Raisioagro results: Benemilk and Russian fish feed exports save the day

By Lynda Searby contact

- Last updated on GMT

Raisioagro has booked significant losses and a decline in net sales for H1 2014. Photo courtesy of www.seniorliving.org
Raisioagro has booked significant losses and a decline in net sales for H1 2014. Photo courtesy of www.seniorliving.org
Raisioagro, the feed and grain division of Finnish agri-food firm Raisio, has booked significant losses and a decline in net sales for the first half of 2014.

The group’s interim report, published last week, showed net sales of €111.6m for the period January to June 2014, down on last year’s H1 sales of €124.4m. Profit for the first half of the year was also down, with the division posting a loss of €-6.1m for the first half of 2014. Although it doubled EBIT (earnings before interest and tax) from last year during the first half of 2014, the termination of Raisioagro’s pig and poultry feed production and reorganisation of the business have incurred expenses of €7.5m that have eaten into earnings.

Core competencies

Despite this outwardly gloomy picture, the division is confident of brighter times ahead. Once it has ceased production of its loss-making pig and poultry feeds, it will be able to concentrate on its core competencies.

“An extensive restructuring of activities will be carried out during the end of this year. The company will focus on cattle and fish feeds, grain trade as well as online sales of farming supplies, and will terminate the production of pig and poultry feeds...Raisioagro aims to be the leading operator in the agricultural sectors where success is based on feeding and plant cultivation expertise and on innovations,”​ wrote the company in its interim report.

Dragged down by pig and poultry feeds

The most significant factor decreasing net sales from the comparison period was the lower sales volume in pig and poultry feeds – production of which will be discontinued at the end of September 2014.

Raisioagro attributed the fall in pig and poultry feed sales to “the intense competition caused by the overcapacity of feed production”​ and its announcement regarding the possible termination of pig and poultry feed production.

The star performers of this review period were Benemilk feeds, sales of which increased considerably versus the comparison period in the Finnish group’s domestic market.

Benemilk enters Russian market

This month, Raisioagro will deliver the first shipment of Benemilk concentrate to a Russian dairy farm near St. Petersburg – this will be the first time that Benemilk feeds have been used commercially outside Finland. The firm has also indicated that autumn will see the launch of some new Benemilk feeds.

It follows, therefore, that Benemilk is the main focus for R&D. During the review period, two studies conducted by the University of Helsinki confirmed the efficacy of the Benemilk concept with various feed mixes. The results obtained in scientific studies were also borne out in farm monitoring.

“Production monitoring carried out on hundreds of Finnish dairy farms provided excellent results and extensive statistical material from the farms using Benemilk confirms the results of studies carried out earlier,”​ said the company.

Cattle feeds are one of Raisioagro’s focus areas under its new business model, and during the first half of 2014, the company maintained its market share of approximately 40% of the Finnish cattle feed market.

Going forwards Raisioagro said it aimed to “complement its product range to suit the component feeding increasingly used on livestock farms”​ and would be “enhancing its cattle feed export to neighbouring areas”​.

Netting fish feed sales in Russia

Fish feeds are another of the group’s more lucrative activities, and during H1 2014 fish feed export to northwest Russia increased significantly compared with the same period in 2013 and Raisioagro maintained its market leader position there.

In the review period, Raisioagro enhanced the production process of fish feeds, allowing for production of higher quality feeds, and increased packaging line capacity at its Nokia flake factory in Finland.

The company’s Hercules LP Opti feeding programme underpins its performance in fish feeds.  Launched in 2013, the programme ensures the formation of wholesome fatty acids in salmon, whilst boosting fish farming profitability and reducing the use of wild fish oil in feeds. Raisioagro said the programme had been well received and already feeds more than half of rainbow trout farmed in Finland.  

Raisioagro said it would also continue its research cooperation with the Finnish Game and Fisheries Research Institute, with new studies investigating nutrient use efficiency.

Related topics: Manufacturers, Cattle - dairy, Europe

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