Price competition at retail level across Atria’s home markets of Finland, Sweden, Estonia and Russia meant the company posted a 2% rise in pre-tax profits when compared to same period a year ago.
“The product groups currently facing the toughest price competition are meat products and pork in Finland and Estonia, as well as some meat-product segments in Scandinavia,” said Juha Grohn, CEO of Atria in a financial statement. “During the spring, raw-material markets turned a corner as the price of pork began to rise in Europe. This change will increase the pressure for price rises among ready-made products."
He added that “fierce price competition” continued across its markets in the first six months of 2016.
Russian sales down
The meat processor posted pre-tax profits of €4.5m, with overall net sales of €655.8m for the second half of the year. Six-month net sales for Atria dropped by more than 16% in Russia with a 0.5% slide in Scandinavian sales, but sales growth was recorded in Finland and the Baltics.
Growth was cooled by a drop in sales prices, upfront costs incurred through the launch of a pig cutting plant in Finland and investment in its Lagerbergs poultry acquisition. In June, but only confirmed now, Atria’s board of directors authorised a two-year €14m investment programme for the development of the Lagerbergs poultry operation in Sweden. “The aim is to make Lagerbergs a strong player on Nordic poultry markets by joining forces with Atria Finland’s poultry operations,” said Grohn.
Surplus clear-out
Atria has also confirmed its plans to acquire a 70% stake in Well-Beef Kaunismaa, a Finnish raw beef specialist operating in the foodservice sector. The deal still requires approval by competition authorities.
The company’s “most significant investment” over the last six months is at its Nurmo pig cutting plant. Thanks to investment in production efficiency, the company is expecting annual running costs to drop by €8m per year.
Atria has also sold several sites deemed surplus to requirements: the Linnamae pig farm, the Vastse-Kuuste production plant in Estonia and a logistics unit in Gothenburg, Sweden.