Raisio PLC: Interim Report Q1-2022

Raisio / FI. (rg) Finland’s Raisio Group announced its First Quarter Interim Report January to March (Q1-2022). The Group announces strong growth amid market and global turmoil. Financial highlights:

January-March 2022, continuing operations

• The Group’s net sales totalled EUR 55.1 (47.5) million, which signified a growth of 15.9 percent.
• Comparable Ebit amounted to EUR 0.1 (4.3) million. That accounted for 0.2 (9.1) percent of net sales.
• Ebit was EUR -4.0 (7.1) million, accounting for -7.3 (15.0) percent of net sales.
• The Healthy Food Segment’s net sales totalled EUR 35.6 (32.0) million. Ebit was EUR 2.7 (4.5) million, which accounted for 7.6 (14.1) percent of net sales.
• The Healthy Ingredients Segment’s net sales totalled EUR 29.0 (22.3) million. Comparable Ebit was EUR -1.3 (0.7) million, accounting for -4.6 (3.0) percent of net sales. Ebit was EUR -5.5 (3.5) million, which accounted for -18.8 (15.5) percent of net sales.
• The Group’s cash flow from business operations after financial items and taxes totalled EUR -5.6 (3.5) million.
• The comparable return on investments (ROIC) was -1.9 (6.8) percent and the return on investments (ROIC) was -7.4 (11.0) percent.
• The overall effect of currency conversions was EUR 0.6 (-1,0) million on net sales, EUR 0.1 (-0.1) million on the comparable Ebit and EUR 0.1 (-0.1) million on Ebit.

January-March 2022, discontinued operations

• Net sales totalled EUR 2.1 (2.4) million, which signified a decrease of 10.9 percent.
• Ebit amounted to EUR -2.7 (0.3) million. Ebit for the review period includes an estimated impairment loss of EUR 2.9 million for asset valuation.

Key Figures Of The Group

		Q1-2022	Q1-2021	12M-2021
Net sales	Mio.EUR	55.1	47.5	237.3
Change in net sales	%	15.9	-8.2	5.9
Comparable EBITDA	Mio.EUR	2.8	5.9	29.4
EBITDA	Mio.EUR	2.8	8.7	31.1
Comparable EBIT	Mio.EUR	0.1	4.3	21.0
Comparable EBIT of net sales	%	0.2	9.1	8.8
EBIT	Mio.EUR	-4.0	7.1	22.7
EBIT of net sales	%	-7.3	15.0	9.5
Comparable earnings per share	EUR	-0.01	0.02	0.12
Earnings per share	EUR	-0.03	0.04	0.13

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Chief Executive’s Commentary

CEO Pekka Kuusniemi: «The year 2022 got underway in a highly promising way, the new strategy period was initiated and the company had measures in place to support the organic growth that began already during the previous financial period. Although the exceptionally poor grain harvest from the previous year and the ongoing threatening activities of Russia toward the end of the year had increased grain prices and, in part, other costs as well, but we were prepared for these changes. At the start of the year, however, we couldn’t have predicted the extent to which these factors would devastate the markets as they now have.

«Russia’s brutal war of aggression in Ukraine is straining the global food system and Raisio as part of this value chain. Once the war broke out, we very quickly made the decision to stop all export activities to Russia. This firm decision had significant impacts, particularly on the fish feed producer, Raisioaqua Ltd, as two thirds of its net sales are typically from deliveries to Northwest Russia. For this reason, we initiated change negotiations as a means of controlling costs in this unit. Furthermore, the decision was made to transfer our subsidiary in Russia that primarily focused on the sales of oat-based foods to discontinued operations and search for a fast solution to continue the activities of that company.

«Despite the dramatic changes in our operational environment during the review period, Raisio’s net sales increased considerably to EUR 55.1 (47.5) million, which signifies an increase of as much as 15.9 per cent. The comparable Ebit, on the other hand, declined significantly as a result of two factors; firstly, the completely unprecedented rise in the price of grain and other costs and, secondly, the planned additional investments intended to boost the growth of the company. Comparable Ebit was EUR 0.1 (4.3) million, accounting for 0.2 (9.1) per cent of net sales. Of the aforementioned factors, the increase of grain acquisition prices and other costs play a more significant part in the decline of profitability.

«Raisio has worked resolutely to counter these negative cost impacts, and we believe that our efforts will notably improve profitability as the year progresses. Of course, a loss of 15 per cent in net sales at one go will inevitably have an impact on everything we do in the company over the coming year. The lost business have contributed to financing our growth and now, we must act quickly to rethink the financing of our growth plans and scheduling.

«Raisio’s long-established and focused strategic position as an industrial manufacturer and marketer of healthy foods and ingredients remains highly relevant. Raisioaqua and the Russian food market were not in the forefront of our strategy, so no significant change in direction is considered necessary. We will continue to follow our chosen path with the strong reinforcement of megatrends with additional consideration for the changing conditions.

«The past two plus years have been extremely exceptional. Raisio managed well throughout the pandemic and will continue to thrive despite the exceptional period caused by the war. Within this crisis, the company is faced with relatively larger challenges than it faced during the COVID-19 years, but we will conquer these challenges with the help of our great personnel and other strong suits. I extend my warmest gratitude to the entire personnel for a job well done.»

Outlook 2022

On 3 March 2022, Raisio withdrew its financial guidelines for 2022 due to the Ukraine war and the unprecedented rise in the price of grain-based raw materials that are key to Raisio as well as uncertainty created by the challenges concerning the availability of these raw materials.

Raisio’s previous guidelines, published on 9 February 2022: In 2022, Raisio estimates that net sales will increase by approximately 5 percent (net sales in 2021: EUR 246.4 million). Our strategy-based growth investments place pressure on our relative profitability in comparison to the previous financial year.