Atria Consumer Goods - Nordea

Atria FinlandConsumer Goods

Commissioned Equity Research • 30 August 2018

KEY DATA

FinlandStock countryATRAV FHBloombergATRAV.HEReutersEUR 8.91 Share price (close)

42%Free FloatEUR 0.25/EUR 0.25Market cap. (bn)

www.atria.fiWebsite25 Oct 2018Next report date

PERFORMANCE

Aug15 Aug16 Aug17 Aug18

9

12

Atria

Finland OMX Helsinki All-Share (Rebased)Source: Thomson Reuters

VALUATION APPROACH

8.7

9.0

10.0

10.5

10.6

11.0

12.2

12.8

8.0 13.0

P/E 19E

EV/EBIT 19E

Div. yield 18E

DCF

Share price, EUR

Source: Nordea estimates

ESTIMATE CHANGES

2020E2019E2018EYearn.a.n.a.n.a.Salesn.a.n.a.n.a.EBIT (adj)


Securing strength in growing poultry marketsAtria is one of the leading meat and food companies in the Nordic countries, with an increasing focus on poultry. Atria has a strong financial position, which we believe supports stable dividends and enables potential acquisitions in the future. We estimate a sales CAGR of 0.9% for 2018-20, with an EBIT CAGR of 5.2%, despite headwind this year owing to unfavourable FX and raw material cost inflation.

Operational efficiencies driving growthAtria is aiming to boost organic growth with its recent investment programmes in Finland and Sweden. We see a solid outlook for the operations in Finland, with stable margins, as well as investments in Swedish poultry operations starting to kick in after challenging market conditions in 2016-17. All four of Atria's business segments reached positive EBIT territory in 2017, as a strong performance from Sibylla boosted Atria Russia's growth. The company has trimmed its productivity and cost efficiency, which should support organic growth together with new product launches.

Strong financial position supporting stable dividendAtria has been able to deleverage its balance sheet after an acquisition spree in 2007-08. The company reduced net gearing from 100% in 2011 to 50% in 2017, and is currently also well above its equity ratio target of 40%. The strong balance sheet and increasing free cash flow offer a stable dividend outlook. Atria estimates that it will finalise its latest investment programme in Sweden during Q3 2018, which will reduce capex needs and support future cash flows. The strong balance sheet offers Atria the flexibility to execute its growth strategy, enabling bolt-on acquisitions.

ValuationWe base our fair value range on a combination of valuation methods, including a DCF-based valuation and a relative valuation with multiples, on top on which we look at Atria's dividend potential. In our relative valuation we compare Atria to the most relevant European peers on various metrics. Based on this combination of valuation methods, we derive a fair value range of EUR 9.5-11.6 for Atria.

Nordea Markets - AnalystsHarri PaakkolaAnalyst

Harri TaittonenChief Analyst

SUMMARY TABLE - KEY FIGURES

2020E2019E2018E2017201620152014EURm1,4731,4521,4381,4361,3521,3401,426Total revenue

93878186787689EBITDA (adj)46413540313640EBIT (adj)

3.1%2.8%2.4%2.8%2.3%2.7%2.8%EBIT (adj) margin1.060.900.740.870.630.740.76EPS (adj)

17.3%22.0%-14.9%37.5%-15.2%-2.5%66.5%EPS (adj) growth0.520.500.500.500.460.400.40DPS (ord)0.30.30.30.40.40.30.3EV/Sales9.811.313.314.317.512.210.8EV/EBIT (adj)8.49.912.013.918.212.28.7P/E (adj)0.60.60.60.80.80.60.5P/BV

5.8%5.6%5.6%4.1%4.0%4.4%6.0%Dividend yield (ord)10.6%8.6%9.1%3.3%6.9%15.9%31.3%FCF Yield bef acq & disp

181194201210212194249Net debt1.92.22.52.42.72.82.8Net debt/EBITDA

5.2%4.6%4.0%4.5%3.7%4.3%4.4%ROIC after taxSource: Company data and Nordea estimates

Marketing material commissioned by Atria

Atria30 August 2018

Contents

Factors to consider when investing in Atria 3

Risk factors 6

Valuation 7

Company overview 11

Strategy and financial targets 23

Market overview 24

Macro outlook 32

Peers 33

Historical financials 35

Estimates 38

Reported numbers and forecasts

Disclaimer and legal disclosures

42

45

Marketing material commissioned by Atria 2

Atria30 August 2018

Factors to consider when investing in AtriaAtria is one of the leading meat and food companies in the Nordic countries, with operations also in Russia and Estonia. The company has a manufacturing share of around 24% in its main categories in Finland, its main market, and in 2017 the company's net sales exceeded EUR 1.4bn, derived from four business areas. Atria's underlying markets are stable and currently the consumer demand in its main markets is shifting from pork towards poultry products. In 2016 Atria strengthened its poultry exposure by acquiring Lagerberg i Norjeby AB, which is the third-largest supplier in the Swedish chicken market. Atria has a strong balance sheet, which bodes well for stable dividend payments and potential acquisitions in the future.

Leading meat and food company in the NordicsAtria is a leading Finnish meat and food company with an international presence. Its largest and single most important market is Finland, where the company claims to be the market leader with a strong presence in consumer-packed meat, poultry, sausages, cold cuts, convenience food and food service.

Atria has expanded its geographical presence with acquisitions, the latest being the Lagerberg acquisition in Sweden, which strengthened Atria's exposure to the growing poultry market. In addition to Finland and Sweden, Atria has operations in Denmark, Estonia and Russia. Atria's export offices are located in Finland, Sweden and Denmark, and its Sibylla fast-food concept with more than 6,000 points of sales (POS) is rapidly expanding to new market areas. The latest and most significant expansions in 2017 for the Sibylla concept have been the UK and South Korea.

We forecast a stable organic sales CAGR of 0.9% for 2018-20 and EBIT margin expansion from 2.8% in 2017 to 3.1% in 2020. The margin expansion is mainly driven by increasing poultry production and the poultry turnaround in Sweden.

NET SALES BREAKDOWN IN 2017

Finland67%

Sweden21%

Russia6%

Denmark & Estonia

6%

Source: Company data

ADJUSTED EBIT AND MARGIN, EURm AND %

0%

1%

2%

3%

4%

5%

0

10

20

30

40

50

2012 2014 2016 2018E 2020E

Adj. EBIT EBIT margin % (RH)

Source: Company data and Nordea estimates

Consumption shifting from pork to poultryAtria has followed the long-term consumer trend by shifting its focus slowly towards poultry and slightly reducing its pork exposure. We find this trend positive for Atria as poultry products generally have higher margins than pork.

Meat consumption increases in Finland are coming mainly from rising demand for poultry. We find the same trend in all of Atria's main target markets, although meat consumption in Russia and Estonia has been increasing even faster than in the Nordic countries. Atria's meat processing figures are well balanced with consumption trends: the decline in pork processing is being substituted with increased poultry processing. Atria's latest acquisition in Sweden, Lagerberg, will further tilt the group's focus towards the more popular poultry.

3

Atria30 August 2018

MEAT CONSUMPTION IN FINLAND, MILLION KG

0

50

100

150

200

250

300

350

400

450

2005 2007 2009 2011 2013 2015 2017

TOTAL Pork Beef Poultry

Source: Natural Resources Institute Finland

MEAT PROCESSED BY ATRIA, MILLION KG

0

20

40

60

80

100

120

140

160

180

200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Pigs Cattle Poultry


Strong balance sheet and stable dividendsAtria has strengthened its balance sheet by reducing its net debt from EUR 364m in 2012 to EUR 211m in 2017 and at the same time reducing net gearing from around 85% to below 50%. We believe the company will use its strong balance sheet to keep paying a stable dividend. Our 2018 dividend estimate is EUR 0.50 (EUR 0.50 in 2017), indicating a payout ratio of 68%. We believe that Atria will maintain its stable dividend and so the company can temporarily go above the 50% payout target as the financial situation is strong. We also believe that Atria could use its balance sheet for further expansion of its operations, although its current strategy leans on healthy organic growth more than on acquisitions.

ADJUSTED EPS, DPS AND PAYOUT RATIO, EUR AND %

0%

10%

20%

30%

40%

50%

60%

70%

80%

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2012 2014 2016 2018E 2020E

Adj. EPS DPS Adj. Payout % (RH)


NET DEBT AND GEARING, EURm AND %

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

50

100

150

200

250

300

350

400

2012 2014 2016 2018E 2020E

Net debt Net gearing % (RH)


Financial targets appear ambitious; our estimates are lowerWe find Atria's EBIT margin target of 5% to be ambitious given that the company was last close to this EBIT margin target in 2007, when it reported 4.8%. Our estimates are more conservative, and we factor in a margin improvement of 30 bp in three years, from 2.8% in 2017 to 3.1% in 2020.

ADJUSTED EBIT AND TARGET LEVEL

0%

1%

2%

3%

4%

5%

6%

2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

Adj. EBIT margin Target level


ROE AND TARGET LEVEL

-2%-1%0%1%2%3%4%5%6%7%8%9%

2012 2013 2014 2015 2016 2017 2018E2019E2020E

ROE Target level


4

Atria30 August 2018

Valuation conclusionWe use a relative valuation, a DCF-based fair value calculation and a dividend yield assumption in our analysis. Based on the assumption that the company can deliver revenue growth and an operating profit margin in line with our expectations, we estimate a fair value range of EUR 9.5-11.6 per share based on our four different valuation approaches (DCF, Dividend yield, 2019E EV/EBIT and 2019E P/E). This valuation range is shown as the red lines in the chart below.

Fair value range of EUR 9.5-11.6 per share

VALUATION APPROACH

8.7

9.0

10.0

10.5

10.6

11.0

12.2

12.8

6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0

P/E 19E

EV/EBIT 19E

Div. yield 18E

DCF

Share price, EUR


5

Atria30 August 2018

Risk factorsIn this section, we highlight the main risks that we find relevant for Atria. We list the risks starting with the most relevant. The following list is not exhaustive but rather our view of some of the key risks for the company.

Increasing raw material pricesAtria's profitability is highly dependent on changes in the global market prices of meat raw materials. Atria procures most of its produced meat from Finland, and although Finnish prices are driven by global trends, they tend to be more stable in the short term due to subsidies. Changes in prices affect Atria with a lag. We suggest that the dry summer at present, with expected low wheat and oat crops, will further increase raw material prices. As Atria and other meat processing companies are in the middle of value chain, it might be difficult for them to fully implement the necessary product price hikes to protect their EBIT margins.

Changes in customers demandAtria's key market areas of retail trade are highly centralised, making the company dependent on individual customers. As a result, shifts in customers demand could affect Atria's margins.

Outbreak of animal diseasesAnimal disease discovered at a critical point in Atria's production chain could interrupt production in the unit concerned and disrupt operations throughout the chain. The recent development of African swine fever may cause similar restrictions and government guidance pressure as avian influenza did in Sweden in H2 2017. Diseases might even lead to import and export restrictions on meat products. Animal diseases would have substantial effects on Atria's sales.

Changes in consumer demandSwift changes in consumer behaviour may change the pattern of demand for Atria's products across different categories. As a result, shifts in consumer demand could affect its net sales and eventually its margins.

Operational disturbancesAtria has production plants in Finland, Sweden, Denmark, Estonia and Russia. Atria's operations are process-centric and disturbances in a critical part of the process may result in suspension of plant operations.

Product safety issuesAs a food manufacturing company, Atria is exposed to internal and external quality and safety issues throughout the production chain. Product safety issues may hamper Atria's reputation as a quality producer.

Financial risksThe key financial risks relate to currency translation, transactions and refinancing. In particular, the weak SEK affects Atria's profitability through increased base material prices, which elevate meat raw material prices. The RUB also adds translation and transaction risk to Atria.

Increasing competition from foreign productsAtria primarily uses domestic meat raw materials and domestic customers mostly demand domestic meat products. In case of changes in demand and foreign competitors entering market, increased competition could affect Atria's profitability.

6

Atria30 August 2018

ValuationWe analyse Atria using a variety of valuation methods and find the company fairly valued given the current earnings outlook. However, if Atria manages to accelerate the pace of its EBIT margin recovery in Sweden, we believe it should support the whole group's earnings development, thus justifying higher valuation multiples. The company has a strong balance sheet, which we believe it can use to maintain its dividend at the 2017 level despite some earnings softness this year. Using a combination of valuation methods, we derive a valuation range of EUR 9.5-11.6.

BackgroundWe use a range of different valuation methods to derive a fair value for Atria. In our analysis, we compare Atria to the most relevant peers using valuation multiples such as EV/EBIT and P/E multiples. We also use a standard DCF model and consider Atria from a dividend case angle, assuming a fair dividend yield of 4.5% for the company in the coming years. The table below shows our valuation peer group of European companies.

