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Atria to Close Russian Primary Pork Production

05 November 2013

FINLAND - Atria, one of Finland's biggest meat processors, has decided to close its unprofitable primary pork production in Russia.

The company is also to end production at its industrial production and logistics unit in Moscow by the end of 2014.

Pizza production will be transferred to the Gorelovo plant in St Petersburg, where investments amounting to €4.6 million will be made.

Sales in Moscow will continue under the Campomos brand.

The impairments resulting from the discontinuation of business operations were recognised for third quarter of 2013.

Atria recognised impairments totalling €23.0 million, €15.4 million of which was allocated to EBIT.

Furthermore, €2.0 million will be recognised as a provision for expenses related to the discontinuation of the aforementioned operations and will be allocated to the fourth quarter of 2013.

On October 2013, Atria lowered its EBIT forecast due to the non-recurring costs of its Russian business operations.

The company expects the full-year EBIT for 2013 to be weaker than the previous year's EBIT, which amounted to €30.2 million.

The company's EBIT without non-recurring items is expected to be higher than €30.2 million.

According to Atria's previous EBIT forecast, the Group's EBIT for 2013 was estimated to be higher than € 30.2 million.

On 28 October 2013, the Finnish Competition and Consumer Authority (FCCA) gave

its decision to commence phase two proceeding in a deal whereby Atria Plc acquires Saarioinen Oy's slaughtering, meat cutting and meat procurement operations.

Atria Group's net sales for July-September totalled €358.4 million compared to €341.1 million last year, up by € 17.3 million year-on-year.

During the period under review, Atria recognised €23.0 million of non-recurring costs for its Russian business operations.

Of this, €15.4 million was allocated to EBIT.

Furthermore, an impairment of €0.9 million was recognised for the Scandinavian business operations due to an asset held for sale.

Consolidated EBIT weakened by €18.4 million compared to the previous year, standing at negative €1.8 million compared to €16.6 million last year. EBIT without non-recurring costs decreased slightly to €14.6 million (€16.6 million in 2012).

Atria Finland's net sales for July-September totalled €224.8 million (€205.1 million in 2012), up by €19.7 million year-on-year.

EBIT was €9.8 million compared to €12.5 million last year, down by €2.7 million year-on-year.

During the period under review, net sales grew in all sales channels. Fiercer price competition in retail products at the end of the quarter, low export prices and the high prices of meat raw materials weighed down the EBIT.

Atria Scandinavia's net sales for July-September totalled €99.7 million compared to €100.1 million in 2012, down by €0.4 million year-on-year.

In the local currencies, net sales increased by 2.8 per cent year-on-year. EBIT was €4.7 million compared to €4.4 million in 2012.

EBIT includes non-recurring costs of €0.9 million resulting from the impairment of an asset held for sale. The positive performance is due to the improved sales structure and stable raw material prices.

Atria Russia's net sales for July-September totalled €32.0 million down from €33.9 million last year.

In the local currency, net sales increased by 2.8 per cent year-on-year.

EBIT showed a loss of €16.4 million compared to a small profit of €0.6 million for the same period in 2012.

Atria Russia recognised non-recurring impairments totalling €23.0 million, €15.4 million of which was allocated to EBIT.

Of the write-downs, €14.3 million was allocated to fixed assets, €7.6 million to deferred tax assets and €1.1 million to other assets. EBIT without non-recurring costs amounted to a loss of €0.9 million compared to a profit of €0.6 million last year.

EBIT without non-recurring costs for July-September was negative due to the poor profitability of primary production. It is estimated that the discontinuation of the unprofitable primary production and the Moscow-based production operations will generate annual cost savings of about EUR 6 million compared to 2013.

The cost savings will be fully realised as of the beginning of 2015.

Atria Baltic's net sales for July-September totalled €8.5 million compared to €8.4 million in 2012.

Efficiency improvement measures saw EBIT improved by €0.7 million to €0.3 million compared to a loss of €0.4 million year-on-year.

In the nine months to September, net sales reached €1,050.4 million compared to €982.9 million, up by €67.5 million year-on-year.

During the nine months, Atria recognised €23.0 million of non-recurring costs for its Russian business operations. Of this, €15.4 million was allocated to EBIT.

Furthermore, an impairment of €0.9 million was recognised for the Scandinavian business operations due to an asset held for sale.

A non-recurring profit of €1.1 million resulting from the reversal of an impairment charge on a property that had been for sale was recognised in Finland.

Consolidated EBIT weakened by €13.3 million compared to the previous year, standing at €9.1 million compared to €22.4 million in 2012.

EBIT without non-recurring items amounted to €24.4 million compared to €22.4 million in 2012.

In March, Atria issued a fixed-interest bond worth €50 million. The funds were used for refinancing and for the Group's general financing needs.

The loan period is five years and a coupon rate of 4.375 per cent is payable on the loan. The bonds are publicly traded on the NASDAQ OMX Helsinki Ltd stock exchange.

ThePigSite News Desk



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