CSM Shows Signs of Recovery

28/02/07 CSM has said that its restructuring program is helping its recovery. Net sales from continuing operations increased from € 2,392 million to € 2,421 million in 2006, up 1.2%. Net sales were adversely affected by currency effects (€ 8 million negative) and the sale and acquisition of activities (€ 18 million negative). If sales growth is adjusted for this, organic growth is 2.3%.

The operating result from continuing operations (Bakery Supplies and PURAC) before exceptional items increased by € 26.8 million to € 155.1 million, up 21%. Currency effects had a limited impact of € 1.5 million negative. CSM said that results were also adversely affected by a rise in the price of sugar, particularly in the US (€ 9 million negative). The contribution by the acquired company CGI Desserts as of September 2006 was in line with our estimate of € 2.5 million.

The improved operating result before exceptional items is attributable to the savings from its 3-S restructuring program in particular. Including the additional savings of € 43 million in 2006, the cumulative savings amounted to € 62 million.

On balance, financial income and charges amounted to € 47.6 million negative (2005: € 59.0 million negative). This item includes charges of arising from the repayment of the private placement (€ 32.7 million) and the convertible bond loan (€ 2.3 million). It also includes an income item of € 12.9 million arising from fluctuations in the fair value of derivatives. The effective tax rate from continuing operations was 14.1% in 2006 (2005: 12.0%). This lower than expected tax resulted in particular from a tax reorganization in the U.S. which enabled fiscal amortization of past goodwill.

Gerard Hoetmer, CEO of CSM said, “The new course has generated a rise in the results for 2006. It is quite an achievement of our people to make sales and profit grow organically in a period of major restructuring. All the businesses at Bakery Supplies Europe took successful steps last year to improve organizational efficiency and effectiveness. For example, the British and German organizations made substantialc changes to their overheads structure and are now working faster and more cost-effectively; the Spanish and Portuguese activities have been merged; and factories have been shut down in, amongst other places, the UK and France.”

Hoetmer said that, “given all the strategic initiatives that were taken in the past year to turn CSM again into an effective and efficiently run organization, we are fully confident that we will achieve our goals for 2008. We also intend to make acquisitions to reinforce our market-leadership positions. In the years ahead we will grow on the basis of the foundations which are now being laid.”