Raisio plc Interim Report 1 January-31 March 2005
Raisio plc Stock Exchange Release 3 May 2005 at 11.15
Finnish time
Raisio plc Interim Report 1 January31 March 2005
FAVOURABLE BEGINNING OF THE YEAR
Result improved significantly
-Raisio's turnover for the first quarter was EUR 98.1 million (EUR
98.7 million for the first quarter of 2004 for continuing
operations).
-Operating result was EUR 4.1 million (EUR 0.2 million).
-Operative profitability of Raisio Nutrition improved significantly
and the growth of Raisio Life Sciences continued.
-Raisio's turnover is expected to be on par with the turnover from
last year's continuing operations, yet their operating result is
expected to improve during 2005 thanks to the extensive
rationalisation programmes and the discontinuation of loss-making
business.
In this review, figures for the comparison period have been presented
in brackets and they stand for the continuing operations unless
otherwise informed.
Key Figures
1-3/2005 1-3/2004 2004
Turnover, EUR million 98.1 98.7* 437.9*
Operating result, EUR million 4.1 0.2* 10.6**
% of turnover 4.2 0.2* 2.4**
Result before taxes, EUR
million 4.8 -0.9* 10.7**
Return on investment, % 5.0 3.5 46.7
Equity ratio % 71.8 28.3 76.4
Gearing, % -39.7 153.7 -41.9
Earnings per share, EUR 0.02 -0.01* 0.07**
Equity per share, EUR 2.11 1.05 2.29
*continuing operations
**continuing operations excluding one-off items
CEO Rabbe Klemets:
"During the first quarter, Raisio's business operations progressed as
planned. Raisio was able to improve the operative profitability of
both business segments and take a few strategic steps that will
enable growth during next year.
Research and product development create a basis for the renewal of
Raisio. The simultaneous implementation of a number of product
development projects requires focusing not only on R&D skills but
also on production technology and marketing. To this end, we have
commenced the planning of and the required change work for a
production plant focusing on the manufacturing of oat and soy-based
products, and formed new partnerships and strengthened old ones in
order to improve the marketing channels for our new products. The
GoGreen joint venture with Cerealia strengthens the commercialisation
opportunities of our oat and soy-based products. The pure oats
project opens a way for us to manufacture products aimed at the
expanding "niche" market of celiac patients. While on the other hand,
the acquisition of a minority share in the Obory dairy in Poland
enables the expansion of the Benecol product family.
In the second proceeding, on the last day of the review period,
Raisio's Annual General Meeting approved a significant amendment to
the Articles of Association. As a result, Raisio's corporate
governance corresponds to the recommendation given to listed
companies, apart from one exception: the Supervisory Board will
continue to be responsible for the selection of Raisio's Board
members. At the same time, it was decided to change the name Raisio
Group plc to Raisio plc. I believe that the streamlining of corporate
governance and the increase in transparency will, for their part,
improve the credibility of Raisio as a listed company, and our clear
and pithy name, Raisio plc, will communicate our dynamics and our aim
for renewal."
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
This interim report has been prepared in accordance with the
principles of the IFRS. Raisio adopted the International Financial
Reporting Standards as of the beginning of 2005. This adoption has
been explained in a separate report on 22 April 2005.
Financial assets have been categorised in compliance with IAS 39 as
financial assets at fair value, loans and other receivables or
financial assets available for sale. Hedge accounting is applied
within the group on selected items. The accounting of financial
instruments according to IFRS principles had no major impact on
equity.
RESULTS AND FINANCING
Raisio recorded a turnover of EUR 98.1 million (EUR 98.7 million) for
the first quarter. The turnover of Raisio Life Sciences increased,
whilst that of Raisio Nutrition decreased. Turnover from outside
Finland for the first quarter represented 35.6% (33.8%) of the total,
or EUR 34.9 million (EUR 33.4 million).
Consolidated operating result for the first quarter was EUR 4.1
million (EUR 0.2 million). Both Raisio Life Sciences and Raisio
Nutrition were able to improve their profitability.
The first quarters result before taxes was EUR 4.8 million (EUR -0.9
million). Raisios net financial items totalled EUR +0.8 million (EUR
-1.1 million). The financial result was significantly increased by
the smaller amount of debt and extensive financial assets.
