The company announced yesterday it will reorganise these sections to make its "cost structure lighter" and to achieve "considerable savings" in 2008.
A large chunk of the company's plan will involve shedding jobs and it has made no secret that any increase in raw materials will be passed on through the supply chain.
One of Raisio's main ingredients is Benecol plant stanol ester which is used in a variety of food products, including fruit drinks and olive oil and for many years it was the profit engine behind the firm.
Sales of Benecol cholesterol lowering margarine are doing well, the group said, and operating result for the ingredients division remained over 20 per cent of turnover during the second quarter in 2007. However, the group said that in Finland the price of plant based raw-materials has been increasing since last autumn.
More increases in grain raw material prices are predicted by the company, which said that the "volatility" of grain prices has hampered the improvement of profitability in the Food and the Feed & Malt Divisions.
Chief executive Matti Rihko said: "The exceptional weather conditions in Europe will also affect the price level of the next grain crop in Finland even though the volume and quality of the Finnish crop are expected to be good.
"The increasing demand for grain to be used for bioenergy and to meet Asian needs will, as such, raise prices, but the uncommon weather will increase fluctuations. This will further emphasise the need to develop the pricing structure used for purchases and sales."
Earlier this month the company posted its half-year results, which showed the ingredients division fell short of last year's €27m turnover by some €4m. Exceptionally strong seasonal fluctuation in partners stocks and the decreased volumes in US and German markets were blamed for this shortfall.
The interim results came with a renewed determination to break into the Asian market, which the company says shows "major market potential," and a spokesperson told NutraIngredients.com that the group is "preparing market entry with local partners."
She said the food division is "expected to report a break-even result in the last quarter of 2007, but this "may be put at risk by the impact that Europe's exceptional weather conditions have on grain prices."
She added that the Ingredients and Feed & Malt Divisions are expected to record better operating results than last year, with turnover expected to grow slightly compared to lat year.
Talks with 300 workers in Finland about job cuts are currently being carried out, and are expected to finish next month. The company said the need for permanent job cuts is approximately 30.
A layer of management has already been cut out of the company after the president of the Food Division announced last week that he will step down. From now on Food Division's country managers will report to chief executive Matti Rihko, which is a similar management structure to the Ingredients Division.
It has been a difficult time for the group, which shed nearly 90 jobs as part of a restructuring effort to save €9m last year.
Half-year results shows that while turnover was down for ingredients operating profit from April to June totalled €2.6m, up on 2006's €2.3m. The increase resulted from enhanced cost-effectiveness, the group said. Operating result in January to June totalled €5m, up from 2006's €4.1m.
Second quarter turnover for food €48.5m was down €1m year-on-year, and feed and malt €53.6m up €3.3m.
The Food Division's turnover in January to June totalled €98.3m, up from €96.9m.
