Raisio plc

Good, beautiful, beautiful midday of August. Welcome to follow Raisio's half-year review. My name is Pasi Flinkman, I am the executive director of the company and with me is Mika Saarinen, our financial manager. Hello. Let's get straight to the point. The strategy phase has started, mainly according to the plans. However, we are still left with the target level in the trade. This is due to the low-priced domestic industry sales as well as the sale of vegetable protein business. The impact of the stock market was about 1.4 million euros. In consumer products, we have had a strong, target-based market, faster growth in the upper line, For example, in the Finnish market, the full-time grocery store has increased by about 1.6% in the first half of the year, while our breakfast and snacking segment has increased by 3.7% and the hardware by 9.1%, so the market is clearly faster. And consumer products have also gained growth from all major markets and major brands. Their profitability has also been improved. In the first half of the year, the use rate increased by over 12% and the turnover by 20%. We are very satisfied with that. In the second quarter of the year, the consumer products we have made the market grow faster, but the challenges of industrial sales are visible, especially in the second quarter of the year. Here are the challenges of industrial sales in the background of the same home country industry, and in addition, the sequestration of the plant-based ester operations. The fluctuations in the plant-based ester operations between different quarters are completely normal. In the first quarter of the year, they were quite large. In the second quarter, they were less large, but in the first quarter of the year, there was no drama, nor was there any expectation of that at the annual level, but it seemed quite normal. Instead, business-to-business challenges that we saw in the development of our business, 4.8% and a drop, they are related to the domestic industry, the needle and the needle trade, where the price level is quite low and where we are going to do our work. This is partly due to the drop in prices driven by Vilja's market price and partly also due to the high from the volume decline in the price competition. In terms of performance development, the 14.5% EBIT in the fourth year is already at a fairly good level, and the improvement of the performance profile continues. The use rate is developing better than the turnover, and the performance rate is still developing better than the use rate. Some of the results also indicate in this episode that the deterioration of the stock market compared to the euro, all the benefits of the growth of Great Britain have not been fully enjoyed in this euro reporting. The profit of the invested capital has improved significantly, i.e. in the lowest line, the profit of the invested capital Now more than 10%, which makes me happy significantly. It has continued to be good, long-term good development. The position of financing is still very strong. There is a small change in the currency flow, but it is a normal change in the use of the currency. There is no drama about the purchase fees, about the taxes paid, about that, but all in all, the development is still going in the desired direction. I think Mika can comment on the views.