The result for the financial period in the first quarter was EUR 3.5
million (EUR -1.6 million). Earnings per share in the first quarter
amounted to EUR 0.02 (EUR -0.01).
BALANCE SHEET AND FINANCIAL POSITION
The balance sheet total at the end of March was EUR 506.3 million
(EUR 514.3 million on 31.12.2004), while shareholders equity
amounted to EUR 348.0 million (EUR 378.1 million on 31.12.2004). The
equity was decreased by a dividend of EUR 34.7 million. Equity per
share at the end of March was EUR 2.11 (EUR 2.29 on 31.12.2004).
The net interest-bearing debt of Raisio at the end of March was EUR -
144.1 million (EUR -168.1 million on 31.12.2004). The equity ratio
at the end of March was 71.8% (76.4% on 31.12.2004), and the gearing
ratio was -39.7% (-41.9% on 31.12.2004).
Working capital increased to EUR 84.2 million (EUR 57.5 million on
31.12.2004). Working capital was increased due to bigger inventories
and smaller accounts payable. Raisios gross investments totalled EUR
4.7 million (EUR 3.5 million).
BUSINESS AREAS
Raisio Nutrition
Raisio Nutrition's turnover for the first quarter was EUR 85.9
million (EUR 88.0 million). The restructuring carried out decreased
the margarine sales in Sweden. Food sales in Finland were also
showing a slight decrease. On the other hand, the turnover in Poland
continued to grow. Turnover generated by the Feed and malt business
was on par with the comparison period.
Raisio Nutrition turnover, EUR million
1-3/2005 1-3/2004 2004
Food 50.1 52.6 217.1
Margarine products 28.3 28.8 121.6
Milling products 18.1 18.6 75.1
Processed food potato 4.6 4.9 21.2
Others - 0.4 0.8
Internal sales -0.9 -0.1 -1.7
Feed and malt 39.5 39.7 190.7
Feeds 36.2 36.4 165.2
Malt 3.0 3.0 24.7
Internal sales -0.2 -0.1 -0.5
Internal sales for business
area -3.8 -4.4 -17.9
Total 85.9 88.0 389.9
Raisio Nutrition booked a significantly improved segment result of
EUR 2.5 million (EUR -0.6 million) for the first quarter, i.e. 3.0%
of the turnover. The improved profitability was due to enhanced
margarine business, increased volume of farm feeds and the higher
pressing margins of vegetable oil.
Codetermination talks, commenced at the beginning of February and
aimed at further enhancing Raisio's margarine production, ended at
the end of March. As a result of these talks, 17 employees will be
made redundant and reorganisation of some tasks will be carried out.
In addition, there will be a reduction of 5 jobs through retirement.
Maintenance operations of the margarine plant were outsourced to ABB
Oy, Service. A total of 110 employees will be working at the plant
following reductions.
Raisio acquired a 25 per cent share of Obory, a Polish dairy company.
Obory is a market leader in yoghurt drinks under the JOVI brand in
Poland, where Raisio will now have the right to sell Obory products
nationwide. Among other things, co-operation with Obory will enable
Raisio to introduce new Benecol products to complement the successful
Benecol margarine. A yoghurt drink, the first Benecol product
manufactured by Obory, was introduced at the end of March. Obory
products will strengthen Raisio's position and complement effectively
the company's product portfolio. They will also give logistic synergy
benefits on the rapidly expanding Polish markets and its neighbouring
markets, both defined as Raisios growth areas.
Raisio and the Swedish Cerealia Foods & Bread company will found
GoGreen AB on the basis of equally shared ownership to meet the
increasing consumer needs in the healthy plant-based products sector.
GoGreen will provide an excellent channel into the North European
markets, for example for the fresh oat and soy-based products in
which Raisio invests by starting the manufacture of fresh oat and soy-
based products in Turku. New products will be launched in early 2006.
Raisio was successful in the "Finnish Food Product of the Year 2005"
competition organised by the Finnish Food and Drink Industries'
Federation. The bread spreads series was won by the Benecol Olive
spread, and the first and main course series by Keiju Fraiche, 20%
cooking fraiches.
