Valio agrees to sell Russian business to Velkom Group

MOSCOW. April 26 (Interfax) - Finnish dairy concern Valio has finalized talks to sell its business in Russia to food product producer Velkom Group.

The parties agreed not to disclose the value or the terms of the deal, Valio said in a statement.

A factory producing processed cheese and semi-hard cheese in Ershovo in the Moscow region and the rights to the Viola brand of processed cheeses are included in the deal, and the new owner may continue producing products under this brand and maintain its local assortment. Following changes in the structure of ownership, all employees will continue to work at Velkom Group.

The Valio brand will remain in Russian stores until packaging runs out or the products expire. Velkom will be able to produce and sell products under brands not included in the deal during a transition period that could last until the end of the year.

Valio's Russian subdivision saw sales of 85 million euros in 2020, accounting for approximately 5% of the concern's global sales of 1.8 billion euros. Valio decided to end operations in Russia on March 7, 2022.

The company has worked in Russia for more than 100 years, but under the current circumstances considers it impossible to continue its activities, Valio said in a statement published in March.

Valio LLC is the Russian subdivision of Valio, which produces cheeses at its own factory in the Moscow region, as well as at local partner facilities. The concern launched production of baby formula at facilities of Galactika Group of Companies in Gatchina in the Leningrad region and production of dairy products at subsidiary enterprise Friesland Campina in the Moscow region in 2020.

According to the SPARK-Interfax analytical system, Valio LLC's revenue to Russian Accounting Standards grew 8.8% to 8.1 billion rubles in 2021, and its net profit rose 29.3% to 320.5 million rubles.

Velkom is one of the largest producers of meat products, mainly charcuterie, in Russia's Central Federal District. It was established in 1992. The Pavlovskaya Sloboda meat processing plant, located in the Istrinsky district in the Moscow region, was launched in September 2004.

According to SPARK-Interfax, the enterprise's revenue totaled 7.293 billion rubles in 2021 compared to 6.936 billion rubles the year before, and its net profit amounted to 220.6 million rubles in 2021 against 442 million rubles in 2020.