Raisio has completed four acquisitions over the past three years as the Finnish food group looked to increase its clout in key markets and refocus its portfolio towards consumer food brands. Yesterday’s strong sales and earnings growth suggests that this strategy is paying off and, speaking to just-food, CEO Matti Rihko hints that the firm is hungry for more.

Raisio has undergone somewhat of a transformation of late.

The maker of Benecol has sharpened its focus on branded consumer foods and expanded the proportion of sales generated by its branded food interests through a number of acquisitions. Notably, in 2010 and 2011, the firm acquired Glisten and Big Bear in the UK.

Since, the group has looked to bolster its position in Eastern Europe. In 2012, the firm snapped up Polish pasta maker Solma. A few months on, and news came that Raisio had also acquired Czech group Candy Plus, in a deal that Raisio said would “complement” its UK confectionery operations.

This strategy is paying dividends, literally. Over the last three years, Raisio’s net sales have increased by about EUR240m, while EBIT has doubled. Booking an 8.8% increase in 2012 operating profit this morning (12 February), the company indicated all four of its recent acquisitions are proving profitable as they are integrated into the group.

While Raisio is still in its “growth phase”, chief executive Matti Rihko suggests the group’s rapid expansion offers further scope to improve sales and margins. In the near term, Raisio will look to cut costs from the business by driving synergies, while also exploiting cross-selling opportunities, he reveals.

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“The growth for the next semester is now about grabbing the low-hanging fruit that we have in front of us. It is reducing costs and it is also exploiting the new opportunities that arise because we now have more market muscle in Europe. We see cross-selling opportunities and also we have the opportunity to streamline. Now that we have a network of production sites it is possible to optimise the volumes and product range for each of them,” Rihko tells just-food.

Nevertheless, acquisitive Raisio also has its eye out for the next potential takeover target that will drive continued growth at its consumer brands division.

According to Rihko, Raisio is “almost net debt free” and the group’s equity ratio is 64%. This strong balance sheet means that the firm has a warchest of EUR400m (US$539.2m) readily available to fund M&A, he reveals. However, Rihko says “based on experience” the “optimal” deal value stands at EUR50-100m.

Raisio has developed a “very simple” criteria with regard to acquisitions, he adds. “It is A, B, C, E. A is for application, so we are looking for snacking – healthy ecological snacking. B is for brand, so we are very much interested in branded businesses which are relevant for the local consumers. C is customer, either access to new markets or strengthening the relationships that we currently have. E is for euro, so the multiple that we pay needs to be good from our perspective.”

While the “core of the core” for Raisio is healthy snacking, Rihko says the firm is open to drive growth through M&A in a variety of categories.

“If you take a look at our product range we are in multiple categories already. The most recent acquisition we made [Candy Plus] was to strengthen the confectionery business. So yes, ideally, acquisition targets would be healthy ecological snacking. But in practical terms we are not very narrow minded.”

While Raisio is building its portfolio of food brands it is simultaneously looking to expand its Benecol heart-healthy ingredient unit, which was separated into a distinct operating division last summer. This is being achieved on a number of fronts, Rihko says.

Significantly, the firm is increasing the cross-over between Benecol and its brands division. This “cross-fertilisation” is something that Raisio is leveraging “more and more”, Rihko observes.

The company is also starting to bring the marketing and production of Benecol consumer products – which have historically been largely licensed out – in-house.

“For example, we recently took over sales of the Benecol margarine in Finland and Poland. We are doing this for two reasons: First, we are able and willing to invest, we know how to run the business. We have doubled the sales of the mini-bottles in the Finnish market in five years. Second, starting the marketing and sales of margarine in this market actually gives us a solid growth in the EBIT. We know how to do the business and the business is good, so no reason to be shy about taking the business back to us,” Rihko says.

Raisio is also looking to drive global growth for Benecol.

In developed markets, Raisio has obtained the “highest health claim status” for Benecol in the EU, while the US Food and Drug Administration has just renewed Benecol’s GRAS (Generally Recognised As Safe) status. For Rihko, these markets are “the classics” and overcoming regulatory hurdles is a significant step for the food group.

However, Rihko reveals, the company is increasingly looking beyond Europe and the US to drive growth in emerging markets.

“You have the new markets… China, India, Russia and Brazil. Actually, Asia outside the giant markets – Indonesia, Thailand and so on. We are targeting markets where they have a lot of people who are in the middle class and people who are concerned about their heart health.”

As Raisio looks to enter these markets, the “typical formula” has been to enter with a local partner, Rihko says. “But more and more we are starting to have the muscle to do the business ourselves. So we have the two options.”

While Raisio would not “count out” expanding its Benecol business in emerging markets through M&A, Rihko says the group often prefers to take an organic route to expand internationally. “It is a matter of asking does it bring us the lift that we want? We have been very conservative about acquisitions in the ingredients. But it is not ruled out.”