FINANCIAL STATEMENTS BULLETIN 2003
Raisio Group plc Stock Exchange Release
February 10, 2004, 12.00
FINANCIAL STATEMENTS BULLETIN 2003
Results weak, cash flow improved considerably
· Turnover grew 2.1% in 2003 to EUR 860.5 million (EUR 843.1
million in 2002). Operating result excluding one-off items stood at
EUR 1.2 million (EUR 23.1 million). The reported operating result
was EUR -14.3 million (EUR 20.6 million) and the result before taxes
EUR -27.2 million (EUR 9.3 million).
· Earnings per share came to EUR -0.16 (EUR 0.03). The Board
proposes a dividend of EUR 0.01 (EUR 0.02) per share for 2003.
· Cash flow from business operations improved considerably to
stand at EUR 77.0 million (EUR 45.4 million). EUR 62.2 million (EUR
64.9 million) were tied up in investments. Working capital went down
EUR 50.7 million to EUR 110.4 million. The equity ratio was 32.2% on
December 31, 2003 (34.4%).
· Result for 2004 is expected to turn into the black and
improve in all three business sectors. Favourable trends in
financial performance and tight capital management will lay the
foundation for improvement in solvency.
FOURTH QUARTER
Turnover for Raisio Group in the fourth quarter was EUR 216.1
million (EUR 225.2 million) and the operating result EUR -7.1
million (EUR 0.6 million). The result before taxes was EUR -10.8
million (EUR -3.6 million) and cash flow from business operations
EUR 41.5 million (EUR 15.8 million). The operating profit excluding
one-off items was EUR 4.4 million (EUR 6.1 million).
For Raisio Chemicals, turnover rose slightly on the same period in
the previous year to EUR 104.3 million (EUR 102.4 million).
Operating profit was EUR 2.2 million (EUR 2.5 million). The result
for the latex business showed a distinct improvement. The operating
profit excluding one-off items rose to EUR 5.6 million (EUR 2.2
million).
Raisio Nutritions turnover went down to EUR 104.4 million (EUR
117.5 million). Food sales were down, but turnover in animal feeds
grew. The operating result was EUR -9.2 million (EUR -1.6 million).
The result for the Animal Feeds business was almost at the level of
the comparison period, but the financial performance in other Raisio
Nutrition business areas weakened. The operating result excluding
one-off items was EUR -1.1 million (EUR 4.1 million).
Turnover for Raisio Life Sciences reached EUR 11.0 million (EUR 9.3
million). The rise was due to the acquisition of a food diagnostics
business in spring 2003. The operating result was EUR -0.2 million
(EUR 0.2 million). Results for the ingredients business improved
slightly on the same period the previous year.
Rabbe Klemets, Chief Executive Officer:
Turnover for the Raisio Group in the fourth quarter was less than
the same period the previous year, but Raisio Chemicals continued
the good performance, particularly in the latex business. In Raisio
Nutrition, the Animal Feeds business area showed growth. Also from
the full-year perspective, Raisio Chemicals and the Animal Feeds
business area were the strongest elements in the Group measured by
both growth and profitability.
Results for the last quarter were extremely poor due to substantial
one-off costs. The operating profit excluding one-off items was EUR
4.4 million, but write-downs and one-off costs caused by the
rationalization programmes took the operating result for the last
quarter into the red by EUR -7.1 million. However, the major
rationalization programmes that have been implemented in Raisio
Nutrition and Raisio Chemicals create a sound basis for improvements
in profitability in 2004.
The projects to reduce working capital included in the
rationalization programmes proceeded as planned in the fourth
quarter as well as in previous ones, and cash flow improved
considerably. During 2003, we were able to release over 30% of
working capital. Reducing working capital by more than EUR 50
million meant that despite the loss-making result and substantial
investments, the cash flow was almost EUR 15 million.
Implementing the Raisio Group strategy drawn up in 2001 has turned
out to be more challenging than expected. The new entries onto
growing markets that occurred in 2003, paper chemicals in China,
food diagnostics in Europe and margarine production in Russia, are
important strategic steps forward. The company succeeded in
divesting some non-core businesses, such as ice cream and BioSafe
lubricating oil businesses. However, the continued economic slowdown
in the paper industry, the prolonged rationalization in margarine
production and the slowness of the regulatory processes in
functional foods have weakened growth and the financial performance,
undermining future investment potential.
