EBITA for CSM B.S.N.A. down narrowly; divestment process continues

by Eric Schroeder
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DIEMEN, THE NETHERLANDS — EBITA of the Bakery Supplies North America division of CSM n.v. in the first quarter of fiscal 2013 was $29 million, down 4% from $30.1 million in the same period a year ago. Excluding restructuring and integration costs, EBITA in the division fell 5% to $28.5 million from $30.1 million. Sales in the division totaled $538.6 million, down 2% from $548.1 million in the same period a year ago.

Reported in euros, CSM said EBITA at B.S.N.A. fell 4% and sales decreased 2% in the first quarter of fiscal 2013.

Bakery Supplies Europe EBITA in the first quarter of fiscal 2013 was €11.3 million ($14.7 million), up sharply from €1.7 million in the same period a year ago. Sales were €266.6 million ($345.8 million), down 1% from €270.4 million.

Overall, CSM EBITA was €28.4 million ($36.9 million) in the first quarter of fiscal 2013, up 4% from €27.3 million in the same period a year ago. Excluding one-off costs, EBITA in the most recent quarter was €31.9 million ($41.5 million), up 4% from €30.6 million. Sales were €779.9 million ($1,013 million), down 2% from €798.7 million.

EBITA from continuing operations was €9.9 million ($12.9 million), down 29% from €14 million in the same period a year ago. Excluding one-off costs, EBITA from continuing operations was €14.6 million, up from €14.4 million. Net sales from continuing operations fell 6% in the first quarter to €180.5 million from €191.2 million.

“The intended divestment of our Bakery Supplies businesses to Rhone Capital, which we announced on March 25, is an essential step in our strategy to transform into a bio-based ingredients company,” said Gerard Hoetmer, chief executive officer 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 Rhone Capital a strong partner which supports existing management in its global growth ambition. Both parties are working toward a fast finalization and smooth handover of the operations. We continue to expect completion of the transaction in the third quarter of 2013.”

Rhone Capital L.L.C. in late March reached an agreement to acquire the bakery supplies businesses of CSM n.v. for approximately $1,361 million. The acquisition includes the European Bakery Supplies and North American Bakery Supplies businesses (excluding Caravan Ingredients) as well as the international bakery supplies activities. Rhone Capital also will acquire the CSM brand name. The businesses Rhone will acquire had aggregate sales of about $3,317 million in 2012.

Mr. Hoetmer said the continuing bio-based business has had “a challenging start to the year.”

“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,” he said. “Improving on the trend of previous quarters Purac volumes on balance were stable, driven by growth in the chemicals and 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).”

Looking ahead, Mr. Hoetmer said CSM not only will work to complete the divestment of its Bakery Supplies businesses, but also will work to expand its 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,” he said. “We will continue to increase these investments in order to access new opportunities which are arising for the continuing bio-based business. A wide range of projects are well under way 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.

“We have also started a rebranding project in anticipation of the transfer of the CSM name with the divested bakery businesses.”
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