Atria: Adjusted EBIT burdened by ramp up of investments - Nordea

Atria reported Q2 EBIT of EUR 10m, 17% (EUR 2.1m) below Refinitiv consensus. Q2 net sales of EUR 457m were up 6% y/y and came 1% above consensus. Q2 EBIT miss was due to Finland and Sweden, while Denmark & Estonia came slightly ahead of our expectation. Atria’s market position has improved clearly in Finland and Estonia. Producer prices have remained above last year level. Q2 EBIT included additional costs related to transfer of production in Sweden (EUR 1.3m in Q1) and ramp up of poultry investment in Finland. Q2 operating cash flow was EUR 44.5m (EUR 22.6m a year ago), supported by lower working capital. Atria maintains its outlook intact and expects adjusted EBIT to decline from 2023 (after EUR 49m in 2022) while Refinitiv consensus has modelled EUR 50m, or 2% increase. We note that Atria issued a similar guidance for 2022 and ended up EUR 0.2m below 2021 level in 2022. However, in 2023, the company will commission a major expansion at its Sköllersta plant in Sweden (transfer completed), and the phased start-up and testing of the new poultry plant in Nurmo has begun. These measures will result in additional costs in 2023. Mathematically, Q2 miss translates into 3-4% downward pressure on consensus EBIT estimates. H1 adjusted EBIT of EUR 20.9m is EUR 4.7m ahead of H1 2022. We have a fair value range of EUR 13.0-15.9 per Atria share.