Raisio doubles profits but sees tough year ahead

By Shane Starling

- Last updated on GMT

Related tags: Stanol ester, Eastern europe, Raisio

Raisio, the Finnish plant stanol and raw ingredients supplier and maker of the Benecol cholesterol-lowering consumer brand, more than doubled profits and increased turnover by 20 per cent in 2008, but its forecasts are humble in the face of the harsh economic climate.

It noted a catalogue of concerns that may effect its performance in 2009 and beyond, not to mention that of the associated industries in which it does business.

These included negative plant sterols/stanols publicity, volatile raw material and energy prices, reduced demand for biofuels as well as reduced demand for feedstock as livestock head dwindle.

2008/Q4

The company’s sales broached the half billion euro mark for the first time in 2008 to hit €504m compared with €421.9m in 2007 – a 20 per cent increase.

The year saw profit jump from €9.9m in 2007 to €24.1m excluding one-off items – representing 4.8 per cent of sales.

For Q4, sales leapt 17 per cent of the last quarter in 2007 to reach €127.8m from €109.2m. Operating profit jumped more than 300 per cent from €1.7m to €5.7m.

Stanols performace

Raisio noted it had received a positive health claim opinion from the European Food Safety Authority (EFSA) for its stanol ester ingredient that provides the cholesterol-lowering cache in its Benecol range of foods and drinks.

But it highlighted a problem of companies employing health claims that were not backed by science.

“During the transition period for the EU’s nutritional and health claim regulations, lasting until 2010, products offered by other manufacturers may feature health claims that even exceed their clinical evidence. This might harm the credibility of all functional foods in the consumers’ eyes,”​ Raisio said in its statement.

“Any negative publicity related to sterols might also be linked stanols, although numerous clinical trials have proved the safety and efficiency of the stanol ester patented by Raisio.”

Tough road ahead

Raisio was unavailable for comment at the time of publication but in a statement chief executive officer, Matti Rihko, praised the company’s performance while warning of difficult times ahead.

“The improvement in Raisio’s profitability was a great achievement under difficult circumstances,”​ he said. “Raisio succeeded in reaching its goals to enhance operations and improve profitability positively and quickly, in view of the challenging and continuously changing operating environment.”“The year 2009 will also be difficult for the whole food chain and everyone involved in it, despite the defensive nature of the sector.”

He added Raisio was, “in an extremely good position to answer the new global challenges facing the food chain.”

Some of these challenges included reduced field cultivation profitability due to demand being sucked from the biofuels market as the economic crisis has intensified. This had left rapeseed, at least, unprofitable “in the short term”.

Eastern Europe

Its malt markets in eastern European countries like Russia and Finland were being affected as global brewing is centralised.

It said it was rationalising its presence in Russia as part of a “risk management”​ process, which accounted for ten per cent of its turnover in food, feed and malt. It noted the Russian rouble and other eastern European currencies had been weakened by the financial crisis, which in turn made EU companies less competitive. “It is yet too early to predict the size, permanence and effects of the change,”​ Raisio said.

Rihko highlighted its green initiatives that included a carbon footprint labelling scheme which it said may yet turn out to be the single most important action in 2008.”

Raisio noted a tax dispute over the sale of its chemicals business, amounting to €220m, was still being settled in the courts

The Benecol range includes margarines, spreads, cream cheese-style spreads, yoghurts, yoghurt drinks, cereals, milk and soy drinks, pasta and olive oil.

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