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CSM consolidates EU bakery operations

By Charlotte Eyre , 14-Jan-2008

Ingredients firm CSM will consolidate its bakery ingredient operations in Germany and France as part of a wide-ranging strategy to cut costs and achieve better operational focus, the company announced Friday.

Company spokesperson Mirko Creyghton told BakeryAndSnacks.com that the streamlining move is part of what CSM calls its worldwide 3S program - the three S's representing 'a Strong company, a Sharp team and a Solid performance' - which was created to focus company efforts on the key growth markets of bakery products and lactic acids. In Germany, CSM will send its artisanal bakery staff in Bremen to join workers in Bingen, "in order to optimise synergy within the organisation." CSM is particularly keen to use this new workforce to develop products for the artisan frozen dessert market, the company said. "The frozen bakery market is one of the most dynamic at the moment," Creyghton said. "Consumers can buy a tasty pre-prepared snack at any time of the day."


"Another advantage is that bakeries and supermarkets can buy these products from us without doing any extra work." In France, CSM will stop production at one facility in Creil, and its operations will be spread to other locations in Europe. The Creil site has already been taken over by an unnamed third party, and so no jobs will be lost, the company said. Consolidation is not a new strategy for the Netherlands-based company, as the 3S program has led to restructuring measures already being carried out in the Netherlands, the UK and the US. Last year, the company sold its QA Products devision to rival firm the Kerry Group, only one year after merging two of its North American businesses - Caravan Products and American Ingredients Company (AIC) - to form a single operating entity.


During the same year, the company also closed a US manufacturing facility, and announced its plans to sell its European sugar vision in order to concentrate on high value ingredients. Chief executive Gerard Hoetmer said at the time that CSM Sugar could not operate competitively on its own once the new EU sugar regime came into force in July 2006. "CSM does not see itself as the consolidator of the European sugar market," he said. The 3S program was initially drawn up in 2005, and will run until the end of 2008, Creyghton said.


According to CSM, the restructuring program in Europe alone has led to cost savings amounting to €43m in 2006, resulting in cumulative savings of €62m. Restructuring costs totalled €24m in 2006, the company said. Like many other companies, the Netherlands-based firm suffered in 2007 because of higher commodity costs, and net sales within the bakery supplies business decreased from €1,053.7m to €1,049.1m for the second half of 2007. Margins increased to 5.8 per cent from 5.5 per cent in the same period last year, however CSM said the rocketing of raw material costs meant this was below its potential, particularly within the Purac business. Creyghton claimed that all the consolidation the company has carried out had nothing to do with these higher costs, as the 3S program came into place before the price of commodities increased.


However, he did admit that any savings accrued from the program could help 'positively' with the company's attempts to keep profits high.

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