Raisio to Close Russian Margarine Plant

28/06/07 Raisio plc plans to enhance its margarine and flake operations in Russia. The company will wind down its margarine production at the plant in Istra, near Moscow, and transfer production to a subcontractor. The goal is to improve profitability by reducing overcapacity. Raisio has also decided to transfer flake packaging to a Russian subcontractor in order to cut production expenses.

Raisio’s CEO Matti Rihko says: “We do not have a need for our own production capacity if it is not cost-effective. We will assign production in Russia to subcontractors and focus on marketing our well-known brands and on developing our distribution channel. Russia will continue to be one of Raisio’s important market areas.”

Closing down production in Istra means reduction of personnell by some 40 people. Continuing operations include sales, marketing, logistics and administration. From the beginning of September 2007 all of Raisio’s margarines sold in Russia will be produced by the company’s subcontractor according to Raisio’s recipe. Raisio is studying different options for the future use of the Istra facilities.

Raisio’s Food Division gets four per cent of its turnover from Russia. The company holds approximately ten per cent of the market for tub margarines in Moscow and St Petersburg. The volume of the Russian margarine market has decreased in recent years, and no significant growth is expected in the near future. The company holds approximately twenty per cent market share of the retail market for traditional cereals in the main market areas in Russia. The growth in flake market in is expected to continue this year. Raisio’s well-known brands in Russia include the Voimix and Dolina Skandi margarines and the Nordic flakes.