Atria to examine Russian division following poor performance

By Aidan Fortune contact

- Last updated on GMT

Atria is to assess its Russian division as part of its 2019 strategy
Atria is to assess its Russian division as part of its 2019 strategy
Finnish processor Atria is to scrutinise its Russian business with a view to changing its structure following a drop in net sales in the region.

In its 2018 financial statement, Atria reported that net sales in its Russian division were down from €85.7m in 2018 to €75.1m. This decrease was attributed to the weakening of the rouble and decreased sales in retail, as well as the rising prices of meat raw materials.

As part of its strategy for 2019, the business said it would be focusing on the rapid improvement of business operations in Russia, which meant increasing sales and margins as well as turning the profit trend into a “positive one”.

Divestment

As part of this strategy project, Atria is also exploring possibilities of divesting Atria Russia’s business operations. It is also evaluating the possibility of reorganising the global legal structure related to its Sibylla fast food business.

“In the future, we will increasingly focus on our core business and the healthy growth of our businesses,”​ said Juha Gröhn, CEO of Atria.

Russia was the only Atria division to see a drop in sales in 2018. Sweden’s net sales were down from €307.2m in 2017 to €287.9m, which the business stated was down to the weak Swedish krona, the divestment of the Nordic Fast Food business operations in December 2017, increased raw material costs, the poor profitability of poultry operations, and employee arrangements at the beginning of the year.

Its Denmark and Estonia division saw a more modest dip in sales from €98.9m in 2017 to €97.4m, which was down to price competition. The group saw increased sales in the Estonian market.

The group was boosted by the performance of its Finnish division, growing from €986.4m to €1,019.2m year-on-year. This growth was attributed to rising sales in retail and to food service customers.

On the business’ overall performance, Gröhn said: “Finland's and Denmark & Estonia's results were as expected. The results of Sweden and Russia did not meet set targets. The increased costs of animal feed caused by the dry summer were transferred to meat raw material costs. The increase in costs has been the strongest in Russia, where the raw material costs increased, especially towards the end of the year, by more than 30% compared with the same period in the previous year.”

Environment

Over the year, Atria made several sustainability shifts to its business. At the beginning of October 2018, all of Atria Finland's beef and pork minced meats will be packed in new low-plastic minced meat packages. On an annual level, this transition will decrease the amount of plastic waste by a total of 250,000kg, while the carbon footprint of the new package is 30% smaller than that of the traditional container package.

In Sweden, the Lönneberga cold cuts range now come in an eco-friendly, partly biomaterial-based packaging while a solar panel park in Nurmo was completed in September and the electricity produced by it replaces approximately 5% of the electricity required by the plant on an annual level.

The business is also involved in the CARBO research project, which aims to decrease the environmental impacts of the Finnish dairy and meat chain through data, new innovations and pilot farms.

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