Atria in profit growth despite ‘tough’ price pressure

14-Feb-2017 - Last updated on 14-Feb-2017 at 11:28 GMT

Atria posted a rise pre-tax profit, but said its growth was slowed by price pressure

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Meat processor Atria has reported a near-30% rise in full-year pre-tax profit as the business, which recently cracked China, continues to expand.

Nordic meat processor Atria posted pre-tax profits of €26.1m for 1 January to 31 December 2016 compared with €20.1m pre-tax profits the previous year.

The solid growth comes as Atria CEO Juha Gröhn said the competition on food prices across Europe last year would continue to be “tough” in 2017. It would appear that the company’s ‘Healthy Growth’ strategy has eased some of the price pressure and Atria had a busy 2016, completing two multi-million euro takeovers.

It acquired the Lagerbergs poultry company for €18.7m, marking its first foray into the Swedish poultry market. The deal is expected to grow Atria’s net sales by €30m annually. The business has also targeted profit growth in Sweden, with Atria’s board of directors sanctioning a long-term investment stimulus package of €14m, signalling intent at the highest levels.

Growing gains

Atria also secured a 70% stake in Well-Beef Kaunismaa (Kaivon Liha, in Finnish) for €15.3m, which has complemented the company’s already-strong beef product range.

Aside from investment, the business has continued to follow a growth strategy that combines acquisitions with product development, brand enhancement and opening new markets.

“We explore new market areas with determination,” said Gröhn in a press statement.

“Atria’s Nurmo plant obtained a permit to export pork to China at the end of 2016, and the first deliveries will be dispatched in May 2017. The goal is for China to become a solid marketplace for Atria in the coming years.”

Deal with the dragon: Atria cracks China

To ensure it has the operational efficiency to satisfy Chinese demand, Atria is investing significantly in its pig cutting plant. Once completed in 2017, the plant will be one of the most modern in Europe, claimed the company.

New technology will enable Atria to trace individual animals back to the farm. While the company has reduced staff numbers by 80, the investment in operational efficiency is expected to net Atria some €8m in annual savings.

Atria’s smallest market in sales terms, the Baltics, launched a new range of minced meat products in January 2016, which increased sales and market share. It’s EBIT improved on 2015 as the business was hit with a goodwill impairment loss of €9.1m.

Atria reported total net sales of €1.35bn for 2016, slightly above the €1.34bn reported the prior year.

Earnings before interest and taxes (EBIT) came to €31.8m, but growth was slowed by a decrease in sales prices and the cost of investments and acquisitions.