Raisio pruning measures make for positive Q1

By Jess Halliday

- Last updated on GMT

Related tags: Profit, Raisio

Raisio is starting to see the results of rationalisation measures
with a Q1 result that was back in the black - though work still
remains before its food division regains profitability.

The Finnish food group has undertaken measures to improve profitability in the past year. Restructuring in summer 2006 led to the loss of 65 jobs in an effort to save some €9m in 2007; then a further 24 jobs went in October, when the company shook up its margarine production. In January Raisio announced its intention to divest of its diagnostics business, followed by a similar announcement for its potato business the following month. But for the first three months of the year Raisio reported turnover of €97.5m, compared with €93.8m for the prior year period. Operating profit was €1.3m, up from a loss of -€1m in Q1 2006. These results exclude operations from the businesses to be divested. "Raisio's operating profit was back in the black as a result of the rationalisation measures beginning to have an impact sooner than expected," said CEO Matti Rihko. He said that with the rationalisation measures set to continues, the main goal for the year is to improve profitability. Overall, the company is expecting a "clearly profitable"​ year, with a slight increase in turnover from 2006. One of the main boons for the quarter was that the Ingredients division reported operating profit of €12.5m - that is, 20 per cent of sales. This was thanks to the effect of investments on production, improved cost-effectiveness, and economically useful use of the US plant. "The market for cholesterol-lowering functional foods is developing though the introduction of new market areas and product applications,"​ said the company, citing Asia as the market with the biggest potential at present. A spokesperson for Raisio told our sister-site AP-Foodtechnology.com​ in March: "The Asian market has been a long time aim for Raisio, with its markets continuing to offer significant potential for our brands."​ This potential was attributed to growing concerns over health and nutritional benefits amongst Asian consumers, particularly in China and India, where adoption of Western easting habits is driving up incidence of lifestyle diseases like heart disease and diabetes. However Raisio's food division did not fare so well as ingredients in the quarter. Although turnover was up to €49.8m from €47.4m in Q1 2006, the operating profit was still €0.9m in the red (albeit better than -€2m for the same period of last year). Rihko said that this result underscores the need to raise Finnish consumer prices to parallel the increase in expenses - particularly those stemming from raw material costs. "The goal of the ongoing product pruning and centralisation measures is to clearly mprove product and consumer profitability,"​ said the company.

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