments to the Articles of Association. Articles 13 and 15 of the Articles
of Association were amended to read as follows:
Article 13: Venue of General Meetings, notice of meeting and registration
The Company's General Meetings shall be held in Kuopio or Helsinki, Finland.
The notice to convene the General Meeting shall be communicated by publishing
the notice on the Company's website and by a stock exchange release at the
earliest three (3) months and at the latest three (3) weeks before the General
Meeting. However, the notice will be published no later than nine (9) days
prior to the record date for the General Meeting. In addition, the Board of
Directors may decide to publish the notice, or delivery notification of the
notice, in one or more national newspapers determined by the Board, or in any
other manner it may decide. To have the right to participate in a General
Meeting, a shareholder must register with the Company no later than on the day
mentioned in the notice of meeting, which can be no earlier than ten (10) days
before the meeting.
Article 15: Book-entry system
The Company's shares belong to the book-entry system.
Major shareholders on 31 December 2010
Major shareholders on 31 December 2010 KII A Total %
--------------------------------------------------------------------------------
Itikka Co-operative 4,914,281 2,642,801 7,557,082 26.73
--------------------------------------------------------------------------------
Lihakunta 4,020,200 3,438,797 7,458,997 26.39
--------------------------------------------------------------------------------
Odin Norden 1,047,216 1,047,216 3.70
--------------------------------------------------------------------------------
Varma Mutual Pension Insurance Company 767,411 767,411 2.71
--------------------------------------------------------------------------------
Pohjanmaan Liha Co-operative 269,500 480,038 749,538 2.65
--------------------------------------------------------------------------------
Mandatum Life Insurance Company 502,000 502,000 1.78
Limited
--------------------------------------------------------------------------------
Public pension insurance company 366,000 366,000 1.29
Veritas
--------------------------------------------------------------------------------
Odin Finland 316,392 316,392 1.12
--------------------------------------------------------------------------------
Nordea Bank Finland Plc 312,329 312,329 1.10
--------------------------------------------------------------------------------
Reima Kuisla 297,470 297,470 1.05
--------------------------------------------------------------------------------
Major shareholders in terms of voting rights, 31 December 2010
KII A Total %
-----------------------------------------
Itikka Co-operative 49,142,810 2,642,801 51,785,611 46.61
--------------------------------------------------------------------------------
Lihakunta 40,202,000 3,438,797 43,640,797 39.28
--------------------------------------------------------------------------------
Pohjanmaan Liha Co-operative 2,695,000 480,038 3,175,038 2.86
--------------------------------------------------------------------------------
Odin Norden 1,047,216 1,047,216 0.94
--------------------------------------------------------------------------------
Varma Mutual Pension Insurance Company 767,411 767,411 0.69
--------------------------------------------------------------------------------
Mandatum Life Insurance Company 502,000 502,000 0.45
Limited
--------------------------------------- -----------------------
Public pension insurance company 366,000 366,000 0.33
Veritas
--------------------------------------------------------------------------------
Odin Finland 316,392 316,392 0.28
-------------------------------------------------------------- ------
Nordea Bank Finland Plc 312,329 312,329 0.28
--------------------------------------------------------------------------------
Reima Kuisla 297,470 297,470 0.27
--------------------------------------------------------------------------------
Corporate governance principles
Atria's Corporate Governance Principles and deviations from the Finnish
Corporate Governance Code are published on the Company's website at
http://www.atriagroup.com.
Dividend proposal
The Board of Directors proposes that a dividend of EUR 0.25 be paid for each
share for the 2010 financial year.
Annual General Meeting on 29 April 2011
Atria Plc invites its shareholders to the Annual General Meeting, which will be
held on Thursday, 29 April 2011 in Helsinki at the Finlandia Hall.
The agenda includes matters that are to be handled by the Annual General
Meeting in accordance with Article 16 of the Articles of Association.
