Baltic meat struggles
troubling Baltic meat processors, with Estonia's largest processor,
Rakvere Lihakombinaat, reporting that its profits have been halved
in the space of a year despite rising production volumes.
RLK, which is owned by Finnish company HK Ruokatalo, reported that its profits for the 2003 financial year dropped by 47 per cent to EEK 40 million and that consolidated turnover had fallen by 5 per cent to EEK 1.17 billion when compared with the figures for 2002.
The company pointed to lower raw meat prices and stiffening competition, particularly in the finished products category. But despite the disappointing results, it seems that market demand is still brusk, with the company reporting that production volume grew by a healthy 3 per cent to 41,000 tons.
Company CEO Olle Horm said that cheap pork from Poland, combined with a ban on meat products from neighbouring Lithuania to counter attack tariffs on pork had led to a challenging year for the company and the meat sector as a whole.
The results will come as a disappointment for the company, which had been experiencing a strong growth in profits from 2000 on account of more favourable market conditions.
Most meat processors in the Baltic states have had a tough year on account of meat tariff disputes and the influx of cheaper meats, especially from Poland. In Estonia the retail price of meats fell between 6 and 8 per cent last year largely in reaction to these conditions.
However, the company did also point out that the favourable market conditions of 2002 were unlikely to be repeated in the near future. On the back of this assumption the company is predicting profit levels for 2004 in line with those announced for last year.
The company is now hoping to focus on pushing its exports outside the Baltic region in an effort to increase dividends in the year ahead. To date the Nordic market, and more specifically Finland, has been a primary aim for the company to break into. This year the company has been granted an export license by the EU authorities, although a glut of pork has meant that only one consignment has so far been exported. The licensing opens not only the EU markets, but also the other Baltic states, as it means veterinary controls between the states are abolished.
