Raisio has lowered its earnings forecast for the full year

Raisio has lowered its earnings forecast for the full year

Shares in Raisio plunged more than 7% today (12 August) after the Finnish food group forecast a fall in EBIT in 2014.

Raisio said it expects EBIT this year to "remain below the level of 2013". The Benecol owner generated EBIT of EUR39.3m (US$52.4m) last year.

The company had hinted in May it would be a "challenge" to hit is previous target of a rise in EBIT this year but this morning it confirmed it now believed its operating profit would fall year-on-year.

For the first half of 2014, Raisio, which also owns Honey Monster cereal and Fox's confectionery, reported a drop in EBIT to EUR13.8m compared with EUR19m for the same period a year earlier. Its branded divison saw EBIT fall 28.8% to EUR14.6m.

Sales fell 10% to EUR249.1m.

For the second quarter of the year, sales dropped 10.9% to EUR132.5m. EBIT fell to EUR8.5m from EUR11m for the same period a year earlier.

Shares in Raisio were down at EUR3.73 per share at 10:53 BST today.

Show the press release

RAISIO’S EBIT EUR 8.5 MILLION; FULL YEAR FORECAST LOWERED

April-June 2014, excluding one-off items

  • The Group EBIT was EUR 8.5 (11.0) million, accounting for 6.4 (7.4)% of net sales.
  • Brands Division’s EBIT was EUR 8.2 (11.1) million, accounting for 11.1 (14.2)% of net sales.
  • Raisioagro’s EBIT was EUR 1.4 (1.3) million, accounting for 2.2 (1.9)% of net sales.
  • The Group net sales totalled EUR 132.5 (148.6) million.
  • Guidance changed: Raisio estimates its EBIT for 2014 to remain below the level of 2013.

January-June 2014, excluding one-off items

  • The Group EBIT was EUR 13.8 million (EUR 19.0 million) accounting for 5.6 (6.9)% of net sales.
  • EBIT for the Brands Division totalled EUR 14.6 million (EUR 20.5 million).
  • Raisioagro’s EBIT was EUR 1.4 million (EUR 0.7 million).
  • The Group net sales totalled EUR 249.1 million (EUR 276.9 million).

Raisio Group’s key figures excluding one-off items

    4-6/
2014
4-6/
2013
1-6/
2014
1-6/
2013
1-12/
2013
Results from continuing operations            
Net sales M€ 132.5 148.6 249.1 276.9 557.6
   Change in net sales % -10.9 -1.3 -10.0 -3.0 -4.5
EBIT M€ 8.5 11.0 13.8 19.0 39.3
   EBIT % 6.4 7.4 5.6 6.9 7.1
Depreciation and impairment M€ 3.6 3.7 7.5 7.6 14.9
EBITDA M€ 12.1 14.7 21.4 26.6 54.3
Net financial expenses M€ 0.0 -0.8 -0.3 -1.2 -1.8
Earnings per share (EPS) 0.04 0.05 0.07 0.09 0.20
Balance sheet            
Equity ratio % - - 68.1 63.9 68.2
Gearing % - - 2.0 8.0 -8.6
Net interest-bearing debt M€ - - 6.4 25.5 -28.5
Equity per share - - 2.03 2.04 2.13
Gross investments M€ 6.0 3.0 10.8 4.8 16.5
Share            
Market capitalisation* M€ - - 688.2 542.1 683.1
Enterprise value (EV) M€ - - 694.6 567.6 654.6
EV/EBITDA   - - 14.8 10.9 12.1

*                    Excluding the company shares held by the Group

 

CEO Matti Rihko’s review

"Raisio Group improved its second-quarter EBIT from the previous year by 600,000 euros, excluding the UK's cereals and snacks business, which also showed improvement and the loss was cut in half compared to the first quarter of this year. The extended snack bar factory in Newport was able to improve its service level in June. Sales decline in Honey Monster cereals compared to the beginning of the year was stopped, but net sales were lower than a year before.Raisio has taken steps to renew the Honey Monster brand but the recovery in cereal sales expected to be slow.

Raisio’s brand activities in Russia and Ukraine are using a flexible business model, which proved effective in the current situation. In Russia, sales volume was stable, EBIT improved and was clearly positive. In Ukraine, volume declined considerably, but EBIT was not negative. In Finland, retail sales of Raisio’s branded products continued to grow.

Benemilk Ltd’s operations entered a new phase when a permanent organisation was built for the company and Tim Londergan was appointed as its CEO. He came to Benemilk Ltd from Intellectual Ventures and has been working with the Benemilk innovation since the beginning of our cooperation. R&D of Benemilk feeds will continue in Finland, but the commercial team will be managed from Seattle, USA. Tim Londergan as well as Connie Wan, Chief Technology Officer, and Mark Handfelt, General Counsel, will be working from Seattle.

At Raisioagro, an extensive restructuring of activities will be carried out during the end of this year. The company will focus on cattle and fish feeds, grain trade as well as online sales of farming supplies, and will terminate the production of pig and poultry feeds. The company doubled its EBIT from last year during the first half of 2014. Raisioagro aims to be the leading operator in the agricultural sectors where success is based on feeding and plant cultivation expertise and on innovations.”

GUIDANCE

Raisio estimates its EBIT for 2014 to remain below the level of 2013.

Previous guidance in May 2014

Raisio’s aim to continue the improvement of its EBIT through organic growth seems more challenging than expected, although the improvement was estimated to focus on the second half of 2014 when the ongoing streamlining projects are completed.

Original source: Raisio