Raisio Life Sciences
The turnover for Raisio Life Sciences grew by 13.2% and amounted to
EUR 13.4 million (EUR 11.8 million). The increase in ingredient sales
came about mostly from increased purchases by existing customers. The
solid growth of yoghurt drinks sold in mini-bottles continued.
Turnover from the diagnostics business was on par with the comparison
period.
Raisio Life Sciences turnover, EUR million
1-3/2005 1-3/2004 2004
Ingredients 11.3 9.8 44.7
Diagnostics 2.1 2.0 8.6
Total 13.4 11.8 53.3
The segment result for Raisio Life Sciences improved in the first
quarter to EUR 2.2 million (EUR 0.9 million) due to the increased
turnover of the ingredients business. The segment result was 16.5% of
the turnover.
RESEARCH AND DEVELOPMENT
Priorities in research and development are the development of new
grain, soy and vegetable oil-based products, as well as new
ingredients to complement Benecol. Raisio will also focus on the
development of new technologies and applications. In food
diagnostics, the development of fast pathogen screening methods is a
priority.
Raisio, together with Finn Cereal, agreed on a Letter of Intent aimed
at the manufacture of so-called pure oat products, especially for
people with celiac disease. On completion of the final agreement,
Raisio will be responsible for contract farming of oat, product
development and marketing, whilst Finn Cereal will be responsible for
the processing of pure oats. This agreement gives Raisio the
opportunity to continue the contract farming of healthy Finnish oats
and their further processing into new consumer products both for the
domestic and other EU markets. The products will be manufactured at
Finn Cereal's Kokemäki production plant, which from now on will be
reserved for pure oat products only.
Research and development costs in the first quarter amounted to EUR
2.2 million (EUR 1.9 million).
PERSONNEL AND GOVERNANCE
Raisio employed 1,372 people at the end of March (1,412 on
31.12.2004), 33% of whom worked outside Finland (32% on 31.12.2004).
At the end of March, Raisio Nutrition employed 1,036 people, Raisio
Life Sciences 146 people, and Research and Development 104 people.
DECISIONS MADE AT THE ANNUAL GENERAL MEETING
The Annual General Meeting held on 31 March 2005 in Turku approved
the financial statements for the financial period of 1 January31
December 2004 and discharged those accountable from liability. The
AGM decided to distribute EUR 0.21 per share as dividends from last
year. The dividend was paid to shareholders on 12 April 2005.
The Board of Directors' proposed amendments to sections 1, 3, 6, 7,
8, 10, 14, 15 and 19 of the Articles of Association were approved.
The new Articles of Association approved in the second proceeding in
accordance with section 19 of the Articles of Association became
effective on 25 April 2005 and are available at www.raisiogroup.com.
The AGM authorised the Board of Directors to decide on the repurchase
and disposal of company shares. The maximum number of shares to be
purchased is five per cent of the company's share capital and five
per cent of all the company's votes. These authorisations are valid
until the Annual General Meeting in 2006, however no later than 31
March 2006. The details of the authorisations have been disclosed in
a stock exchange release issued on 16 February 2005.
The number of members in the Supervisory Board for 2006 was confirmed
as 23. The following people were selected as members of the
Supervisory Board from 1 January 2006 until the end of the Annual
General Meeting in 2008: Risto Ervelä, Holger Falck, Esa Härmälä,
Timo Järvilahti, Antti Lithovius, Urban Silén and Simo Vaismaa.
Johan Kronberg and Mika Kaarisalo, authorised public accountants,
were elected regular auditors for the financial year 2006.
PricewaterhouseCoopers Oy and Kalle Laaksonen, authorised public
accountant, were elected deputy auditors.
SHARES AND SHAREHOLDERS
The number of Raisio plc's free shares traded on the Helsinki
Exchanges in the first quarter totalled 41.0 million (46.6 million).
The value of share trading was EUR 92.8 million (EUR 65.9 million)
and the average price EUR 2.26 (EUR 1.42). The closing price on 31
March 2005 was EUR 2.36. The price of the series V shares rose by 24%
from the beginning of the year.
