In the third quarter, the business environment remained very similar to the second quarter. Due to the economic uncertainty and the slow decline in inflation, price remains a key driver of consumer choice, but consumer behaviour also continues to show signs of a budding resurgence of responsibility, convenience and wellness. Falling interest rates and rising purchasing power are paving the way for this trend to gain momentum.

There is variation between geographical areas in both consumer and retail behaviour. While Nordic retailers are increasingly seeking to serve other needs in addition to price consciousness, most English and Polish chains, for example, still focus heavily on price alone. We will not allow ourselves to rely on the recovery of the external environment; instead, we will actively seek growth and efficiency improvements ourselves, regardless of changes in the world around us. Our strategy work is progressing on schedule, and we will present our updated strategy during the first quarter of 2025.

Raisio’s products have a solid foundation, which is developing positively. Our growth has remained consistently strong and volume-driven also in the third quarter. Strong market positions and brands in our main markets are reducing our exposure to unhealthy price competition. At the same time, however, the market situation is slowing down our establishment in newer markets, as consumers’ willingness to try new products has declined.

Overall, we have witnessed a tentative decline in raw material prices this year, even though there have been divergent trends across product groups and cost items. As price volatility is expected to continue, the ability to anticipate and react remains important. Grain yields have been normal in terms of quantity, but the quality varies considerably. On the one hand, grain prices reduced our costs, but on the other hand they also increased price competition, especially in B2B channels, weighing on our profitability in the quarter. The comparable EBIT for the quarter is also impacted by the provision for retrospective payments to the authorities, without which we would have been very close to last year’s level. Our investments in future growth were also higher than in the previous year, as planned.

We have entered the last quarter of the year in good spirits. Breakfast oatmeal, snacks and heart health are popular all year round. Therefore, demand for our products is fairly stable throughout the year and we are not dependent on seasons, like many other food companies. As a result, the food industry’s holiday season is not causing us any holiday stress. Getting ready for the increasing regulation is a lot of work, but we believe that the Corporate Sustainability Reporting Directive, for example, will make our long-term sustainability efforts more transparent and allow us to also make better commercial use of them in the future. The last quarter of the year will also be partly spent preparing for the celebrations, as next year Elovena® will be 100 years old and Benecol® 30 years old. The celebrations will be reflected in both brands next year. The anniversary of the Elovena® brand in particular will be strongly present in everything we do right from the start of the year.

Looking back, I can say that I am also satisfied with the third quarter. Raisio’s employees have continued their good work in creating new solutions to build a healthier and more sustainable future and improving our efficiency. Thanks to them, the Benecol® brand has continued to grow in our largest markets in the UK and Finland, Elovena® has broken sales records in Finland and we launched Elovena® snack biscuits in September in ICA stores in Sweden.

As the Swedes say: Havre bra!

Pasi Flinkman
CEO, Raisio plc
November 2024

Interim Report January-September 2024

The crises and sharp fluctuations that have marked the grocery sector in recent years became less pronounced during the first half of the year. Our operating environment is on a positive trend, although the environment remains price-sensitive and difficult to predict due to weak consumer purchasing power and confidence. Price competition is particularly fierce in the B2B market. A gradual improvement in consumer confidence and lower inflation with lower interest rates are supporting a recovery in private consumption. The gradually improving economic outlook is also creating the conditions for a rebound in the demand for responsibly produced food.

Despite the continued sluggishness in the market, Raisio’s sales volumes have returned to growth thanks to strong brands, interesting product launches and market share gains. Volumes improved in the first quarter of the year and continued to do so in the second quarter. As a result, both of our reportable business segments increased their sales value above the levels of the comparison period. Developments in our main markets have been particularly promising.

Net sales in the second quarter increased by almost nine per cent from the previous year’s level, amounting to EUR 57.3 (52.7) million. Our comparable EBIT grew by almost a third, reaching EUR 7.4 (5.7) million, or 13.0 (10.8) per cent of net sales. Higher sales and an improved gross margin significantly improved our results, despite the investments in international growth, marketing and product development in line with our strategy, which were higher than in the comparison period. The comparable return on invested capital (ROIC) also continued to develop positively, reaching 9.3 (7.4) per cent.

