Atria: Takeaways from capital markets day - Nordea

Atria hosted its CMD event yesterday. The event did not offer any large surprises as strategy and financial targets were maintained intact. We make following remarks.

1) Current investment phase is nearing its end, which should turn net debt level to decline during 2024E. More than 90% of debt is long-term with larger bank loans due on 2027-28 with average interest rate of 4.5%. In the next investment phase, we believe the company need to further update its Nurmo facility where oldest parts are closing end of their lifespan. We believe the focus on the next investment phase will be in convenience food which continues to grow in all markets.

2) Poultry investment in Nurmo has reached its last phase as the company has started commissioning of the slaughterhouse. We have anticipated full operational readiness during H1 2024, which we believe is achievable by the company.

3) In Atria Sweden, volume losses have mainly been due to change in offering and transfer of production lines to Sköllersta. Following the transfer and investment into Sköllersta (EUR 3.5-4m annual cost savings), and EUR 2.5m cost savings programme, we believe the company will focus its efforts on growing volumes in Sweden.

4) In Denmark, Atria has been struggling with tight competitive environment, while the company appeared confident on turnaround with improved efficiency supply chain and aimed to increase its export volumes in both existing markets (mainly UK) and new markets.

5) In Estonia, the company has been able to outgrow the market recently, while consolidation of the market could result in tighter competitive environment, we believe.

6) Sustainability was clearly seen as a competitive advantage for the company and we note new regulations which could offer some advantage for Atria during coming years as its products have low carbon footprint relative to the competition. As a conclusion, we do not expect any material consensus revision following the event. The company appears to be slightly ahead of its announced timetable with the new poultry facility, which could offer some upside to 2024 estimates, depending of the final ramp-up of the facility. However, we note uncertainty related to price levels for 2024E. Negotiations with retail channel are likely fierce given groceries’ soft volume development in 2023. We believe the company has additional investment needs during coming years in order to support its growth, while we expect next larger investment phase to begin in 2026-27.

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