PEERS' VALUATION MULTIPLES

European peers 2017 2018E 2019E 2020E 2017 2018E 2019E 2020E 2017 2018E 2019E 2020E

Apetit Oyj 54.3 14.1 11.8 19.0 15.8 1.1% 5.8% 5.8% 5.8%Bell Food Group Ag 17.4 17.2 15.6 14.7 10.9 13.8 14.2 13.3 0.0% 2.0% 2.0% 2.2%Cranswick Plc 18.1 16.9 16.0 15.1 23.0 21.4 20.2 18.9 0.0% 1.7% 1.8% 2.0%Fleury Michon Sa 19.4 9.7 7.2 6.4 25.5 12.6 9.1 7.9 0.3% 2.4% 2.5% 2.5%Hkscan Oyj 27.2 37.9 4.9% 3.4% 3.4%Raisio Oyj 9.3 15.3 13.0 12.6 13.8 21.7 17.9 17.4 5.6% 5.6% 4.8%Scandi Standard Ab (Publ) 16.3 15.5 12.6 11.5 15.9 15.2 11.3 10.8 3.5% 4.6% 4.9%Societe Ldc Sa 11.0 10.0 9.3 8.6 15.9 14.9 13.8 13.1 1.2% 1.2% 1.3%Ter Beke Nv 21.3 13.9 13.8 12.5

Average 20.9 14.1 14.4 11.5 17.0 16.2 17.3 13.9 1.3% 3.2% 3.4% 3.4%Median 17.8 15.4 13.5 11.8 15.9 14.9 14.2 13.3 0.3% 2.9% 3.0% 2.5%Atria 10.7 12.4 9.7 8.9 10.0 12.0 8.9 8.1 5.5% 5.5% 6.0% 6.6%Atria vs peer median -40% -19% -29% -25% -37% -20% -37% -40% 5.2pp 2.6pp 3.1pp 4.1pp

EV/EBIT P/E Div yield %

Data as of market close on 27 August 2018.

Source: Thomson Reuters

EV/EBIT at a discount to the sector due to slightly lower EBIT marginsAtria has historically traded below its peers on forward-looking EV/EBIT multiples, which we see as justified since it has, on average, delivered slightly lower EBIT margins.

The margin gap has been stable over the past five years and it seems fair that consensus expects a similar gap to persist, with Atria's EBIT margin forecast to climb to 3.3% in 2020 versus the peer median of 4.8%.

We expect the EBIT margin for Finland (~70% of group sales) to be around 3.5-3.6% in 2018-20, whereas Sweden is still digesting the new factory expansion (due for completion in Q3 2018) and so the segment is likely to break even at the end of 2018. Should the Swedish operations show a faster-than-expected improvement, we believe Atria should trade at higher valuation multiples. If we apply a 15% discount (which is in line with the three-year historical average) to peers' EV/EBIT multiples, we arrive at a fair value range of EUR 9.0-11.0 per share.

7

Atria30 August 2018

EV/EBIT NEXT 12 MONTHS

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

13.0x

14.0x

15.0x

16.0x

Aug-13 Aug-14 Aug-15 Aug-16 Aug-17

Atria Peer median


EBIT MARGIN, %

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

201

8E

201

9E

202

0E

Atria Peer median


Current price-to-earnings level justified versus peersAtria has historically traded at a discount of around 25% in the past three years to its peers and if we compare its return on equity (ROE) and price-to-book value with that of peers', the current valuation seems justified when taking into account the earnings outlook. By applying a 25% discount to peers' P/E multiples, we derive a fair value range of EUR 8.7-10.6 per share.

P/E, NEXT 12 MONTHS

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

Aug-13 Aug-14 Aug-15 Aug-16 Aug-17

Atria Peer median


ATRIA VS PEERS, P/B VS ROE %

Atria0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0 5 10 15 20

P/B

val

uatio

n 20

18

ROE % 2018


Dividend yield assumption of 4.5% gives a fair value of EUR 10.0-12.2Atria has historically paid stable dividends, with an average dividend yield of 4.3% in the past two years. Despite some earnings softness this year, we expect Atria to be able to maintain its dividend per share at EUR 0.50, since it has a strong balance sheet. Our 2018 dividend estimate implies a payout ratio of 68%, slightly over the company's target of 50%. Thanks to its financial stability and the relatively good predictability of earnings, we believe a 4.5% dividend yield is fair for Atria. If we assume a 4.1-5.0% dividend yield range as fair and believe the company will keep this yield in the future, we arrive at a fair value range of EUR 10.0-12.2 per share.

HISTORICAL DIVIDEND YIELD, %

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Sep

-15

Nov

-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep

-16

Nov

-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep

-17

Nov

-17

Jan-

18

Mar

-18

May

-18

Jul-1

8


NET DEBT AND GEARING, EURm AND %

0%

20%

40%

60%

80%

100%

120%

0

50

100

150

200

250

300

350

400

450

2010 2011 2012 2013 2014 2015 2016 2017

Net debt Net gearing


8

Atria30 August 2018

DCF modelA discounted cash flow (DCF) model is one of the most common ways to evaluate the intrinsic value of a business and so we also use it to estimate the value of Atria. A DCF model discounts the value of all future cash flows to their present value using the weighted cost of capital (WACC). The WACC takes into account the expected return for both equity and bond holders of a company. A DCF valuation can be described by the following steps:

1. Discount a company’s free cash flows at WACC to derive the total company’s enterprise value (EV).2. Identify which parts of the total enterprise value are related to debt holders and non-equity claims.3. Deduct all components that are not related to the equity holders’ claim to derive equity value for the company. The equity value is then divided by the number of outstanding shares to achieve DCF-based share price.

We find DCF to be a good valuation method since it takes into account the fundamental drivers of a company, such as the cost of capital, growth rates, reinvestments rates etc. The main appeal of a DCF model is that is only takes into account a company’s cash flows instead of accounting-based earnings. A disadvantage is that it is relatively sensitive to changes in input values.

DCF valuation of Atria is EUR 10.5-12.8In our DCF model, we value Atria based on the current business, assuming no additional value-adding acquisitions and that sales will grow on average by 1.5% until 2023 and subsequently at a 2.0% pace to perpetuity, meaning organic growth roughly at the average inflation. We also assume Atria will keep its current profitability level with an adjusted EBIT margin of 3.0%. We use a cost of debt of 4.0% in our DCF as the current level of around 2.3% is unlikely to persist in the long term. We also assume that average debt will go down owing to higher interest rates in the future and so we assign the company a long-term equity weight of 70% in our DCF model.

WACC COMPONENTS

WACC components

Risk-free interest rate 1.5%Market risk premium 5.5%Equity beta 1.5-1.7Cost of equity 9.8-10.9%Cost of debt 4.0%Tax-rate used in WACC 20%Equity weight 70%WACC 7.8-8.6%


DCF VALUATION

DCF value Value Per share

NPV FCFF 529 17.6-19.9(Net debt) -210 -7.5Market value of associates 0 0.0(Market value of minorities) -12 -0.4Surplus values 0 0.0(Market value preference shares) 0 0.0Share based adjustments 0 0.0Other adjustments 0 0.0Time value 21 0.8DCF Value 328 10.5-12.8


DCF ASSUMPTIONS

Averages and assumptions 2018-23 2024-28 2029-33 2034-38 2039-43 2044-48 Sust.

Sales growth, CAGR 1.4% 2.0% 2.0% 2.0% 2.0% 2.0%EBIT-margin, excluding associates 3.1% 3.0% 3.0% 3.0% 3.0% 2.0%Capex/depreciation, x 1.1 1.0 1.0 1.0 1.0 1.0Capex/sales 3.4% 3.0% 3.0% 3.0% 3.0% 3.0%NWC/sales 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%FCFF, CAGR 8.0% -2.0% 2.0% 2.0% 2.0% -6.3% 2.0%


DCF valuation sensitivityTo highlight the sensitivity of our DCF valuation, we also provide sensitivity matrices modelling variations in revenue growth, margin assumptions and cost of capital. The sensitivities in our WACC are outlined in the following tables.

When we use sensitivities of ±0.5 pp for WACC, ±0.5 pp for sales growth and ±0.5 for EBIT margin change, our DCF model gives us a value range of EUR 8.3-15.6 per share.

9

Atria30 August 2018

SENSITIVITY OF OUR DCF MODEL, EUR

Sensitivity analysis: WACC vs EBIT margin

7.2% 7.7% 8.2% 8.7% 9.2%1.0pp 22.7 18.1 16.0 14.3 12.7

EBIT marg. 0.5pp 17.7 15.6 13.8 12.3 11.0change 0.0pp 14.9 13.1 11.6 10.3 9.2

-0.5pp 12.0 10.6 9.4 8.3 7.4-1.0pp 9.2 8.1 7.2 6.4 5.6

Sensitivity analysis: WACC vs Sales growth

7.2% 7.7% 8.2% 8.7% 9.2%1.0pp 16.9 14.8 13.1 11.6 10.3

Sales gr. 0.5pp 15.8 13.9 12.3 10.9 9.7change 0.0pp 14.9 13.1 11.6 10.3 9.2

-0.5pp 14.0 12.4 11.0 9.7 8.7-1.0pp 13.2 11.7 10.4 9.2 8.2

Sensitivity analysis: Sales growth vs EBIT margin

-100.0% -50.0% 0.0% 50.0% 100.0%1.0pp 14.3 15.1 16.0 17.0 18.1

EBIT margin 0.5pp 12.3 13.0 13.8 14.7 15.6change 0.0pp 10.4 11.0 11.6 12.3 13.1

-0.5pp 8.4 8.9 9.4 10.0 10.6-1.0pp 6.5 6.8 7.2 7.6 8.1

WACC

Sales growth change

WACC


Valuation conclusionWe use relative valuation, a DCF-based fair value calculation and a dividend yield assumption in our analysis. Based on the assumption that Atria can deliver revenue growth and an operating profit margin in line with our expectations, we estimate a fair value range of EUR 9.5-11.6 per share based on our four different valuation approaches (DCF, dividend yield, 2019E EV/EBIT and 2019E P/E). This valuation range is represented as the red lines in the chart below.

VALUATION APPROACH

8.7

9.0

10.0

10.5

10.6

11.0

12.2

12.8

6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0

P/E 19E

EV/EBIT 19E

Div. yield 18E

DCF

Share price, EUR


10

Atria30 August 2018

Company overviewAtria is one of the leading food companies in the Nordic countries, with operations in Finland, Sweden and Denmark as well as Russia and Estonia. The company dates back to 1903 when the first Finnish meat company operating according to co-operative principles was founded in Kuopio in eastern Finland. Currently, Atria employs around 4,500 people. It commands a market share of about 24% in Finland and in 2017 total net sales exceeded EUR 1.4bn.

Leading food company in Nordic countriesAtria is a leading Finnish meat and food company with an international presence. It operates through four business areas: Atria Finland, Atria Sweden, Atria Denmark and Estonia and Atria Russia

With net sales of EUR 986m (67% of group sales) and EBIT of EUR 36.3m in 2017, Atria Finland is the largest and most important of the business areas. The segment employs around 2,300 personnel. Atria Finland's leading brand is Atria, one of the best-known food brands in Finland. Core categories in Finland include cold cuts, meat products, fresh meat and consumer-packed meat, poultry products, convenience food and animal feed. All of the meat used in Atria's own branded products is produced in Finland. According to Atria, apart from its own brands, the company also has a strong position in private labels, which it produces for customers such as the K Group and S-Group, the two largest grocery chains in Finland.

Atria Sweden is the group's second-largest segment with net sales of EUR 307m (21% of group sales) and EBIT of EUR 2.4m in 2017. The Swedish operations employ about 850 personnel and the core categories in Sweden are meat products, cold cuts, convenience food, poultry products and vegetable and fresh delicatessen products. The meat raw material used in Atria Sweden's product categories is primarily of domestic origin.

The Atria Denmark & Estonia segment generated comparative net sales of EUR 99m and EBIT of 5.2m in 2017. Before January 2018, Denmark was reported under the Scandinavian segment and Estonia under the Baltic segment. The number of employees in the new business area is approximately 430 and the core categories are cold cuts, meat products, consumer-packed meat and convenience food. Atria has its own primary production in Estonia, and according to Atria, it is the country's second-largest pork producer. The meat raw material used in Atria's product categories is mainly of domestic origin.

Atria Russia markets its meat products and convenience foods mainly in the St Petersburg regions, generating net sales of EUR 86m and EBIT of EUR 0.8m in 2017. The employee base in Russia is about 860. Atria procures its meat raw material from international meat markets and Russia.

11

Atria30 August 2018

NET SALES BREAKDOWN IN 2017

Finland67%

Sweden21%

Russia6%

Denmark & Estonia

6%


EBIT BREAKDOWN IN 2017

Finland81%

Sweden5%

Russia2%

Denmark & Estonia

12%


Company history at a glanceAtria's roots date back to 1903 to Kuopio in eastern Finland, when its oldest owner co-operative Lihakunta was founded as Kuopion Karjanmyyntiosuuskunta. Itikka Co-operative was subsequently founded in 1914, and has been instrumental in the growth of the company. Itikka Co-operative is currently Atria's largest shareholder.

In 1963, the Atria brand was first introduced in TV commercials, but it was not until 1994 that Atria actually became the name of the entire group.

In 1988, the slaughterhouse operations of two co-operatives were incorporated into limited liability companies, Lihapolar Oy and Itikka Lihabotnia. These two companies subsequently merged in autumn 1990 and became Itikka-Lihapolar, which then acquired the Pohjanmaan Liha co-operative and went public in the summer of 1991.

From 1992 to 1996, the company concentrated on efficiency measures and heavily centralised its operations at three sites. The new food factory in Nurmo was commissioned in 1992 with a major debt load during the early 1990s depression in Finland.

Atria expanded into Sweden in 1997 by acquiring Lithells, simultaneously gaining access to the Sibylla brand, which is currently the second-largest fast-food chain in Sweden.