At the beginning of 2004 we started to work on analysing the Group
strategy and the various restructuring alternatives. The key aim is
to focus operations more clearly and continue to develop Raisio
Group as a specialist in well-being. The divestment of Raisio
Chemicals is being planned and discussions aimed at selling it have
been started with a number of companies in the chemicals sector. The
final decision is expected to be taken in the second or third
quarter of 2004.ö
RAISIO GROUP PLC
Taru Narvanmaa
Executive Vice President, Communications and IR
For further information, please contact:
Rabbe Klemets, Chief Executive Officer, tel: +358 2 443 2220, +358
400 821 614
Antti Salminen, Chief Financial Officer, tel: +358 2 443 2460, +358
40 535 1216
Taru Narvanmaa, Executive Vice President, Communications and
Investor Relations, tel: +358 2 443 2240, +358 50 590 9398
Telephone conference in English on February 10, 2004 at 2 p.m.
Finnish time (tel +358 9 8248 3177 and PIN-code 8872).
Press conference in Raisio on February 10, 2004 at 3 p.m. Finnish
time in Raisio Group headquarters in Raisio (address Raisionkaari
55).
The Raisio Group annual report will be published in the week
starting March 15, and the Annual General Meeting will be held on
March 26, 2004 in Turku. The interim report for January-March 2004
will be published on May 4, 2004, the interim report for January-
June 2004 will be published on July 30, 2004, and the interim report
for January-September 2004 will be published on November 4, 2004.
This review has not been audited.
Attachments:
Report of the Board of Directors
Financial statements
REPORT OF THE BOARD OF DIRECTORS
In the annual report for 2002, Raisio Groups turnover and results
were forecast to grow in 2003. Turnover did indeed grow, especially
in Raisio Chemicals, but trends in profitability were clearly weaker
than expected. On the other hand, working capital was reduced more
successfully than anticipated.
The key theme for 2003 was increasing the efficiency of Raisio
operations. Both Raisio Chemicals and Raisio Nutrition carried out
substantial rationalization programmes, the impact of which will
begin to be seen from 2004 onwards. As a part of the restructuring,
some 420 jobs will be cut in different units in the Group during
2003-2004.
Slow organic growth hampered the implementation of the growth
strategy drawn up in 2001. As a result, the Board reassessed
Raisios vision and strategy in autumn 2003 and decided to study
alternatives for restructuring the Group, including the divestment
of Raisio Chemicals. Discussions with a number of international
companies have already begun. Listing Raisio Chemicals on the stock
exchange is another alternative being examined.
TURNOVER
Turnover in 2003 grew 2.1% to EUR 860.5 million (EUR 843.1 million).
Turnover increased for Raisio Chemicals and Raisio Life Sciences
mainly due to acquisitions, but turnover went down for Raisio
Nutrition.
The changes in exchange rates reduced turnover. Calculated on the
average 2002 exchange rate, turnover would have been EUR 25 million
higher.
Turnover from outside Finland came to EUR 448.6 million (EUR 442.7
million), i.e. 52.1% (52.5%) of total turnover.
FINANCIAL PERFORMANCE AND DIVIDEND PROPOSAL
Operating profit for 2003 excluding one-off items was EUR 1.2
million (EUR 23.1 million). One-off costs arose from write-downs of
balance sheet values for certain real estate holdings not used for
production purposes, from the rationalization programmes at Raisio
Chemicals and Raisio Nutrition, and from the decision to close down
the grain starch business. The reported operating result was EUR
-14.3 million (EUR 20.6 million). Operating result weakened in all
business sectors. The changes in exchange rates did not have a
significant effect on results at the Group level.
One-off items
2003 2002
Income Expenses Income Expenses
Raisio EUR 0.8 EUR 8.9 million EUR 1.8 -
Chemicals million rationalization million
sales costs EUR 0.5 IFRS*
profit million write- adjustment
from sale downs in fixed
of BioSafe assets
Raisio EUR 1.2 EUR 3.7 million EUR 1.2 EUR 5.7
Nutrition million rationalization million million from
sales costs, EUR 4.4 IFRS* transferring
profit million write- adjustment margarine
from ice- downs in fixed production
cream assets
business
Raisio - - EUR 0.2 -
Life million
Sciences IFRS*
adjustment
Total EUR 2.0 EUR 17.5 EUR 3.2 EUR 5.7
million million million million
*Transfer to IFRS-based valuation of inventories.