Restrictions on trading by insiders
The Company's insiders may not trade company shares during a period which is 14
days before the publication of the Company's interim reports and financial
statement release (“closed window”).
Financial calendar 2011
Atria Plc will publish three interim reports in 2011:
- interim report January to March on 29 April 2011 at approximately 08:00
- interim report January to June on 28 July 2011 at approximately 08:00
- interim report January to September on 27 October 2011 at approximately 08:00.
Company releases are published in Finnish and English. The interim reports may
also be viewed on the company's website at www.atriagroup.com immediately after
their release.
Silent period
Atria Group's IR applies a silent period, which means that Atria does not give
any statements about its financial situation, three weeks prior to the
publication of interim reports and financial statements.
Accounting principles
This financial statement release was prepared in accordance with the IAS 34
Interim Financial Reporting standard. In preparing this financial statement,
Atria has applied the same principles as in preparing the 2009 annual financial
statements. However, as of 1 January 2010, the Group has adopted the new and
revised standards published by the IASB that are included in the accounting
principles for the 2009 annual financial statements and have not had any
material impact on the figures presented for the period.
The principles and formula for the calculation of key indicators have not
changed, and they are presented in the 2009 annual financial statements.
The figures of the financial statement release are unaudited.
FINANCIAL INDICATORS
mill. EUR
31.12.10 31.12.09 31.12.08 31.12.07 31.12.06
--------------------------------------------------------------------------------
Net sales 1 300.9 1 316.0 1 356.9 1 272.2 1 103.3
EBIT 9.8 27.5 38.4 94.5 41.5
% of net sales 0.8 2.1 2.8 7.4 3.8
Financial income and expenses -11.1 -12.4 -22.3 -14.3 -7.3
% of net sales 0.9 0.9 1.6 1.1 0.6
Profit before tax 0.3 16.5 16.7 80.6 34.6
% of net sales 0.0 1.3 1.2 6.3 3.1
Return of equity (ROE), % -1.0 1.7 2.5 17.2 8.8
Return of investment (ROI), % 1.9 4.7 5.3 15.2 8.7
Equity ratio, % 40.2 39.7 38.4 47.6 42.8
Interest-bearing liabilities 429.9 425.8 448.4 321.9 244.2
Gearing, % 96.4 97.5 103.1 67.6 78.1
Net gearing, % 92.2 89.4 94.6 60.1 66.8
Gross investments in fixed 46.2 33.0 152.6 284.1 89.0
assets
% of net sales 3.5 2.5 11.2 22.3 8.1
Average FTE 5 812 6 214 6 135 5 947 5 740
R&D costs 10.3 9.4 9.9 8.4 7.4
% of net sales * 0.8 0.7 0.7 0.7 0.7
Volume of orders **
* Booked in total as expenditure for the
financial year.
** Not a significant indicator, as
orders are generally
delivered on the day following the order
being placed.