In 2000, a new logistics centre was added in Nurmo, Finland to reinforce the logistics operations. A-Farmers was incorporated in 2001, which was responsible for meat procurement and consultation.

The Baltic operations began in 2003 through an acquisition in Lithuania. Atria then expanded its reach to Russia in 2005 by acquiring Pit Product, and to Denmark in 2007 by acquiring publicly-listed company AB Sardus. At the time of the acquisition, AB Sardus had majority of its operations in Sweden.

Over the past ten years Atria has acquired multiple companies and brands with a heavy investment programme. Its latest acquisition of Lagerbergs in Sweden in 2016, combined with a EUR 14m investment programme for Lagerbergs' operations, expanded its offering in the growing Swedish poultry market.

12

Atria30 August 2018

COMPANY TIMELINE


MAJOR ACQUISITIONS SINCE 1997

Year Country CompanyNet sales (est. at

acqusition)Brands Main categories

1997 Sweden Lithelss AB FIM 950m Lithells, Sibylla Fast food1999 Finland Liha ja Säilyke Oy not disclosed Forssan Salads and convenience food2002 Sweden Samfood AB EUR 41m Mainly sausages

Sweden Spira Ready Meal AB not disclosed2003 Lithuania UAB Vilniaus Mesa EUR 10m Vilniaus Mesa2005 Estonia AS Valga Lihatööstus EUR 10m Maks & Moorits Various meat products

Russia OOO PIT Product EUR 40m Pit-Product Mainly sausages2007 Finland Pouttu meat operations EUR 25m Beef, pork and chicken

Sweden/Denmark AB Sardus EUR 230m Aarborga Pastej, Lönneberga, Cold cuts and convenience foodPastejköket, 3-Stjenet

2008 Estonia Wõro Kommerts EUR 10m Wõro Mainly sausagesAS Vastse-Kuuste EUR 9m VK

Sweden AB Ridderheims Delikatesser EUR 50m Ridderheims High-added-value products

Russia OOO Campomos EUR 75m CampoMos Meat products and pizzas

2013 Finland Saarioinen meat operations EUR 70m Jyväbroiler Beef, pork and chicken

2015 Denmark Aalbaeck Specialiteter A/S EUR 10m Aalbaeck Organic cold cuts

2016 Sweden Lagerberg i Norjeby AB EUR 30m Lagerbergs Chicken


Productivity and technology enhancements to ensure healthy growth

Atria's strategic goal is to improve profitability, accelerate growth and increase the company's shareholder value. At the beginning of the century, the company focused on international growth, followed by a long period of productivity improvements. Its latest strategy for 2016-20 aims to ensure healthy growth, mainly through organic growth, combined with productivity and technology enhancements.

Atria seeks to respond to changes in its operating environment with its "Healthy Growth" strategy, by which it means growth that does not compromise the company's profitability. Profitability has evolved favourably since the latest strategy was introduced in 2016.

For the past decade, gross investments have been below 5% of sales, except in 2016 when Atria acquired Lagerbergs. The major expansion into international markets is visible in Atria's gross investments, which peaked around 2007 when Atria acquired publicly-listed Swedish company Sardus. In our view, Atria's strong financial position bodes well for potential future expansion.

13

Atria30 August 2018

GROSS INVESTMENTS, EURm

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

3002

000

200

12

002

200

32

004

200

52

006

200

72

008

200

92

010

201

12

012

201

32

014

201

52

016

201

7

EURm % of sales (RH)


CUMULATIVE ADJUSTED EBIT, EURm

0

5

10

15

20

25

30

35

40

45

Q1 Q2 Q3 Q4

2015 2016 2017 2018

Source: Company data and Nordea

KEY BRANDS IN FINLAND


Atria Finland: Investments driving Atria's "healthy growth"Atria Finland is the most important business area for Atria, with net sales accounting for approximately 70% of total group net sales in 2017. In Finland, Atria has a strong position in all of its main categories. Atria also sells animal feed products in this market.

ATRIA'S MANUFACTURING SHARES AND MARKET POSITION IN FINLAND IN 2017

Manufacturing share Atria brands

Consumer packed meat 28% #1Poultry * 44% #2Sausages 23% #2Cold cuts 20% #1Convenience food 16% #2Total 24% #1

* According to Atria, current manufacturing share is ~50% as of Q2 2018; Source: Company data

Key customers include retail traders, food service customers, food industries, Sibylla concept customers and export customers. In Finland, Atria has significant export operations and own primary production, which is managed by A-Farmers. All of the meat used in production originates from Finland.

After almost a ten-year licensing process, Atria started exporting pork to China in May 2017, with exports in the first year amounting to around 3,000 tonnes. Atria expects that it will take a couple of years to get to know the Chinese market before it can fully exploit the potential of the world's largest and fastest-growing pork market. In 2017, Chinese pork consumption totalled about 55 million tonnes, equivalent to about 55% of total global pork production.

During 2017, Atria completed its upgrade of the Nurmo pork production plant (EUR 36m investment) and centralised a lot of its pork production from Jyväskylä at the Nurmo plant, while the Jyväskylä plant continues to produce beef. According to Atria, the cost savings from centralisation are expected to be around EUR 1.2m annually from June 2018 onwards.

14

Atria30 August 2018

PRODUCT PLANTS IN FINLAND


Atria has slaughtering and manufacturing operations in five locations in Finland:

Nurmo: Pork production as well as some poultry production.Kauhajoki: Beef production.Jyväskylä: Solely beef production since reconstruction.Sahalahti: Joint responsibility for poultry production with the Nurmo plant.Forssa: Centralised convenience food production.

In addition, Atria owns animal feed company Best-In, which has manufacturing plants at Atria's old site in Kuopio. To our knowledge, all production facilities in Finland are modern and in good shape, requiring only regular maintenance investments.

Atria Finland is also a major player in the food service sector with a 21% market share in terms of value in 2017. In addition, it supplies syndicates' private label products, which account for a significant proportion of sales, although the strongest phase of growth in this segment is expected to level out, according to Atria.

Investments in the Finnish operations and efficiency improvements materialised as sales and EBIT margins started to increase following price pressure in 2015-16. Organic growth was supported by the acquisition of Kaivon Liha in Q4 2016.

ATRIA FINLAND: 12-MONTH ROLLING NET SALES AND ADJUSTED EBIT MARGIN, EURm

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

880

900

920

940

960

980

1000

1020

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017 2018

TTM sales TTM adj. EBIT margin (RH)


KEY BRANDS IN SWEDEN


Atria Sweden: Seeking growth from popular poultryAtria Sweden is Atria's second-largest business segment; before 2018, it was included in Atria's Scandinavia segment together with the Danish operations. In 2017, Atria had sales of around EUR 60m and EBIT of around EUR 2.5m in Denmark.

Atria started expanding its Swedish operations in 1997 when it bought Lithells, and simultaneously became the owner of Sibylla, one of the best-known fast-food chains in Sweden. The Sibylla concept has expanded rapidly from Sweden, and is currently present in ten countries with over 6,000 points of sale (POS). Sibylla's expansion has been rapid, as it only had 3,300 points of sale in 2012.

In 2007, Atria acquired Sardus for around EUR 124m, strengthening Atria's position in Sweden and Scandinavia. The main competitors in Sweden are Finland's HK Scan and Sweden's Scandi Standard and Guldfågeln, with the latter two companies operating solely in the poultry segment.

15

Atria30 August 2018

The current structure of Sweden Atria was established after it sold its non-core Falbygdens cheese operations in 2014 and acquired the Lagerbergs poultry company in 2016. Atria aims to increase its exposure to the growing Swedish poultry market; in Sweden, it operates through seven production plants using mainly domestic meat in its production.

According to Atria, it is the second-largest producer of sausages and cold cuts with a 16% manufacturing share and the third-largest in chicken products with a 9% manufacturing share in Sweden in 2017. Additionally, Atria is a strong private label supplier and it commands a significant and increasing share of the food services market and concept businesses.

Atria's operations in Sweden have recently faced headwind from multiple directions: producer prices have been elevated; the poultry market has faced challenges due to avian disease cases; and, currency movements have been unfavourable, tilting EUR-denominated sales and EBIT margins downwards. We believe producer prices are likely to remain elevated in the near future owing to an exceptionally warm and dry summer this year, which has lifted grain prices significantly.

In addition, Atria Sweden had some ramp-up costs related to poultry plant renewals of the acquired Lagerbergs poultry factory (in Q2 2016) and a EUR 14m (reported by Atria) investment programme, which was backed up by a long-term contract on the delivery of chicks. The investment programme extends into 2018 and to our knowledge the investment programme was extended by additional investments of around EUR 6m. Lagerbergs' poultry factory is operational and we believe the investment programme will be complete during Q3 2018. To our knowledge, new production lines will reduce the need for manual labour, thereby reducing costs.

Atria Sweden's margins have been under pressure owing to ramp-up costs, while avian influenza caused a demand shock...

ATRIA SWEDEN: SALES AND ADJUSTED EBIT MARGIN, EURm

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

64

66

68

70

72

74

76

78

80

Q1 Q2 Q3 Q4 Q1 Q2

2017 2018Sales Adj. EBIT margin (RH)


16

Atria30 August 2018

...which is also visible in old reporting segment figures

ATRIA SCANDINAVIA (OLD SEGMENT): 12M ROLLING SALES AND ADJ EBIT MARGIN, EURm

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

290

300

310

320

330

340

350

360

370

380

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016 2017



KEY BRANDS IN DENMARK & ESTONIA


Atria Denmark & Estonia: Small but profitable segmentAtria simplified its reporting structure by removing Denmark from the Scandinavia segment (which is now called Atria Sweden) and combining this smaller segment together with Estonia. In Denmark, Atria's presence has its roots in the Sardus acquisition through which Atria gained the 3-Stjernet brand. 3-Stjernet has an export licence to China, covering heat-treated meat products (eg sausages). The operations in Denmark also include Aalbaek, a producer of organic cold cuts that Atria acquired in 2015. Atria has two production plants in Denmark.

In Estonia, Atria has one production plant and primary production, making it the country's second-largest pork producer, according to Atria. Expansion to Estonia has been twofold. In 2005, Atria acquired AS Valga Lihatööstus, with leading brand Maks & Moorits, which has had its image revamped in recent years, as it was previously associated with low quality. In 2008, Atria continued to expand by acquiring two meat processing companies, with the key brands Wõro and VK.

After a weak 2015 with problems in its primary production (caused by low summer sales and African swine flu), Atria initiated an efficiency programme in Estonia in 2016, including centralisation of its industrial operations and the sale of a northern Estonian pig farm. Combined with favourable retail volumes and pricing, this boosted sales and improved EBIT margins.

The new business unit has shown stable sales and EBIT margins since Q1 2017. Improvement of the Estonian Maks & Moorits brand image should continue, and in Denmark Atria has introduced new products to support growth.

Atria Denmark & Estonia has stable sales and solid EBIT margins...

ATRIA DENMARK & ESTONIA: SALES AND ADJUSTED EBIT MARGIN, EURm

0%

1%

2%

3%

4%

5%

6%

7%

10

12

14

16

18

20

22

24

26

28

30

Q1 Q2 Q3 Q4 Q1 Q2

2017 2018

Sales adj. EBITmargin (RH)


17

Atria30 August 2018

...supported by the strong Estonian operations, in particular

ATRIA BALTIC (OLD SEGMENT): 12-MONTH ROLLING SALES AND ADJ EBIT MARGIN, EURm

0%

1%

2%

3%

4%

5%

6%

7%

8%

30

31

32

33

34

35

36

37

38

39

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016 2017



KEY BRANDS IN RUSSIA


Atria Russia: Sibylla concept expansion continues in huge marketAtria acquired Pit Product in 2005 and started expanding into the Russian market, mainly in the St Petersburg area. The expansion continued into the Moscow area with the acquisition of loss-making Campomos in 2008 after which Atria became the largest foreign-based meat processor in Russia.

After a long struggle with Campomos' margins, Atria trimmed its product mix in 2012, selling off the Campomos' manufacturing and logistics centre and discontinuing unprofitable primary pork production in Russia in 2014; this left Atria with the Campomos brand itself. Currently, Atria operates mainly in St Petersburg and Moscow, although all of the production and logistics operations are centralised in St Petersburg.

The Russian grocery market is still quite fragmented and Atria has thus opted to partner with just a few larger grocery chains. Furthermore, Atria is increasing its share of the food service market with Sibylla products, which it introduced to the Russian market in 2008. Expansion has been fast, as the number of points of sale (POS) has increased in Russia from 500 to over 3,000 between 2012 and 2017.

Profitability in Atria Russia has been increasing since the major restructuring in 2012, which further continued in 2014, resulting in positive EBIT margins for the first time in 2017. In Russia, Atria experiences seasonally large volatility between quarters, with Q1 being the smallest, historically posting negative adjusted EBIT.

Atria Russia's sales and EBIT margins are largely affected by currency fluctuations

ATRIA RUSSIA: 12-MONTH ROLLING SALES AND ADJUSTED EBIT MARGIN, EURm

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

0

10

20

30

40

50

60

70

80

90

100

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017 2018

TTM sales TTM adj. EBIT margin


18

Atria30 August 2018

Executive managementAtria has an experienced management team consisting of Juha Gröhn (CEO), Tomas Back (CFO, deputy CEO and executive vice president, Atria Denmark), Mika Ala-Fossi (executive vice president, Atria Finland), Jarmo Lindholm (executive vice president, Atria Sweden), Olle Horm (executive vice president, Atria Estonia), Andrey Shkredov (executive vice president, Atria Russia), Lars Ohlin (executive vice president, human resources) and Pasi Luostarinen (executive vice president, marketing & market insight).