Result before taxes was EUR -27.2 million (EUR 9.3 million). Group
financial expenses were EUR 12.9 million (EUR 11.3 million). Average
borrowing was higher than in the previous year, which increased
interest payments, and currency gains were less than in the previous
year. The prudence principle has been applied in entering deferred
tax assets. The net result after taxes was
EUR -26.7 million (EUR 5.4 million).
Earnings per share came to EUR -0.16 (EUR 0.03). The Board proposes
a dividend of EUR 0.01 (EUR 0.02) per share for 2003.
BUSINESS SECTORS
Raisio Chemicals
Following various crises early in the year, the global economy began
picking up. Paper consumption is estimated to have grown
2-3% during 2003. Growth in consumption was largest in Asia and
Eastern Europe.
However, paper production volumes grew considerably in Western
Europe due to robust export growth. Manufacture of graphic papers as
a whole grew by over 4% with manufacture of coated papers increasing
by 7%. Consequently, demand for latex binders strengthened. Demand
for specialty chemicals on the North American and European markets
remained at the same level as the previous year, but in Asia demand
grew substantially. Unfavourable weather conditions in Central and
Southern Europe and in Finland reduced the grain and potato harvests
and caused prices of raw materials for starch binders to rise
considerably. As a result of this, there will be major pressure to
raise starch binder prices in 2004.
Raisio Chemicals turnover grew 14.1% to EUR 422.3 million (EUR
370.1 million). Growth was due mainly to the Latexia acquisition and
increased sales of latex binders. On the other hand, sales of starch
binders were down due to the German sales company terminating
operations in summer 2002. The weaker dollar was a major reason for
the fall in turnover of specialty chemicals.
Raisio Chemicals turnover by business area, EUR million
2003 2002
Latex 207.7 127.7
Specialty chemicals 125.0 135.8
Starches 89.6 106.6
Total 422.3 370.1
Raisio Chemicals operating profit excluding one-off items was
EUR 10.5 million (EUR 8.9 million). The rationalization programme
launched in spring 2003, causing one-off costs, began to have a
positive effect towards the end of the year. The goal of the
rationalization programme is to achieve annual cost savings of
EUR 15 million. The full weight of the cost savings will be felt in
2004 and beyond.
Reported operating profit was EUR 1.9 million (EUR 10.7 million).
The profitability of the latex business improved because of new
customers and the successful integration of Latexia into Raisio
Chemicals. Tougher competition weakened the profitability of starch
and specialty chemical operations.
A new latex factory with a production capacity of 100,000 tonnes
will come on stream in the Zhenjiang region of China at the
beginning of 2004. At the same time production capacity for Raisio
specialty chemicals will also grow when a specialty chemicals plant
starts up in the Suzhou region in China.
The test printing plant, Future Printing Center, owned by Raisio
Chemicals in conjunction with Hansaprint, Omya, Metso Paper and
Flint-Schmidt Finland, commenced operations in Raisio at the
beginning of 2004. The Coating Technology Center, CTC, and several
other Raisio Chemicals research centres are located in the same
area. Together, they form a unique paper testing and development
service covering every stage of the papermaking process from base
paper to the finished printed product. The development centres allow
for more comprehensive cooperation with customers on the development
of paper chemicals.
Raisio Chemicals sold the BioSafe lubricating oil business, with a
turnover of some EUR 3 million, to the Swedish company Binol AB at
the end of December. Raisio Chemicals thus continued to prune its
non-core businesses in order to focus on paper chemicals, i.e.
latex, specialty chemicals and starch binders.
Raisio Nutrition
EU enlargement will present Raisio Nutrition opportunities for
operating in new markets. Polands future EU membership will open up
new opportunities for Raisio Polska Foods in the EU single market.
On the other hand, it may well be that EU enlargement will increase
imports of food and animal feeds and tighten competition,
particularly in the retail sector in Finland. Decisions on subsidies
for farming at both the EU common agricultural policy level and the
national level will also affect Raisio Nutritions business.
Growing interest in the links between nutrition and health and the
ageing of the population provide a sound basis for developing
functional and healthy foods. Demand for easy-to-use foods is also
increasing. Russia and the Baltic region are considered to be future
growth markets, so Raisio Nutrition is focusing investment and
networking on these regions.
