CSM believes it is back on track after first half results revealed some strong improvement, breaking a three-year trend of declining results.
The Netherlands-based bakery ingredients giant said that operating result before exceptional items increased by over 30 per cent to €66.4 million for the period.
In addition, CSM Bakery Supplies Europes operating result before exceptional items increased by 27 per cent, primarily as a result of the firm's cost-saving 3S programme and discontinued unprofitable operations.
"The results show that the large number of measures we have taken to implement our tighter strategy are having positive effects," said CSM CEO Gerard Hoetmer.
"The 3S savings amounted to €23 million in the first half-year, up €16 million compared to the same period in 2005. Of these savings around €3 million has been spent on projects to realise future growth through innovation and market development.
"The savings also enabled us to offset rises in the price of fuel and sugar in particular which, for market-strategic reasons, have not been fully passed on to the customers."
For the past few months, CSM has been putting into effect a number of measures designed to streamline its bakery portfolio and strengthen growth in pivotal areas. The CSM Sugar Division for example is scheduled to be handed over in the fourth quarter of 2006 for a provisional price of €202m.
Most recently, the group made a $70m acquisition of CGI Desserts, a supplier of thaw and serve bakery products, underlines again the firm's focus on the bakery market. And in May, the group divulged plans to spend €19m on expansion of its American-style bakery lines.
German subsidiary BakeMark Deutschland, which produces frozen bakery goods, was given the investment in order to target key European markets by early 2007.
As a result, Hoetmer said that Bakery Supplies Europe has made good progress.
"As planned, fundamental strategic improvements are being resolutely implemented through restructuring and optimisation. BakeMark UK successfully implemented its restructuring initiatives and performed well in the first half of the year."
CSM division Delices de la Tour however, showed disappointing results. "There is no prospect of sustainable improvement, especially in the viennoiserie market," said Hoetmer.
As for the rest of 2006, further sales growth within Bakery Supplies Europe is expected to be limited. However the trend of sales growth and improving margins within Bakery Supplies North America is expected to continue.
"As regards CSM Sugar, the investigation into its possible sale has been concluded," said Hoetmer. "We expect to complete the announced intended sale of CSM Sugar to Royal Cosun in the fourth quarter of this year."
CSM is a global producer and distributor of bakery products and food ingredients. CSM's main product groups include bakery ingredients and products, lactic acid and lactic acid derivatives, and sugar. With these activities CSM has an annual turnover of €2.6 billion and a workforce of approximately 8,500.