CSM Sales Drop 10.5% in Q4

Although sales volume in Bakery Supplies showed a normal seasonal pattern in Q4, it was 6.2% lower compared to the more exceptional Q4 of 2008.

24 Feb 2010 --- Leading bakery ingredient supplier CSM has reported that in the fourth, quarter net sales decreased by € 75.0 million (-10.5%) to € 637.6 million. Net sales were negatively impacted by exchange rate effects of € 39.6 million, mainly due to a weaker US dollar. Acquisitions had a minor positive net effect of € 0.2 million. Organic sales growth was negative € 35.5 million (5.0%). The lower organic growth is attributable to a decline in volumes sold in the bakery supplies divisions. Although sales volume in Bakery Supplies showed a normal seasonal pattern in Q4, it was 6.2% lower compared to the more exceptional Q4 of 2008. The higher sales volumes in Q4 of 2008, led to the build up of stock which negatively impacted sales in Q1 of 2009. In the first month of Q1 2010 we see sales volumes following a normal pattern. PURAC had a strong quarter with a volume increase of 12% resulting from improved industry demand.

EBITA in the fourth quarter amounted to € 42.3 million compared to € 37.5 million in 2008 (before exceptional items), an increase of almost 13%. EBITA of BSNA decreased by € 2.9 million to € 21.1 million, of which € 2.0 million due to the weaker US dollar. BSNA experienced in the fourth quarter lower volumes and higher general costs. In BSEU, the lower sales volumes were the main reason for the lower EBITA. PURAC benefited from the higher volumes sold combined with higher margins.

For the full year, CSM reported that net sales in 2009 were slightly lower than in 2008, down 1.7% to € 2,555.9 million (2008: € 2,599.3 million). Exchange rate differences, particularly the US dollar, positively impacted the sales figures by € 39,3 million. The net effect of acquisitions and divestments was € 3 million positive, mainly due to the full year effect of the 2008 acquisition of Harden Fine Foods in the UK. Adjusted for currency effects and acquisitions/divestments, organic growth was -3.3%.

Gerard Hoetmer, CEO of CSM, comments on results 2009: "Although we experienced a slow start, I am very satisfied with our strong performance in the second half of the year which resulted in a substantially improved EBITA with 13% for the full year 2009. In particular Purac and Bakery Supplies North America showed a strong performance and delivered substantially improved results. Bakery Supplies Europe improved during the year. The impact of the recession on volume development lessened over the course of 2009 albeit there remained a degree of volatility in demand. This being said, we delivered a higher result, which includes costs for efficiency improvements, management structure changes and bonus payments. As during previous years we continued our efforts to improve our balance sheet. Strict working capital management improved our free cash flow and net debt position, delivering the financing to fund our growth strategy. A strategy driving organic growth within Purac and both organic and acquisition growth in Bakery Supplies. The recently announced acquisition of the US company Best Brands and the investment in a new lactide plant in Thailand are important milestones in driving this growth strategy. Our 2009 results in combination with the strategic steps taken, clearly reflect our ability to execute our strategy despite the challenging economic environment. We will continue to build on our strengths and remain focused going forward."

CSM said that it does not expect the economic climate to change significantly in 2010. “Our Bakery Supplies business will continue to lead the market forward, both in terms of innovative products and services by anticipating consumer and industry trends. We clearly see a trend of consolidation, in which we will continue to play our part as market leader.” CSM noted that looking forward and estimating the impact of the recovery on volumes is very difficult, which is why the company will not give an outlook for the full year 2010 at this stage. “For the first quarter of 2010, taking into account acquisition costs (approx. € 6 million) for the Best Brands transaction, we see a substantial improvement in EBITA compared with the first quarter of 2009 It should be noted that we had a slow start in 2009, leading to a disappointing EBITA in the first quarter of last year.”