Finland: Raisio announces write-down of assets in malt and potato businesses
The prolonged poor market outlook of Raisio’s malt and potato businesses has caused re-evaluation of the assets tied up in these businesses, Food Ingredients First communicated on January 17.
As a result of the impairment tests required by the IFRS accounting principles Raisio has decided to write down the book value of the malting factory’s intangible and tangible assets in their entirety, EUR 8.4 million. The intangible and tangible assets of the potato business will be written down by EUR 7.5 million. These write-downs will have a positive effect of approximately EUR 2 million in the 2006 operating result.
After the write-downs, the tied-up capital in the malting business (inventories and receivables) is approximately EUR 10 million and in the potato business (intangible and tangible assets, inventories and receivables) approximately EUR 4.5 million.
Also the market outlook for some of the Raisio food diagnostics products has weakened, which has lead to lowered growth estimate of the current product portfolio. As a consequence, the good-will related to these products will be written down by EUR 5.1 million. After the write-down, the tied-up capital in the food diagnostics business (goodwill, intangible and tangible assets, inventories and receivables) is approximately EUR 9 million. As a result of the R&D, Raisio is planning to launch new-generation testing methods in 2007.
In addition to the above mentioned one-off expenses, Raisio will book EUR 1.0 million in non-cash affective, non-recurring income related to dissolving of the technical reserves of Raisio’s captive insurance company.
Including the EUR 1.7 million non-recurring sales profit from shares reported already earlier, Raisio will book EUR -18.3 million in non-recurring items in total in 2005. Without these non-recurring items the estimated 2005 operating profit of Raisio is approximately EUR 9 million (EUR 10.6 million in 2004) due to the weaker than expected fourth quarter in the Finnish food business. Furthermore, the starting costs of the soy and oat plant burden the result.
The measures taken in order to improve the operational efficiency, e.g. cost cutting, adaptation of production and investigation of potential structural solutions have been started. First major step in the renewal process of Raisio is the start of the soy and oat plant in Turku. Marketing of the new soy and oat based fresh products has started in January under the brand name GoGreen in Finland and in Sweden.
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