SHARE-ISSUE ADJUSTED PER-SHARE
INDICATORS
31.12.10 31.12.09 31.12.08 31.12.07 31.12.06
--------------------------------------------------------------------------------
Earnings per share (EPS) EUR -0.18 0.25 0.42 2.56 1.15
Shareholders equity per share 15.68 15.39 15.34 16.77 13.28
EUR
Dividend/share EUR* 0.25 0.25 0.20 0.70 0.595
Dividend/profit, %* -138.9 99.5 48.1 27.4 51.7
Effective dividend yield * 2.8 2.3 1.7 4.0 3.3
Price/earnings (P/E) -50.0 44.0 27.9 6.8 15.9
Market capitalisation 254.4 312.6 327.9 490.4 422.4
Share turnover/1 000 shares, A 9 702 7 389 4 077 7 933 3 899
Share turnover %, A 50.9 38.8 21.4 41.6 28.1
Number of shares, million, 28.3 28.3 28.3 28.3 23.1
total
Number of shares, A 19.1 19.1 19.1 19.1 13.9
Number of shares, KII 9.2 9.2 9.2 9.2 9.2
Share issue-adjusted average
number of shares 28.3 28.3 28.3 26.1 21.8
Share issue-adjusted number
of shares on 31 December 28.3 28.3 28.3 28.3 23.1
* Proposal of the Board of
Directors
SHARE PRISE DEVELOPMENT
Lowest of period, A 8.74 6.50 10.51 16.90 15.00
Highest of period, A 13.48 13.00 18.29 28.77 21.50
At end of period A 9.00 11.06 11.60 17.35 18.29
Average price for period A 10,93 10,76 14,04 22,18 18,31
ATRIA GROUP
CONSOLIDATED INCOME STATEMENT
EUR million 10-12/10 10-12/09 1-12/10 1-12/09
--------------------------------------------------------------------------------
Net sales 346.7 340.4 1 300.9 1 316.0
Cost of goods sold -308.3 -297.2 -1 149.1 -1 151.0
--------------------------------------------------------------------------------
Gross profit 38.4 43.2 151.8 165.0
Sales and marketing costs -22.7 -21.3 -84.5 -77.7
Administration costs -11.6 -12.1 -47.3 -47.7
Other income 1.4 1.6 7.7 4.6
Other expenses -1.1 -7.5 -17.9 -16.7
--------------------------------------------------------------------------------
EBIT 4.4 3.9 9.8 27.5
Finance income and costs -3.2 -1.2 -11.2 -12.4
Share of the result of associates 0.3 0.5 1.7 1.4
--------------------------------------------------------------------------------
Profit before tax 1.5 3.2 0.3 16.5
Income tax expense -1.4 -4.6 -4.5 -9.1
--------------------------------------------------------------------------------
Profit for the period 0.1 -1.4 -4.2 7.4
Profit attributable to:
Owners of the parent 0.3 -1.2 -5.0 7.0
Non-controlling interests -0.2 -0.2 0.8 0.4
Total 0.1 -1.4 -4.2 7.4
Basic earnings/share, EUR 0.01 -0.04 -0.18 0.25
Diluted
earnings/share, EUR 0.01 -0.04 -0.18 0.25
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million 10-12/10 10-12/09 1-12/10 1-12/09
--------------------------------------------------------------------------------
Profit for the period 0.1 -1.4 -4.2 7.4
Other comprehensive income after tax:
Available-for-sale financial assets 0.1
Cash flow hedging 2.7 -1.4 3.2 -1.4
Net investment hedging 0.3 -0.3 0.3 -0.3
Translation differences 4.3 3.2 16.9 2.5
--------------------------------------------------------------------------------
Total comprehensive income for the 7.4 0.2 16.2 8.2
period
Total comprehensive income attributable
to:
Owners of the parent 7.7 0.4 15.3 7.8
Non-controlling interests -0.3 -0.2 0.9 0.4
Total 7.4 0.2 16.2 8.2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
EUR million 31.12.10 31.12.09
----------------------------------------------------------------
Non-current assets
Property, plant and equipment 470.1 467.3
Biological assets 1.9 1.8
Goodwill 162.9 157.8
Other intangible assets 75.5 70.0
Investments in joint ventures and associates 11.9 7.4
Other financial assets 1.6 2.3
Loans and receivables 20.1 20.4
Deferred tax assets 11.5 7.0
----------------------------------------------------------------
Total 755.5 734.0
Current assets
Inventories 105.3 110.1
Biological assets 5.8 5.4
Trade and other receivables 217.3 206.5
Cash and cash equivalents 18.5 35.3