ATRIA'S EXECUTIVE MANAGEMENT

Juha Gröhn Tomas Back Mika Ala-Fossi Jarmo LindholmPosition Position Position PositionCEO CFO, Deputy CEO, Executive Executive Vice President, Executive Vice President,

Vice President, Atria Denmark Atria Finland Atria SwedenEducation Education Education EducationMSc in Food Science MSc in Economics Meat industry technician MSc in EconomicsSelected Experience Selected Experience Selected Experience Selected ExperienceVarious positions at Atria Various director positions at Various positions at Atria since Various positions at Atria,from 1990 Atria since 2007, 2000 Account and marketing

CFO at Huhtamäki Americas/ manager at AC NielsenRigid Europe

Held position since Held position since Held position since Held position since2011 2018 2011 2018Shareholdings Shareholdings Shareholdings Shareholdings20,500 1,880 940 1,020

Olle Horm Ilari Hyyrynen Lars Ohlin Pasi LuostarinenPosition Position Position PositionExecutive Vice President, Executive Vice President, Executive Vice President, Executive Vice President,Atria Estonia Atria Russia Human Resources Marketing & Market InsightEducation Education Education EducationEngineer MBA BA (International BA) MSc in EconomicsSelected Experience Selected Experience Selected Experience Selected ExperienceExecutive VP at Atria Baltic, Country director, Tikkurila, Various positions at Atria since Various positions at Atria sinceChairman of the Board of Russia, 2007, Business development 2000, Maag Meat Industry Various positions at Tikkurila director at Sardus Marketing director at Valio

Held position since Held position since Held position since Held position since2018 2018 2016 2016Shareholdings Shareholdings Shareholdings Shareholdings0 0 510 1,880

Source: Company data and Thomson Reuters

19

Atria30 August 2018

Board of directorsAtria has an experienced board of directors with vast experience from the field of agriculture and other business areas. Five members of the board, including the chairman and vice chairman, are dependent of the company and of the principal shareowners. All five have held or currently hold board positions at major shareowners. The board of directors consists of eight members, with Seppo Paavola as chairman.

ATRIA'S BOARD OF DIRECTORS

Seppo Paavola Jyrki Rantsi Nella Ginman-Tjeder Pasi KorhonenPosition Position Position PositionChairman of the Board Vice Chairman of the Board Board member Board member

Education Education Education EducationAgrologist Agrologist MSc in Economics FarmerSelected Experience Selected Experience Selected Experience Selected ExperienceFarm advisor, agricultural Agricultural entrepreneur, CEO of Eira hospital, Farmer,entrepreneur, Chairman of the Board of CEO of Ifolor 2007-2014, Vice Chairman of the Board ofChairman of the Supervisory Lihakunta, Vice Chairman of the Board member of Viking Malt Lihakunta, Councillor of theBoard of Itikka Board of A-Farmers Sotkamo Municipal CouncilHeld position since Held position since Held position since Held position since2012 2015 2016 2016Shareholdings Shareholdings Shareholdings Shareholdings4,000 700 0 0Independency Independency Independency IndependencyDependent of the company and Dependent of the company and Independent of the company Dependent of the company andof the principal shareowners of the principal shareowners and of significant shareowners of the principal shareowners

Jukka Moisio Kjell-Göran Paxal Ahti Ritola Harri SivulaPosition Position Position PositionBoard member Board member Board member Board member

Education Education Education EducationMSc in Economics, MBA Agrologist Bachelor of BA MSc in AdministrationSelected Experience Selected Experience Selected Experience Selected ExperienceCEO of Huhtamäki, Primary production manager, Entrepreneur in agriculture, CEO of GS1 Finland, Restel andVarious positions at Chairman of the Board of real estate and commerce, Onninen,Ahlström between Pohjanmaan Liha, Westfarm Member of the Board of Itikka Chairman of the Board of1991 and 2008 and Foremix TokmanniHeld position since Held position since Held position since Held position since2014 2012 2018 2009Shareholdings Shareholdings Shareholdings Shareholdings0 2,166 0 10,000Independency Independency Independency IndependencyIndependent of the company and Dependent of the company and Dependent of the company and Independent of the company andof the principal shareowners of the principal shareowners of the principal shareowners of significant shareowners

Source: Company data and Thomson Reuters

20

Atria30 August 2018

Incentive scheme for management and key personnelAtria's incentive scheme is divided into two different schemes:

Short-term incentive scheme – The maximum bonus payable under Atria's short-term incentive plan is 25-50% of annual salary, depending on the performance impact and requirement level of each individual's role. In addition to the CEO and other members of the group's management team, Atria's short-term incentive scheme covers approximately 40 people.

Share-based incentive scheme – Atria has a long-term incentive plan for key personnel for the period 2018-20, divided into three one-year periods. The possible bonus in the scheme is based on the company's earnings per share (70%) and organic growth (30%). Potential bonuses are paid in three equal parts, partly as company shares and partly in cash. The share-based incentive scheme covers a maximum of 40 people and the maximum value of the bonuses to be paid on the basis of the 2018 earnings period is not more than EUR 2m.

AGM authorisation for share buyback and issuance The company's AGM held on 26 April 2018 authorised the board of directors to:

acquire a maximum of 2,800,000 of the company's own series A-shares. The number of shares corresponds to ~10% of total shares, and ~15% of series A-shares.Issue a maximum of 5,500,000 new series A-shares with a right to decide on any terms and conditions of the share issue.

Two share seriesAtria has two share series, of which KII shares entitle holders to ten voting rights and series A to one voting right. There are two important restrictions on the Atria shares:

Shares from series A carry the right of priority to a dividend of EUR 0.17, after which KII-series are paid a dividend of up to EUR 0.17. If distributable dividends remain after this, series A and series KII shares entitle their holders to an equal right to a dividend.If series KII shares are transferred to a party outside the company or to a shareholder within the company who has not previously owned series KII shares, the proposed recipient of the shares must inform the board of directors without delay, and series KII shareholders have the right to pre-emptively purchase the shares under certain conditions. In addition, the acquisition of series KII shares by means of transfer requires approval by the company.

Atria's share capital is divided into two series as follows:

Series A-shares (one vote per share): 19,063,747Series KII shares (ten votes per share): 9,203,981Total shares: 28,267,728

21

Atria30 August 2018

ShareholdersAtria's largest shareholders, Itikka osuuskunta and Lihakunta are co-operatives and major owners and developers of Atria since the 1980s. With the third co-operative, Pohjanmaan Liha, it commands (through KII shares) almost 90% of total voting rights in the company.

Currently, 57.7% of the shares and 87.1% of the voting rights are owned by the two largest shareholders, Itikka and Lihakunta.

Of the total shares, the three main owners by type are companies (64.8%), households (17.7%) and financial and insurance institutions (5.2%).

LARGEST SHAREHOLDERS IN ATRIA AS OF 30 JUNE 2018

Number of shares % of voting rights % of shares

Itikka osuuskunta 8,451,933 47.4% 29.9%Lihakunta 7,868,273 39.6% 27.8%Skandinaviska Enskilda Banken AB 1,206,353 1.1% 4.3%Nordea Bank Ab (Publ), Suomen Sivuliike 1,075,750 1.0% 3.8%Mandatum Life Unit-Linked 757,363 0.7% 2.7%Osuuskunta Pohjanmaan Liha 749,538 2.9% 2.7%Varma Mutual Pension Insurance Company 524,640 0.5% 1.9%Oy Etra Invest Ab 200,000 0.2% 0.7%OP Life Assurance Company Ltd 150,873 0.1% 0.5%Elo Pension Company 126,289 0.1% 0.4%The estate of Greta Von Julin 112,000 0.1% 0.4%Atria Oyj 111,312 0.1% 0.4%Sijoitusrahasto Taaleritehdas Arvo Markka Osake 105,000 0.1% 0.4%The Central Union of Agricultural Producers and Forest Owners (MTK) 101,518 0.1% 0.4%Syrjänen Eva Annika Elisabeth 93,685 0.1% 0.3%Ilmarinen Mutual Pension Insurance Company 90,000 0.1% 0.3%Norvestia plc 86,877 0.1% 0.3%Mäkinen Markku 80,000 0.1% 0.3%Linden Kenneth 70,000 0.1% 0.2%Sun Marianne Oy 70,000 0.1% 0.2%

22,031,404 94.4% 77.9%

Other shareholders 6,236,324 5.6% 22.1%

TOTAL 28,267,728 100.0% 100.0%


SHAREHOLDER TYPE IN ATRIA AS OF 31 DECEMBER 2017

Number % of owners 1000 shares % of shares

Companies 391 3.1% 18312 64.8%Financial and insurance institutions 21 0.2% 1456 5.2%Public corporations 8 0.1% 753 2.7%Non-profit organisations 87 0.7% 370 1.3%Households 11985 95.8% 5009 17.7%Foreign owners 24 0.2% 24 0.1%TOTAL 12516 100.0% 25924 91.7%

Non-registered 9 2344 8.3%


22

Atria30 August 2018

Strategy and financial targetsAtria's strategic goal is to improve profitability, accelerate growth and increase the company's shareholder value. To achieve this, the company is implementing its Healthy Growth strategy, which is intended to run until 2020. Atria aims to grow primarily through organic means, increasing the pace of growth by launching into new product segments and market areas. Each of Atria's business areas are implementing their own development projects in line with the company's main themes. The strong financial position bodes well for stable dividend payments.

Three strategic themes...

...and seven focus areas within

The Healthy Growth strategyAtria's latest strategy runs from 2016 to 2020, aiming to improve profitability, accelerate growth and increase shareholder value. The strategy builds on three themes:

Commercial excellence - Atria aims to maintain and accelerate its growthEfficiency – It aims to improve productivity and profitabilityAtria Way of Work – Atria seeks to ensure profitable, healthy growth in the long term through shared practices and values.

Within these three themes, Atria has seven focus areas:

Market insight - Extensive and diverse use of market and consumer data; Atria claims to be a pioneer of management by information in its sectorCategory and brand management – Atria sees the opportunities of making its brands stronger via the management and development of brands and categoriesCommercial excellence – Atria aims to develop and reinforce sales tools and customer collaboration with an open mindDaily operational efficiency – Aims to bolster operational efficiency throughout the companySupply chain efficiency – Seeks efficiency in the entire supply chain in close collaboration with different parties in the chainResource optimisation – More efficient resource usage through optimisationAtria's Way of Leading – Focus on solutions, not problems. Development of management, involving interaction, participation and development.

With this strategy, Atria seeks the ability to grow, transform and respond to ongoing changes in the business environment in all business areas. Each of its four business areas (Finland, Sweden, Denmark and Estonia and Russia) are implementing their own development projects in seven focus areas.

ATRIA'S FINANCIAL TARGETS

Target 2015 2016 2017

EBIT level of 5% 2.2% 2.3% 2.8%Equity ratio of 40% 47.4% 46.5% 47.5%Return on equity (ROE) ratio of 8% 3.6% 4.7% 6.7%Dividend distribution ratio of 50% 82.0% 71.2% 54.4%


Guidance for 2018Atria expects 2018 net sales to remain flat and group EBIT to be lower than in 2017. Net sales were EUR 1,436m and group EBIT was EUR 40.9m in 2017.

Atria lowered its guidance for 2018 on 13 July. The previous guidance was for 2018 net sales to grow and group EBIT to be better than in 2017.

23

Atria30 August 2018

Market overviewAtria's main target markets have evolved and now offer different opportunities for the company. In general, Atria's investments have mirrored the favourable trend in poultry consumption in the two most important markets, Finland and Sweden. We suggest that a highly concentrated grocery market, a rising share of private labels and increasing producer prices will keep prices under pressure. Developing retail markets in Estonia and Russia, on the other hand, still offer room to introduce more value-added products. We think poultry will remain the key driver for future growth in Atria's main markets.

Finland – Poultry leading the growthOf Atria's three main categories – pork, beef and poultry – poultry has been best-performing in terms of volume. Poultry consumption increased at a CAGR of 4.2% between 2000 and 2017, whereas the CAGRs for pork and beef volume were 0.1% each. The total meat consumption CAGR during the period was 1.0%. The only negative growth year for poultry was 2006, owing to the bird flu epidemic. Poultry growth has been especially strong since 2015, boasting up to 8.8% annual growth.

Poultry production has been increasing steadily, in line with poultry consumption, thereby putting pressure on producer prices, which declined in 2013-17 but have remained flat since. The poultry products tend to have higher gross margins than the pork and beef products, and are therefore more resilient to lower producer prices. We expect poultry prices to increase in line with inflation.

The pork industry is the most cyclical of the three and producer price data indicates that the cycle has turned after reaching the trough in 2016. Producers cut their production after a lengthy period of contracting prices, leading to increases in producer prices and a reduction in slaughtering volumes.

The Finnish beef industry has been stable and consumption has been steady in the past ten years. The producer prices of cattle have moved roughly in line with the prices of poultry and pig in 2004-12, but since 2013 cattle prices have been markedly higher. We believe that consumers are willing to pay a premium for domestic beef products, which supports Finnish cattle prices.

