Atria Russia – Hopefully small will be beautiful

Atria’s Interim Report Q3/2013 tells on page 6 that the primary production in Russia has been unprofitable. But most importantly, the statement implicitly suggests that the Moscow unit has no longer been unprofitable. Still, also it will be now abandoned.  

Atria Russia will discontinue its unprofitable primary pork production in Russia. Furthermore, the industrial production and logistics unit located in Moscow will be discontinued by the end of 2014.

Anyway, Atria Russia is now the same as Pit Product and practically the same as the Gorelovo plant and logistic center.  Plant’s capacity utilization rate is about 60 to 70 percent. Currently Atria Russia’s yearly revenues is about €125 million, which means a crude and naïve forecast of about €200 million in the coming years at most.  This in turn means yearly EBIT about €10 million at most.  Hype is over. 

In St. Petersburg Atria’s market share has long been about 25 percent.  It cannot become much larger.  Atria’s convenience food launch is of course a good way to increase sales also in Moscow.  But there is one way more.  Namely Atria Russia has recently and repeatedly told that, in addition to hypermarkets, it has found a clientele of small retail shops in St. Petersburg. This photo on a fresh news page suggests that the company has some suitable means of transportation. Small is beautiful also in Russia? Hopefully yes.

There is still one thing that leads to ask whether small will be beautiful.  This thing is Sibylla fast food chain.  It operates in ten European countries, Sweden, Finland, Poland, Czech Republic, Slovakia, Hungary, Estonia, Latvia, Lithuania and Russia.  Outside Sweden, Sibylla outlets are not only small but mostly tiny and therefore their product range is fairly narrow.  However, the chain keeps growing and currently the number of outlets in Russia is not far from 1000.  They are located at gas stations, sports arenas, concert halls, universities for example. Here’s a map.  It in fact misses the newest ones in Omsk and Novosibirsk, that’s Southern Siberia. And here is a fan of the KHL team HC Ugra from the city of Khanty-Mansiysk. There is going on one of Sibylla Russia’s latest promotions.  Sibylla’s slogan in Russia seems to be “Tasty and Healthy”.  One may doubt its brilliance for fast food generally and for average sports fans specifically. 

All in all, many believe that Atria Russia is on its way to profits. However, the money can be wasted in so many ways and almost record weak ruble surely hurts pork import and diminishes profits anyway.  Nevertheless, Jarmo Lindholm, EVP Atria Russia, is exceedingly positive. He has said recently in a broad interview that by 2015 Atria Russia will be the most profitable part of the whole Group.  One must hope, that it means prosperity in Russia rather than ruin in other business areas.

We will look at Atria later but on Thursday, December 5th, we are going to look at HKScan’s businesses.  Soften your downfall - be small.

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