Increasing farm sizes, plus the need to boost production efficiency
and save labour have been steadily increasing the use of industrial
feeds in Finland over the past ten years. In the last couple of
years, there has been growth in poultry and pig feeds in particular.
During the year, Raisio Animal Feeds broke all production records at
both the Raisio and Anjalankoski feed plants.
Competition in the malt markets became keener in the early part of
2003 as beer consumption in Europe slowed down. Total sales of beer
in Finland were 3% down on the previous year. On the other hand,
beer consumption in Russia went up by about 7% on the previous year.
Raisio Nutritions turnover decreased to EUR 417.9 million (EUR
458.5 million). The reduction in turnover was affected by
divestments of the ice cream, almond paste and industrial margarine
businesses. Furthermore, the transfer of margarine production and
the industrial disputes causing production disruptions decreased the
turnover.
Raisio Nutrition turnover by business sector and business area,
EUR million
2003 2002
Food 232.2 266.9*
Margarine 130.8 160.6
Milling 75.3 77.1
Potato Processing 21.2 25.0
Other 14.4 11.1*
Internal sales in Food -9.5 -6.9
Animal Feeds 163.8 159.4
Malt 26.4 30.2
Grain Starch 15.0 20.6
Internal sales -19.5 -18.6
Total 417.9 458.5
*Figures have been adjusted to conform to current organization
Raisio Nutritions operating result excluding one-off items was EUR
-4.8 million (EUR 15.5 million). In autumn 2003, Raisio Nutrition
launched a rationalization programme which resulted in some
reorganization of operations and the decision to close down the
grain starch business. One-off costs caused by the rationalization
programme amounted to EUR 8.1 million. Reported operating result was
clearly down at EUR -11.7 million (EUR 11.0 million). Results in all
Raisio Nutritions business areas weakened.
Raisio Nutrition strengthened its position in Russia by acquiring
dairy facilities at Istra near Moscow in April 2003. Margarine
production at Istra started up at the beginning of 2004. A new
production line will come on stream at Vihanti in 2004, which will
boost the competitiveness of potato processing operations. Raisio
Nutrition is cooperating more closely with the Swedish food group
Cerealia. The Cerealia Foods sales organization has been taking care
of Raisio margarine and Beneviva product group sales to retailers
and institutional kitchens in Sweden since the beginning of 2004.
Correspondingly, Raisio Nutrition will start handling sales of a
wider range of Cerealia products in Finland from the beginning of
May 2004 onwards. Work is in progress on extending cooperation to
the Baltic region.
Raisio Life Sciences
Development in the market for functional foods has been held back by
slow, non-uniform regulatory procedures in different countries.
Nevertheless, Raisio Life Sciences in conjunction with its European
customers succeeded in obtaining regulatory approvals, which allowed
13 new products to be launched in different parts of Europe in late
2003. Because of decisions taken at the European Union level,
regularoty procedures are expected to become harmonized during 2004,
so it will be easier to bring new products onto new EU markets.
Interest in functional foods has grown considerably, particularly in
Central and Southern Europe.
In spring 2003, Raisio Life Sciences acquired the Swedish food
diagnostics company Diffchamb AB. A number of other mergers and
acquisitions also took place in the food diagnostics business
environment in 2003. Some consolidation is clearly occurring on the
markets and, as a consequence, some small companies may become
important operators in the sector in the short term. Food
diagnostics is a sector that is expected to grow at a rate of around
10-20% annually, since the purity and safety of food has become more
and more important to the consumer because of the occurrence of BSE,
hormone residues, salmonella and listeria. The trend is clearly
towards quicker and easier testing procedures.
Raisio Life Sciences turnover grew 12.4% to EUR 34.0 million
(EUR 30.3 million). This growth was due to the acquisition of the
food diagnostics business. Growth in ingredient sales was limited by
most new launches taking place at the end of the year. Pruning low-
margin products from the product range affected the diagnostics
sales.
Raisio Life Sciences turnover by business area, EUR million
2003 2002
Ingredients 27.0 30.3
Diagnostics 7.0 -
Total 34.0 30.3
Raisio Life Sciences operating result was EUR -5.4 million (EUR 0.5
million). Heavy marketing input weakened profitability in the
ingredients business. In diagnostics, profitability was burdened by
the costs of taking over Diffchamb and by goodwill depreciation. As
part of the acquisition process, the efficiency of diagnostics
operations was stepped up by a number of measures including closing
the UK sales office and reorganizing operations in Italy.
