Atria's performance does not inspire hopes

Atria’s Q1-2013 really does not give any clear indication that the EBIT target of 5% could be achieved soon. Reported new and still ongoing savings might help, at least in Finland and Russia.

Instead of the quarterly report, let’s look a little bit the Annual Report 2012.  The Board of Directors says for example: “The strongest growth potential in Atria’s area of operation is in Russia.”

It’s about growth not about profits but it is evident that Atria is not intending to come home from Russia for a long time. It means continuing losses, if primary production is not abandoned.

Top management is happy with the company's situation

CEO Atria Plc, Juha Gröhn  seems pleased with last year.  His interview in the Annual Report is titled as follows: “We succeeded well in strengthening the basis”. Gröhn also says: “At Atria, our absolute focus in all operations has been on improving profitability, even at the expense of growth.”

Yes, it improved certainly but EBIT of 2,2% is still modest, to say the least.

The EVP’s seem to be mostly confident or pleased as well. Atria Finland’s EVP Mika Ala-Fossi admittedly notes that the challenge is to improve profitability or even maintaining current level but he is looking for growth across a broad front, across all product groups and he describes the current situation by the term “post-recession market”.

Personally I would say that the correct term is pre-recession.

Atria Scandinavia all right? The Annual Report also tells that in Atria Scandinavia, only in four years, the number of plants has been cut from 18 to 8, productivity has increased and the cost structure has lightened. Company’s position in cold cuts in Sweden strengthened, Atria 3-Stjernet brand in Denmark showed more rapid growth than the market overall and there are many other positive news about Atria Scandinavia in the Annual Report.

But why these improvements do not show in the last line?

According to Jarmo Lindholm EVP Atria Russia, the company really tries to be permanently profitable in the latter half of the year and after that the target is to grow profitably. It should be noted that he says also as follows: ”We will continue to improve profitability, but most of the corrective measures have now been taken.”

Not much of anything no longer needed? But the fact is that Atria Russia is not yet profitable.  We also know that Pit Products market share already is tremendous, about 25% in Saint Petersburg.  Why does it not show in the last line?

Olle Horm EVP Atria Baltic wants rapid growth and thinks that they have appropriate product groups to achieve this but he says also: ”But I want to stress that growth can only happen if markets recover.”

That’s very likely a realistic approach.

Number of employees once again – any savings?

Last November we looked at the number of employees in Atria’s different business areas.  We saw, that the trends are downward.  We thought that it would mean a lot of savings. The chart is now updated and the trends continue. 

However, now the series of Salaries and Benefits is added to the chart.  These yearly figures are marked by white solid squares. No downward trend in personnel costs. No savings at all? 

Figure:  Atria’s number of employees by business area over the last five years*(left axis) and yearly Salaries and benefits € million (right axis).

*The data is taken from Atria’s quarterly reports, but possible errors and misunderstandings are mine.  Quarter specific employee readings, at least in most cases, refer to the average number of employees from the beginning of the year up to the end of the quarter.

We will discuss Atria later but on Friday, May 24^th, we are going to look at HKScan’s businesses.  Summer visited here.  Three days only.  Sad. (But the rich Swedes are of course thrilled also about short summer.)

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