Poppets owner Raisio trying to improve production efficiency at UK plant in Leicester

Poppets owner Raisio trying to improve production efficiency at UK plant in Leicester

Raisio, the Finland-based food group, today (9 August) described its second-quarter underlying EBIT as "satisfactory" amid falling profits at its UK confectionery business.

The company, which last month issued a profit warning on the back of issues at its UK confectionery arm, said it had started to "solve the operational problems" at its plant in the UK city of Leicester but warned "tackling the commercial challenges will take more time than expected".

Raisio posted comparable EBIT - excluding items such as a write-down in the UK and the fair value of Halo Foods assets sold last year - of EUR13.1m (US$15.3m) for the three months to the end of June, down from EUR15m a year ago. Its first-half comparable EBIT was EUR23.6m, versus EUR24.7m generated in the opening six months of 2016.

CEO Jarmo Puputti said: "Raisio's EUR13.1m comparable EBIT for April to June was a satisfactory performance as the profitability of the UK confectionery business decreased substantially with the continued operational and commercial challenges at the Leicester confectionery plant and with the declining pound."

On a reported basis, Raisio posted second-quarter EBIT of EUR12.4m, up from an operating loss of EUR6.2m in the second quarter of 2016. It made a first-half EBIT of EUR22m, against EUR3.5m a year ago.

Second-quarter net sales stood at EUR144m, up from EUR124.1m a year ago. However, first-half net sales fell from EUR238.1m in the opening six months of last year to EUR236.5m.

Comparable net sales, which excluded revenues from a property divestment, fell 17%. Raisio pointed to the impact of the weakening in sterling over the period and the fact it was lapping a first half of 2016 that included sales from the UK cereal and snack bar business the company has since sold.

Raisio's overall confectionery business has been boosted by the performance of operations it has in the Czech Republic. In the UK, production issues have hit deliveries, meaning sales from both Raisio's branded and own-label businesses in the country fell "significantly" in the second quarter.

The company, which owns UK confectionery brands like Poppets chocolates and Fox's Glacier mints, said it has been investing in improving efficiency at the plant in Leicester one production line at a time and had seen "very good results" on the first line tackled under the programme.

"Raisio strongly believes that the operational problems at the Leicester factory can be fixed and this work is proceeding well. To increase sales and re-establish customer relationships will take longer than expected," it said.

The group's second-quarter net profit stood at EUR4m, compared to a loss of EUR8.4m a year ago. Its first-half net profit was EUR11.8m, against a loss of EUR1m in the opening six months of 2016.