Atria's minority shareholders feel the pain again

While a poor result should no longer come as a surprise from Atria, and the company had posted a profit warning earlier, the numbers in the Q2 interim report are painful to see. Atria plc says that high raw material costs and low sales burdened result. Net sales were 333.6 million Euros and EBIT for second quarter was minus 5.7 million Euros.

Main shareholders in Atria, a meat processing firm, are meat raw material producers (over 50% ownership). Atria said that to ensure availability of meat raw material, the producer prices paid in Finland were on average 7.3% higher than in 2010. Atria made a major investment to Kauhajoki bovine slaughterhouse and in connection it also bought shares in Kauhajoen Teurastamokiinteistöt Oy (slaughterhouse property) from largest shareholder Itikka Co-operative (a meat producers cooperative) for 6.1 million Euro.

The Finnish food industry company has been trying to diversify and grow in nearby regions. Atria Russia’s result still isn’t showing any improvement whatsoever. EBIT for the second quarter was -5.6 million and net sales 32.5 million, amounting to EBIT margin of -17.1. Rapid increase in raw material prices was met by slack demand. St. Petersburg operations are doing somewhat better than operations in Moscow.

Atria’s pork farm in Russia suffered from high feed costs. Atria is restructuring operations in Russia since 2010 and says annual savings of 6 million will start to have an effect next year and be fully in place by 2013, an incredibly slow process at that and at current rates close to merely a quarterly loss for the operations (H1 EBIT for Atria Russia is -11.1 million Euro). So far the entire investment isn’t looking good. Atria already took a goodwill write-down on Russian operations last year.

Atria Finland’s net sales were a bit higher as comparison period was marred by a strike from Finnish Food Workers’ Union SEL. Atria Scandinavia’s net sales were down on discontinued operations and lower sales volumes. Atria Baltic’s sales were stable. The stock has fallen below 2009 bottom and lost another 5% today.