Measures taken in the strategically important UK market have started to bear fruit and the sales of Benecol® products are returning to growth, while the long-standing growth in Ireland has remained strong. Overall, our cholesterol-lowering products have played a significant role in our improved performance in the first half of the year. In the domestic market, Elovena® has continued its strong development and has been an important driver of growth and market share gains for Raisio. The launch of Elovena in the Netherlands and Belgium, which started at the beginning of the year, continued in the second quarter. We have not yet reached the ambitious sales targets we set for the launch, but compared to our peers, the products have performed rather well in the market. We will continue to fund this expansion as planned throughout the rest of the year.

The challenges in the plant protein market remain unchanged, and we are not expecting quick wins. The market shares of strong, well-known brands such as Härkis® have remained high. The benefits of the planetary health diet are undeniable, and further growth is predicted globally in the longer term. Key factors for success in the market include high-quality products, the avoidance of opposition between plant-based and mixed diets, and the courage to seek competitive advantage by standing out.

It is a privilege to work in the food industry. People are interested in food. We all have opinions about it and encounter it every day. In the food industry, we have a real opportunity to contribute to the health of our fellow human beings, the smooth running of their daily lives and the well-being of our planet. This makes working with food very meaningful.

After the first few weeks as the new CEO, I find Raisio to be a fascinating combination of roots deep in the Finnish soil, a great capacity for renewal and a wealth of strong expertise. Inspiring examples of what our organisation is capable of include the traditional and iconic Elovena brand’s ability to stay in touch with the times, and the company’s in-depth research and development of plant stanols and carbon-neutral in-house production. Indeed, it is easy to be a proud new member of the Raisio team.

Pasi Flinkman
CEO
August 2024

Half-Year Financial Report January-June 2024

The market environment has begun to show signs of stabilisation during the first quarter of the year. Volumes have stopped falling and, especially in the B2B sector, we are seeing a gradual increase in order volumes. Uncertainty is sustained by the protracted war in Ukraine and other regrettable unrest in recent times.

Net sales were practically on a par with the previous year, EUR 55.5 (56.5) million, with Easter being in March this year. Our comparable EBIT was EUR 4.2 (4.2) million, which accounted for 7.6 (7.5) per cent of net sales. Marketing costs were clearly higher than in the comparison period due to entering the Dutch and Belgian markets and a high number of new product launches. Profitability differences between segments were accentuated during the period, with Healthy Food improving both sales and profit, while Healthy Ingredients saw reduced sales value and profitability due to
price competition.

Cash flow improved significantly, reaching EUR 8.5 (3.3) million. The comparable return on invested capital (ROIC) also continued to develop positively, reaching 7.4 (6.4) per cent. As the times of crisis have somewhat subsided, we have been better able to optimise our working capital and have set clear targets for it going forward.

The cholesterol-lowering category has seen fierce price campaigning as consumers become more price-conscious. For Benecol® products, the first quarter was cautiously positive as the volume decline levelled off. Raisio is increasingly collaborating with healthcare professionals to raise awareness of Benecol® products. The UK, a key market for Raisio, has been given special attention when refining the strategy.

Sales of oat products have increased in both the B2C and B2B markets. Elovena®, which will celebrate its centenary next year, has entered the Dutch and Belgian markets during the period, in addition to its previous foreign markets in Poland, Ukraine, the Baltic countries and Sweden. To consolidate our position in the market, we are ready to invest substantially to establish the brand and further expand the range of products we sell.

The iconic Elovena® received a great recognition in March: According to the Sustainable Brand Index, consumers rank Elovena® as the most sustainable brand in Finland. In April, after the review period, Finland Chamber of Commerce selected Elovena® as the winner of the Brand of the Year 2024 competition. The jury’s reasons for the choice included the successful renewal of the Elovena® brand and the development of the product range in line with today’s trends. The benefits of the brand have been successfully integrated into the business and its development.