A total of 661,826 restricted shares were traded in the first quarter
(456,621). The value of share trading was EUR 1.5 million (EUR 0.7
million) and the average price EUR 2.29 (EUR 1.50). The closing price
on 31 March 2005 was EUR 2.38. The price of the series K shares rose
by 29% from the beginning of the year.
On 31 March 2005, Raisio had 44,857 registered shareholders. Of all
shares, 12.7% were in foreign holding (11.7 % on 31.12.2004) with the
corresponding value for free shares being 16.0% (14.8% on
31.12.2004).
OUTLOOK
Raisio's turnover is expected to be on par with the turnover from
last year's continuing operations, yet their operating result is
expected to improve during 2005 thanks to the extensive
rationalisation programmes and the discontinuation of loss-making
business. However, the second quarter operating profit is estimated
to be somewhat lower than the operating profit for the continuing
operations (EUR 4.7 million excluding one-off items) in the
comparison period.
Raisio, 03.05.2005
Raisio plc
Board of Directors
Further information:
Taru Narvanmaa, Executive Vice President, Communications and Investor
Relations, tel. +358 50 590 9398
Jyrki Paappa, Chief Financial Officer, tel. +358 50 5566 512
A press and analyst conference will be organised in Helsinki on 3 May
2005 at 3 p.m. A teleconference in English will be held on 3 May 2005
at 4.30 p.m. tel. +358 (0)800 148 766.
No auditors report has been issued concerning the Interim Report.
INCOME STATEMENT (EUR million)
1-3/2005 1-3/2004 2004
CONTINUING OPERATIONS:
Turnover 98.1 98.7 437.9
Cost of sales -76.4 -81.0 -360.0
Gross profit 21.6 17.7 78.0
Other operating income and expenses, net -17.6 -17.4 -96.2
Operating result 4.1 0.2 -18.4
Finance income and expenses 0.8 -1.1 -1.6
Share of result of associates -0.1 -0.1 -0.4
Result before tax 4.8 -0.9 -20.3
Income tax -1.3 -0.7 1.2
Result for the period from the continuing
operations 3.5 -1.6 -19.1
DISCONTINUED OPERATIONS:
Result for the period from discontinued
operations - -14.3 232.1
RESULT FOR THE PERIOD 3.5 -16.0 213.0
Attributable to:
Equity holders of the parent 3.4 -16.1 211.3
Minority interest 0.1 0.2 1.7
Earnings per share from the profit
attributable to equity holders of the
parent (EUR) 0.02 -0.10 1.28
Earnings per share from continued
operations (EUR) 0.02 -0.01 -0.12
Earnings per share from discontinued
operations (EUR) - -0.09 1.40
BALANCE SHEET (EUR million)
31.3.2005 31.3.200431.12.2004
Non-current assets
Intangible assets 10.2 12.2 10.2
Goodwill 16.8 41.2 17.0
Tangible assets 127.1 136.3 127.0
Shares in associated companies 1.5 1.9 1.6
Investments available for sale 8.1 7.1 8.0
Receivables 7.0 7.5 6.7
Deferred tax assets 8.7 18.3 9.5
Current assets
Inventories 68.8 80.6 56.5
Accounts receivables and other receivables 66.5 44.6 63.8
Financial assets at fair value through
profit or loss 184.7 8.9 210.4
Cash in hand and at banks 6.8 4.2 3.8
Non-current assets available for sale - 329.4 -
Total assets 506.3 692.3 514.3
Equity attributable to equity holders of
the parent 348.0 172.7 378.1
Minority interest 14.8 22.8 14.7
Deferred tax liability 10.3 16.5 10.3
Pension liabilities 0.7 3.9 0.7
