Adria's profits fall in challenging market – outlook unchanged

Meat company Adria, led by Kai Gilstrom, announced its results on Tuesday morning. Currently there is an oversupply of red meat in the market.

Atrium The adjusted operating result was 8.0 million euros in the first quarter of the year, compared to 10.9 million in the same period last year.

“Operating profit decreased due to lower turnover in Finland, start-up costs at Narmo Poultry Factory and overhead inflation.”

The company asserts that all business areas achieved positive operational results during the review period.

“In Sweden, efficiency program measures and centralization of production strengthened operating profit.”

On the other hand, earnings per share were 0.10 euros, compared to 0.23 euros a year ago.

The company's turnover at the beginning of the year was 416.8 million euros, compared to 428.0 million euros a year ago.

“The decrease in turnover is a result of lower selling prices for feed and weaker export and foodservice sales volumes in Finland.”

Analysts (3pc) expect operating profit of 4.2 million euros, earnings per share of 0.01 euros and turnover of 414 million euros.

The instructions remain unchanged.

In 2024, Adria Group's adjusted operating profit is estimated to be lower than the previous year, when it stood at 49.6 million euros.

Administrative director Guy Gilstrom Nevertheless, the revenue and profitability of the review period remained “very good”.

“A year ago, we had a record good result in the first quarter and the growth was also faster than usual. Considering the challenges of the market situation, we may be satisfied in early 2024.”

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In Finland, the market is “challenging”.

“Feed selling prices have decreased along with falling grain prices, which has weakened our feed business's earnings compared to the prior year. Similarly, Adria Suoman's export and food service sales have declined.

The slowdown in foodservice sales can be explained by the fact that exports fell significantly for a few weeks due to strikes, and that consumers' purchasing power has weakened.

“There is currently an oversupply of red meat in the market, which is driving down meat prices. Apart from the decline in turnover, the result has been weighed down by general expenditure inflation and the costs of running a poultry factory.”

In Sweden, the closure of the Malmö factory, the centralization of production at the Sköllersta factory and the change in corporate structure implemented in Sweden over the past year are now seen as an improvement in profitability.

In Denmark, price competition in the retail sector is “tight”.

“However, we were able to increase exports, which led to an improvement in revenue in Denmark. The result also improved, which is due to the implementation of efficiency programs.”

In Estonia, Adria increased its market share in the retail sector and further strengthened its position as the second market.

“Atria Estonia's results were good and turnover increased.”

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