----------------------------------------------------------------
Total 346.9 357.3
Non-current assets
held for sale 9.2 10.0
----------------------------------------------------------------
Total assets 1 111.6 1 101.3
Equity and liabilities
mill. EUR 31.12.10 31.12.09
----------------------------------------------------------------
Equity belonging to the shareholders
of the parent company 443.2 435.1
Non-controlling interest 2.9 1.8
----------------------------------------------------------------
Total equity 446.1 436.9
Non-current liabilities
Interest-bearing financial liabilities 302.8 318.9
Deferred tax liabilities 46.8 41.2
Other non-interest-bearing liabilities 0.8 1.4
Provisions 0.8
----------------------------------------------------------------
Total 351.2 361.5
Current liabilities
Interest-bearing financial liabilities 127.2 106.9
Trade and other payables 187.1 196.0
----------------------------------------------------------------
Total 314.3 302.9
Total liabilities 665.5 664.4
----------------------------------------------------------------
Total equity and liabilities 1 111.6 1 101.3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
--------------------------------------------------------------------------------
-
EUR Equity belonging to the shareholders Non--
Total
milloin
of parent company cont
equity
roll
Share Share Own Other Inv. Trans Retain Total ing
ca pre sha reser non-- lation ed inte
pit mium res ves rest. diff. earn rests
al equity ings
fund
--------------------------------------------------------------------------------
-
Equity
01.01.09 48.1 138.5 -0.5 0.1 110.3 -33.4 170.5 433.5 1.4
434.9
Periods
comprehensive
income
Profit 7.1 7.1 0.4
7.4
for the
period
Other
comprehensive
income:
Availabl
e-for-sa
le
financia
l assets
Cash
flow
hedging -1.4 -1.4
-1.4
Net
investme
nt
hedging -0.3 -0.3
-0.3
Translat 2.4 2.4 0.1
2.5
ion
diff.
Transact
ions
with
owners
Acquired
treasure
shares -0.8 -0.8
-0.8
Share-based 0.3 0.3
0.3
payment
Distribu
tion
of -5.7 -5.7
-5.7
dividend
s
---------
------------------------------------------------------------------------
Equity
31.12.09 48.1 138.5 -1.3 -1.7 110.6 -31.0 171.9 435.1 1.8
436.9
--------------------------------------------------------------------------------
-
Periods
comprehensive
income
Profit -5.0 -5.0 0.8
-4.2
for the
period
Other
comprehensive
income:
Availabl
e-for-sa
le
financia
l assets
Cash
flow
hedging 3.2 3.2
3.2
Net
investme
nt
hedging 0.3 0.3
0.3
Translat 16.8 16.8 0.1
16.9
ion
diff.
Transact
ions
with
owners
Share-based
payment
Distribu
tion
of -7.0 -7.0
-7.0
dividend
s
--------------------------------------------------------------------------------
-
Equity
31.12.10 48.1 138.5 -1.3 1.8 110.6 -14.3 159.8 443.2 2.9
446.1
--------------------------------------------------------------------------------
-
CONSOLIDATED CASH FLOW STATEMENT
mill. EUR 1-12/10 1-12/09
---------------------------------------------------------
Cash flow from operating activities
Operating activities 85.5 92.7
Financial items and taxes -40.9 -31.0
---------------------------------------------------------
Net cash flow from operating activities 44.6 61.7
Cash flow from investing activities
Tangible and intangible assets -39.6 -32.3
Investments -0.6 -1.8
---------------------------------------------------------
Net cash used in investing activities -40.2 -34.1
Casa flow from financing activities
Loans drawn down 40.8 41.8
Loans repaid -56.2 -64.8
Dividends paid -7.0 -5.7
Acquired treasury shares -0.7
---------------------------------------------------------
Net cash used in financing activities -22.4 -29.4
---------------------------------------------------------
Change in liquid funds -18.0 -1.8
OPERATING SEGMENTS
mill. EUR 10-12/10 10-12/09 1-12/10 1-12/09
