Raisio CEO Matti Rihko said Raisio’s board of directors has decided to significantly reduce Benemilk’s business operations.
“With Benemilk’s international licensing, we decided to take a time out because, due to the crisis facing the dairy market, it seems that customers are not ready to change their feeding models within the next couple of years,” Rihko said.
“Even though Benemilk Ltd is now becoming dormant, the consolidation of its IP portfolio continues; the portfolio will be made a ready, strong package.
In Australia, we had an encouraging proof of the IP’s strength as the Benemilk feed and the milk produced through Benemilk feeding were granted a patent in July. In Finland, Benemilk has made a breakthrough and Raisioagro will continue its sale as usual.”
Investments in the international commercialization of innovation will be minimized and, for now, the focus will be on the pending patent processes and IPR protection against potential infringements.
Benemilk has two business areas. The ingredient business is based on the sale and marketing of palm oil-based raw material under the Primafat trade mark and on the related IPR.
The licensing business includes the development, commercialization and licensing of IPR based on the Benemilk innovation.
Benemilk was established in the spring 2013, with Raisio holding 57% of its shares.
Financial results published
Raisio also published its half-year financial reports for the six months ending June 30, 2016, with net sales dropping from €238.1m ($265.9m) in 1H2016 compared to €264m ($294.9m) in the comparable period in 2015.
EBITDA dropped from €31.2m ($34.8m) to €26.6m ($29.7m), however Rihko said Raisio continued to improve its operational results during the second quarter.
“Our comparable EBIT grew by 7%, totaling €15m ($16.8m). Our relative profitability increased from some 10% to 12% of net sales,” Rihko said.
Raisio’s Benecol brand saw a half-year drop in profits from €70.5m ($78.7m) in the first half of 2015 to €66m ($72.7m) in the same period in 2016.
Benecol products are available in 30 countries with almost 140 products in the markets.
Raisio said that in the first quarter, some of the UK’s large retail chains decided to withdraw from promotional sales of yogurt drink multipacks, which affected sales significantly. In the second quarter, Raisio managed to restore promotional sales of multipacks in most retail chains.
In the UK, volumes in Benecol spreads increased while volumes in yogurt drinks and yogurts decreased.
New spread in Poland
In Poland, sales volume in Benecol spreads increased from the comparison period. Raisio said that in April, the company succeeded well with its launch of Benecol Buttery Taste spread.
Price competition remained tight in the market of cholesterol-lowering functional foods in Finland, where sales of Benecol spreads increased while sales in yogurts and yogurt drinks decreased.
The company said profitability improved mainly due to cost savings and streamlining of operations.