CSM's N. American sales increase after acquisitions

by Jeff Gelski
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DIEMEN, THE NETHERLANDS — Sales for CSM n.v.’s Bakery Supplies North America jumped to $722.5 million before exceptional items in the first half ended June 30 of the 2007 fiscal year, which compared with $663.4 million in the previous year’s first half. EBITA increased to $51 million from $43.1 million.

"The increase in sales by approximately $60 million and the increase in EBITA by approximately 25% can be largely attributed to the successful integration of CSI and the specialty bakery division of ADM, which were acquired in September 2006 and February 2007, respectively," CSM said, and added two of its ingredients companies, Caravan Products and AIC, merged successfully.

Most of the growth in Bakery Supplies North America came from out-of-home in the food service segment, said Koos Kramer, chief financial officer for Diemen-based CSM, in an Aug. 15 earnings conference call.

A further increase in raw materials prices cannot be passed on fully in the selling prices in the short term, according to CSM, and will have a limited adverse effect on margins in the fiscal year’s second half. As expected, the price of sugar fell in the United States, but edible oils, egg products and dairy products became more expensive.

"In North America, the positive sugar price decrease we expected from last year to now has been fully absorbed by the other costs increasing," said Gerard Hoetmer, chief executive officer for CSM. "And let me give you some examples. Eggs — we’ve been using eggs to make cakes and cake mixes — went up $1.50 a pound to $2.20."

Companywide, CSM’s net sales increased to €1,206.5 million ($1,616.2 million) to €1,204.1 million ($1,613.0 million) in the fiscal year’s first half. EBITA from continuing operations before exceptional items increased to €69.7 million from €66.8 million. The 3-S Program savings in the first half were €79 million, or €17 million more than in the previous year’s first half.

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