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Rising feed costs hit Atria’s 2018 bottom line

Finland-based meat firm, Atria PLC, has blamed higher raw material costs — particularly for livestock feeds — for a 37 percent fall in profit in 2018 compared to the previous year, and disappointing results are behind an upcoming review of the company’s Russian business.

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Finland-based meat firm Atria PLC has blamed higher raw material costs — particularly for livestock feeds — for a 37 percent fall in profit in 2018 compared with the previous year, and disappointing results are behind an upcoming review of the company’s Russian business.

With growth of 2 percent compared with the previous year, Atria Group achieved net sales of almost EUR1.439 billion (US$1.428 billion) in the period January 1 to December 31, 2018.

Despite this improvement, profitability (in terms of earning before interest and taxes, EBIT) was down from EUR40.9 million in 2017 to EUR28.2 million last year. This represents a drop in EBIT as a percentage of net sales from 2.8 percent to 2.0 percent.

Performance by the firm’s regional businesses was mixed, with its largest division, Atria Finland, driving the group’s growth with higher sales and EBIT in 2018 than in the previous year. For Denmark and Estonia, profit was up slightly.

However, negative EBIT was recorded for Atria’s businesses in Sweden and Russia, where local currency weaknesses brought down the group’s sales. In Sweden, this situation was exacerbated by higher raw material costs and the unfavorable sales structure of the firm’s poultry operations.

In both countries, costs were pushed up by rising animal feed prices caused by the prolonged dry summer in 2018, according to Atria Group CEO Juha Gröhn. In Russia, these raw material costs were up to 30 percent higher than in the previous year.

Among the business developments over the year highlighted by Gröhn were the successful completion of the investment plan in the poultry processing plant in Sweden, and a decision to invest EUR3.4 million in increasing the cutting capacity at the Finnish company’s plants in Nurmo and Sahalahti.

Also at Nurmo, a new solar park will provide 5 percent of the plant’s electricity requirements, and the firm owns 10 percent of Nurmon Bioenergia Oy, which is Finland’s largest biogas plant.

Early in 2018, Atria began marketing pork under the Atria Family Farms brand from pigs that had been reared without antibiotics. This came after the launch the previous year of “antibiotic-free” products for its poultry meat range.

The firm’s businesses in Finland and Sweden have changed the packaging of selected products to more environmentally friendly materials.

Looking ahead to the 2019 financial year, Gröhn forecasts growth in net sales and an improvement in Atria Group’s EBIT compared with 2018.

Divestment considered for Atria Russia

Rapid improvement in business operations is a new key objective for Atria Russia in the coming year.

Divestment of the Russian business, and reorganization of the legal structure of the Sibylla fast food company are among the strategies under consideration.

According to Gröhn, these moves support the firm’s aim to focus on the achievement of healthy growth in its core business.

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