Atria Plc Q1-2014 - slight improvement expected

Atria's Q1-2014 Interim Report will be published on May 7^th. Let’s look at the results from recent years.  The chart below illustrates Atria's quarterly EBITs starting from 2009.  The readings are highly unofficial. Large write-offs are excluded. 

Together with the chart, it is interesting to look at what analysts might think of Atria's Q1-2014.  FT summarizes analysts' forecasts and other company information.  Analysts’ Q1-2014 consensus EPS for Atria is €0.022.  We do not know the arguments of the analysts, but now we will speculate on what kind of business area specific results their estimates could be based on. 

In the chart below, actual EBITs are indicated by solid lines.  Dashed circles show a set of reasonable country-specific Q1-2014 EBIT figures, which could lead to EPS of €0.018, which is close to the above mentioned analysts’ Q1-2014 EPS consensus.

Quarterly earnings before interest and taxes by year in Atria's business areas, large write-offs excluded.

At the first sight, Q1 consensus EPS of €0.022 does not look challenging at all but indeed, it requires improvement to last year.  Let’s go very briefly through the country-specific Q1-2014 figures presented on the chart.

Atria Finland – Q1-2014 EBIT of €6 million might be somewhat optimistic. It is quite close to last year’s corresponding EBIT of €6.7 million, which in fact includes a non-recurring profit of €1.1 million.  The fact is that general economic conditions in Finland are still worsening.  Consumers are prone to switch to cheaper imported products and lower priced product groups. There are even chances that the result will be close to the terrible Q1-2011 which would ruin the whole Group’s Q1 result.  However, the analysts might be expecting a decent EBIT of something around €6 million.

Atria Scandinavia – Q1-2014 EBIT of €1 million might be pessimistic but Q1 results have lately been just above zero.  Last year’s Q4 was promising, however. Cleverly Lithells, using imported meat, makes virtue out of necessity by launching “Världskorv” product family, including sausages with exotic names like Welsh Dragon, New Orleans, Oxford and Santiago. At the same time, the premium brand Lönneberga which uses domestic meat, prominently emphasizes brand’s Swedish origin. Atria Scandinavia might soon be doing very well but for now the analysts are most likely expecting a normal Q1 result, perhaps an EBIT of €1 million. Anything below zero would be a huge disappointment.

Atria Russia - Q1-2014result will almost surely be below zero.  New products supposedly are not selling enough. Weak ruble certainly weakens the result and due to the ongoing pork ban, pork is more expensive anyway. Evidently analysts are not expecting any turnaround for the better just now. Perhaps an EBIT of €-2 million is a common guess among analysts, but a result somewhat below it would not be a real disappointment.

Atria Baltic – Q1-2014 EBIT of €0 million is slightly optimistic.  Russian pork ban has hit hard, but Olle Horm, EVP Atria Baltic, declares that the primary production will be maintained.  One may see but in the short term, Atria Baltic will likely continue around zero and the analysts might well expect a fairly normal result, perhaps just an EBIT of €0 million.

Some more guesswork – Total of those guesses about what the analysts might have thought, makes €5 million.  We must now make a few subtractions using the past few quarters’ readings as guidelines.  Some minor subtractions or additions are ignored.  Subtracting unallocated costs about €1 million, finance cost about €3 million and taxes, let’s say €0.5 million, we get the final reading of around €0.5 million. Then earnings per share would be about €0.018, which is quite close to the analysts’ consensus. 

We will look at Atria later but on Friday, April 25th we are going to look at HKScan's businesses. But now, poetry for your pleasure.

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