The plant protein category has fared poorly under the pressures of COVID-19 and inflation. This phenomenon is not limited to the Finnish market, where Härkis® is the leading brand; Europe has also seen a decline in demand on a broad front. It is clear that in the short term it is a question of taste and price compared to meat proteins, which is why we must persevere with our development work.

As the economy improves, the food market will certainly return to normal. Raisio has overcome difficult times before, staying true to its strategy. Our employees have embraced the company’s purpose and values as part of their daily work and are each developing the company in line with the strategy. My heartfelt thanks to all of you!

Pekka Kuusniemi

CEO

May 2024

Interim Report January-March 2024

Net sales in 2023 were roughly at the previous year’s level, at EUR 219.5 million (220.8). At the same time, despite significant changes in volumes, we were able to improve profitability significantly: comparable EBIT was EUR 22.7 (18.4) million, accounting for 10.4 (8.3) per cent of net sales. Operational efficiency and price discipline were key to maintaining costs at the previous year’s level, despite inflationary pressures. Raisio’s cash flow was very strong at EUR 37.0 (11.2) million. Similarly, comparable return on invested capital improved to 9.2 (5.6) per cent.

The sharp fall in consumer purchasing power due to high inflation and rising interest rates caused major changes in the market environment during 2023. Volumes fell and demand shifted to less expensive products; in particular, supermarkets’ own-brand products grew at the expense of branded products. Raisio’s focus is on innovative, healthy and responsible branded products, and the market proved surprisingly challenging for us.

As a premium-priced product with health benefits, Benecol® saw the hardest impact of inflation in its almost 30 years of success. There were large differences in demand between markets. The UK’s post-Brexit macroeconomic crisis was also reflected in a significant volume decline for us, while in Ireland, the profitable double-digit growth that has been going on for several years continued throughout the financial year. We will continue our long-term work with healthcare professionals in all of our target markets, and once purchasing power improves, our profitable business will also grow in terms of volumes.

The strong growth of Elovena® products has continued despite the gloomy consumption environment. Our 20 per cent growth, numerous successful launches and increased market share in the drinkable and spoonable oat product
categories were truly great achievements during the year. As we have stated before, Elovena’s strategy also includes international growth, and in the coming days, we are launching sales through Albert Heijn, the leading grocery company in the Netherlands. We have worked persistently to enter one of the most attractive plant-based markets in Europe, and now it is becoming a reality. In the short term, this will bring cost pressures due to brand building, but this is an important and expected step for us.

Unfortunately, the plant protein market has suffered the most in relative terms from the market turmoil. In the Finnish market, where Härkis® is a leading brand, the whole category has declined quite sharply. We will continue to develop our products, and our basic assumption about the future need and growth of plant proteins has not disappeared, despite the market turmoil. Business-to-business sales were also under pressure as our customers’ final demand declined, but despite the pressure on prices, we were able to maintain our accounts thanks to our high-quality products and timely deliveries.

We updated the long-term objectives for the strategy period in December 2022. The 2023 financial year was marked by high inflation and rising interest rates, and we made an error in our assumption about the impact of these factors on consumer behaviour. Today, it is safe to say that achieving the December 2022 targets through organic growth is unrealistic. As a result, we announced in February 2024 that we will abandon our previously set growth targets for the period up to the end of 2025. We continue to believe in long-term growth in our key categories, but growth will be slower than expected in the short term due to the challenging market conditions. We will continue to promote the key priorities of our strategy in a systematic and sustained manner, now with a better understanding of the short-term market challenges.

I am very pleased with the results of our recent employee satisfaction survey. The response rate was very high at 91%, and the eNPS score was 40, which is an excellent score for a listed company based on the benchmark data we received. A stable, responsible employer is a desirable workplace and delivers improving business results. A sincere thank you to the employees of Raisio, which celebrates its 85th anniversary this year!

Pekka Kuusniemi

CEO

February 2024

Financial Statements Bulletin 2023