Benecol disappoints again

Increasing turnover at Raisio's chemicals division has not been enough to counter the downward trend in margarine sales and the lack of anticipated interest in Benecol this year, but the company just made it back into the black in the third quarter.

The Finnish group has seen continued problems at its Nutrition unit and the impact of the Diffchamb acquisition and restructuring saw last year's promising signs of profit diminish fast in the first half of 2003.

But the Life Sciences division (maker of the cholesterol-lowering ingredient Benecol) says it has new products, with official approval, ready for launch at the end of the year and in early 2004, which should help regain some of its expected growth. The unit is unlikely to meet this year's targets, with food ingredients partners introducing no new products in the third quarter, but the new diagnostics business Diffchamb looks set to boost sales.

Turnover in Life Sciences for the third quarter reached €8.5 million, up from €7.6 million the previous year, while the January-September figure was up by 10 per cent to €23.0 million. Profits fell however to -€2.0 million, from a slim €0.4 million in the previous year's quarter, partly due to efforts to improve business operations in Central and Southern Europe, according to Raisio.

The acquisition of Diffchamb also impacted the division's profits and for the nine months, the unit has recorded a loss of -€5.2 million.

Raisio Chemicals' turnover continued to grow in the third quarter but that of Raisio Nutrition fell distinctly on 2002. For the first nine months, the group has recorded a 4 per cent rise in sales to €644.4 million.

Operating profit was still considerably lower in the quarter, at €3.2 million down from €7.6 million the previous year, impacted by one-off costs of €1.8 million, and the poor performance of Raisio Nutrition and Raisio Life Sciences.

The January-September period showed an operating result of -€7.2 million, falling from €20.2 million, partly due to €5.2 million in one-off costs. The consolidated income for the first nine months of 2003 fell to -€17.8 million, down from a profit of €7.1 million in the previous year.

CEO Rabbe Klemets said: "The most encouraging development in the third quarter was in working capital and cash flow. Our long-term efforts to release capital bore fruit and we were able to release more than €20 million from working capital during the quarter. In the third quarter, business operations generated a positive cash flow of some €38 million."​

Performance this year has set Raisio back after 2002 promised continued recovery.

"Compared with the second quarter, the peak improvementwas shown by Raisio Nutrition businesses and Raisio Chemicals' latex and starch businesses. We will strive hard to ensure that the positive development continues in the final quarter of the year,"​ added Klemets.

Full-year turnover will be lower than anticipated and weaker than 2002. Rationalisation measures are expected to have an effect on Raisio Chemicals' cost efficiency in the final quarter but for Raisio Nutrition, savings will not be seen before next year, said the ingredients group, and will generate €3-4 million in one-off costs in the final quarter.