Corbion Reports Strong Sales Growth in Q2, Volume Increase in Biobased Food Ingredients

07 Aug 2013 --- Corbion (the new trade name of CSM nv) has delivered organic sales growth of 5.0% in Q2 2013, bringing total net sales €190.0 million, mostly driven by volume growth of 5.5%. EBITDA before one-off costs increased by 6.3% to €27.2 million.

On July 3rd, just after closing of Q2, Corbion completed the divestment of the Bakery Supplies businesses. “In the second quarter both the Biobased Food Ingredients and the Biochemicals segments realized solid organic sales growth. I am also very happy to see that volumes showed growth in the 2nd quarter after a challenging 1st quarter. With the divestment of the Bakery Supplies businesses completed we can now fully focus on the development of our biobased products activities. Overall, the developments in the 1st half-year are encouraging,” comments Gerard Hoetmer, CEO.

Net sales development strengthened in Q2, with an organic growth rate of 5.0% and 5.5% volume growth (compared to Q2 2012). Both segments contributed, especially the Biochemicals segment which showed a 9.3% volume growth, while Biobased Food Ingredients delivered a volume increase in Q2 of 4.6%. One additional business day in Q2 2013 versus Q2 2012 impacted comparisons slightly.

For H1 2013 net sales amounted to €370.5 million, an organic growth of 0.5% (€1.9 million) driven by 1.5% volume growth compared to H1 2012. However, net sales were negatively impacted by exchange rate effects of €-8.3 million (-2.2%), due to weaker Japanese yen, Brazilian real and US dollar. The sales volume growth was realized at slightly lower average sales prices. Comparisons to H1 2012 are slightly impacted due to the fact that H1 2013 has two working days less.

EBITDA improved because of better performances of both Biobased Food Ingredients and Biochemicals. Higher volumes, albeit at somewhat lower prices were the main driver of the higher EBITDA. Raw material costs were somewhat lower, partially offsetting the lower selling prices. R&D expenses increased, in line with our strategy. The EBITDA margin before one-off costs reached 13.7%, up from 13.4% last year.

On July 3rd Corbion completed the sale of its Bakery Supplies businesses for an enterprise value of €1050 million. We have received a net cash amount of €874 million. This amount is slightly higher compared with the amount mentioned in the press release of March 25 which stated approximately €850 million. With the proceeds we have redeemed the short term debts on our balance sheet. To the holders of our US$ denominated private placement we have proposed a voluntary repayment of the outstanding debt, in the course of August we will have more insight into the potential repayment of this loan. The remaining funds are held in secure short dated Dutch government bonds, money market funds and direct deposits with banks.

With the divestment of the Bakery Supplies businesses completed we can now fully focus on the development of our Biobased Products activities. The developments in the 1st half-year are encouraging, and the stable to declining raw material prices will support our margins. Strengthening our innovation efforts is an integral part of Corbion's strategy. The resulting increase in R&D expenses in the 2nd half of 2013 will be partially offset by the reduction in other G&A expenses. Financial income & expenses will come down sharply as a result of the proceeds received from the divestment of our Bakery Supplies activities. The tax rate for the 2nd half of 2013 will be approximately 20%. We expect our capital expenditures for the full year 2013 to be between €70 million and €80 million. During the 2nd half of 2013 we intend to return €250 million to our shareholders. The €50 million special dividend payment has been executed in July and the share buyback has started.

Net sales for the Biobased Food Ingredients segment in H1 2013 decreased by 2.1% to €283.2 million, due to weaker exchange rates. The organic growth was slightly positive (0.1%) mainly on stronger volumes (0.6%). The average net sales price reduced by 0.5% due to mix effects and price reductions in selective market segments as to increase market shares. Organic growth in Q2 was 4.4% which was supported by one additional trading.

EBITDA margin in H1 2013 ended at 19.1%, up from 18.4% in 2012, while Q2 featured an even higher margin of 20.2% driven by higher volumes. Within the Biobased Food Ingredients segment, the Meat market unit performed increasingly well in the course of H1 2013. 'This was especially the result of by volume gains in the US and European markets where market shares could be improved. For the US Meat market, we now see less switching to Low Cost in Use chemicals applications. At the same time our premium clean label products (Verdad) are gaining momentum. The Bakery market unit also experienced an improved sales performance in Q2 after the slow start in Q1 which was initially impacted by the bankruptcy of a major account. In Q2 this lost business is more than fully compensated for through growth at other customers. Some incidental orders also supported growth.'