CHANGE IN MEAT CONSUMPTION PER CAPITA IN FINLAND, Y/Y, %

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Pork Beef Poultry

Source: Natural resources institute Finland

24

Atria30 August 2018

According to Atria, it has a ~50% market share in poultry products

Producer prices on an upward trend

MEAT PRODUCTION AND CONSUMPTION IN FINLAND, MILLION KG

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Pork production Beef production Poultry production

Pork consumption Beef consumption Poultry consumption


QUARTERLY PRODUCER PRICES, INDEX 2010=100

60

70

80

90

100

110

120

130

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Pigs Cattle Poultry


PRIVATE LABEL DEVELOPMENT

Source: Finnish Grocery Trade Association

Highly concentrated Finnish grocery marketThe Finnish grocery market is dominated by S-Group and K Group, followed by Lidl. In 2017, these two players had a combined market share of 82%, and including Lidl, these three commanded 91% of the market.

Procurement for all the syndicates is handled by five logistic companies, of which SOK (S-Group) and Kesko are the largest. This hands high negotiating power to the large retail chains, as the market is very concentrated. For Atria, and the rest of the food processors, this brings longer pass-through times for prices and makes it generally difficult for them to achieve large price increases.

The relatively high share of private labels (eg Pirkka brand by K Group and Rainbow brand by S-Group) puts pressure on the margins of food processing companies, as the cheaper private labels compete with the own branded label of the companies (including Atria). In 2017, private labels accounted for 24% of total grocery sales, up from 9% in 2007. The share is still relatively low compared with European countries, where the share of private labels is around 30-40% of total sales. Smaller food processing companies can benefit from private labels, as they lack the marketing power, but the private labels typically mean lower margins for larger companies.

25

Atria30 August 2018

FINNISH GROCERY MARKET IN 2017

Syndicate Stores % of all sales Sales, EURm

S-Group 1040 45.9% 8074K Group 1284 35.8% 6299Lidl 169 9.3% 1636Tokmanni 175 1.6% 278Stockmann 6 0.8% 145Minimani 5 0.6% 96M-ketju 70 0.5% 91Other 1875 5.5% 976TOTAL 4624 100.0% 17595

Source: Finnish Grocery Trade Association

Sweden: Fewer origin-sensitive customersIn Sweden, meat consumption in general expanded between 2000 and 2016, largely owing to an increase in the population. As in Finland, the leading meat by volume has been poultry, increasing at a CAGR of 4.6% in 2000-16. Beef consumption rose by a CAGR of 1.6% and pork by a CAGR of 0.4% over the same period. Meanwhile, the population and total meat consumption in Sweden increased by a CAGR of 0.7%, indicating that consumption of poultry and beef per capita has risen and pork consumption has declined. The drop in beef figures in 2017 was the result of growing consumer awareness of climate effects, we would argue. Poultry consumption in 2017 was affected by high levels of campylobacter infections, as a result of errors in a competitor's new cleaning system.

Simultaneously, while consumption of meat has increased, the production of beef and pork has decreased, indicating that Swedish consumers are less sensitive to imported meat than their Finnish neighbours. It is also notable that Denmark, a large pig producer, is closer to Sweden, leading to smaller entry barriers for foreign fresh meat. We are expecting a further increase in domestic poultry production, as all the major poultry companies in the country have invested in poultry production from 2016 onwards, boosting the poultry self-sufficiency levels, although it was still at a relatively low level of 68% in 2017.

Avian diseases affected the Swedish market in 2016 and 2017

CHANGE IN MEAT CONSUMPTION PER CAPITA IN SWEDEN, Y/Y, %

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Pig Beef Poultry

Source: Jordsbruksverket

26

Atria30 August 2018

Firmly expanding Swedish poultry market

MEAT PRODUCTION AND CONSUMPTION IN SWEDEN, MILLION KG

0

50

100

150

200

250

300

350

400

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016


Pork consumption Beef consumption Poultry consumption

Source: Jordsbruksverket

MONTHLY PRODUCER PRICES, INDEX 2010=100

50

60

70

80

90

100

110

120

130

140

150

2005 2007 2009 2011 2013 2015 2017

Pigs Cattle Poultry

Source: Jordbruksverket

SWEDISH MEAT SELF-SUFFICIENCY

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Pork Beef Poultry

Source: Jordsbruksverket Marknadsrapport 2017

Like Finland, Sweden has a highly concentrated grocery market. The three largest syndicates hold a combined ~86% market share. In addition, the second-largest syndicate, Coop, is also the largest player in the Danish market.

In Sweden, private labels are more common than in Finland. Currently, 25% of ICA's sales and 28% of Axfood's are generated through private labels. Both companies are aiming to increase the share of private products in their categories and they use mainly domestic meat in their private-label meat products.

SWEDISH GROCERY MARKET IN 2017

Syndicate Number of stores Market share % Sales, SEKbn

ICA 1177 50.4% 132.6Coop 587 18.2% 48.0Axfood 798 17.2% 45.3Bergendahls 172 7.5% 19.8Lidl 172 4.4% 11.6Netto 164 2.2% 5.7TOTAL 3070 100.0% 263.0

Source: DLF, Delfi, HUI

Denmark and Estonia: Two different playing fields Atria's main offering in Denmark is cold cuts. According to the company, the market for cold cuts in Denmark was EUR 346m in 2017, and it claims a market-leading position here with an 18.5% market share. The Danish grocery market is similar to those of Finland and Sweden – highly concentrated, the market leaders being Coop and Danske Supermarked. Atria's main competitor in Denmark is Danish Crown, which is Europe's largest pork processor.

27

Atria30 August 2018

Denmark is the world's largest organic food country in terms of consumption per capita. Atria has organic cold cuts offerings through Aalbaek, one of Europe's largest organic cold cuts manufacturers. The organic cold cuts market increased from DKK 102m in 2010 to DKK 252m in 2017 and we believe its outlook is solid.

The Danish organic food market is expanding rapidly

TURNOVER OF ORGANIC COLD CUTS IN DANISH RETAIL SHOPS, DKKm

-20%

-10%

0%

10%

20%

30%

40%

0

50

100

150

200

250

300

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Organic cold cuts of meat and poultry Change y/y % (RH)

Source: Statistics Denmark

In Estonia, Atria has a wider product offering, since there it is involved in the whole meat product market. The Estonian grocery market is still fairly fragmented, but according to news reports, Lidl has investigated the possibility of entering the Estonian grocery market.

Atria works across a complete production chain in Estonia, including pig farms and slaughterhouses. Total meat production in the country was on the increase until 2015, since when Estonia has been suffering from African swine flu, which hit the country in 2014, and is visible in the production figures for 2016-17.

Estonia is closing the gap to the EU in meat consumption

Estonian meat consumption per capita has steadily increased since the financial crisis, at a CAGR of 3.1% for 2010-16. Pork consumption in Estonia has been the main driver of this, at a 5.6% CAGR. Poultry has been the second fastest-growing meat type with a 2.6% CAGR, while beef consumption contracted between 2010 and 2016 at a CAGR of 4.8%.

We estimate that Estonian meat consumption growth will slow down in the coming years, as it has almost reached the average meat consumption per capita in the EU (84.8 kg in 2017). Although we estimate slowing growth, we think this market has the appetite for higher value-added products, suggesting a solid outlook for Atria in this segment.

African swine flu affected pork production...

MEAT PRODUCTION IN ESTONIA, MILLION KG

-30%

-20%

-10%

0%

10%

20%

30%

0

10

20

30

40

50

60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Ch

ang

e y/

y %

Pro

du

ctio

n, m

illio

n k

g


Pork change y/y % (RH) Beef change y/y % (RH) Poultry change y/y % (RH)

Source: Statistics Estonia

28

Atria30 August 2018

...but consumption growth has persisted

MEAT CONSUMPTION IN ESTONIA, KG PER CAPITA

0

5

10

15

20

25

30

35

40

45

50

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Pork Beef Poultry

Source: Statistics Estonia

Russia: Grocery market still fragmentedRussia is the largest grocery market in Europe, with sales of EUR 284bn in 2017, according to the Institute of Grocery Distribution (IGD). The IGD expects this market to increase at a CAGR of 4.8% until 2022, reaching EUR 359bn in sales.

Russia has reached self-sufficiency in poultry production and is closing in on self-sufficiency in pork production. Beef products are mainly imported and production levels have decreased slightly since 2000. Recent strong growth in production, combined with stagnant growth in consumption, has pushed food prices down to lower levels. Consumption levels in the larger cities, where Atria mainly operates, are even higher, suggesting that sales growth lies in more processed products.

Russian self-sufficiency levels can also be seen in the meat trade balance. As poultry and pork production has ramped up, the deficit in the trade balance has almost vanished. An increase in Russian domestic meat production could drive producer prices lower, supporting Atria's operations in Russia, we believe. Higher domestic procurement would lower Atria's transaction risk.

RUSSIAN MEAT PRODUCTION AND CONSUMPTION

0

10

20

30

40

50

60

70

80

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Kg

per

ca

pit

a

Mill

ion

to

nn

es

Pork production Beef production

Poultry production Total consumption per capita, kg (RH)

Source: Food and Agriculture Organisation of the United Nations and RUSSTAT

29

Atria30 August 2018

INFLATION-ADJUSTED FOOD PRICE DEVELOPMENT IN RUSSIA

94

96

98

100

102

104

106

108

110

112

114

2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Food and Agriculture Organisation of the United Nations

RUSSIAN MEAT TRADE BALANCE, THOUSAND TONNES

-1400

-1200

-1000

-800

-600

-400

-200

02000 2002 2004 2006 2008 2010 2012 2014 2016

Pork Beef Poultry

Source: Food and Agriculture Organisation of the United Nations

The Russian grocery market is still very fragmented, with the top seven retail chains accounting for only ~26% of the total market. Retail chains together represent only ~54% of the total market, versus close to 100% in the Scandinavian countries. Market modernisation is still underway, as only ~69% of retailers are considered modern retailers.

Atria's focus on top retail chains here seems reasonable, as we expect Russian grocery market consolidation in the future. Two of the largest syndicates, X5 and Magnit, have a strong presence in Atria's target markets of the St Petersburg and Moscow areas. According to retailer X5, the number of private-label products is expected to increase in the coming years as two of the largest syndicates aim to bolster the number of domestically produced private labels in their offerings. Currently, this is ~9% of total grocery sales, although higher as a share of food products.

Russia is the single most important market for Atria's Sibylla concept. During 2017, total POS grew to more than 6,000, of which ~3,100 are located in Russia.

The Russian food retail market was worth RUB 14.4trn in 2017

RUSSIAN FOOD RETAILERS, AS OF THE END OF 2017

Syndicate Stores Market share Sales, RUBbn

X5 12121 9% 1287Magnit 16350 8% 1143Dixy 2703 2% 283Auchan 313 3% 389Lenta 328 3% 365Metro 92 2% 224Okey 145 1% 177Others 81% 11119Total 14400

Source: Companies, INFOline, Thomson Reuters and Magnit's estimates

A fragmented market, as the top seven chains account for only 26% of the total market

RUSSIAN FOOD RETAILERS' MARKET COMPOSITION BY FORMAT, AS OF END-2016

Top-7 retail chains26%

Other chains28%

Modern non-chain stores15%

Traditional trade24%

Open markets7%

Source: INFOline

30

Atria30 August 2018

The recent downturn in producer prices has turned

Producer price development in the Finland, Sweden and the EU Meat producers are highly affected by producer prices, especially when a retail sector is highly concentrated and has high pricing power. Large deviations in EU average producer prices either decrease or increase imports to Finland.

The EU-wide pig meat producer price is highly exposed to exports to China, which peaked in 2016. The Chinese market has contracted since 2017, lowering the average producer price in the EU market. Atria mainly uses domestic products, which creates price pressure when export meat is cheap, lowering margins.

Cattle prices in Finland have closely followed EU average prices, while Swedish producer prices have soared since 2015, also reducing margins.

Chicken prices have been stable in Finland and Sweden above the EU average, mainly thanks to higher value-added and customers' willingness to buy domestic products.

CAGR IN PRODUCER PRICES FOR 2000-17

Pig Bovine ChickenFinland 1.7% 1.8% 2.2%Sweden 2.3% 3.1% 1.6%EU 1.4% 1.9% 1.9%

Source: EU Commission and Nordea

PIG (CLASS S/E) PRODUCER PRICES

50

70

90

110

130

150

170

190

210

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

EU

R/1

00kg

Finland Sweden EU

Source: EU Commission

CATTLE (BOVINE) PRODUCER PRICES

150

200

250

300

350

400

450

500

550

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

12

012

201

3

201

4

201

5

201

6

201

7

201

8

EU

R/1

00k

g

Finland Sweden EU


CHICKEN PRODUCER PRICES

50

100

150

200

250

300

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

2011

201

2

201

3

201

4

201

5

201

6

201

7

201

8

EU

R/1

00k

g

Finland Sweden EU


31

Atria30 August 2018

Macro outlookThe macroeconomic outlook is currently favourable in the Nordic countries, with 1.8-3.0% GDP growth in 2018E. Nordic unemployment rates have been falling for the past few years and inflation has been steadily rising. Atria has opened export channels for fresh pork to China, where economic growth has been slowing, albeit from high levels. We still expect China to have an annual GDP growth in excess of 6% for 2018.

