DEVELOPING RAISIO GROUP CONTINUES
Raisio Group plc Stock Exchange Release
18 June 2004 at 10:00 a.m. Finnish time
DEVELOPING RAISIO GROUP CONTINUES
Strong financial position allows extra dividends
The completion of the Raisio Chemicals divestment provides Raisio
with new opportunities, both as a specialist in food-related well-
being and as a financially sound, growing listed company. Raisios
objective is to generate added value for its customers and success
to its shareholders by creating advanced solutions for foods that
promote well-being.
STRONG FINANCIAL POSITION
According to the closing accounts the profit from the divestment
of Raisio Chemicals is approximately EUR 220 million at the
operating profit level. The sales profit enables an extra dividend
in 2004. At the extraordinary shareholders meeting to be held in
the autumn of 2004, the Board of Directors will propose a dividend
of 12 cents per share. Additionally, the Board of Directors plans
to propose an extra dividend of 18 cents to the Annual General
Meeting next spring.
Raisios Board of Directors also approved the dividend policy. In
order to generate added value for its shareholders, Raisio plans
to further develop its business operations and improve the
profitability, and to follow an steady dividend policy.
The objective is to annually distribute half of the per-share
earnings generated by the continuing business operations, provided
the dividend payment does not compromise the companys ability to
meet its strategic objectives.
UPDATES TO COMPANY VISION AND THE STRATEGIC KEY PRIORITIES
Raisios vision is to be the leading specialist in plant-based
products and in ensuring food safety.
Raisios key strategic priorities include products upgrading as
well as new product and technology innovations. Plant-based
consumer trends support Raisios existing special competence
associated with the grain, oil plant and potato raw material base.
Research and development, as well as sales and marketing efforts,
will be focused on identifying and creating consumer and customer
needs. Strong production based on contract farming combined with a
good market position in Finland will help provide opportunities
for new added-value products for both food and feed customers.
The development of functional food ingredients will continue
within the existing cholesterol-lowering Benecol product range,
but will also involve combination ingredients or entirely new
ingredients, particularly those designed to help manage
cardiovascular diseases and diabetes. Growing consumer interest in
the healthiness and safety of food offers ample growth potential
for the food diagnostics business. Furthermore, development of the
ingredient and diagnostics businesses will help bolster Raisios
food and feed businesses.
Geographically, the food, feed and malt businesses are strongly
focused on Finland, Poland, Russia and the Baltic States. The
functional ingredients and food diagnostics businesses have global
focus, but they seek growth especially in the European markets.
A key strategic priority alongside renewal is the ongoing
enhancement of operational efficiency. To sharpen its competitive
edge, Raisio will focus on fully utilizing the synergies generated
by its different businesses, eliminating organizational overlaps,
trimming loss-making business operations and products, and further
developing logistics. An approximately EUR 3 million provision
will be made in the second quarter for the estimated one-off items
associated with the rationalization measures.
In connection with the strategy reassessment process, Raisio
updated the business plans for the business sectors and conducted
a critical assessment of the valuation of balance sheet items in
the light of the new strategy and the current profitability
expectations. In total EUR 32 million will be written down on
goodwill and other balance sheet items, major ones being
approximately EUR 20 million related to goodwill of the Swedish
margarine business and around EUR 4 million related to goodwill of
Diffchamb.
PRODUCT DEVELOPMENT AND INVESTMENTS TO ACCELERATE ORGANIC GROWTH
A cornerstone for Raisios development is an increasingly heavy
focus on research and development utilizing the group-level
synergies more effectively. More than EUR 20 million will be
invested annually on new technology and production in Finland,
Russia and Poland.
Raisio Nutrition is expected to reach an organic growth of 2% in
Finland and approximately 5% in Russia and Poland in the next few
years. Raisio Life Sciences is expected to grow organically by 15
to 20%.
Raisio will seek to improve its profitability by increasing the
added value in its products and by enhancing operational
efficiency. The target is to increase the return on capital
employed to 12% in the next couple of years.
A strong balance sheet will also allow Raisio to carry out
moderate acquisitions in line with its well-being strategy.
UPDATING CORPORATE GOVERNANCE AND THE GROUP STRUCTURE
At the extraordinary shareholders meeting in the autumn,
proposals will be made to amend the Articles of Association. The
Supervisory Boards duties will be restricted to the election of
Board members, supervision of the administration and issuing
instructions, as well as duties specified in the Companies Act.
According to the proposals, the Supervisory Board would no longer
make decisions to essentially expand or reduce the companys
operations. Furthermore, the proposal suggests that the number of
Supervisory Board members be reduced to 15-25. It is the aim that
the Supervisory Board elected at future Annual General Meetings
will be even more representative of all Raisio shareholders.
The election of the Chief Executive Officer is suggested to be
carried out by the Board of Directors instead of by the
Supervisory Board. In the future, the CEO needs not be a Board
member. According to the proposal, deputy members would no longer
be elected to the Board of Directors. The members term is one
calendar year.
In addition, the proposal would eliminate the 15-per-mille
shareholder-specific vote restriction clause in the Articles of
Association.
A recommendation for the corporate governance of listed companies
will enter into force on 1 July, 2004. The amendments to be made
in Raisio Groups Articles of Association require approval by two
successive shareholders meetings; therefore, Raisio does not, for
the time being, fully comply with the recommendation.
Raisio Nutrition and Raisio Life Sciences will continue to
represent the Groups business areas. Raisio Nutrition includes
two businesses - Food and Feed & Malt - and, similarly, Raisio
Life Sciences two - Ingredients and Food Diagnostics. The business
areas are supported by Research and Development unit, which will
be strengthened with a New Venture unit. Service functions will be
reorganized and centralized at the Group level.
Mr. Rabbe Klemets, the CEO of Raisio Group, will also be in charge
of co-ordinating the research and development activities.
Following the divestment of Raisio Chemicals, Jari Lehmusvaara,
Vice President of Raisio Chemicals, resigned from his position as
deputy Board member.
CEO Rabbe Klemets comment:
"Raisio is now well poised for a new start as a financially sound
listed company. Our strong balance sheet gives us new
opportunities to become the forerunner in the food and feed
business in Finland, and to achieve strong growth, particularly in
Russia and Poland. Our strong presence in the growth businesses,
functional food ingredients and food diagnostics, helps support
the development of food and feed&malt businesses and also provides
us with global growth potential. Our significant distributable
equity enables us to distribute extra dividends and share buy-
backs in the upcoming years."
RAISIO GROUP PLC
Board of Directors
Additional information:
Rabbe Klemets, Chief Executive Officer, tel: +358 2 443 2220
Taru Narvanmaa
Executive Vice President, Communications and Investor Relations
tel. +358 2 443 2240, mobile +358 50 590 9398
Press Conference will be held on 18 June 2004 at 12.30 a.m. in Raisio.
Conference call in English will be held at 14.00 a.m. Finnish time,
tel: +358(0)800 148766.
