Rapid reaction to operational changes is essential for Atria
For the first half of 2022, Atria Group achieved a 7.8% year-over-year increase in net sales to €806.7 million ($827.5 million).
Once adjusted for certain items, the group transformed a loss of €26.0 million for the first half of 2021 into a profit of €18.2 million for the six months ended June 30, 2022. Profitability is presented 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 has Atria Group increased its meat sales through retail and fast food channels compared to the same period of 2021, but it has also increased its animal feed sales and exports of meat products. , especially to China. Additionally, the company made its first shipment of poultry products to South Korea in March this year.
In the report, the company commented on the rising costs of 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 earlier.
Commenting on the results, CEO Juha Gröhn said, “Besides the quality of day-to-day operations, what is extremely important right now is the ability to detect changes in the operating environment and quickly make the necessary adjustments to policies.”
Based in Finland, the company is also present in Sweden, Denmark and Estonia. It processes poultry, pork and other meat products and sells them through retail and food service channels, as well as for export.
Mixed fortunes for Atria’s operations
Atria’s largest operation continues to be in Finland. Net sales there increased by 10.4% year-on-year, to nearly 594 million euros.
Sales to retail and foodservice customers increased, as did selling prices. As hospitality fully reopened in March, this sales channel has also started to recover. However, exports to China were lower than in the same period of 2021, although larger volumes were shipped to other European countries.
The domestic market results in the first half of 2022 were limited by the weak profitability of the previous quarter. As a result, EBIT for the period January-June decreased by EUR 4.6 million year-on-year to EUR 16.5 million, and the EBIT percentage fell from 3.9% to 2, 8%.
In Sweden, Atria reports that sales developed favorably with retail and general foodservice customers. However, the sale of its fast food business in Russia earlier this year impacted overall sales through this channel.
For its retail customers, a reduction in sausage sales was offset by an increase in deli meats and poultry sales. 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 to the same period last year. The EBIT for the last semester was 10.7 million euros and the EBIT percentage was 6.0%.
For Atria’s smallest subsidiary covering Denmark and Estonia, record energy and raw material costs offset a 6.2% year-on-year increase in net sales to €54.4 million for the period January-June.
Compared to the first half of 2021, the EBIT of these operations decreased by €2.5 million to €1.5 million, and the EBIT percentage decreased from 7.7% to 2.8% .
Outlook: Atria adjusts its annual profit downwards
For its 2022 financial year, Atria Group forecasts an EBIT of less than 49.2 million euros last year.
This, he attributes mainly to the prospect of continued increases in production costs, as well as the continuing imbalance in global pork supply and demand.
However, Atria sees its overall business stability underpinned by a strong market position, brand investments, good customer relationships and reliable industry processes.
Progress in sustainability
One of Atria Group’s strategies is to become a leader in sustainable development.
On the packaging of its poultry products, the company now affixes a label indicating the carbon footprint of the product according to the farm of origin. Earlier this year, for this innovation, Atria received the European Cooperative Innovation Award from the largest organization of agricultural cooperatives in the region, Cogeca.
In Finland, Atria is involved with a partner to conduct the country’s first tests on a feed additive to reduce methane emissions from cows. The additive is DSM’s Bovaer, and has been shown to reduce emissions of this greenhouse gas by 30%.
In addition, Atria has started planning a wind power plant at its Nurmo plant in Finland and has installed a new biofuel boiler at one of its Swedish plants. This plant no longer uses fossil fuels and carbon dioxide emissions are significantly reduced.
Finally, Atria claims to have joined the United Nations Global Compact corporate sustainability initiative. As a result, according to the company, its development work in terms of environmental and social responsibility is strengthened.
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With annual slaughters of 43 million poultry, Atria Group is one of 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 meat and meat products, as well as poultry meat. From its headquarters in Finland, the company also has a presence in Sweden, Denmark and Estonia, and achieves strong export sales.
Two months ago, Russia’s largest meat and poultry producer, Cherkizovo Group, completed the acquisition of Russian fast-food company Sibylla Rus LLC from Atria Group. The assets and activities of Sibylla Rus were transferred to Cherkizovo’s subsidiary Mikhailovsky Agricultural Complex Limited Liability Company.
In its report for the first quarter of the current fiscal year, Atria said its profit was squeezed by rising costs.
Previously in the second trimester, Atria has sold its Malmö plant, Sweden, to an unspecified buyer. However, Atria has announced that it will continue to operate the facility throughout this year and into 2023.