RESEARCH AND DEVELOPMENT
Group research and development expenditure in 2003 was EUR 21.1
million (EUR 20.3 million), or 2.5% (2.4%) of Group turnover. Raisio
Chemicals spent EUR 14.6 million (EUR 14.0 million) on R&D, which is
3.5% of its turnover. Raisio Chemicals also received technology
income by selling research, analysis and test-run services to
industrial customers. Raisio Chemicals most important R&D
investments were the construction of the Future Printing Center, the
test printing plant, and the purchase of a unique, new generation
Optiload Twinline multinip calender for the Coating Technology
Center, CTC.
Raisio Nutritions R&D expenditure amounted to EUR 4.4 million (EUR
4.3 million), or 1.1% of its turnover. Raisio Life Sciences spent
EUR 2.1 million (EUR 2.0 million) on R&D, which is 6.2% of its
turnover.
INVESTMENT
The Groups gross investment in 2003 was EUR 63.7 million
(EUR 81.0 million), or 7.4% of turnover (9.6%). Raisio Chemicals
share of this was EUR 30.3 million (EUR 62.4 million). The biggest
individual investments were the latex and the specialty chemicals
plants in China.
Raisio Nutritions gross investment totalled EUR 12.3 million
(EUR 13.8 million). The most important investments were associated
with starting up margarine production in Russia and expanding
production capacity for animal feeds. Raisio Life Sciences gross
investment was EUR 19.9 million (EUR 3.5 million) and the biggest
single investment was the acquisition of the shares in the food
diagnostics company, Diffchamb.
FINANCE
Net financial expenses for 2003 were EUR 12.9 million
(EUR 11.3 million). The most important reasons for the growth in
financial expenses were that average borrowing was higher than in
the previous year, and exchange rate gains and financial income were
lower than in the previous year.
Cash flow from operations amounted to EUR 77.0 million
(EUR 45.4 million), i.e. EUR 31.6 million better than in 2002.
A total of EUR 62.2 million (EUR 64.9 million) was tied up in
investments.
The syndicated loan facility signed by the Group in 1998 continued
to be a key instrument in planning and managing liquidity, but in
June 2003 a Finnish commercial paper programme of up to a maximum of
EUR 90 million was introduced alongside it.
The accounting practice for the syndicated loan was amended at the
beginning of 2003 to present a clearer picture of its terms, by
entering the loan (USD 154 million at December 31, 2003) under non-
current liabilities. The covenant for the loan facility (USD 190
million) is a minimum equity ratio of 30%.
Net interest-bearing liabilities totalled EUR 277.8 million
(EUR 281.4 million) at the end of the financial year. The equity
ratio stood at 32.2% (34.4%) at the end of the year and the gearing
ratio was 127.9% (109.4%).
Capital management progressed well and the volume of working capital
was reduced by EUR 50.7 million. At year end working capital
amounted to EUR 110.4 million. The amount of capital tied up in
inventories fell almost EUR 35.9 million for a number of reasons,
including changes in purchasing policy. The sale of receivables
began in the last quarter. This released about EUR 25 million in
sales receivables. The total volume of the sales receivables went
down by EUR 27.9 million during 2003.
GOVERNANCE, MANAGEMENT AND PERSONNEL
In 2003, the Board of Directors of the Raisio Group consisted of
Jörgen Grandell, Antti Haavisto, Jaakko Ihamuotila, Rabbe Klemets,
Matti Linnainmaa, Kaarlo Pettilä, Christoffer Taxell and Arimo
Uusitalo. The Supervisory Board released Antti Haavisto from his
duties as a member of the Raisio Group Board in January 2003.
In November, the Raisio Group Supervisory Board elected Erkki
Haavisto to the Raisio Group Board for the period 2004-2005. Members
of the Board whose terms came to an end were also re-elected to the
Board for the period 2004-2005. At their first meeting in 2004, the
Board re-elected Arimo Uusitalo as chairman and Matti Linnainmaa as
vice chairman.
