On the other hand, Atria’s profit warning speaks of weak sales in Finland and Russia, and operating profit is still growing from the previous year, so exports to China may be quite profitable.
In three months +35%. Was the idea to add China on top of normal trading? Now normal trading faltered, but luckily China.
China has been the boost, but has the core business been neglected? Was it assumed that China would buy everything? Now the freezers are full of meat and the stock is tanking.
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I haven’t been following companies very closely, but I assumed that the China pull would be strong. However, has the export price been that good, or has domestic sales stalled that much otherwise?
From a TA perspective, we are approaching a very important support level of 2.25. If it doesn’t hold, then the next weekly support level is unclear. The ascent started from as low as 1.58.
So, soon there will be a good buying opportunity or not for a while.
The earnings report seems to be on February 3rd.
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The Q4 report should have been on 6.2.
Was there at least 2 weeks to announce a negative/positive report? If so, an announcement should come out by Wednesday at the latest. I don’t believe it will be negative. If no message comes from HK before the Q4 report, then maybe we’ll reach 2.25 levels. Perhaps Christmas meat sales in Finland were slower. It was difficult to find ham in stores at Christmas, though. Poor selection.
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TradingView is wrong, sry - I checked the company’s website and indeed February 6th is correct!
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One could also speculate that Atria benefited from HK’s severe startup problems at its Rauma broiler plant in 2018 and gained market share, but now Rauma is rolling and Atria’s market share is taking a hit. However, broiler is the only meat whose sales are growing in Finland, meaning its importance for meat companies’ results is constantly increasing. But this is just my own speculation, I have no figures to back this up. We will probably be wiser on February 6th.
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Good point.
I can’t believe the market share has seesawed like this.
Poultry, in general, seems to be a big deal right now. When I used to work in poultry, it was already going strong back then.
https://www.talouselama.fi/uutiset/atria-satsaa-siipikarjaan-130-miljoonan-investointi/bf3b26a3-140c-4e0c-8280-31329f9ebf95
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I didn’t start following the course of Atria’s decline with my guard completely down. I might still take a slice, waiting for the 2019 results. If there’s anything positive in the air, I believe it’ll rise back to around 2.8 euros.
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Was the renewal of the poultry line already known about?
Good question. It feels like poor planning. Building, demolishing, renovating… a waste of money.
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On the other hand, if potential areas for improvement have been identified (considering what a hassle the entire investment and ramp-up of operations have been), then a €6 million investment is quite a small sum if it can further streamline the process and thereby increase revenue and improve results.
Edit: In the new strategy, “significant increase in internal productivity” was mentioned as a key aspect of the operating model, so I believe this measure fits very well with its implementation. This is also supported by the accompanying words in the press release:
“We are renewing the entire initial part of the production process at the Rauma poultry unit, as the slaughter line put into operation in 2017 does not meet the standard required by the current management of the Group,” says HKScan’s CEO Tero Hemmilä.
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The investment amount is small. Mostly, I was just trying to ask if this came out as new information or if there was info about it earlier? I’ve been thinking about opening a position.
I don’t personally recall seeing any news about this additional investment.
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Well, now I have to add one myself. 
Paxinos
One could also speculate that Atria benefited from HKScan’s severe startup problems at the Rauma broiler plant in 2018 and gained market share, but now Rauma is rolling and Atria’s market share is taking a hit. Broiler is, however, the only meat whose consumption is growing in Finland, meaning its importance to meat companies’ results is constantly increasing. But this is just my own speculation, I don’t have any figures to back this up. We’ll probably be wiser on February 6th.
I started browsing the Q3 report, and I have to bring up the following excerpt from the report in this context:
The most significant factors contributing to the improvement in third-quarter results were the positive development of the Finnish poultry business, which was favorably impacted by improved productivity and delivery capability of the Rauma unit, as well as the strong Kariniemen® brand. Commercial measures, cost management in line with targets, and production efficiency measures in all market areas also strongly contributed to the improvement in results. The company’s cash flow before financing was positive in July-September and almost 29 million euros better than in the comparative period, even though net working capital increased.
HKScan’s net sales grew by almost 6 percent during the review period, and growth was achieved in all of the company’s market areas. The reported net sales figures include a shift in sales responsibility from Sweden to Denmark amounting to just under 4 million euros, so adjusted net sales in Sweden also grew. HKScan’s red meat sales value grew by over 5 percent in the third quarter compared to the comparative period, even though the market was subdued. Red meat sales volume also grew. In Finland, HKScan’s poultry business sales grew by over 15 percent. During the summer period of 2019, HKScan achieved market leader status in the Finnish poultry category, and the Kariniemen® brand also became the market leader in branded products. All of the company’s key product categories grew.
So, they have indeed taken over the market leader position during the last year, which has certainly affected Atria in turn.
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I’ll link the entire press release here. I think this is excellent news – the company is investing in production capacity (+20%) and thus responding to growing demand. According to the release, there will be a small write-down that will not, however, affect cash flow in Q4/2019, so it won’t ruin the year-end results… Another good thing is that the construction work will not affect the factory’s delivery reliability, meaning there will be no delivery disruptions this year that might tarnish the brand’s reputation.
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That write-down specifically hurts the result (unless HK publishes some adjusted figure from which this has been removed).
It will affect cash flow at the end of 2020, but then it will not affect the result because the investment is put on the balance sheet from which depreciations are made.
However, I also think it looks like a good update if those figures promised in the release are achieved.
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HK’s production difficulties in 2017-2018 regarding broiler meat have been apparently severe, judging from old news coverage from August 2018. The article directly states that “HKScan’s financial success in Finland was particularly hampered by the prolonged problems in the start-up phase of the Rauma broiler production plant. Due to start-up issues, HKScan was unable to deliver broiler meat, which led to a loss of market share.” On the other hand, Atria’s report mentions that “Atria benefited from HKScan’s Rauma unit’s problems, as Atria managed to increase its poultry sales.” And now, in Q3/2019, HK has achieved a market leader position, meaning this could partly explain Atria’s slight revenue decline from last week.
https://otlehti.pellervo.fi/2018/08/30/atria-menestyi-hkscanilla-vaikeaa/
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