Raisio looking at sale of chemicals unit

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Finland's Raisio Group, the maker of Benecol, is mulling the
divestment of its chemicals unit, to allow it to invest further in
its food businesses.

The unit makes chemicals for the paper industry and has a significant market position in Europe. It is currently expanding its operations in China and has shown stronger performance over the last year than the group's other units - Nutrition, which makes margarine and the Life Sciences division, combining production of the cholesterol-lowering ingredient Benecol and a new diagnostics business.

However Raisio said it is looking to increase its focus to drive long-term growth. The board said this week that it wants to invest in the core food and feed businesses, to develop the group as 'an innovative life science-oriented food and feed company'. Early last year it sold the Swedish ice cream business Carlshamn to Ingman Foods, another Finnish dairy producer.

They have also hinted at further restructuring in the Baltic food and feed markets. Networking with other Nordic players and expansion into the Baltic Sea area have already started.

After making a small operating profit in 2002 (€0.5 million, compared to losses of €3.5 million the previous year) Raisio Life Sciences has so far this year failed to meet expected turnover. Although there have been some new products launched recently, such as the Benecol Yogurt Drink, marketed by McNeil Consumer Nutritionals, claimed to deliver the recommended daily intake of cholesterol-lowering properties in one go, which should help the unit regain some of its expected growth for the year.

For the first nine months of 2003, Raisio reported an operating result of -€7.2 million, falling from €20.2 million in the previous year's same period, partly due to €5.2 million in one-off costs. The consolidated income for the first nine months of 2003 fell to -€17.8 million, down from a profit of €7.1 million in the previous year.

Cash flow is improving however.

Some international chemical companies have already shown an interest in Raisio Chemicals, according to the company. It will also consider listing as an alternative. The decision to revise the current strategy and structure will be made in the second or third quarter 2004.

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