Yes, thank you Pasi. So really here already earlier this year, we have given the views for the coming season and at this stage we also keep them in mind, as Pasi stated, the changes in the first and second quarter, the movements slightly balanced each other and especially balanced or in fact from a really good point of view, K1 is behind and at the end of the year, expectations are still quite positive, so at the moment we don't need to make any changes to this, so we'll go with the current view profile. Then from these new segments, which are now the second year for the first time, The fourth figures were reported that the company is divided into two main segments and that Brands and Industrial includes our, especially in sales, very balanced units, i.e. Breakfast, Snacking and Food Solutions, which all our plant-based doing, branded and industrial, has been positioned here. and HeartHealth as well as the heart health Benekon consumer brand and then industrial sales also at Kasvistalo Dester on this HeartHealth so these form the brands and industrial other operations as well as there Group Services has of course been with us before and now at the same time this New Business Development has been separated where there is mainly such an R&D based approach to us and there is somewhat visible then from the point of view of the private sector, CAPEXIA will go to certain piloting purposes, to the facilities and in practice to the staff who then aim to initially from AMT's point of view from the raw material, then different tools and other developments in the future for business. As soon as this starts, the starting point is there. A few words about Brands and Industrials separately. Here you can see the two business units on the upper bar, as mentioned, on the second line. Here you can see how we share this change of business also in external reporting. both of them so that in breakfast snacking food solutions Finland shows the lion's share of the consumer business food solutions is there then in the industrial side and others still separately there is a second small AATL in the same type of distribution so that there are three of our main consumer market reports separately in terms of sales and others are our smaller and smaller consumer market countries and then the industrial and the flow is also in the others. So Heart Health is currently a more international business. Naturally, this breakfast, snacking and food solutions and there as the brand of Elovena Kärki to become international is also on that path. And also in the strategy phase, the goals of Heart Health are still international. the expansion of the international footprint, so we are looking for a new growth and a new market. Then, in terms of the turnover in Q2, as stated, a fairly stable performance after Q1, as stated, in terms of balance. Pasi also mentioned that the industrial side, which is Vilja's different manufacturing for industrial workers, there the volume and the turnover has been more noticeable. In our large companies, about 70% of our output, of the entire turnover, is the turnover of consumer branded products. It is also good to note that this industrial side is smaller in the end, although very significant and now, of course, in the short term, we have seen a decline in raw materials, a decline in business and also profitability has left a lot of room for hope in Hathelt. On the other hand, as has been said, this has been more balanced and also more balanced from good development for the rest of the year. Then here are my sales shares still in Breakfast, Snack and Food. So here it is stated in such a way that Finland is a very significant market in this field-based market. We have several brands from which Elovea dominates the sales of this business unit. Good growth still. In Food Solutions, we have both the B2B trend, a long-term trend, and then the B2B trend in Finland, where this report was clearly seen in the reported volume and turnover. Also the ORECA business activity belongs to the same food solutions, as we can see in these bullets. Its development was quite good, it grew by two numbers. And then others, maybe it's good to clarify, here are our the internationalization of these new countries that we have been talking about. On the other hand, at a fairly low trade level, one of the most numerous markets there has now been opened, and then there is also, for example, our Ukrainian business, which belongs to others, as well as these industrial networks. grain trade is quite small in the current year, it corresponds to 2% of our rupee turnover, no more and also the side flows that always arise when this kind of grain raw material is collected, then their turnover rate has also dropped here because the total demand and sales figures have dropped And in Hathelt, the sale is split in this way. Here it is emphasized how in practice Great Britain is a very significant market for us and there is a small growth in the euro, a little better in the pound. Ireland, at the same time below, is quite stable in doing about 10 million annual sales at this rate. And in Finland, of course, Beneko has been a consumer brand for 30 years from the beginning, so there are still quite quite good growth as you can see here and then here in the others it is really this mentioned industrial sales and side-current sales so sorry for the side-currents not here, but the continuation of the plant molester in the second was weaker than in the first, so this is due to this let's say not a decline, but a balance here, so quite a balance of doing and in this way this sale now also looks out of us a little better understanding of where our activity is and how it is distributed. So I could give this to Kapulo. Thank you.

The implementation of the strategy has actually started in a planned manner. And this actually leads us to three areas, i.e. breakfast and lunch products and heart health products are a business that we want to accelerate growth. These consumer products have grown quite a lot and the market is growing faster. In the long term, we are looking for growth in the future in research, especially in crop innovation and weight reduction solutions, and also in new business operations, where we are looking for structural growth. These agricultural industry solutions and local traditional brands have their own clear role in bringing us positive cash flow, covering high costs and maintaining the capacity use aspect. Each part has its own clear role and purpose, each area has its own concrete plans on how to bring added value to them. In the beginning of this year, we have reorganized again for the effective implementation of this strategy, and we are also revising our portfolio to further implement and speed up this more efficient use. In the plant-based business, our growth has been much stronger and continuous over the years, especially with Elovena Branding, where we have been able to bring new categories under the brand, and the brand has grown significantly. We have a good display that allows us to create growth without cannibalizing the core and the bottom of the brand. Another very strong base for us is this strong position in the home market. On the left, you can see our position in different categories in the sub-segments in the market. Very strong market positions. and on the right side of the graph you can see that we have actually developed the market faster in these that we will also take market shares further. On the part of heart health, the challenge in the big picture has been more to speed up growth. Our average growth over the past few years has been negative, minus 1.8. Now we are looking for about 3% growth rate towards the end of the strategy period, until the end of 2027. And it will come from the current market, where we will expand our supply, product portfolios, expand our distribution. We have particularly strong positions in supermarkets and hypermarkets. Cheap trade and close trade sides still offer us good places for growth. We see that we have clear development opportunities with the brand. we also encourage our cooperation with health care professionals and use growing and new target groups. In addition, what we have not done in a short time, we have not expanded internationally, what we will continue to do during this strategy period. So, if we summarize the strategy, In the first half a year, we have focused our business on the production of plant protein. We are able to focus on breakfast and lunch products, heart health products and the development of new business. We have reorganized, created clear management responsibilities and through this we are able to allocate our resources better and we have also improved our cost effectiveness. by establishing a government with a new M&A-sector. We are also happy to have found a new CEO from the company, who will start the first quarter for us. Also, the international legislation continued in April, when the business operation in Spain was launched in Elvena. This is what we thought to share here. Tällä kertaa ilon mielin vastataan mahdollisiin kysymyksiin, jos niitä on. En tiedä, onko meillä tullut mahdollisesti chattiin jotain.

