Finland's Raisio - makers of cholesterol lowering ingredient Benecol - announced Monday Q1 consolidated losses before tax of €9.2 million, as had been expected, despite growth of group sales by 3 per cent.
In the first quarter of 2003 to group sales were €201.0 million compared to €194.9 million for Q1 in 2002, while most of the growth in sales is said to be derived from the acquisition of Latexia in August 2002.
Turnover from outside Finland accounted for 53 per cent, or €106.5 million, a slight increase on the €103.2 million reported fro the same quarter in 2002. Significantly the consolidated operating loss for January to March was €6.7 million, down from €7.5 million in Q1 2002 while the consolidated loss before tax was €9.2 million against €4.6 million for 2002.
Raisio Group stated that sales for the whole of 2003 are expected to increase compared with 2002, thanks to the acquisition of Latexia and Diffchamb and startup of the specialty chemicals plant in China in the summer.
At Raisio Nutrition, however, sales are expected to be affected by sale of the ice-cream and almond paste businesses and the manufacture of industrial margarine in Sweden. Despite this the company says that the measures being taken to improve efficiency are expected to boost Raisio's performance toward the end of the year.
In the second quarter, the outlook for Raisio Chemicals in particular is reported to be considerably better than in the first quarter and the group's full year result before taxes is estimated to be positive.
Nevertheless, Raisio highlights the fact that there are several risks related to the development of results, especially price trends in petrochemical raw materials, the cost of energy and the degree to which the demand picks up.
CEO Rabbe Klemets said: "2003 got off to a difficult start in all three business sectors. The Raisio Chemicals result was weighed down by trends in the prices of petrochemical raw materials and low demand.
"Raisio Nutrition sales were eroded by industrial disputes and delivery problems, while Raisio Life Sciences still had to wait for new customers to launch their products. However, our turnover grew during the first quarter and stocks have decreased. Raisio Nutrition continued to rationalise its operations by divesting the ice-cream and almond paste businesses."
Commenting on the future Klemets said: "The recent acquisition of Diffchamb will open up new opportunities for Raisio in the new and fast growing market for rapid testing in food diagnostics. In my opinion there will be light at the end of the tunnel later this year. Raisio Chemicals has managed to compensate for higher raw material costs through its current sales prices in the second quarter. Its rationalisation programmes will slightly improve profitability this year, and the full impact of these measures will show in 2004.
"With the decisions made in April on Raisio Nutrition investments, we can start developing new potato products and launch competitive production on the Russian margarine market. Raisio Life Sciences new customers have moved forward in their regulatory processes, and this will increase sales towards the end of the year."