Non-current interest bearing liabilities 23.2 218.7 26.0
Accounts payable and other liabilities 85.8 54.7 61.8
Current interest bearing liabilities 23.5 12.1 22.8
Liabilities related to non-current assets
available for sale - 190.9 -
Total equity and liabilities 506.3 692.3 514.3
CHANGES IN GROUP EQUITY (EUR million)
Sha- Share Reser- Ot- Trans- Re- Re- To- Mino- To-
re- pre- ve her lati- valu- tai- tal rity tal
ca- mium fund re- on ati- ned in-
pi- acc- ser- dif- on ear- te-
tal ount ves fe- re- nings rest
ren- ser-
ces ve
Equity at
1.1.04 27.8 2.9 88.8 0.2 0.0 0.0 69.9 189.5 23.1 212.6
Dividend paid -1.7 -1.7 -0.2 -1.9
Changes in
translation
differences 0.0 1.7 -0.7 1.0 0.3 1.3
Net profit for
review period -16.1 -16.1 0.2 -16.0
Items recognised
directly in equity -0.2 -0.2 -0.2
Tax of previous 0.1 0.1 0.1
Other changes 0.0 0.1 0.1 -0.5 -0.4
Equity at
31.3.04 27.8 2.9 88.8 0.2 1.6 0.0 51.5 172.7 22.8 195.6
Equity at
1.1.05 27.8 2.9 88.6 0.0 -3.2 0.0 262.0 378.1 14.7 392.8
Effects of
adopting
IAS 32 and
IAS 39 0.3 -0.3 0.0 0.0
Dividend paid -34.7 -34.7 -34.7
Changes in
translation
differences 1.4 -0.4 1.0 1.0
Items recognised
directly in equity -0.1 -0.1 -0.1
Tax of previous 0.0 0.0 0.0
Cash flow hedges
Hedge result
referred
to equity -0.1 -0.1 -0.1
Investments available
for sale
Fair value profits 0.6 0.6 0.6
Deferred tax entered in equity -0.1 -0.1 -0.1
Net profit for
review period 3.4 3.4 0.1 3.5
Other changes 0.0 0.0 0.0 0.0
Equity at
31.3.05 27.8 2.9 88.6 0.0 -1.9 0.6 230.0 348.0 14.8 362.8
CASH FLOW STATEMENT (EUR million)
1-3/2005 1-3/2004 2004
Cash flow before change in
working capital 10.2 14.4 44.6
Change in working capital -24.2 -5.9 13.1
Financial items and taxes 0.6 -5.5 -11.9
Cash flow from business operations -13.4 2.9 45.9
Investments -6.8 -12.2 -32.5
Proceeds from sale of fixed assets - 0.5 406.3
Cash flow from investments -6.8 -11.6 373.8
Change in non-current loans -2.8 0.4 -219.2
Change in current loans 0.3 3.4 0.3
Change in loan receivables - -0.1 -1.0
Dividend paid - -0.2 -21.7
Cash flow from financial operations -2.5 3.5 -241.6
Unallocated items -0.1 0.6 1.4
Change in liquid funds -22.9 -4.6 179.5
Liquid funds at beginning of period 214.1 34.6 34.6
Impact of change of market value on
liquid funds 0.3 - -
Liquid funds at end of period 191.5 30.1 214.1
TURNOVER BY SEGMENT (EUR million)
1-3/2005 1-3/2004 2004
Raisio Nutrition 85.9 88.0 389.9
Raisio Life Sciences 13.4 11.8 53.3
Other operations 0.2 - -
Interdivisional turnover -1.4 -1.1 -5.3
Total turnover from continuing operations 98.1 98.7 437.9
Discontinued operations - 108.2 192.7
Eliminations - -1.3 -3.6
Total turnover 98.1 205.6 627.0
SEGMENT RESULTS (EUR million)
(Operating profit + share of result of associates)
1-3/2005 1-3/20042004
Raisio Nutrition 2.5 -0.6 -10.2
Raisio Life Sciences 2.2 0.9 -4.8
Other operations -0.6 -0.2 -3.9
Eliminations -0.1 0.0 0.1
Segment result from continuing operations 4.0 0.1 -18.8
Discontinued operations - 6.6 240.9
Eliminations - 0.0 -
Total 4.0 6.7 222.2
NET ASSETS BY SEGMENT (EUR million)
31.3.2005 31.3.200431.12.2004
Raisio Nutrition 163.7 177.1 147.5
Raisio Life Sciences 51.1 64.7 47.0
Other operations 148.0 -46.2* 198.3
