CSM Optimises Italian Bakery Activities

The specialization of the factory creates a better focus on specific strategic areas related to the market of bakery supplies where BakeMark Italy enjoys a leading position.

11/10/06 CSM has informed the personnel of BakeMark Italy, the trade unions and the municipality of Crema of its intention to reorganize its operations in Italy and concentrate its production at one site. Approximately 68 people will be affected by redundancies. CSM expects the reorganization to be completed in quarter 4 of 2007.

A major cost savings and restructuring program is set in place to ensure efficient operations that fits in the European manufacturing network of CSM. The specialization of the factory creates a better focus on specific strategic areas related to the market of bakery supplies where BakeMark Italy enjoys a leading position. Non-value added co-packing activities will be stopped and the production of flour based mixes will be moved to other specialized factories of CSM in Europe.

CSM recently exited the sugar industry by merging its sugar activities with Royal Cosun. The company is currently meeting with investors and financial analysts and is presenting its view on the bakery supplies market and the strategy to deliver profitable growth and shareholder value.

In 2005 CSM announced a strategic plan for bakery supplies that will result in cost savings of € 75 million being generated between 2005-2008 as part of the 3S program. Half of the cost savings will benefit operating profits and half will be invested in growth initiatives with the aim of strengthening organic growth.

CSM has a target of increasing operating margins to 8-10% and return on capital employed to 11-13% by 2008 for bakery supplies. The growth initiatives should result in organic growth of 1-2% above market growth by 2008.