CSM streamlines to achieve cost savings

By Anthony Fletcher

- Last updated on GMT

Related tags: Csm bakery supplies, Acid, Lactic acid, Metabolism, Csm

CSM's decision to close a production facility in the US is the
latest in a series of initiatives designed to consolidate the Dutch
group's market position.

The plant closure, due for completion by the second quarter of 2007, is part of what the firm calls its optimisation process of the supply chain at CSM Bakery Supplies North America.

The Elk Grove Village facility employs 146 employees in the manufacturing of frozen dough, fillings and icings under the 'Karp's' brand.

Production will be transferred to other manufacturing facilities in a phased schedule over the next twelve months in order to ensure uninterrupted supply and service.

This measure is in line with previous announcements regarding the reinforcement of CSM's market positions and organisations and is part of what CSM calls its worldwide 3S program (a Strong company, a Sharp team, and a Solid performance).

The 3S program has already led to many restructuring measures including, so far in 2006, reorganisations in the Netherlands, France, Germany and the UK.

In February for example, CSM announced its plans to sell its European sugar division in order to concentrate on high value ingredients. The company felt 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,"​ said CSM chief executive Gerard Hoetmer.

The Netherlands-based company says that it intends to focus its efforts on growth markets such as bakery ingredients and bakery products on the one hand and lactic acid and lactic acid derivatives on the other.

It would appear that poor 2005 results represented something of a watershed for the ingredients giant. "CSM's conglomerate days are clearly over following the sale of sugar confectionery early 2005 and assuming the sale of the sugar division in the course of 2006,"​ said Hoetmer last month.

Net sales from continuing operations decreased last year by 4.2 per cent to € 2.618,0 million, while operating result from continuing operations before exceptional items amounted to € 169.1 million, a decrease of 12 per cent.

These figures are a symptom of the major upheaval CSM has experienced in some key sectors hence the restructuring. Hoetmer believes that the streamlining initiative in place could bring total savings of up to € 55 million, of which half will contribute directly to the operating result.

Related topics: Markets

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