Finnish food group Raisio has announced an 18.9% fall in first quarter revenues as the weak pound hit sales of Benecol and its confectionery products in the UK.
Net sales dropped from €114m to €92.5m driven by underperformance in the UK market.
The group’s comparable EBIT was up to €10.6m from €9.7m in the quarter due to the divestment of its loss-making UK snack bar business and organic sales growth in healthy snacks.
EBIT of its brands division was up to €12m in the first quarter, rising from €11.4m in the same quarter in 2016.
CEO Jarmo Puputti commenting on the UK, said it was “essential” to take “resolute action to remedy and improve the situation”.
“Benecol’s price increases in the UK retail trade did not fully compensate for the negative effects of the currency and raw material price increases,” he said. “In the UK, the profitability of confectionery business fell due to a sales decline in our own branded products and delivery difficulties.”
He added: “During the first months of this year, we have been working on our business strategies and identified several growth opportunities. We have also looked critically at our opportunities and taken account of the increasingly rapid changes in the operating environment. Through our strong balance sheet, we also have an opportunity to be an active player in M&A.”
Puputti said its core strategy was still based on wellbeing, but has evolved to focus on expansion into new markets and new product categories as well as the ability to launch new products faster.
He said: “We have also started improving the efficiency of operations in line with the lean philosophy. We will invest in our brands in order to support growth. We will be able to finance a significant part of investments with the benefits of improved efficiency.”
Throughout the rest of the year Raisio said it will invest in brands, product concepts, sales and marketing, and in the enhancement of its operations.
The group estimates its comparable EBIT for 2017 will fall slightly short of comparable EBIT for 2016, given exchange rates will continue to “significantly” affect sales and profits this year.
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