Finnish foods and ingredients group Raisio is to close its margarine production plant at Istra, near Moscow, and transfer production to a subcontractor.

The closure will mean the loss of 40 jobs, but sales, marketing, logistics and administration operations will continue.

Raisio said it plans to enhance its margarine and flake operations in Russia, and the closure would improve profitability by reducing overcapacity. The company said it had also decided to transfer flake packaging to a Russian subcontractor in order to cut production expenses.

"We do not have a need for our own production capacity if it is not cost-effective," said CEO Matti Rihko. "We will assign production in Russia to subcontractors and focus on marketing our well-known brands and on developing our distribution channel. Russia will continue to be one of Raisio's important market areas."

Raisio said that from the beginning of September all of its margarines sold in Russia would be produced to the company's formula by a third party. The company is reviewing options for the future use of the Istra facilities.

Russia accounts for 4% of turnover from Raisio's food business. The company has around a 10% market share of the tub margarine sector in Moscow and St Petersburg but the margarine market in Russia is in decline.