Raisio mulls Nokia mill closure

By Jess Halliday

- Last updated on GMT

Related tags Wheat

Raisio has revealed that it is considering shutting down its grain
mill in Nokia, Finland, to raise profitability in the face of
changing market conditions.

The food group, which specialises in plant-based nutrition, has mills for wheat, oats and rye at its Nokia plant.

There is presently a problem of over-capacity, and since Raisio has recently made deliveries to only a few customers it judges that the only way for the mills to continue turning is for the price increase for grain raw materials to be passed on to customers.

Members of personnel groups have been invited to take part in discussions over the future of the Nokia mill, beginning on July 4.

The company is being quite realistic that closure is one option on the table, but the talks are expected to extend through to September at least.

A spokesperson for Raisio told FoodNavigator.com that closure would be the "worst possibility".

Seventy people are employed at the Nokia plant.

She added that the problem of overcapacity is affecting the grain industry in general.

The grain produced by the Nokia plan is mainly for flour for bakeries and other industrial companies in the domestic Finnish market.

This means that is difficult to increase the customer base by seeking new customers abroad.

Should the Nokia plant be closed, this would not represent an exit from grain raw materials.

The company also has another grain plant of similar size in the eponymous town of Raisio, in the west of the country.

Raisio is presently taking a long, hard look at all of its business units in an effort to increase its bottom line.

"This work proceeds in stages, and insofar as volumes and prices cannot be raised to a reasonable level of profitability, we must adjust capacity," said CEO Matti Rihko.

Just yesterday the group announced that it is to cease production of margarine at its plant in Russia in an effort to curb over-production, and is instead transferring this function to a subcontractor.

Earlier this month Raisio completed the sale of its potato business in Russia to Profood Oy in an effort to streamline business operations and improve performance.

When this sale was first announced in March Raisio said that while income from its food potato business had a minor, but positive, impact on the company's results, the company's overall target was to clarify the organisation structure and enhance operations.

The group's turnover from continuing operations was €436.3 m, the company's operating result from continuing operations, excluding one-off items, came to -€6.0 million (compared to €9.1 m in 2005).

The operating result as reported in the financial statements came to €-38.5 million (-€10.9 million).

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