Finnish economy picking upSolid outlook for Atria's main marketsIn Atria's main market areas, Finland and Sweden, the macroeconomic outlook is bright. Economic growth is accelerating in Finland in 2018, and we expect 3.0% GDP growth there, up from 2.6% in 2017. We expect inflation in Finland to remain below the Nordic and Eurozone average in the next few years, which should bolster households' purchasing power.

Swedish economic outlook remains positive

Swedish economic growth has been solid in the past few years, although the outlook for the years ahead is dominated by uncertainty surrounding the housing market on the one hand and strong global activity on the other. We suggest that the recent housing market slowdown could quell domestic consumption. However, the outlook for the overall Swedish market remains positive. We expect GDP growth of 2.5% in 2018, only slightly shy of the 2.7% in 2017.

Danish economy is fuelled by households' high purchasing power

Denmark has witnessed good times for households. Economic growth has been strong and, combined with low growth in consumer prices and ultra-low monetary policy, this has led to a sharp increase in households' purchasing power. In Denmark, approximately half of the economic activity is attributable to households, and we expect private consumption to increase in the coming years.

Russian market is turbulent, but there are bright spots in retail sales

Russian economic activity is picking up as oil prices rise. However, economic growth is turbulent owing to the geopolitical uncertainties. Retail sales remain the bright spot following the economic crash in 2015-16. Retail sales are boosted by public sector wage indexations, and we expect this to spread to the private sector. The high consumer confidence and low unemployment rate should propel retail sales, although the RUB depreciation weighs on this outlook somewhat.

GDP GROWTH, % (Y/Y)

2015 2016 2017E 2018E 2019E

Finland 0.1 2.1 2.6 3.0 2.5Sweden 4.3 3.0 2.7 2.5 1.9Denmark 1.6 2.0 2.2 1.8 1.7Russia -2.5 -0.2 1.5 1.2 1.3Eurozone 2.3 1.8 2.5 2.5 2.0World 3.5 3.3 3.8 3.9 3.8

Source: Nordea Economic Outlook April 2018

CONSUMER PRICES, % (Y/Y)

2015 2016 2017E 2018E 2019E

Finland -0.2 0.4 0.7 0.8 1.2Sweden 0 1 1.8 1.7 1.8Denmark 0.5 0.3 1.1 0.9 1.4Russia 12.9 5.4 2.5 4.2 4Eurozone 0.0 0.2 1.5 1.3 1.3World 2.8 2.9 3.2 3.6 3.3

Source: Nordea Economic Outlook April 2018

32

Atria30 August 2018

PeersWe see multiple relevant European meat and consumer goods company peers for Atria. We believe the most relevant for Atria is Finnish peer HKScan, but we also identify peers from Europe such as France's Fleury Michon, Belgium's Ter Beke and Sweden's Scandi Standard. Beyond Europe, we include Russian meat company Cherkizovo, US-based companies Tyson Foods and Sanderson farms, and Brazil-based BRF.

OverviewAtria is an established and leading meat and food companies in the Nordic countries. Its closest rival and peer is publicly listed HKScan, operating in the same countries and segments as Atria. Finnish peers Apetit and Raisio operate mainly in different segments than Atria, but they are affected in a similar manner by changes in the Nordic economies. The rest of the peer group has similar structures and exposures but operates in different countries.

Listed European peers

Apetit – Finland-based food company, concentrating on vegetables and oilseeds. It operates mainly in the Finnish markets. Bell Food – Switzerland-based company primarily engaged in the production and distribution of different meat and meat products.Cranswick – UK-based food company, engaged in the manufacture and supply of food products to the UK grocery retailers, the food service sector and other food producers.Fleury Michon – France-based company that is engaged in developing meal solutions in the self-service delicatessen and prepared meals segments in France.HKScan – Finland-based meat and meals company, operating throughout the value chain. It sells and markets pork, beef and poultry meat, processed meats and convenience foods. Its customers are retail, food service, industrial and export sectors. HKScan's home markets consist of Finland, Sweden, Denmark and the Baltics. It exports to close to 50 countries. Raisio – Finland-based international company specialising in healthy and responsibly produced vegetation-based food and functional food ingredients and raw material exports. Scandi Standard – Sweden-based company that offers chicken-based food products. Scandi Standard produces and sells fresh and frozen chicken as well as other chicken products through its Kronfagel, Danpo and Den Stolte Hane brands and through private labels.Societe – France-based holding company engaged in food processing. The company has poultry, pig and cattle farming, as well as egg production.Ter Beke – Belgium-based food company, concentrating on production and sale of processed meat products and chilled ready meals.

International peers

Cherkizovo – Russia's largest producer of meat products and one of the largest companies serving the country's chicken, pork and processed meat markets. Net sales in 2017 were RUB 90,465m, with EBIT of RUB 9,726m.BRF – Brazil-based multinational company that owns a diverse portfolio of products and is a producer of foods. The company has operations in Latin America, Europe, Middle East, Africa and Asia.Sanderson Farms – US-based poultry processing company that is engaged in the production, processing, marketing and distribution of fresh and frozen chicken.Tyson Foods – US-based and one of the world's largest food companies, employing approximately 122,000 people. Net sales in 2017 were EUR 38,260m, with EBIT of EUR 2,931m.

33

Atria30 August 2018

PEERS' VALUATION

Price Mcap EV

European peers Country Local EURm EURm 2017 2018E 2019E 2020E 2017 2018E 2019E 2020E 2017 2018E

Apetit Oyj Finland 12.0 75 71 54.3 14.1 11.8 19.0 15.8 1.1% 5.8%Bell Food Group Ag Switzerland 295.5 1,624 2,228 17.4 17.2 15.6 14.7 10.9 13.8 14.2 13.3 0.0% 2.0%Cranswick Plc UK 3,232.0 1,817 1,794 18.1 16.9 16.0 15.1 23.0 21.4 20.2 18.9 0.0% 1.7%Fleury Michon Sa France 51.6 225 222 19.4 9.7 7.2 6.4 25.5 12.6 9.1 7.9 0.3% 2.4%Hkscan Oyj Finland 2.7 131 462 27.2 37.9 4.9% 3.4%Raisio Oyj Finland 3.0 501 428 9.3 15.3 13.0 12.6 13.8 21.7 17.9 17.4 5.6%Scandi Standard Ab (Publ) Sweden 55.3 343 547 16.3 15.5 12.6 11.5 15.9 15.2 11.3 10.8 3.5%Societe Ldc Sa France 128.5 2,169 1,980 11.0 10.0 9.3 8.6 15.9 14.9 13.8 13.1 1.2%Ter Beke Nv Belgium 161.0 278 406 21.3 13.9 13.8 12.5

Average 796 904 20.9 14.1 14.4 11.5 17.0 16.2 17.3 13.9 1.3% 3.2%Median 343 462 17.8 15.4 13.5 11.8 15.9 14.9 14.2 13.3 0.3% 2.9%Atria 9.1 173 435 10.7 12.4 9.7 8.9 10.0 12.0 8.9 8.1 5.5% 5.5%

International peersBrf Sa Brazil 19.9 3,383 7,118 17.9 39.9 18.0 11.9 44.8 12.5 1.3% 0.0%Gruppa Cherkizovo Pao Russia 1,065.0 598 1,311 9.0 6.7 14.4%Sanderson Farms Inc US 106.2 2,077 1,831 5.2 22.7 21.6 17.4 8.8 34.3 27.4 21.8 2.0% 1.2%Tyson Foods Inc US 62.8 19,693 28,253 10.2 10.2 9.9 9.3 11.4 10.5 9.9 9.0 1.7% 2.0%

Average 6,438 9,628 10.6 24.3 16.5 12.8 9.0 22.4 27.4 14.5 4.8% 1.1%Median 2,730 4,475 9.6 22.7 18.0 11.9 8.8 22.4 27.4 12.5 1.8% 1.2%Atria 9.1 173 435 10.7 12.4 9.7 8.9 10.0 12.0 8.9 8.1 5.5% 5.5%

EV/EBIT P/E Div yield %

Data as of market close on 27 August 2018.


PEERS' OPERATING METRICS

European peers 2017 2018E 2019E 2020E 2017 2018E 2019E 2020E 2017 2018E 2019E 2020E

Apetit Oyj -14.3% -11.9% 3.4% 2.6% 0.4% -0.7% 1.7% 1.9% 2.4% -1.9% 3.7% 4.5%Bell Food Group Ag -0.9% 17.6% 1.3% 1.7% 4.1% 3.5% 3.9% 4.0% 12.8% 9.8% 8.8% 9.1%Cranswick Plc 13.8% 4.4% 4.5% 4.6% 6.1% 6.3% 6.3% 6.4% 15.6% 14.7% 14.1% 13.6%Fleury Michon Sa -2.8% 3.0% 3.0% 3.3% 1.6% 3.1% 4.1% 4.5% 3.9% 8.3% 10.0% 10.8%Hkscan Oyj -3.5% -3.5% 4.6% -1.0% -1.7% 0.9% -12.4% -11.0% 1.3% 0.0%Raisio Oyj 1.3% -48.0% 2.6% 2.1% 10.4% 12.2% 14.0% 14.1% 14.0% 8.5% 11.1% 10.8%Scandi Standard Ab (Pu 16.6% 14.9% 5.0% 4.3% 4.6% 4.2% 5.0% 5.2% 13.8% 15.7% 19.3% 19.5%Societe Ldc Sa 6.3% 7.1% 5.7% 4.7% 4.7% 4.9% 5.0% 5.1% 13.0% 12.0% 11.3% 11.0%Ter Beke Nv 21.5% 42.0% 5.0% 3.8% 0.0% 0.0% 14.3% 0.0% 0.0% 0.0%

Average 4.2% 2.9% 3.9% 3.3% 3.9% 3.5% 4.5% 5.9% 8.6% 6.2% 8.8% 8.8%Median 1.3% 4.4% 4.5% 3.3% 4.1% 3.5% 4.1% 5.1% 13.0% 8.5% 10.0% 10.8%Atria 6.2% -0.8% 0.7% 1.3% 2.8% 2.5% 3.1% 3.4% 6.2% 4.9% 6.5% 6.9%

International peersBrf Sa -5.1% -14.3% 7.3% 6.6% 4.4% 2.3% 4.8% 6.8% -8.2% -9.5% 4.4% 7.6%Gruppa Cherkizovo Pao 2.2% 11.2% 11.1%Sanderson Farms Inc 10.7% -4.0% 4.2% 6.2% 12.2% 2.9% 2.9% 3.4% 19.3% 8.0% 7.6% 0.0%Tyson Foods Inc 0.1% 5.3% 1.0% 2.0% 8.2% 7.8% 8.0% 8.3% 19.4% 18.7% 0.0% 0.0%

Average 2.0% -4.3% 4.2% 5.0% 9.0% 4.3% 5.2% 6.2% 10.4% 5.8% 4.0% 2.5%Median 1.1% -4.0% 4.2% 6.2% 9.7% 2.9% 4.8% 6.8% 15.2% 8.0% 4.4% 0.0%Atria 6.2% -0.8% 0.7% 1.3% 2.8% 2.5% 3.1% 3.4% 6.2% 4.9% 6.5% 6.9%

Sales growth EBIT margin ROE


34

Atria30 August 2018

Historical financialsAtria achieved a 2010-17 sales CAGR of 1.4% and increased its adjusted EBIT margin to 2.8% in 2017 (from 0.8% in 2010). The company has carried out smaller bolt-on acquisitions and minor divestments throughout the years and has managed to strengthen its balance sheet remarkably. Net gearing dropped to around 50% in 2017 from ~100% in 2011. The equity ratio has also improved, now reaching 47%, well above the company's target of 40%.

Sales and adjusted EBIT have risen in recent years

Financial performanceAtria has expanded its operations geographically and into new categories mainly through acquisitions, on top of which it has divested non-core businesses. The company achieved a 2010-17 sales CAGR of 1.4%, and adjusted EBIT rose from EUR 22m in 2010 to EUR 40m in 2017. The 2011 drop in adjusted EBIT was due to increased economic uncertainty and an imbalance in the meat raw material market. The slight dip in adjusted EBIT in 2015-16 was due to an oversupply of meat on international markets and high price competition in the Finnish market, accompanied by ramp-up costs related to the Nurmo pork production plant in 2016.

GROUP NET SALES, EURm

0

200

400

600

800

1000

1200

1400

2010 2011 2012 2013 2014 2015 2016 2017

Net sales


ADJUSTED EBIT AND MARGIN, EURm AND %

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

0

5

10

15

20

25

30

35

40

45

2010 2011 2012 2013 2014 2015 2016 2017

Adj. EBIT Adj. EBIT margin


Gross profit and COGS Atria's gross margin has been trending downward since 2012 as a result of increasing producer prices, which are difficult to transfer to the customers. This is especially true in Finland, where the grocery market is very concentrated and dominated by the two main players. Reported costs of goods sold (COGS) for Atria include employee benefits. Despite upward trending COGS in relation to sales, Atria has managed to increase its EBIT margin from the low levels of 2011.

