Raisio reports “satisfactory” profits amid problems for UK confectionery business
09 Aug 2017 --- Finland-based food group, Raisio, has reported its second-quarter results, underlying EBIT as “satisfactory” amid falling profits at its UK confectionery business.
Raisio posted comparable EBIT - excluding items such as a write-down in the UK and the fair value of Halo Foods assets sold last year - of €13.1 million (US$15.3 million) for the three months to the end of June, down from €15 million (US$17.6 million) a year ago. Its first-half comparable EBIT was €23.6 million (US$27.7 million), versus €24.7 million (US$29 million) generated in the opening six months of 2016.
Last month, the company issued a profit warning on the back of issues at its UK confectionery arm, said it had started to “solve the operational problems” at its plant in the UK city of Leicester but warned, “tackling the commercial challenges will take more time than expected”.
CEO Jarmo Puputti’s said: “Raisio’s €13.1 million (US$15.3 million) comparable EBIT for April-June was a satisfactory performance as the profitability of the UK confectionery business decreased substantially with the continued operational and commercial challenges at the Leicester confectionery plant and with the declining pound.”
“During the spring and summer, we have started to solve operational problems at the Leicester confectionery plant. Tackling the commercial challenges will take more time than expected. The Czech confectionery business continued its steady performance, in terms of both net sales and profitability.”
“In June, Raisio made an important deal and divested its Southall industrial property near London. The purchase price paid by the buyer was approximately €40 million (US$46.9 million). Southall is one of the most important urban development areas in London,” explains Puputti.
Raisio’s Board of Directors approved the renewed business strategy in April and the Group strategy in early summer. Both the strategies are for the years 2017 – 2022. The strategy emphasizing well-being is based on the company’s strong competence areas: plant-based and functional foods, effective feeds, and value-creating digital services. A responsible way of operating covers all Raisio’s businesses and is a central part of the company's continuous improvement objective.
“The company seeks profitable growth with an agile product and brand development, new markets and product categories, digital services, and through acquisitions. The renewed strategy creates a well-targeted and determined operating model for growth. Raisio aims to be a great place to work,” adds Puputti.
Revised outlook
Raisio has revised its 2017 outlook in the stock exchange release published on 21 July 2017. For the full year 2017, the company estimates its comparable EBIT to be approximately €45 million (US$52.8 million). The outlook revision was due to the prolonged commercial and production problems at the UK confectionery business, lower than expected profitability and weakening of the pound against the euro. Exchange rates will continue to significantly affect Raisio’s net sales and EBIT.
In line with the renewed strategy, Raisio continues to invest in brands, product concepts, sales and marketing, to streamline its operations and expand into new markets in Europe. This will pave the way for future growth and success.
Raisio’s full-year outlook
In 2017, Raisio will invest in brands, product concepts, sales and marketing, and in the enhancement of its operations. This will pave the way for future growth and success. Raisio estimates its comparable EBIT for 2017 to fall slightly short of comparable EBIT for 2016. Exchange rates will continue to significantly affect Raisio’s net sales and EBIT.