Mikko Korttila, Olavi Kuusela and Jari Lehmusvaara were elected as
new deputy members of the Board, and Antti Salminen was re-elected
when his term came to an end. Jukka Lavis term as a deputy member
of the Board will continue in 2004.
Olavi Kuusela was appointed President of Raisio Nutrition on
September 1, 2003. His predecessor, Urpo Pirilä, resigned from
Raisio Group in September 2003 and resigned from his duties as a
deputy member of the Raisio Group Board at the same time. Merja
Lumme was appointed Executive Vice President, Human Resources of
Raisio Group as of September 1, 2003.
The Raisio Group Executive Committee comprises Rabbe Klemets, Chief
Executive Officer, Jari Lehmusvaara, Raisio Chemicals, Olavi
Kuusela, Raisio Nutrition, Jukka Lavi, Raisio Life Sciences, Antti
Salminen, Chief Financial Officer, Merja Lumme, Human Resources,
Mikko Korttila, Legal Affairs, and Taru Narvanmaa, Communications
and Investor Relations.
Raisio Group employed 2,735 (2,767) on December 31, 2003 and 45%
(45%) worked abroad. Raisio Chemicals employed 1,151, Raisio
Nutrition 1,312 and Raisio Life Sciences 199 people at the end of
the year.
Amount of personnel was increased by the acquisition of Diffchamb
and the growth of Raisio Chemicals operations in China. Number of
personnel was reduced by the rationalization programmes and by
closing down margarine production in Sweden.
SHARE INFORMATION
A total of 45.7 million Raisio Group plc free shares were traded on
Helsinki Exchanges in 2003. The value of trading was EUR 47.9
million and the average price EUR 1.05. The last quotation for 2003
was EUR 1.24. The price of free shares rose 15.9% from the beginning
of the year.
A total of 633,302 restricted shares were traded on Helsinki
Exchanges in 2003, for a total of EUR 765,439 and at an average
price of EUR 1.2. The last quotation for 2003 was EUR 1.26. The
price of restricted shares fell 11.3% from the beginning of the
year.
On December 31, 2003, the company had a total of 47,224 registered
shareholders. Some 5.8% of the stock and 7.4% of free shares traded
were owned by shareholders outside Finland.
In early October, Raisio Group was accepted onto the new Kempen/SNS
Smaller Europe SRI Index. A total of 69 European companies from 12
countries, with operations fulfilling impeccable social, ethical and
environmental standards, were chosen for this sustainable
development index.
The Board has not used the authorization granted by the Annual
General Meeting on March 21, 2003 to increase the share capital.
The 1998-2003 option programme for the Raisio Group Board of
Directors, management and key personnel ended on January 30, 2004.
No shares were subscribed under the option-rights within the
programme.
ADAPTING IFRS PRACTICE FOR THE FINANCIAL STATEMENTS
Preparatory work for the adoption of the IFRS standards into the
consolidated financial statements has proceeded according to plan.
Raisio Group will switch over to IFRS practice for the financial
statements in 2005. Figures for 2004, re-accounted according to the
IFRS standards, will be published in spring 2005.
VISION AND STRATEGY
In autumn 2003, the Raisio Group Board reassessed the vision and
strategy drawn up for the Group in 2001. In the opinion of the Board
of Directors a more clearly focused approach will be required to
enable the Group to develop favourably over the long term. This will
secure the conditions under which all three business sectors can
grow and prosper.
As an immediate measure, the Board decided to examine the options
for restructuring the Group, including the possibility of the
divestment of Raisio Chemicals. Listing Raisio Chemicals on the
stock exchange is another option to be considered. The final
decision is expected to be taken during the second or third quarter
of 2004.
The planning of the new strategy is based on special expertise in
well-being, something that Raisio has with regard to food and its
functional ingredients, animal feeds and food diagnostics. The Board
sees interesting potential for further restructuring in the Baltic
region.
Networking with other players in the sector and expansion in the
Baltic region are already under way. Expansion on a global scale and
rapid growth are being sought through the ingredients and
diagnostics business areas.
The intention is to develop closer cooperation between Raisio
Nutrition and Raisio Life Sciences. This enables the further
development of the chain from safe and traceable raw materials to
tasty and healthy products that consumers want.
OUTLOOK FOR 2004
The market situation is expected to remain challenging and the
competition keen in 2004. Raisio Groups key target for 2004 is to
improve profitability and move results back into the black. The
rationalization programmes and the measures to reduce working
capital will provide a sound basis for this. Financial performance
in 2004 is expected to improve in all three business sectors.
