Raisio Divests Potato Business

07/02/07 Raisio has executed a preliminary agreement on selling its food potato business in Vihanti to a newly established company owned by Pohjoisen Kantaperuna Ltd, Potwell Ltd and Markku Tuuli. The transaction is to be completed in the first half of 2007. The buyer has announced it will continue production in Vihanti.

The Vihanti-based potato product plant had a turnover of some EUR 16 million in 2006 and employs approximately 50 people. The plant uses annually nearly 50 million kilograms of Finnish potato acquired from contract farmers.

The income from Raisio’s food potato business has a minor, but positive, impact on the company’s result. Raisio’s target is to clarify the organisation structure and enhance operations. This deal is in line with the company’s targets.

As a result of assessment of foreign investment projects started in December 2006, Raisio has initiated negotiations on a withdrawal from a currently planned project concerning the construction of a flake mill in Burunduk, Russia. The decision is based on a considerable increase in investment costs, which is expected to result in the project no longer meeting the original revenue requirements.

To cover the probable risks related to changes made to the project agreements, the company will include a write-down of approximately EUR 5.8 million in the financial statements for 2006.

Raisio will continue to sell and market flake products in Russia.

According to Raisio’s CEO Matti Rihko: “The evaluation of solidity of assets and investment projects initiated by the new management in December 2006 is now completed by these measures. Raisio has taken the first steps in focusing its business portfolio with decisions concerning diagnostics and potato businesses but the streamlining of the company will continue. Raisio’s main target for 2007 is to improve profitability.”