CSM Bakery Supplies sales climb 12% in 2007

by Eric Schroeder
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DIEMEN, THE NETHERLANDS — Growth across all customer segments, but especially in frozen products, drove improved sales and earnings at CSM Bakery Supplies North America in fiscal 2007. Net sales in the year ended Dec. 31 totaled $1,528 million, up 12% from $1,361.5 million in fiscal 2006, parent company CSM n.v. said Feb. 27. Operating results in the year improved 10% to $95.2 million from $85.7 million in the previous year.

CSM said the sluggish U.S. economy had only a "limited effect" on the bakery ingredient and product market in 2007. The food service and away-from-home market segment showed the most impressive growth, the company said, with strongest demand for frozen products such as cakes, cookies and almost-ready items.

The company also noted stepped-up demand for high quality bread, driven by a trend toward healthy eating and the desire for European-style quality bread.

"CSM is well positioned to meet this growth thanks to its newly established innovation centers and the interaction with our European division," the company said.

CSM said savings generated by its 3-S Program amounted to $30 million in 2007, up $16 million from fiscal 2006.

H.C. Brill, the division of CSM active in bakery ingredients and frozen products for in-store and away-from-home markets, provided "disappointing results," CSM said.

"Due to a combination of mergers, factory closures, and strong growth in the frozen products market, this led to an overburdened organization with production inefficiencies, low service levels, and a trailing planning in the second half of 2007," the company said. "This, in turn, caused higher waste and labor costs, higher stock depreciations, and a lower growth rate."

Looking ahead to 2008, CSM said its bakery organizations in the United States and Europe "will have the envisaged integrated structure." Behind efficient procurement, supply chain and R.&D. organizations, the company expects to achieve organic growth of 1% to 2% above market averages.

"We will also further raise our selling prices to a total of approximately 10% to absorb the overall rise of approximately €190 million in the costs of raw materials," CSM said. "Based on our experience in the second half of 2007 and the new contract positions at year-end, we are confident that we will succeed in implementing those price increases. In 2008 we shall continue to implement our strategy as a basis for autonomous growth. We also intend to reinforce our organization with strategic acquisitions."

CSM n.v., based in Diemen, companywide reported sales from continued operations of €2,486 million ($3,759 million) for 2007, an increase of 3% from €2,421 million in fiscal 2006. Operating results before exceptional items eased 2% to €154 million from €157 million. After figuring in exceptional items, operating results fell 48% to €65 million from €124 million.

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