Favourable trends in financial performance and tight capital
management will lay the foundation for improvement in solvency.
Discussions related to divestment of Raisio Chemicals have begun and
preparatory work on the new Raisio strategy is under way. The aim is
to complete both of them by the autumn.
Raisio, February 10, 2004
Raisio Group plc,
Board of Directors
FINANCIAL STATEMENTS (not audited)
CONSOLIDATED INCOME STATEMENT
(EURm) 2003 2002
Turnover 860.5 843.1
Income and expenses from
business operations -814.5 -772.3
Depreciation of goodwill -5.1 -4.1
Other depreciation and write-downs -54.8 -45.9
Share of associated companies results -0.3 -0.1
Operating result -14.3 20.6
% of turnover -1.7% 2.4%
Financial income 4.1 5.1
Financial expenses -17.0 -16.4
Result before extraordinary items
and taxes -27.2 9.3
% of turnover -3.2% 1.1%
Extraordinary items 0.0 0.0
Result before taxes -27.2 9.3
% of turnover -3.2% 1.1%
Income taxes 1.4 -2.9
Minority interest -0.9 -0.9
Consolidated result for the period -26.7 5.4
% of turnover -3.1% 0.6%
Taxes are calculated based on the appropriate tax on the result.
CONSOLIDATED BALANCE SHEET
(EURm) 31.12.2003 31.12.2002
Non-current assets
Intangible assets 23.4 28.2
Goodwill 65.3 57.3
Tangible assets 277.2 289.7
Investments 12.6 12.9
Current assets
Inventories 117.7 153.6
Deferred tax assets 20.3 11.9
Accounts receivable 86.8 114.7
Other receivables 37.1 38.9
Securities under financial assets 14.1 30.0
Cash in hand and at banks 20.5 12.2
Assets 675.0 749.4
Share capital 27.8 27.8
Other shareholders equity 166.2 205.7
Minority interest 23.2 23.6
Deferred tax liability 22.0 20.7
Non-current liabilities 235.0 100.5
Accounts payable 75.2 81.8
Other current liabilities 125.5 289.2
Liabilities 675.0 749.4
CONSOLIDATED SOURCE AND APPLICATION OF FUNDS
(EURm)
31.12.2003 31.12.2002
Cash flow before change in
working capital 44.4 69.9
Change in working capital 50.7 -6.7
Financial items and taxes -18.2 -17.9
Cash flow from business operations 77.0 45.4
Investments -65.8 -69.2
Proceeds from sales of fixed assets 3.6 4.3
Cash flow from investments -62.2 -64.9
Change in non-current loans -18.1 -24.3
Change in current liabilities -1.0 46.9
Change in non-current loan receivables 0.1 0.2
Dividend paid -3.5 -3.0
Cash flow from financial operations -22.6 19.8
Unallocated items 0.3 0.9
Change in liquid funds -7.5 1.2
Liquid funds at beginning of period 42.2 41.0
Liquid funds at end of period 34.6 42.2
FINANCIAL INDICATORS
31.12.2003 31.12.2002
Return on equity, ROE, % -10.9 2.4
Return on investment, ROI, % -1.8 4.5
Interest-bearing liabilities
at end of period, EURm 312.5 333.6
Gross investments, EURm 63.7 81.0
% of turnover 7.4 9.6
R & D expenditure, EURm 21.1 20.3
% of turnover 2.5 2.4
Personnel average 2,822 2,654
Equity ratio, % 32.2 34.4
Gearing, % 127.9 109.4
Earnings/share, EUR -0.16 0.03
Cash flow from operations/share, EUR 0.47 0.27
Equity/share, EUR 1.17 1.41
Average number of shares during
the period, in 1000s
Free shares 129,768 129,761
Restricted shares 35,381 35,388
Total 165,149 165,149
Market capitalization of shares at end
of period, EURm
Free shares 160.9 138.8
Restricted shares 44.6 50.2
Total 205.5 189.0
CONTINGENT LIABILITIES
(EURm) 31.12.2003 31.12.2002
Assets given as security
For the company
Mortgages on real estate 72.4 10.5
Securities pledged 4.0 0.0
Corporate mortgages 53.1 22.8
Contingent off-balance-sheet liabilities
Leasing liabilities
Amounts outstanding on leasing contracts
Falling due during 2004 4.7 4.5
Falling due later 4.9 6.2
Contingent liabilities for the Group companies
Guarantees 1.0 67.5
Contingent liabilities for the Company 9.2 14.4
Contingent liabilities for associated companies
Guarantees 0.0 0.0
Contingent liabilities for others
Guarantees 0.4 0.2
Liabilities arising from derivative contracts
Raw material futures: market value -0.5 -0.3
Raw material futures:
value of underlying instruments 11.3 11.6
Forward electricity contracts:
market value 0.0 0.0
Forward electricity contracts:
value of underlying instruments 2.6 0.5
Currency forward contracts:
market value 2.1 0.4
Currency forward contracts:
value of underlying instruments*) 53.0 26.7
Interest-rate swaps: market value -1.5 -1.5
Interest-rate swaps:
value of underlying instruments 80.0 80.0
*) Some equity hedging of foreign subsidiaries was adopted during
the review period, resulting in an appreciable increase in the total
value of underlying instrument for currency forward contracts.