GROSS PROFIT AND MARGIN, EURm AND %

9.0%

9.5%

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

0

20

40

60

80

100

120

140

160

180

200

2010 2011 2012 2013 2014 2015 2016 2017

Gross profit Gross margin


COST OF GOODS SOLD, EURm

85.0%

85.5%

86.0%

86.5%

87.0%

87.5%

88.0%

88.5%

89.0%

89.5%

90.0%-1500

-1300

-1100

-900

-700

-500

-300

-100

2010 2011 2012 2013 2014 2015 2016 2017

COGS % of net sales


35

Atria30 August 2018

Fairly stable employee costs –the second-largest cost item

Other costsAfter raw material costs, employee costs are the largest cost item. Atria has kept its employee costs fairly stable over the past four years at around 17% of net sales. Selling, general and admin costs, on the other hand, have been trending down since 2012 and currently represent around 9.4% of net sales. The decrease has been driven by lower sales and marketing costs.

EMPLOYEE COSTS, EURm

14.5%

15.0%

15.5%

16.0%

16.5%

17.0%

17.5%

18.0%

18.5%

19.0%-280

-230

-180

-130

-80

-30

2010 2011 2012 2013 2014 2015 2016 2017Employee benefits % of net sales


SELLING, GENERAL AND ADMIN COSTS, EURm

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

11.0%-150

-145

-140

-135

-130

-125

-120

-115

-110

-105

-1002010 2011 2012 2013 2014 2015 2016 2017

SGA % of net sales


Currently strong financial positionAtria has improved its financial position significantly, with net gearing dropping from around 100% in 2011 to around 50% in 2017. Its high leverage was the result of large acquisitions in 2007 (the Sardus and Pouttu meat operations) and 2008 (VK, Wõro, Ridderheims and Campomos). Atria's improved financial position is also reflected in its equity ratio, which has increased from 40% in 2010 to 47% in 2017, well above the target of 40%. The balance sheet could, in our view, be used to secure a stable dividend or for further expansion.

NET DEBT AND GEARING, EURm

0%

20%

40%

60%

80%

100%

120%

0

50

100

150

200

250

300

350

400

450

2009 2010 2011 2012 2013 2014 2015 2016 2017

Net debt Net gearing


EQUITY RATIO, %

30%32%

34%

36%

38%

40%42%

44%

46%

48%

50%

2010 2011 2012 2013 2014 2015 2016 2017

Equity ratio Target level


DividendsAtria has paid out a stable and increasing dividend at an average payout ratio of around 50% in the past five years. It aims to pay out a 50% dividend. In our view, Atria has good financial flexibility at present, which we believe will support stable dividend payments despite some earnings softness in 2018.

36

Atria30 August 2018

EPS, DPS AND PAYOUT, EUR AND %

-150%

-100%

-50%

0%

50%

100%

150%

-0.40

-0.20

0.00

0.20

0.40

0.60

0.80

1.00

2010 2011 2012 2013 2014 2015 2016 2017

Adj. EPS DPS Payout % (RH)


Cash flowsOperating cash flow has been stable, although the price pressure of the last two years is visible in operating cash flow. Free cash flow was strong between 2012 and 2015, until the 2016 Lagerbergs acquisition and the investment programme (expanding to 2018) pushed free cash flow into negative territory. Atria's capex has been around EUR 45m, with a slight increase in 2017 owing to the Nurmo pork production plant upgrade and the Lagerbergs investment.

CASH FLOWS, EURm

-80

-60

-40

-20

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016 2017

Operating cash flow Free cash flow Capex


37

Atria30 August 2018

EstimatesOur estimates reflect the current agricultural headwind caused by the abnormally warm summer across Europe. We expect a solid performance from Atria, with sales set to increase from 2019. Atria's increased focus on poultry is in line with changing consumption patterns. Combined with recent improvements at production facilities, we believe this will drive Atria's margin expansion. We forecast 0.9% sales CAGR with adjusted EBIT CAGR of 5.2% in 2018-20.

We expect flat sales in 2018Stable sales growth aheadAtria's underlying markets have shown stable development with slightly increasing consumer demand for poultry, whereas the demand for pork has been decreasing at a slow pace. We expect Atria to grow at a sales CAGR of 0.9% in 2018-20E, not assuming any acquisitions or divestments. In 2018, we assume a growth rate of +0.1%, driven by a weaker development in Sweden as well as Denmark & Estonia, where we expect flat sales growth owing to lower sales volumes in Denmark. For 2019, we assume that the Swedish operations will get back on track and that the new factory expansion (to be completed in Q3 2018) should start contributing to growth and further change the sales mix towards poultry.

NET SALES AND NET SALES GROWTH, EURm AND %

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

0

200

400

600

800

1,000

1,200

1,400

2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

Net sales Sales growth % (RH)


Swedish poultry market expected to recover after avian disease outbreaks

EBIT margin expansion driven by improvement in SwedenIn 2018 we expect Atria's adjusted EBIT margin to decrease slightly owing to the weakness in Sweden. However, we expect the Sweden business area to have largely overcome its challenges by H2 2018. Should the recovery speed up, we may see a faster margin expansion in the coming years. The Swedish poultry market is showing signs of recovery from cases of avian disease outbreaks in 2016-17 and Atria is expected to complete a factory expansion in Q3 2018, which should both support profitability.

The development in Finland has been very stable and we expect gradual EBIT margin improvement in the segment as the sales mix is slowly shifting towards higher margin products like poultry and higher value-added products.

Denmark & Estonia are expected to continue to perform strongly

Atria's new business area Denmark & Estonia has been the strongest sector-adjusted EBIT margin-wise. We expect a strong performance ahead, supported by the solid organic food market in Denmark and modernisation of the Estonian grocery market.

Russian turnaround expected to continue

The turnaround in Russia should support EBIT margin expansion as it reached positive territory for the first time in 2017. Russia has been suffering from an economic downturn since 2014, which turned positive in 2017. We expect the positive trend for Atria to continue, especially with Sibylla concept stores supporting margin improvements.

38

Atria30 August 2018

We forecast a 3.1% adjusted EBIT margin in 2020

We forecast 2018 adjusted EBIT to be EUR 35m, down slightly from the EUR 39.6m in 2017. The drop is mainly driven by increased costs on meat raw materials and unfavourable currency rate movements in the Swedish crown and Russian rouble. We believe cost pressure will persist in the market during 2019 as poor cereal crops across Europe will probably keep feeding prices, and thus also meat raw material prices, high. Despite the cost pressure, we believe that Atria's transformation towards poultry and higher value-added products will support margins in 2019-20. We expect Atria's adjusted EBIT margin to reach 3.1% in 2020.

ADJUSTED EBIT AND EBIT MARGIN, EURm AND %

0%

1%

2%

3%

4%

5%

0

5

10

15

20

25

30

35

40

45

50

2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

Adj. EBIT EBIT margin % (RH)


Cost efficiency well under controlAtria has optimised and digitalised its production in recent years and the investments in the Swedish poultry factory continue this trend. Meat raw material costs have been on the rise in 2018, putting pressure on Atria's gross profit. The highly automated Nurmo factory has increased cost efficiency through more efficient meat raw material and has enabled lower employee costs.

Higher meat raw material prices will increase COGS in 2018 slightly more than Atria can raise prices, we forecast. Based on our assumptions, Atria should be able to normalise its COGS level in 2019-20 through higher poultry sales and better efficiency at its Swedish poultry factory and lower costs at the Nurmo plant.

Atria's increased efficiency is also visible in selling, general and administration (SGA) costs, which have been decreasing. We estimate slightly lower SGA costs in 2018 based on lower sales and marketing costs. However, we estimate a slight increase for 2019-20 owing to higher marketing costs. The Swedish market is recovering from a dented reputation following an avian disease outbreak and we believe that companies in general need to step up their marketing efforts to support sales.

COST OF GOODS SOLD, EURm

87%

87%

88%

88%

89%

89%-1350

-1300

-1250

-1200

-1150

-1100

COGS % of sales (RH)


SELLING, GENERAL AND ADMINISTRATION COSTS, EURm

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

11.0%-145

-140

-135

-130

-125

-120

SGA % of sales (RH)


39

Atria30 August 2018

Balance sheet continues to strengthenAtria has rapidly improved its balance sheet after large acquisitions and currently (Q2 2018) equity ratio of 47.5% is well above its long-term target of 40%. Net debt has decreased and is presently (as end of 2017) at materially good level with net gearing well below 50%. We see no further need for Atria to deleverage its balance sheet or increase its equity ratio, supporting our view of a dividend yield and potential bolt-on acquisitions. The strong balance sheet may even open the door to larger acquisitions.

NET DEBT AND NET GEARING, EURm

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

Net debt Net gearing % (RH)


We find Atria's targets overly ambitious

Another balance sheet target ratio set by Atria is the return-on-equity (ROE) ratio. Our estimates for 2018 indicate a dip in ROE, but we believe this will rebound during 2019-20, reaching 6.9% in 2020. In our view, the target of 8% is very ambitious and we do not believe that Atria can achieve this in the near future.

EQUITY RATIO

0%

10%

20%

30%

40%

50%

60%

2012 2013 2014 2015 2016 2017 2018E2019E2020E

Equity ratio Target level


RETURN-ON-EQUITY

-2%-1%0%1%2%3%4%5%6%7%8%9%

2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

ROE Target level


Strong EPS growth with normalising free cash flow

EPS growth to surpass sales growthAtria's margin expansion is set to drive EPS growth and we model a 3.9% EPS CAGR until 2020. We expect cash flow from operations (CFO) to increase gradually and to reach EUR 77m in 2020. Free cash flow (FCF) has been burdened by multiple investment programmes, mainly related to Finnish and Swedish production facilities. We estimate normalising capital expenditure as the latest large investment programme in Sweden is expected to be finalised in Q3 2018. Owing to lower capex needs (big investment programmes completed during 2018), we estimate EUR 31m FCF and a 6.9% FCF yield for 2020.

We forecast that Atria will maintain its current dividend per share (EUR 0.50) for 2018-19 and increase DPS slightly (EUR 0.52) for 2020, reaching its target payout ratio of 50%. We note that 2018-19 dividend estimates are higher than the company's target but we expect Atria to maintain its dividend thanks to its strong balance sheet.

40

Atria30 August 2018

EARNINGS PER SHARE AND DIVIDEND PER SHARE, EUR

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2012 2013 2014 2015 2016 2017 2018E2019E2020E

EPS DPS


CFO, FCF AND CAPEX, EURm

-80

-60

-40

-200

20

40

6080

100

120

2012 2013 2014 2015 2016 2017 2018E2019E 2020E

CFO FCF CAPEX


DETAILED ESTIMATES AND DIVISIONAL FORECASTS, EURm

Income statement (EUR) Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18E Q4/18E 2017 2018E 2019E 2020ESales 333 368 361 374 345 359 358 375 1,436 1,438 1,452 1,473- sales growth 5.7% 8.0% 6.3% 4.9% 3.9% -2.5% -0.6% 0.1% 6.2% 0.1% 1.0% 1.5%

EBITDA 13.0 21.5 27.4 25.0 15.3 16.8 22.4 26.5 87.0 81.0 87.0 93.2- margin 3.9% 5.8% 7.6% 6.7% 4.4% 4.7% 6.3% 7.1% 6.1% 5.6% 6.0% 6.3%

D&A -12 -12 -11 -12 -12 -11 -11 -11 -46 -46 -46 -47

EBIT reported 1.2 10.0 16.2 13.4 3.5 5.4 11.0 15.2 40.9 35.0 40.6 46.1Adj. EBIT 1.3 10.0 16.2 12.1 3.5 5.4 11.0 15.2 39.6 35.0 40.6 46.1- margin 0.4% 2.7% 4.5% 3.2% 1.0% 1.5% 3.1% 4.0% 2.8% 2.4% 2.8% 3.1%

Net finance -1.4 -2.1 -2.1 -1.7 -2.3 -1.5 -2.0 -2.2 -7.3 -8.0 -8.0 -8.0Associated companies 1.0 0.4 0.1 0.5 0.0 0.1 0.7 0.7 1.9 1.5 1.7 1.7Adj. PTP 0.8 8.3 14.2 10.8 1.2 4.0 9.7 13.7 34.1 28.5 34.3 39.8

Taxes -0.8 -1.3 -2.9 -2.1 -0.5 0.7 -1.9 -4.0 -7.1 -5.7 -6.9 -8.0Profit before minorities 0.0 7.0 11.3 10.1 0.7 4.6 7.7 9.7 28.4 22.8 27.4 31.8

Minorities -0.6 -0.4 -0.8 -0.7 -0.6 -0.3 -0.6 -0.5 -2.5 -2.0 -2.4 -2.8Adj. Net Profit -0.6 6.6 10.5 10.8 0.1 4.4 7.1 9.2 24.5 20.8 25.4 29.8

EPS, excluding NRI -0.02 0.23 0.37 0.38 0.00 0.16 0.25 0.33 0.87 0.74 0.90 1.06

Divisional sales EURm Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18E Q4/18E 2017 2018E 2019E 2020EFinland 228 252 245 261 246 255 249 265 986 1,014 1,024 1,034Sweden 73 78 79 78 70 72 72 74 307 287 288 294Denmark & Estonia 23 25 25 25 23 24 25 26 99 99 100 102Russia 19 23 22 22 17 19 22 22 86 80 82 86Group eliminations -10 -11 -11 -11 -10 -10 -11 -11 -42 -42 -43 -44Group 333 368 361 374 345 359 358 375 1,436 1,438 1,452 1,473

