The third quarter continued largely along the same lines as the previous one, with consumers’ purchasing behaviour remaining very cautious as a result of inflation and the uncertain economic situation. However, during the summer and early autumn, the demand situation in the Finnish consumer market improved somewhat for Raisio, while in our other main market, the UK, the cost of living crisis continued to challenge the sales volume of Benecol® products. The challenging market situation of B2B customers is also still reflected in the development of Raisio’s net sales.

The 2023 grain harvest in Finland was the third worst of the millennium. However, prices have not yet shown any significant changes, and I do not believe that we will be seeing the massive price increases that we witnessed two years ago. In any case, procurement prices are facing upward pressure because both the quantity and quality of the harvest are woefully low.

During the review period, the company’s net sales remained similar to the comparison period at EUR 56.1 (56.5) million. In the previous year, most of the price increases had already been made during the second quarter, so comparability is already quite good. Performance improved significantly, with comparable EBIT rising to EUR 7.4 (6.5) million, accounting for 13.1 (11.4) per cent of net sales. Cash flow after financial items and taxes was remarkably strong at EUR 15.0 (1.8) million. With the change programme launched in August last year, our operations are evolving in different areas and will gradually be reflected in our performance indicators.

Over the past two years, we have significantly upgraded our production capabilities, with a brand new plant for drinkable and spoonable plant-based products launched in autumn 2021 at our carbon-neutral industrial area in Raisio and a completely renewed pasta production line completed this summer. The commissioning of both of these new investments, worth over EUR 50 million in total, has gone well and the payback of the investments has started well. With regard to the new plant, it should be noted that Raisio had no market share in these categories before, and today we are a powerful player in the Finnish market, strongly challenging the market leader. The Elovena® brand has thus proven its strength also in new product areas and brought significant growth to our sales in Finland.

During the summer and early autumn, the availability of pasta in Finland has come up in the public debate, somewhat unexpectedly. The installation and commissioning of the Raisio pasta line coincided with supply problems in the industry, resulting in gaps on shop shelves. At the moment, demand has exceeded expectations and the factory employees are doing their best to ensure that Finnish consumers have enough good Finnish pasta. In our strategy, we have placed the Torino® pasta brand in the ‘local hero’ category, and its role is to contribute to a steady cash flow for the company and help ensure Finnish security of supply.

We have paved the way for international sales of oat products by carefully researching the European markets and working with customers in the most attractive geographical areas. We aim to establish a permanent position in markets much larger than Finland, and achieving this position will require a great deal of work and money. Achieving market positions in competitive consumer markets is expensive and even risky, but we believe that the strong Elovena® brand, which will soon be a century old, will also flourish on a global scale.
I wish to extend my sincere thanks to Raisio’s employees for their great work in the ever-changing market situation.

Pekka Kuusniemi

CEO

November 2023

The sharp rise in food prices, general inflation and the rapid rise in interest rates have had an unexpected impact on consumer purchase behaviour. The weakening of purchasing power has resulted in a significant drop in volumes as consumers seek to save on their daily spending, which has affected all of Raisio’s market areas. The biggest drop in volumes has been seen in the UK, where macroeconomic challenges have been widely felt in the grocery sector. In Ireland, however, demand for Benecol® products has continued to grow despite the inflation developments.

The volume challenges increased during the second quarter, and Raisio’s net sales fell by 5.1%. However, increasing efficiency in all operations significantly improved comparable EBIT, which amounted to EUR 5.7 (4.4) million and 10.8 (7.9) per cent of net sales. Cash flow after financial items and taxes was very strong at EUR 9.8 (-0.2) million. We have been able to quickly turn all key performance and profitability indicators in the right direction after the shock we suffered as a result of Russia’s invasion of Ukraine.

In a declining market, Raisio’s focus is on developing profitability, marketing efforts are targeted around the moment of purchase and efforts are made to make the most of the value of new product launches. The development of new products, made possible by the new production facilities, continues to accelerate, and consumers continue to be interested in innovative brand products, despite the recent trend towards frugality in food choices. The continued success of Elovena® products is an excellent demonstration of this, with a 20% growth during the review period.

The comprehensive modernisation of our pasta factory has progressed according to plan during the period. The new production line installed during the summer will be ready for production in August, and Torino® pasta products will again be produced in Raisio for Finnish consumers in a factory with state-of-the-art technology and product safety. The investment is worth EUR 4.1 million and the installation work will take approximately 10 weeks in total.

Raisio’s strategy focuses on the strengths we have developed over a long period of time, and we have a proven ability to respond quickly to changing market conditions and a resilient balance sheet that allows us to invest in future growth. My warmest thanks to Raisio’s staff for their continued good work in these exceptional times!

Pekka Kuusniemi

CEO

August 2023

Exceptional times in the food chain continue. The strong turbulence in raw material prices that started as a result of Russia’s war of aggression continues, with grain prices fluctuating significantly and other production costs continuing to rise. During the first quarter, the sharp rise in prices led to changes in consumers’ purchasing habits, and volumes have fallen across the board. The inflationary shock has been exceptionally severe. With food purchases, consumers have control over the quantity of products they buy, unlike many other purchases that generate direct costs. This has been clearly reflected in all our markets.