--------------------------------------------------------------------------------
Net sales
Finland 213.9 207.5 767.8 781.9
Scandinavia 98.0 98.8 391.6 405.2
Russia 32.2 29.8 129.2 113.0
Baltic 8.7 9.0 35.0 37.5
Eliminations -6.1 -4.7 -22.7 -21.6
--------------------------------------------------------------------------------
Total 346.7 340.4 1 300.9 1 316.0
EBIT
Finland 7.8 11.2 30.7 42.9
Scandinavia 5.6 3.4 13.9 10.0
Russia -7.6 -0.4 -27.9 -9.8
Baltic -0.7 -9.1 -3.7 -12.6
Unallocated -0.7 -1.2 -3.2 -3.0
--------------------------------------------------------------------------------
Total 4.4 3.9 9.8 27.5
ROCE *
Finland 7.9 % 10.2 %
Scandinavia 5.3 % 4.0 %
Russia -16.9 % -6.9 %
Baltic -9.6 % -26.5 %
Group 1.1 % 3.1 %
* ROCE =
EBIT, 12mr / Capital employed, 12 mr avg
*100
Investments
Finland 4.2 4.1 13.3 14.2
Scandinavia 3.3 2.4 9.5 5.3
Russia 4.1 4.5 22.6 11.9
Baltic 0.4 0.4 0.8 1.6
--------------------------------------------------------------------------------
Total 12.0 11.4 46.2 33.0
Depreciations
Finland 6.8 7.2 28.7 29.7
Scandinavia 3.1 2.7 11.9 12.0
Russia 2.7 1.9 18.9 6.4
Baltic 0.7 8.0 3.0 10.5
--------------------------------------------------------------------------------
Total 13.3 19.8 62.5 58.6
CONTINGENT LIABILITIES
mill. EUR 31.12.10 31.12.09
------------------------------------------------------------
Debts with mortgages or other collateral
given as security
Loans from financial institutions 5.4 6.0
Pension fund loans 4.9 4.2
Total 10.3 10.2
Mortgages and other securities given as
comprehensive security
Real estate mortgages 5.0 6.7
Corporate mortgages 4.0 3.1
Total 9.0 9.8
Guarantee engagements not included
in the balance sheet
Guarantees 0.8 0.8
IMPAIRMENT TESTING
Impairment testing performed as a result of steep rise of meat raw material
prices, a decline in market demand and weakened margins lead to the company
recording goodwill impairment losses of EUR 10.8 million in Atria Russia. The
recording was performed for Q3/2010.
Key assumptions: Atria Russia 2010 2009
-----------------------------------------------
Long-term growth rate of net sales 5.0% 5.0%
Discount rate defined before taxes 9.9% 10.0%
The recoverable amount of a cash-generating unit is defined on the basis of
value-in-use calculations. In these calculations, cash flow forecasts are used
for a period of five years that are based on budgets and other plans approved
by the management, defined before taxes. Cash flows are realised after more
than five years are extrapolated using growth rates, which shall not exceed the
average long-term growth rate in the industry of the cash-generating unit.
The key assumptions concerning cash flow forecasts used by Atria in impairment
testing are the growth of net sales and long-term profit margin. The growth and
profitability assumptions used are based on the company's net sales growth
percentages and profitability levels in the next few years.
The impairment testing for Atria Finland, Atria Scandinavia and Atria Baltic
carried out at the end of the accounting period did not indicate a need for
recording goodwill impairment.
USED EXCHANGE RATES
Average rates: Closing rates:
1-12/10 1-12/09 31.12.10 31.12.09
------------------------------------------------
SEK 9.4926 10.5875 8.9655 10.2520
DKK 7.4477 7.4461 7.4535 7.4418
RUR 40.2217 44.3005 40.8200 43.1540
EEK 15.6466 15.6466 15.6466 15.6466
LTL 3.4528 3.4528 3.4528 3.4528
PLN 4.0049 4.3469 3.9750 4.1045
NOK 8.0034 8.6892 7.8000 8.3000
ATRIA PLC
Board of Directors
For further information, please contact Matti Tikkakoski, President and CEO,
tel. +358 50 2582.
DISTRIBUTION
Nasdaq OMX Helsinki Ltd
Major media
www.atriagroup.com
The financial statements will be mailed to you upon request and are also
available on our website at www.atriagroup.com.
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