Yes, there are a few questions that were answered. For example, what is reported in Food Solutions? That was answered. Then we have a question here. Will the comparison of last year be different according to the new segments? Also for the other four? This was the first to be reported. So, naturally, there will be more of this in comparison. I would take a few from there first, let's see if there is anything else here Let's ask about the continuation of the rise in the gross margin, is it more of a defining factor the reduction in production costs or the improvement in sales share? Well, here I would say that in fact both got some of the cost factors in terms of the production factor benefits through cheap raw materials, in the field, in Hathelt, the distribution does not really improve, because this industrial, especially the field-based sale is already in practice cheaper than branded products, and the volume of this distribution can be seen in the direct production market, at least I have seen some of these in these investments.

And then, of course, the production and marketing activities can also be seen there, is also partly visible as an improvement in prices. Yes. Then let's ask about Eloveena. The volumes of Elo products have developed in the expansion markets in recent times. There is growth, for example, in the expansion new markets in the second quarter, from which there was still growth for us. In that part of the area, on the down side, Older markets, for example, Ukraine and some old traditional brands in the Scandinavian area Expansion has definitely increased There are very established positions, for example, in the gluten-free side, in the longer market, very growing positions But then, for example, the Spanish market is very new have been on the market for a couple of months, so it's still very difficult to say anything more specifically.

Then, as a final question, could you, Pasi, tell us what cooperation means in practice with health care professionals?

I'll take the next one. Okay, yes. We do a lot of cooperation with different health care professionals, but it is based a lot on where we physically meet people in our field organization, and the scalability is not so effective. It brings good effectiveness, but it requires quite long-term stress, and you can't get a huge mass, so we are looking for models where we can achieve it more effectively by talking to these larger groups. The technology is probably something that we are looking for support for, as well as alternative models. In addition, more precise targeting and identifying the right areas and the right people is also related to empowerment.

The second part of this question is about the quality and quantity of contract producers. This is a good question and the time is right now, in mid-October. The view, not only for us, but also in Europe, which has its own importance for us in terms of price formation. Kotimainen asked about contract producers. At the moment, the understanding is that from the point of view of the amount, at least, this 25 years would be the highest production amounts in the year 2024. The quality is still too early to say that. We have started the operations, yes, and the quality tests are just being done. Of course, they are done quite extensively and all the time, but there is no alarm clock at all that in any case the quality would be bad. It seems that there is a significant amount of fear rising, at least in terms of quantity, that there should not be a shortage of supplies. Then we could probably take the last one here.

The instruction is not so honorable compared to what the level of income has been with H1. Why not dare to use stronger words? comment on that?

Yes, as stated, it is possible that when we go a little further here, and of course we also estimate that this will continue to be updated monthly, there will always be a better view at the end of the year, so this kind of clarification may well come here as a matter of time, but still at this stage, when we were at the time of the K1 report, we saw that There is no reason to suspect any major disappointment or something that would prevent or calculate our views in any way, but we want to be more precise in that way. If we define, then we have to have a pretty accurate view of where to define. This might be a bit of our idea and related to this. We want to be more precise than to come to this kind of possible action.

It's great that there were so many questions. Thank you very much for that. Thank you to everyone who was with us today. Have a great rest of the summer. Thank you from my part as well. Thank you.