Chief Executive's review
2013 was a good year for Raisio. Uncertainty in the European economy continued and it was challenging for the companies to maintain margins, but grocery trade was not subject of the strongest pressure.
We are particularly pleased with four things:
- Raisio delivered a record EBIT of EUR 39.3 million*, which is a good performance in the challenging economic climate of Europe. EBIT improved by almost 14 per cent from the previous year and was Raisio's all-time record.
- The Group's balance sheet has been kept strong with a positive cash flow of almost EUR 72 million. So it was not only about making profit but also about generating cash.
- Raisio established a joint venture, Benemilk Ltd, in Finland together with Intellectual Ventures. We already have nearly 100 new Benemilk-related ideas; some of the inventions are further developed in order to prepare new patent applications. Our aim is to commercialise Benemilk internationally and to create a meaningful IPR portfolio. At the end of 2013, Benemilk Ltd took another step forward. The joint venture's operations were expanded so that, in addition to the Benemilk innovation, the company will also commercialise other innovations and related IPR in the food and agriculture sector. Our salmon feed invention, for which we have already filed a patent application, is a good example of this. Benemilk Ltd is shaping up to be a holding company for the technologies and IPR of the healthy and sustainable food chain.
- Last but not least, I want to highlight Raisio's dividend that has had eight consecutive years of growth. Our ability to improve the dividend every year makes us a positive exception among the Finnish listed companies.
Brands Division improved; Streamlining continues
EBIT for the Brands Division totalled EUR 41.4 million* accounting for 13.6 per cent of net sales. It was a very good performance and EBIT percentage was at the level of leading European brand houses. In 2013, Raisio had good achievements in its Northern European markets resulting from our streamlining efforts, product range renewal and good sales development of the Benecol margarines in Poland. In addition, our confectionery business performed well. On the other hand, we are also facing challenges that we take seriously. One of them is the volatility related to customer volumes of the Benecol products.
We have been running, and still are, significant production transfers, which are part of Raisio's streamlining efforts in the Western European markets. These projects are well on track, but they also bring challenges related to cost management and service level, among other things. Only when both the projects have been completed, we can see their full positive impact. This is also a challenge that we need to take seriously.
Raisioagro on the right track
In 2013, Raisioagro showed the ability to improve its profitability by delivering EBIT of EUR 3.1 million. This indicates that Raisioagro is on the right track to reach the EBIT of EUR 5 million, which is considered the minimum level for the company.
Raisioagro will focus on value-added products, such as Benemilk, fish feeds and online store. The company has a busy time ahead, but in the end, Raisioagro will be stronger than ever.
Outlook for 2014
In 2014, Raisio aims to continue its EBIT improvement. Raisio is a strong enough company to make acquisitions if good deals come across.
Benemilk Ltd is at the beginning of an active and exciting journey. We have started roadshows to meet potential international Benemilk licensing partners. It is very interesting to see what we can achieve.
* Excluding one-off items