Dutch ingredients company CSM saw sales from its continuing businesses decline by 5.6% from €191.2 million to €180.5 million in the first quarter of 2013. Volume reduction accounted for 2.5% - largely as a result of a 3.9% decline in the Caravan Ingredients business – while currency accounted for 1.8% and price/mix for 1.3%.
The company had announced the sale of its Bakery Supplies businesses to Rhône Capital in March.
EBITA before one-off costs for the continuing business increased slightly from €14.4 million to € 14.6 million driven by strict cost control. CSM said that it is continuing to increase its investments in new opportunities which will drive future growth.
“The intended divestment of our Bakery Supplies businesses to Rhône Capital, which we announced on 25 March, is an essential step in our strategy to transform into a bio-based ingredients company,” said Gerard Hoetmer, CEO of CSM. “Selling these businesses in one transaction, in accordance with our original intention, will lead to minimal disruption for the divested businesses and the continuing business. We have found in Rhône Capital a strong partner which supports existing management in its global growth ambition. Both parties are working towards a fast finalization and smooth handover of the operations. We continue to expect completion of the transaction in the 3rd quarter of 2013.”
“The continuing bio-based business has had a challenging start to the year,” he continued. “We saw no significant changes in overall market conditions in the first quarter, and sales was impacted by a lower number of trading days compared to Q1 last year. Improving on the trend of previous quarters Purac volumes on balance were stable, driven by growth in the Chemicals & Pharma segment, with the Food segment showing a slight decline. Caravan Ingredients was affected by the bankruptcy of major customer Hostess, whose volumes are already gradually being picked up by other industrial bakers (who are also supplied by Caravan Ingredients).”
“EBITA before one-off costs increased slightly due to good cost control. Looking ahead, in parallel with the divestment process of our Bakery Supplies businesses we are working to expand our markets and generate substantial organic growth at the continuing business. First and foremost, this is driven by the investments in product innovation we have made in recent years which give us today an exciting pipeline of new products and customer projects. We will continue to increase these investments in order to access new opportunities which are arising for the continuing biobased business.”
“A wide range of projects are well underway at the continuing businesses, including shaping our combined food strategy, defining the bio-chemicals products and innovation portfolio, establishing a new organization structure, rightsizing the head office, and combining the strengths of both Purac and Caravan so that the organizations can reinforce one another,” concluded Hoetmer. “We have also started a rebranding project in anticipation of the transfer of the CSM name with the divested bakery businesses.”
