Raisio reports sluggish start to 2006
heavy on its powerhouse Benecol brand, and which echoes the drop
off in performance seen at the end of 2005.
The Finnish group's turnover for the quarter was on a par with the prior year period (€99.3m compared to €98.1m). But the operating profit was poor, slipping into the red from €4.1m last year to -€1.5 this year.
Commenting on the results, CEO Rabbe Klemets said that the group's difficulties in the Swedish margarine market deepened, and the company continued to experience stiff competition in malt markets.
He does not expect the entire year to be tarred with the same unprofitable brush, though. In Q2 the company expects to break even, and for full year 2006 the operating result to fall only slightly short of 2005, excluding one-off items.
Turnover in full year 2005 was €424.6 million and the recorded operating result, including one-off items, was -€10.9 million.
According to Klemets, Raisio's renewal is expected to stem from its emphasis on research and product development. R&D costs in Q1 amounted to €2.2m.
The latest results come two weeks after the company announced a structural overall involving the dissolution of its Raisio Nutrition and Raisio Life Sciences.
From Q3 the company's results will be reported under four profit centres or divisions: food; feed and malt; ingredients; and diagnostics.
"The change aims at more rigorous performance monitoring and improved customer orientation," said Klemets.
Raisio forewarned of the poor Q1 results in the restructuring announcement, saying that they were "clearly weaker than the comparison period".
Until now, the ingredients division, together with diagnostics, has been reported under Raisio Life Sciences.
The company's powerhouse is clearly its Benecol branded plant stanols, strong demand for which in Europe boosted overall ingredients sales from €11.3m in Q1 2005 to €13.2 this year.
The quarter's most significant product launches using the ingredient were Tropicana orange juice in the UK and Benecol capsules in Finland.
However raw material and marketing costs for ingredients meant that Raisio Life Sciences reported lower operating profit than last year - a €1.3m compared to €2.2m. The development of new rapid testing methods in diagnostics also contributed to this result.
Klemets said: "The ingredients division is preparing for growth in the Asian and South American markets by expanding its partner network and engaging in professional marketing."
Raisio Nutrition has been the umbrella division for the company's food, feed and malt and internal sales businesses.
Amongst the most momentous developments of the quarter was the launch of GoGreen fresh soy- and oat-based products in Finland and Sweden, and the upgrade of the Keiju margarine brand at the beginning of this year with the addition of omega-3 from Camelina vegetable oil. Keiju has improved its market share by some three percentage points.
In Q1 Raisio Nutrition reported turnover of €85.6m, and operating result of -€1.5m (compared to €4.8m last year).
