CSM Reports Slight Increase in Sales

Corresponding with the results came the news that PURAC will offer bio-plastics producers the technical and economical solutions that have so far restrained them from entering the Poly-Lactic Acid (PLA) bio-plastics market.

15/08/07 CSM has made further progress with the implementation of its initiatives in the first half-year of 2007. The country-based European Bakery Supplies organization is being transformed into a market-oriented European business unit structure. Strategic acquisitions in out-of-home growth markets and the sale of non-strategic activities are leading to more focus. The implementation of the 3-S efficiency improvement program is on schedule. The favorable trend in EBITA due to those structural improvements was significantly offset by adverse effects of strong increases in the prices of raw materials and exchange rate fluctuations, particularly at PURAC. As a result of these effects the financial targets set for PURAC and therefore for CSM as a whole will be achieved in 2009 instead of 2008.

Net sales from continuing operations increased to EUR1,206.5 million (first half 2006: EUR1,204.1 million). The increase in net sales was impacted by negative exchange rate effects of EUR48.7 million, due mainly to the weaker US dollar. Acquisitions and divestments had a positive net effect of EUR28.7 million, the company said.

“During the first half-year of 2007 CSM consistently worked on the implementation of its strategy: the transformation of BSEU into one European organization, the integration of the logistics operations at BSNA, the investments in the construction of the lactic acid production facility in Thailand, and innovations in all our activities. These developments are of great strategic and organizational importance, but the financial results thereof will only become apparent in a later stage,” said Gerard Hoetmer, CEO of CSM.

“The Bakery Supplies divisions contributed the most to the operating result for the first half-year and are well on track. Further professionalization and more focus can be seen in the organization. Investments in innovation capacity and strategic acquisitions such as Titterington’s and Kate’s Cakes give us access to new markets. The Bakery Supplies divisions are on course to achieve our targets for 2008”, he added.

“At PURAC a lot has changed recently. The organization is being increasingly prepared for high-grade production at low cost. To enter new markets important innovations are being developed, such as PLA applications for the plastics industry. Sales are developing positively. We are, on the other hand, disappointed at not having been able, as the industry leader, to create more momentum for reasonable price increases, which would have been justified in view of the strong rise in the prices of raw materials. Unfortunately, this, combined with the weak US dollar, has led us to the conclusion that the targets for PURAC will be achieved in 2009 instead of 2008. The new management is working on measures focusing on further growing sales, reducing costs and adequately addressing the increased prices of raw materials,” he commented.

Corresponding with the results came the news that PURAC, global market leader in lactic acid will extend its portfolio with Lactides, offering bio-plastics producers the technical and economical solutions that have so far restrained them from entering the Poly-Lactic Acid (PLA) bio-plastics market.

In addition to its patented Lactide solutions, PURAC will expand its product portfolio with D(-) technology. With compounded (D- and L+) PLA polymers it is possible to efficiently produce bioplastics that withstand temperatures of at least 175 C, for diverse applications such as hot-fill bottles, microwaveable trays, temperature resistant fibres, electronics and automotive parts. Poly-Lactic Acid (PLA) is a raw material for bio-degradable plastics, an environmentally-friendly alternative to oil-based plastics. PLA is produced from lactic acid coming from agricultural products such as corn, sugar beet, tapioca and sugar cane.

Arno van de Ven, VP Chemicals and Pharma at PURAC says: “Market growth has been hampered by the availability of economically achievable production technology. By using Lactides as a monomer for PLA production, PURAC bridges the technology gap that currently restricts the plastics industry to accelerate the PLA market growth. The Lactide technology will reduce costs and investments for the bio-plastics industry and significantly contribute to the growth of the PLA market. With the new D(-) technology bioplastics producers can now produce compounds for a wide variety of new high-end applications. PURAC has filed several patents to protect its technologies”.

PURAC, together with leading plastics producers, is investigating the necessary investments to be able to meet future demand. Industry experts project a steady market growth as of 2010 when products will be available in sizeable volumes.