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Recession Hits Atria's Performance

by 5m Editor
4 November 2009, at 12:27pm

FINLAND - Finnish meat processing company Atria Group's third quarter net sales showed an 8.4 per cent fall year-on-year.

The company said that the recession has lowered demand in all of Atria's business areas. The Group's EBIT in the third quarter was €16.9 million, representing 5.2 per cent of net sales.

As a result of successful management of product margins and costs, Atria Finland's EBIT improved slightly from the figure for the corresponding period in 2008.

To ensure future competitiveness, an efficiency improvement programme was launched during the review period. The effects of the programme will begin emerging gradually at the end of the year and will be fully realised by Q3/2010.

Atria Scandinavia's comparable net sales (excluding the net sales of the Läätta Mååltider unit) decreased by 4.9 per cent.

As a result of a more stable Swedish krona, better raw material prices, an improved sales structure, and efficiency improvements, Atria Scandinavia's profitability showed improvement since the beginning of the year.

Atria Russia's net sales increased by 26.4 per cent year on year. The earnings improvement continues to develop positively, the company says.

The operating loss of Campomos decreased markedly, and, because of the good profitability of Pit-Product, only a slight operational loss was posted. The integration and efficiency improvement of Campomos, which was acquired toward the end of last year, has progressed as planned.

Pig slaughtering volumes in the Finnish operation are lower than last year, which decreased Atria's export sales during the period under review.

The production of pork decreased by 5.1 per cent in Finland in comparison to the corresponding period in 2008 (source: Suomen Gallup Elintarviketieto Oy, October 2009).

Atria's pork processing volumes decreased by some four per cent, so the company said it was able to increase its procurement share of domestic pork.

The poultry slaughtering volume also has been adjusted in response to lower demand.

The downward trend in sales of the Food Service products, which first emerged during the autumn of 2008, has also had an effect on the development of net sales.

To ensure future competitiveness, Atria Finland launched a comprehensive efficiency improvement programme with which it seeks to achieve annual savings of approximately €5 million in its cost structure.

Overall market development in 2010 is expected to be weaker than that for 2009.

Atria Scandinavia's market shares have remained stable although the recession has weakened demand, especially for the Foodservice products.

The company said that a restructured business and centralised production and logistics in Scandinavia will make for a stronger and sleeker Atria Deli product range and generate considerable cost savings. Market conditions and raw material prices are expected to remain stable in the last part of the year.

Atria Russia's net sales for the period increased significantly year on year, which is mainly due to the consolidation of Campomos, acquired last autumn, into Atria. However, the weakening of the Russian rouble against the euro weighed down the growth in net sales.

Atria's market share in modern retail trade in the St Petersburg region remains strong at 27 per cent. The market share in Moscow also remains stable.

During the review period, Atria Russia continued to implement its efficiency improvement programme, aimed at improving the cost-efficiency of the Russian operations.

Atria Group's third quarter net sales in Estonia remain at the same level as that seen last year.

The company said the performance in Estonia was unsatisfactory but somewhat better than in the second quarter of the year.

The company believes that the slowing of economic growth and the resultant weaker consumer demand will have an effect on Atria's sales volumes.

Moreover, the discontinuation of the salad and sandwich business in Sweden and of business with unprofitable customers in Russia, as well as the weaker Swedish krona and Russian rouble, will result in the Group's full-year net sales remaining somewhat lower than in 2008.

As a consequence of improved operational effectiveness and more stable currency rates, Atria Russia and Atria Scandinavia are expected to see improved fourth quarter results year on year.

However, as a result of weak performance near the beginning of 2009, full-year earnings in Russia and Scandinavia will remain below last year's level. Atria Finland's full-year EBIT is expected to grow year on year, but the Group's full-year EBIT is predicted to fall slightly in comparison to 2008.