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CSM’s soon-to-be axed bakery business shines in Q3

By Kacey Culliney , 25-Oct-2012
Last updated on 25-Oct-2012 at 18:25 GMT

CSM’s soon-to-be axed bakery supplies business shined in the third quarter alongside a ‘satisfactory’ performance of the future bio-based business, its CEO said.

The Dutch ingredients supplier noted bakery business strengths in its interim management statement for the third quarter (Q3). It showed performance of North American bakery business to be especially strong.

While volumes for both Bakery Supplies Europe (BSEU) and Bakery Supplies North America (BSNA) were down 5.6% and 2.8% respectively compared to Q3 2011, sales were up - 0.3% for BSEU and 11% for BSNA.

As the firm posted its Q3 update today, it also distributed its Information Memorandum containing historical and forward looking business details to prospective buyers.

CSM confirmed its decision to axe its bakery business, representing around two-thirds of overall business, back at the beginning of July. Divestment is set to commence mid-2013.

Set to axe its strength?

The decision to divest its majority business arm will CSM rid its European and US bakery businesses and reposition as a bio-based ingredients company. Purac and Caravan Ingredients will make up ‘Future CSM’.

In its Q3 update, CSM noted that its bakery business in North America recorded $7.6m (€5.9m) in earnings before interest, taxes, depreciation and amortization (EBITDA), at constant currency.

Gerard Hoetmer, CEO of CSM, said: “I am especially pleased with the development of our results in our North American Bakery Supplies businesses; Bakery Products, Caravan Ingredients and BakeMark were all able to improve their EBITA in a market impacted by lower consumer spending.”

In contrast, the CEO said performance of ‘Future CSM’ (Purac and Caravan Ingredients) was “satisfactory” against a background of ongoing tough market situation.

While both companies posted increased EBITA for Q3, volumes were down at Purac.

Bakery strengths to be sold

Regarding the distribution of its Information Memorandum, CSM said: “The forward looking statements for the business intended to be sold show consistent sales growth for the Bakery Supplies business for the next few years, at least in line with expected growth of the bakery markets.”

“We expect the European and North American bakery markets to continue to grow approximately in line with GDP and in the emerging markets to grow faster than GDP.”

“Margins for the business intended to be sold are expected to strengthen, particularly in our North American business,” it concluded.

Hoetmer referenced the recent joint venture with BASF for succinic acid as an “important step forward in the execution of our strategy to develop CSM into a bio-based ingredients company”.

Overall financials

It its interim management statement for the third quarter (Q3), bakery ingredients giant CSM recorded overall sales of just over $1.08bn (€834.2m) for the third quarter of 2012, up from $1.01bn (€784.8m) in 2011.

$8.9m (€6.9m) of this year on year increase is attributable to acquisitions, CSM said.

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