Divisional operative EBIT Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18E Q4/18E 2017 2018E 2019E 2020EFinland 4.1 7.7 13.1 11.4 6.7 6.9 9.9 12.6 36.3 36.2 35.5 36.8Sweden -0.6 0.9 0.7 0.0 -3.2 -1.8 -0.4 0.8 1.0 -4.6 1.1 4.6Denmark & Estonia 1.2 1.3 1.4 1.3 1.3 1.4 1.4 1.6 5.2 5.7 5.8 6.1Russia -1.7 0.5 1.3 0.8 -0.6 -0.1 0.7 1.3 0.9 1.3 1.7 2.1Group eliminations -1.7 -0.4 -0.3 -1.4 -0.7 -1.0 -0.7 -1.1 -3.8 -3.5 -3.5 -3.6Group 1.3 10.0 16.2 12.1 3.5 5.4 11.0 15.2 39.6 35.0 40.6 46.1

Divisional sales growth Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18E Q4/18E 2017 2018E 2019E 2020EFinland 2% 8% 8% 6% 8% 1% 1% 2% 6% 3% 1% 1%Sweden n.a. n.a. n.a. n.a. -4% -9% -8% -5% n.a. -6% 0% 2%Denmark & Estonia n.a. n.a. n.a. n.a. -1% -4% 2% 2% n.a. 0% 1% 2%Russia 38% 30% 15% 3% -7% -19% -1% 2% 19% -7% 3% 5%Group eliminations nm. nm. nm. nm. nm. nm. nm. nm. nm. nm. nm. nm.Group 6% 8% 6% 5% 4% -3% -1% 0% 6% 0% 1% 1%

EBIT margin Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18E Q4/18E 2017 2018E 2019E 2020EFinland 1.8% 3.1% 5.3% 4.4% 2.7% 2.7% 4.0% 4.8% 3.7% 3.6% 3.5% 3.6%Sweden -0.8% 1.1% 0.9% 0.0% -4.6% -2.5% -0.5% 1.1% 0.3% -1.6% 0.4% 1.5%Denmark & Estonia 5.1% 5.2% 5.6% 5.1% 5.6% 5.8% 5.5% 6.0% 5.3% 5.7% 5.8% 6.0%Russia -9.1% 2.2% 5.8% 3.7% -3.5% -0.5% 3.0% 5.9% 1.1% 1.6% 2.0% 2.5%Group eliminations nm. nm. nm. nm. nm. nm. nm. nm. nm. nm. nm. nm.Group 0.4% 2.7% 4.5% 3.2% 1.0% 1.5% 3.1% 4.0% 2.8% 2.4% 2.8% 3.1%


41

Atria30 August 2018

Reported numbers and forecastsINCOME STATEMENT

2020E2019E2018E20172016201520142013201220112010EURm1,4731,4521,4381,4361,3521,3401,4261,4111,3441,3021,301Net revenue1.5%1.0%0.1%6.2%0.9%-6.0%1.1%5.0%3.2%0.1%-1.1%Revenue growthn.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.of which organicn.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.n.a.of which FX

93878187796890101805660EBITDA-47-46-46-46-47-47-48-64-50-51-63Depreciation and impairments PPE4641354132224237305-2EBITA000007-1-171312Amortisation and impairments

464135413229412030810EBIT00000000000of which associates22221062312Associates excluded from EBIT

-8-8-8-7-6-9-13-15-15-14-11Net financials40342936262034719-50Pre-tax profit-8-7-6-7-7-5-7-11-9-2-5Reported taxes32272328201527-410-7-4Net profit from continued operations00000000000Discontinued operations

-2-2-2-3-1-1-1000-1Minority interests30252126181426-410-7-5Net profit to equity

1.060.900.740.920.650.490.93-0.160.35-0.24-0.18EPS0.520.500.500.500.460.400.400.220.220.200.25DPS0.520.500.500.500.460.400.400.220.220.200.25of which ordinary0.000.000.000.000.000.000.000.000.000.000.00of which extraordinary

Profit margin in percent6.3%6.0%5.6%6.1%5.8%5.1%6.3%7.2%5.9%4.3%4.6%EBITDA3.1%2.8%2.4%2.8%2.3%1.6%2.9%2.6%2.2%0.4%-0.2%EBITA3.1%2.8%2.4%2.8%2.3%2.2%2.8%1.4%2.2%0.6%0.7%EBIT

Adjusted earnings93878186787689119805872EBITDA (adj)464135403129415430710EBITA (adj)4641354031364037311022EBIT (adj)

1.060.900.740.870.630.740.760.460.31-0.160.24EPS (adj)

Adjusted profit margins in percent6.3%6.0%5.6%6.0%5.8%5.6%6.2%8.4%6.0%4.4%5.6%EBITDA (adj)3.1%2.8%2.4%2.8%2.3%2.2%2.8%3.9%2.2%0.6%0.7%EBITA (adj)3.1%2.8%2.4%2.8%2.3%2.7%2.8%2.6%2.3%0.8%1.7%EBIT (adj)

Performance metricsCAGR last 5 years

1.9%0.4%0.4%1.3%0.8%0.6%1.6%0.8%1.0%3.3%5.8%Net revenue6.4%-0.6%-4.4%1.8%7.2%2.5%1.2%3.7%-10.6%-6.8%-3.3%EBITDA9.7%0.0%12.2%6.2%31.9%24.3%8.1%-12.5%-20.4%-28.1%-24.6%EBIT

16.7%-0.6%n.m.21.3%n.m.n.m.30.2%n.m.-33.0%n.m.n.m.EPS5.2%4.6%17.8%17.8%18.1%9.9%9.9%1.9%-20.7%-19.6%-15.9%DPS

Average last 5 years2.7%2.5%2.5%2.3%2.2%1.9%1.6%1.4%1.7%2.7%3.3%Average EBIT margin6.0%5.7%5.8%6.1%6.1%5.8%5.7%5.7%5.5%6.5%7.0%Average EBITDA margin

VALUATION RATIOS - ADJUSTED EARNINGS

2020E2019E2018E20172016201520142013201220112010EURm8.49.912.013.918.212.28.716.820.0n.m.37.5P/E (adj)4.85.35.86.67.05.84.84.36.69.69.1EV/EBITDA (adj)9.811.313.314.317.515.210.59.417.475.767.1EV/EBITA (adj)9.811.313.314.317.512.210.813.817.254.930.3EV/EBIT (adj)

VALUATION RATIOS - REPORTED EARNINGS

2020E2019E2018E20172016201520142013201220112010EURm8.49.912.013.217.818.57.1n.m.17.9n.m.n.m.P/E0.30.30.30.40.40.30.30.40.40.40.5EV/Sales4.85.35.86.57.06.44.75.06.610.010.8EV/EBITDA9.811.313.313.817.320.310.313.817.7108.0n.m.EV/EBITA9.811.313.313.817.315.210.525.817.470.067.1EV/EBIT

5.8%5.6%5.6%4.1%4.0%4.4%6.0%2.8%3.5%3.4%2.8%Dividend yield (ord.)10.6%8.6%9.1%5.6%-0.8%26.8%23.8%24.9%26.9%5.7%1.8%FCF yield48.7%55.4%67.6%54.4%71.2%81.8%43.0%n.m.63.0%n.m.n.m.Payout ratio



Atria30 August 2018

BALANCE SHEET

2020E2019E2018E20172016201520142013201220112010EURm256256256256263237239242247238238Intangible assets

00000000000of which R&D8989898994797677787476of which other intangibles

167167167167170158164165169163163of which goodwill421418414409405395391434478466472Tangible assets

2018161514131315151412Shares associates11111112222Interest bearing assets00067765151611Deferred tax assets99991111117122020Other non-IB non-current assets00000000000Other non-current assets

707702696696701665663706768755755Total non-current assets95949393908193114114108105Inventory

117115114114109101117114140177200Accounts receivable44445478101723Other current assets

3219123543297719Cash and bank248232223214208190220265271309347Total current assetsn.a.n.a.n.a.000417349Assets held for sale9559349199109098559239781,0421,0681,112Total assets

452437425419410400402408428419443Shareholders equity00000000000Of which preferred stocks00000000000Of which equity part of hybrid debt

1816141212543333Minority interest471453439431422405406412431422446Total Equity

4747474749454445474847Deferred tax122122122122178156203216264297303Long term interest bearing debt

66667787870Pension provisions00000010001Other long-term provisions888811666841Other long-term liabilities00000000000Convertible debt00000000000Shareholder debt00000000000Hybrid debt

184184184184245214260273327357351Total non-current liabilities00000000000Short-term provisions

207204202202200192199174175177187Accounts payable11113000101Other current liabilities

92929292404452119106112127Short term interest bearing debt300297295295242236250293283289314Total current liabilities

00000070000Liabilities for assets held for sale9559349199109098559249781,0421,0681,112Total liabilities and equity

Balance sheet and debt metrics181194201210212194249304362401410Net debt

77771-6186288125141Working capital714709703703703659681768856879897Invested capital655637623615667619673685759778797Capital employed

6.7%5.9%4.9%6.2%4.5%3.4%6.5%-1.0%2.3%-1.6%-1.1%ROE5.2%4.6%4.0%4.5%3.7%4.3%4.4%3.6%2.8%0.9%2.0%ROIC7.0%6.4%5.6%6.7%4.8%4.7%6.0%2.9%4.0%1.0%1.2%ROCE

1.92.22.52.42.72.82.83.04.67.26.8Net debt/EBITDA5.85.14.45.65.03.13.21.32.10.60.9Interest coverage

47.4%46.7%46.3%46.0%45.1%46.8%43.5%41.8%41.1%39.2%39.9%Equity ratio38.5%42.8%45.8%48.7%50.3%48.0%61.5%73.8%83.9%95.1%91.9%Net gearing



Atria30 August 2018

CASH FLOW STATEMENT

2020E2019E2018E20172016201520142013201220112010EURm93878187796890101805660EBITDA (adj) for associates-8-7-6-10-6-4-8-6-9-11Paid taxes-8-8-8-8-4-9-7-13-13-13-10Net financials000-10-11-1161Change in provisions00615-1-51312-1-11Change in other LT non-IB00000000000Cash flow to/from associates00000000000Dividends paid to minorities000-10-166165216619-6Other adj to reconcile to cash flow

77727359581151361151376736Funds from operations (FFO)00067-24-44-26-37-169Change in NWC

77727365659192891005045Cash flow from operations (CFO)-50-50-50-53-43-50-34-39-50-34-40Capital expenditure272223112240585049165Free cash flow before A&D00086331940-7-1Proceeds from sale of assets0000-30-5-330-200Acquisitions

27222319-268445447104Free cash flow

-14-14-14-13-11-11-6-6-6-7-7Dividends paid00000000000Equity issues / buybacks000-315-55-81-36-39-214Net change in debt0000001816-8-16-19Other financing adjustments000-4-1-2-1-65230Other non-cash adjustments

1389-101-25220-12-17Change in cash

Cash flow metrics107.1%108.7%109.7%115.3%90.9%127.5%68.9%47.3%102.2%71.7%78.1%Capex/D&A

-3.4%-3.5%-3.5%-3.7%-3.2%-3.7%-2.4%-2.7%-3.7%-2.6%-3.0%Capex/Sales

Key information9991211978669Share price year end (/current)

251251251341324255186218176168253Market cap.450461466563548441426509527558654Enterprise value28.228.228.228.228.228.228.228.228.228.228.2Diluted no. of shares, year-end (m)



Atria30 August 2018

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Atria30 August 2018

Analyst Shareholding

Nordea Markets analysts do not hold shares in the companies that they cover.No holdings or other affiliations by analysts or associates.

Market-making obligations and other significant financial interestNordea Markets has no market-making obligations in Atria.

Fair value sensitivityWe calculate our fair values by weighting DCF, DDM, SOTP, asset-based and other standard valuation methods. When applicable, we set a 12-month target price by applying an appropriate premium/discount and/or other relevant adjustment to our fair value to reflect the share price potential we see within the coming 12 months. Our fair values are sensitive to changes in valuation assumptions, of which growth, margins, tax rates, working capital ratios, investment-to-sales ratios and cost of capital are typically the most sensitive. It should be noted that our fair values would change by a disproportionate factor if changes are made to any or all valuation assumptions, owing to the non-linear nature of the standard valuation models applied (mentioned above). As a consequence of the standard valuation models we apply, changes of 1-2 percentage points in any single valuation assumption can change the derived fair value by as much as 30% or more. Dividend payouts are included in the target price. All research is produced on an ad hoc basis and will be updated when the circumstances require it.

Investment banking transactionsIn view of Nordea’s position in its markets readers should assume that the bank may currently or may in the coming three months and beyond be providing or seeking to provide confidential investment banking services to the company/companies

Marketing MaterialThis research report should be considered marketing material, as it has been commissioned and paid for by the subject company, and has not been prepared in accordance with the regulations designed to promote the independence of investment research and it is not subject to any legal prohibition on dealing ahead of the dissemination of the report. However, Nordea Markets analysts are according to internal policies not allowed to hold shares in the companies/sectors that they cover.

Where applicable, recommendation changes are available at: https://research.nordea.com/compliance#equity-changes.

Issuer Review

This report has been reviewed, for the purpose of verification of fact or sequence of facts, by the Issuer of the relevant financial instruments mentioned in the report prior to publication. No Nordea recommendations or target prices have, however, been disclosed to the issuer. The review has led to changes of facts in the report.

Completion Date

30 Aug 2018, 10:30 CET

Nordea Bank AB (publ) Nordea Danmark, filial af Nordea Bank AB (publ), filial i Nordea Bank AB (publ), filial iNordea Bank AB (publ) Finland NorgeSverige

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