Despite the market turmoil, Raisio’s net sales increased by 6.1 per cent to EUR 56.5 (53.2) million. Volumes fell across the board. However, what is most important is that we were able to maintain our market share in terms of value in key categories, and in some categories we were even able to increase our share. Our comparable EBIT increased from the exceptional comparison period, reaching EUR 4.2 (1.5) million and 7.1 (2.7) per cent of net sales. The euro conversion of our trading currencies had a negative impact on both net sales and EBIT compared to the comparison period.

In a turbulent market, new products seem to gain even more importance, and Raisio’s fast pace of product development is paying off. Many new oat-based products were launched during the review period, and their excellent reception in the market is encouraging. Our investments in sales and marketing increased clearly from the comparison period. As a company focused on healthy plant-based foods, our future is strongly innovation-driven, and in March we appointed a Chief Innovation Officer with a strong track record.

The sale of Raisioaqua, launched at the beginning of last summer, was completed at the end of February after a lengthy process. I am pleased with the outcome: the company found an owner focused on the fish farming business, the committed personnel were transferred to the new owner as old employees and industrial activity will continue at Raisionkaari Industrial Park. The continuation of the operations is also important for Finland’s security of supply, as the fish feed factory is the only one of its kind in Finland.

The exceptional period in the food system that started in autumn 2021 is still ongoing. Strong brands, innovative new products and planned but agile operations are key success factors for Raisio in these exceptional circumstances. A resilient balance sheet and the ability to invest and pursue potential acquisitions are strong competitive factors in the current operating environment. A heartfelt thank you to Raisio’s employees for their good work this spring!

Pekka Kuusniemi

CEO

May 2023

2022 was a very challenging year for Raisio, but we managed it well considering the circumstances. Russia’s war of aggression in Ukraine, which began in February, instantly changed our plans for the year, which had started so well. We decided very quickly to terminate all our business linked to Russia, which accounted for about 20% of the company’s net sales. This inevitable change, together with the unprecedented surge in grain raw material prices, had a major impact on our profitability in the first half of the year.

The divestment of the Russian sales company in April and the transfer of Raisioaqua to discontinued business operations in May made it necessary to look at the company’s operations from a new perspective. To accelerate the implementation of the strategy, we launched a comprehensive change programme in early August. As a result of this planning, in December Raisio updated its long-term financial goals until 2025.

The continuing operations’ net sales for the financial year increased to EUR 220.9 (200.0) million, which signified a growth of 10.4%. The sharp rise in costs led to a need for significant price increases. We implemented the increases in the shortest time frame possible, and profitability started to recover already in early summer. The comparable EBIT was EUR 18.4 (21.3) million, but what is noteworthy is the rapid rebound to good profitability, as evidenced by the final quarter’s profit of EUR 6.0 (4.9) million and 10.9% (9.2) of net sales. The more than doubled grain prices tied up working capital and thus weakened Raisio’s cash flow, which was EUR 11.2 (28.4) million, but in the final quarter it was EUR 10.8 (9.2) million. The strong positive change in cash flow is another indicator of the rapid improvement in the situation.

In the Healthy Food Segment, profitability was maintained at the previous period’s level at EUR 18.0 (18.4) million, despite the difficult conditions. Marketing investments were increased by more than three million euros compared to the comparison period to support Raisio’s numerous new product launches. The impact of inflation on consumer demand became most visible in the final quarter. The decline in volume has been moderate and I do not see it continuing. Our strong brands, with a steady stream of interesting new launches, keep consumer demand up. Particularly pleasing is the staggering growth of almost 30% for the iconic Finnish oat brand Elovena® during the review period. Benecol® lost volume due to significant price increases in the second half of the year but maintained a good level of profitability. Preparations for the renewal of the Härkis® plant protein brand were made during the review period, the results of which will be enjoyed in the current year.

The difficult raw material situation particularly impacted the performance of the Healthy Ingredients Segment and profitability decreased to EUR 3.4 (6.3) million. The sharp rise in grain prices, combined with the previous year’s poor harvest in terms of quantity and quality, reduced both yields in production and profitability in BtoB sales, despite the price increases. However, profitability improved once processing of the new harvest started towards the end of the third quarter. Sales efforts for both domestic and international markets increased significantly during the period, with a focus on gluten-free oats and plant protein products.

The financial year as a whole was definitely one of the most challenging in Raisio’s 84-year history. With good cooperation, we achieved an upward trend, as the financial development within the year clearly demonstrates. As the challenges in the operating environment continue, it is excellent that the company has a clear strategic direction and a very strong balance sheet and financial position. At the beginning of our strategy period, we also communicated our goal to release additional capital to our shareholders, which we are now proposing to the Annual General Meeting, as we did after the previous financial year. A big thank you to our employees and partners for the past financial year. Full steam ahead!

Pekka Kuusniemi

CEO

February 2023