CSM Ponders Sugar Division Sale

16/02/06 Dutch sugar and bakery ingredients giant CSM NV is exploring the possibilities of selling its Sugar division, as the strong impact of the upcoming EU Sugar reforms becomes even more apparent. CSM said that this step should be seen as part of its strategy to further streamline the CSM portfolio. “By selling it we expect CSM Sugar to retain its strong position both in the short and long term. CSM nv does not see itself as the consolidator of the European sugar market”, CEO Gerard Hoetmer said.

CSM intends to focus its efforts on global market-leader positions in its growth markets: bakery ingredients and bakery products on the one hand and lactic acid and lactic acid derivatives on the other. Approximately 300 personnel are employed on a permanent contract at CSM Sugar, with some 75 extra personnel recruited temporarily during the campaign. CSM said that the company has an annual turnover of EUR 250 million and runs at a good profit. The services of a bank have been enlisted to coordinate the process of a possible sale.

CSM Sugar is an efficient company that specializes in sugar and sugar specialties. It produces and sells between 350,000 and 380,000 tons of sugar every year. The company is based in Diemen, the Netherlands, and has two
production sites: Vierverlaten (Hoogkerk, Groningen), which produces sugar from beet. This factory processes 18,500 tons of sugar beet a day. CSM’s Breda facility produces sugar specialties (syrup, caster sugar, liquid sugar etc.) and is where the central laboratory is located.

“CSM Sugar is an excellent company. The factory in Vierverlaten is one of the most efficient in Europe. We still see scope for further efficiency improvements, but the new EU sugar regulation will open a new era”, Gerard Hoetmer, CEO at CSM NV.

From the 1st of July, the conditions for both the sugar industry and the beet growers will change due to the EU’s new sugar regime and new rules for EU sugar exports. EU agriculture ministers agreed to cut the guaranteed price for sugar by 36 pct in November. The new regulation will then become effective and continue till 2014/2015.

Earlier this month Danish producer Danisco announced plans to close three Nordic plants and lose up to 350 jobs as the sugar giant aims to remain competitive in the face of the reforms. Danisco said that its measures will contribute to realising the previously announced earnings level for the sugar activities of DKK 600-750 million.

Danisco said it would close its sugar factories in Assens, Denmark, Köpingebro, Sweden and in Salo, Finland, after the 2006 campaign. Meanwhile the measures include a sale of parts of the sugar quotas in Sweden and Finland and the purchase of extra quota for the sugar factory in Anklam, Germany. Danisco will optimise administrative functions in 2007. Danisco said that the efficiency measures will affect up to 350 employees and reduce Danisco's total production of quota sugar by around 100,000 tonnes.

Meanwhile changes at CSM have been coming thick and fast of late. Last month CSM announced intentions to integrate some of the operations of two of its French bakery supplies: Délices de la Tour in Paris and BakeMark Ingrédients France in Strasbourg. CSM said that it is also engaged in negotiations with the employee representatives of BakeMark Deutschland regarding the further streamlining of processes. CSM expects this action to result in the loss of some 50 jobs in 2006 and 2007, spread over the entire BakeMark organisation in Germany. CSM also announced a reorganisation at BakeMark UK in January.