CONSOLIDATED TURNOVER BY BUSINESS SECTORS*)
(EURm) 2003 2002
Raisio Chemicals 422.3 370.1
Raisio Nutrition 417.9 458.5
Raisio Life Sciences 34.0 30.3
Interdivisional -13.8 -15.8
Turnover, total 860.5 843.1
CONSOLIDATED TURNOVER BY MARKET AREA
(EURm) % of % of
turn- turn-
2003 over 2002 over
Finland 412.0 47.9 401.4 47.6
Scandinavia 66.5 7.7 77.3 9.2
Europe (excl. Finland
and Scandinavia) 278.2 32.3 258.3 30.6
The Americas 47.4 5.5 52.6 6.2
Asia 54.6 6.3 52.0 6.2
Other 1.9 0.2 1.6 0.2
Total 860.5 100.0 843.1 100.0
CONSOLIDATED OPERATING RESULT BY BUSINESS SECTORS*)
(EURm) 2003 2002
Raisio Chemicals 1.9 10.7
Raisio Nutrition -11.7 11.0
Raisio Life Sciences -5.4 0.5
Others 1.0 -1.6
Operating result, total -14.3 20.6
QUARTERLY PERFORMANCE*)
(EURm) 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/ 7-/9 10/12
2002 2002 2002 2002 2003 2003 2003 2003
Consolidated turnover
Raisio Chemicals 86.3 85.8 95.6 102.4 103.2 109.4 105.4104.3
Raisio Nutrition 106.5 116.4 118.2 117.5 94.6 110.4 108.5
104.4
Raisio Life Sciences 6.2 7.1 7.6 9.3 6.3 8.3 8.5 11.0
Interdivisional -4.1 -3.8 -4.0 -4.0 -3.0 -3.3 -3.8 -3.6
Turnover, total 194.9 205.5 217.5 225.2 201.0 224.8 218.7
216.1
Consolidated operating result
Raisio Chemicals 3.8 2.1 2.3 2.5 -3.2 -0.1 2.9 2.2
Raisio Nutrition 4.0 3.1 5.5 -1.6 -1.4 -2.4 1.3 -9.2
Raisio Life Sciences -0.1 0.0 0.4 0.2 -1.6 -1.7 -2.0 -0.2
Others -0.2 -0.3 -0.5 -0.6 -0.6 0.5 1.0 0.1
Operating result, total 7.5 5.0 7.6 0.6 -6.7 -3.7 3.2 -7.1
Financial items -2.9 -0.3 -4.0 -4.2 -2.5 -2.5 -4.2 -3.7
Result before extraordinary
items and taxes 4.6 4.7 3.6 -3.6 -9.2 -6.3 -1.0 -
10.8
Extraordinary items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Result before taxes 4.6 4.7 3.6 -3.6 -9.2 -6.3 -1.0 -
10.8
Income taxes -2.4 -1.9 -1.1 2.5 0.0 0.2 -1.0 2.2
Minority interest 0.2 -0.2 -0.4 -0.5 -0.1 -0.2 -0.4 -0.2
Consolidated result for the period
2.3 2.6 2.1 -1.6 -9.3 -6.2 -2.4 -8.8
*) Comparative figures have been adjusted to conform to current
organization.
