Raisio PLC: Interim Report Q3 and 9M-2019

Raisio / FI. (rg) Finland’s Raisio Group announced its Third Quarter Interim Report January to September (9M-2019). The Group’s net sales totalled EUR 181.8 (172.6) million, which signified a growth of +5.3 percent in 9M-2019. Financial development in brief:

July to September 2019

• The Group’s net sales totalled EUR 69.2 (63.1) million, which signified a growth of +9.7 percent.
  Ebit was EUR 10.7 (7.8) million, accounting for 15.5 (12.3) percent of net sales.
• The Healthy Food Unit’s net sales totalled EUR 33.6 (33.6) million.
  Ebit was EUR 5.6 (3.9) million, accounting for 16.8 (11.6) percent of net sales.
• The Healthy Ingredients Unit’s net sales totalled EUR 42.3 (35.9) million.
  Ebit was EUR 5.4 (4.4) million, accounting for 12.8 (12.3) percent of net sales.

January to September 2019

• The Group’s net sales totalled EUR 181.8 (172.6) million, which signified a growth of +5.3 percent.
  Ebit was EUR 23.0 (18.6) million, accounting for 12.6 (10.8) percent of net sales.
  Comparable Ebit was EUR 23.0 (20.6) million, accounting for 12.6 (11.9) percent of net sales.
• The Healthy Food Unit’s net sales totalled EUR 102.5 (102.3) million.
  Ebit was EUR 14.1 (12.5) million, accounting for 13.8 (12.2) percent of net sales.
  Comparable Ebit was EUR 14.1 (12.6) million, accounting for 13.8 (12.3) percent of net sales.
• The Healthy Ingredients Unit’s net sales totalled EUR 98.9 (89.5) million.
  Ebit was EUR 10.7 (10.1) million, accounting for 10.8 (11.3) percent of net sales.
• The Group’s cash flow from business operations after financial items and taxes totalled EUR 13.8 (4.0) million.
• The Group’s outlook for 2019 remains unchanged.

Key Figures of the Group

		7-9/2019	7-9/2018	1-9/2019	1-9/2018	1-12/2018
Net sales	Mio.EUR	69.2	63.1	181.8	172.6	228.2
Change in net sales	%	9.7	-6.7	5.3	-4.6	-2.7
Comparable Ebit	Mio.EUR	10.7	7.8	23.0	20.6	25.6
Comparable Ebit of net sales	%	15.5	12.3	12.6	11.9	11.2
Ebit	Mio.EUR	10.7	7.8	23.0	18.6	16.6
Ebit of net sales	%	15.5	12.3	12.6	10.8	7.3
Comparable Ebitda	Mio.EUR	12.3	9.2	27.8	24.8	31.3
Ebitda	Mio.EUR	12.3	9.2	27.8	22.9	31.0
Comparable earnings per share	EUR	0.06	0.04	0.14	0.10	0.12
Earnings per share	EUR	0.06	0.04	0.14	0.09	0.08

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Chief Executive’s statement

President and CEO Pekka Kuusniemi: «Raisio’s third quarter was extremely strong, as expected, with net sales increasing by nearly 10 percent and Ebit by nearly 40 percent in relation to the comparison period. Our key goals for 2019 focus on securing growth and profitability. We have proceeded well, thus far, and our long-term growth potential remains evident. The current year started with an exceptional situation in which the price of grain raw material had increased by up to 60 percent in comparison to the conventional prices realised over a longer period of time. As a result, the profitability of all our grain-based products was threatened, but thanks to the determined activities of our organisation, we were able to react to the changing situation commendably. The new grain harvest quality and volume are estimated to represent a normal level over a longer period, which relieves the pressure to increase sales prices for now.

«The demand for oat products has developed especially well both in the consumer and BtoB sectors. Despite the increased sales prices, the sales of Elovena products increased further in Finland without affecting the volume. International interest in oat is constantly on the rise.

«We are supporting our strategy through focused investments; the long-term modernisation of our oat mill and the building of our new production plant specialising in the development and production of plant-based value-added products, which was initiated during the review period, are progressing as planned. The foundations of the facility were laid in September and the project is proceeding on schedule. Raisio’s investments during the review period totalled EUR 4.1 million, which is more than three times that of the comparison period. Despite the increased investments, Raisio’s cash flow was positive.

«The political situation in Great Britain has affected consumer confidence and, in terms of purchasing behaviours, there has been a drop in overall demand towards the end of the review period. Using all means at our disposal, we have prepared for any future changes, some of which cannot be predicted. At the same time, we have responded to heightened political tensions by holding back on some of the planned measures to promote sales, thus avoiding an ineffective use of these resources. We have managed to turn the Russian and Polish consumer markets to a positive trend despite the profitability challenges that arose during the previous fiscal period. In Russia, sales during the review period increased by ten percent, and the revitalisation of the Polish market is proceeding according to plan.

«Raisioaqua continued its excellent performance, as commenced in the spring, and our key markets of Finland and Russia showed a particularly strong result. In terms of future business prospects, the opening of new market areas in Sweden and Poland seem very encouraging. As the season ends, we are turning our focus towards the further development of productivity in preparation for the opening of the new season.

«Our strategical policy of ‘fewer but stronger brands’ is proceeding and, during the review period, we continued with the development of the Elovena brand, our international oat brand. We will be consolidating our oat-based Nordic and Provena brands in stages to become part of the Elovena product family in order to achieve economies of scale and comprehensive brand visibility. Additionally, our international super brand Benecol shall be positioned even better to support its unique ability to lower cholesterol.

«The achievements of the current year have further confirmed that the strategy we have chosen is working. Raisio Group’s business operations are characterized by internal cyclicity within the year, but they are not fundamentally bound to economic growth perspectives. The consistent and long-term implementation of our strategy will facilitate profitable growth.»

Outlook 2019

The Group’s outlook remains unchanged. In 2019, Raisio expects its net sales for continuing operations to grow (2018: EUR 228.2 million) and comparable Ebit to be over 10 percent of net sales. Raisio will continue its investments in the brands, R+D and the company’s own production in its most important product categories.