Total 362.8 195.5 392.8
* incl. discontinued operations
INVESTMENTS BY SEGMENT (EUR million)
1-3/2005 1-3/2004 2004
Raisio Nutrition 2.8 2.3 16.0
Raisio Life Sciences 1.0 0.2 2.8
Other operations 4.5 0.9 4.4
Eliminations -3.6 0.0 -1.2
Total investments from continuing
operations 4.7 3.5 22.1
Discontinued operations - 10.0 12.8
Total investments 4.7 13.5 34.8
TURNOVER BY MARKET AREA FROM CONTINUING OPERATIONS (EUR million)
1-3/2005 1-3/2004* 2004*
Finland 63.1 65.3 280.8
Poland 9.2 7.6 33.4
Russia 4.0 4.5 32.4
Other Europe 20.9 20.1 85.1
ROW 0.8 1.2 6.2
Total 98.1 98.7 437.9
* continuing operations
QUARTERLY PERFORMANCE (EUR million)
1-3/200510-12/20047-9/2004 4-6/20041-3/2004
Turnover of Raisio
Nutrition 85,9 97,5 99,0 105,4 88,0
Turnover of Raisio Life
Sciences 13,4 16,1 11,7 13,7 11,8
Interdivisional turnover -1,2 -1,5 -1,1 -1,5 -1,1
Total turnover 98,1 112,1 109,6 117,5 98,7
Segment result of
Raisio Nutrition 2,5 4,3 3,4 -17,3 -0,6
Segment result of Raisio Life
Sciences 2,2 1,6 0,8 -8,1 0,9
Other operations -0,6 -0,5 -0,5 -2,7 -0,2
Eliminations -0,1 0,0 0,0 0,0 0,0
Total segment results 4,0 5,5 3,7 -28,1 0,1
Finance income and expenses,
net 0.8 0.7 0.2 -1.3 -1.1
Result before tax 4.8 6.1 3.9 -29.4 -0.9
Income tax -1.3 -2.8 7.1 -2.4 -0.7
Result for the period from the
continuing operations 3.5 3.3 11.0 -31.8 -1.6
KEY INDICATORS
1-3/2005 1-3/2004 2004
Return on equity, ROE, % 3.7 -31.3 70.4
Return on investment, ROI, % 5.0 3.5 46.7
Interest bearing liabilities at end of period,
EURm 47.4 330.5 49.5
Gross investments, EURm 4.7 13.5 34.8
Gross investments from continuing operations,
EURm 4.7 3.5 22.1
% of turnover from continuing operations 4.8 3.5 5.0
R & D expenditure, EURm 2.2 4.6 12.9
R & D expenditure from continuing
operations, EURm 2.2 1.9 8.4
% of turnover from continuing operations 2.3 1.9 1.9
Personnel average 1,378 2,719 2,005
Personnel average in continuing
operations 1,378 1,522 1,498
Equity ratio, % 71.8 28.3 76.4
Gearing, % -39.7 153.7 -41.9
Earnings/share, EUR 0.02 -0.10 1.28
Cash flow from operations/share, EUR -0.08 0.02 0.28
Equity/share, EUR 2.11 1.05 2.29
Average number of shares during the period,
in 1,000s
Free shares 130,585 130,097 130,455
Restricted shares 34,564 35,052 34,694
Total 165,149 165,149 165,149
Market capitalisation of shares at end of the
Period, EURm
Free shares 308.2 201.0 248.1
Restricted shares 82.2 52.6 63.9
Total 390.4 253.6 312.0
CONTINGENT LIABILITIES (EUR million)
31.3.2005 31.3.2004 31.12.2004
Assets given for security
For the company
Mortages on real estate 52.7 72.6 52.7
Securities pledged 0.2 4.1 0.5
Corporate mortgages 34.1 46.9 34.4
Contingent off-balance sheet
Non-cancellable other leases
Minimum lease payments 2.6 1.7 1.8
Contingent liabilities for
the Group companies
Guarantees - 1.0 -
Contingent liabilities for the Company 2.1 4.8 2.1
Contingent liabilities for others
Guarantees - 1.1 0.1
Other liabilities 1.5 5.0 -
DERIVATIVE CONTRACTS (EUR million) 31.3.2005 31.3.2004 31.12.2004
Nominal values of derivative contracts
Raw material futures 2.0 14.0 0.8
Forward electricity contracts 1.0 4.1 5.6
Currency forward contracts 38.9 61.9 35.9
Interest-rate swaps - 80.0 -
