CSM has reported higher sales and EBITA before one-off costs in the third quarter of 2012 compared to the third quarter of 2011. EBITA excluding one-off costs amounted to € 40.4 million, an increase of €10.1 million. The focus on margin improvement and cost reductions paid off and was the most important factor in the recovery of our EBITA before one-off costs. Positive currency effects supported both sales and EBITA. One-off costs related to initiatives for structural cost reduction and the strategic transformation of CSM.
Commenting on the third quarter results, Gerard Hoetmer, CEO of CSM, said: “Despite the ongoing challenging trading environment I am pleased we have achieved a further recovery of the underlying results of our company. Based on improved margins and the effects of our improvement program Relevance, our EBITA excluding one-off costs in the third quarter of 2012 increased compared to the third quarter of 2011. 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 Europe, the consumer trend to switch to lower priced sales channels continued in the Bakery market, impacting our artisan business. In line with their strategy, Bakery Supplies Europe is successfully targeting growth in the out-of-home and in-store bakery channels, while sales in Continental Europe benefited from the experience and know-how of our UK and US activities in these areas.
However, this growth could not mitigate the impact of declining volumes in the artisan market, where our objective is to further improve our market shares. At Purac, total volumes declined slightly due to a small volume decline in the Food activities which was not fully offset by the volume growth in the Chemicals & Pharma unit. The Food activities are still impacted by a decline in the sale of natural meat preservation solutions in especially low cost meat products, due to legislation changes in 2011 which allowed the use of cheaper chemical based alternatives.
The growth achieved in the other food segments could not fully compensate for this decline. The performance of Future CSM, consisting of Purac and Caravan Ingredients, was satisfactory against a background of ongoing tough market situation. EBITA at both Purac and Caravan Ingredients increased in Q3 compared to Q3 2011. We have covered most of our raw materials for the remainder of 2012. We will continue to respond to changing consumer preferences towards lower cost/better value products. Our Relevance restructuring program is on track and is contributing to the improved results.
As announced previously, savings in full year 2012 will exceed the original target of € 30 million of savings in 2012. The recently announced joint venture with BASF to develop a market leader position in bio-based succinic acid is an important step forward in the execution of our strategy to develop CSM into a biobased ingredients company. I want to express my sincerest thanks and appreciation to all the employees who are continuing to focus on serving our customers and driving results in these challenging times and also adapting successfully to major changes in our organization.”
The strategic transformation of CSM is developing according to plan with the Information Memorandum regarding the Bakery Supplies activities being sent out to selected potentially interested parties as of today. The Information Memorandum includes both historical and forward looking information.
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 approx. 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.
As a result of our Relevance program and continued strict cost control, expenses expressed as a percentage of sales are expected to decrease in the next few years. Expense control and efficiency improvements are supported by capital investments. Working capital and capital expenditure requirements are expected to remain in line with recent years.
