Exchange rates cut into Corbion sales

by Jeff Gelski
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AMSTERDAM, THE NETHERLANDS — Corbion n.v. spent its first full quarter as a bio-based products company dealing with exchange rates and weaker bakery market volumes, but it still posted improved earnings.

Third-quarter EBITDA of €23.3 million ($32.1 million) was up from €18.2 million in the previous year’s third quarter. The effect of exchange rate movements on EBITDA was a negative €3 million ($4.1 million). Corbion expects the currency effects to continue into the fourth quarter. Excluding one-off costs, EBITDA was €26.1 million, down from €27.3 million.

Net sales of €188.5 million ($260 million) in third quarter were down from €194.4 million in the third quarter of the previous year. A negative currency effect of 6.3% offset volume growth of 3.3%.

“With the divestment of our bakery supplies businesses completed early July, this has been the first quarter in which our organization fully operated as a bio-based products company,” said Gerard Hoetmer, chief executive officer of Amsterdam-based Corbion. “We are in the process of finalizing the readjustment of our organization, in line with our strategy. I am therefore pleased to see that the positive underlying volume and EBITDA trend of our bio-based activities continued.”

Corbion, formerly known as CSM, in July announced it had completed the divestment of its European Bakery Supplies and North American Bakery Supplies businesses to Rhone Capital. Corbion now has two segments in Biobased Food Ingredients, which includes Caravan Ingredients and Purac, and Biochemicals.

Biobased Food Ingredients had EBITDA of €26.6 million in the third quarter, down from €28.8 million in the previous year’s third quarter. Third-quarter net sales in Biobased Food Ingredients were €145 million, down from €149.7 million mainly because of weaker exchange rates caused in part by the weaker U.S. dollar. Organic sales growth of 0.2% came mostly on stronger volumes, which were up 0.6%.

In the bakery market unit, volumes decreased slightly, in line with the market.

“Bakery had a more challenging quarter, despite an improvement in our market position, and even though profit-wise the unit delivered, volumes are not yet where we want them to be,” Mr. Hoetmer said in an Oct. 23 conference call. “However, we do see some signs of market improvement in bakery North America.”

Mr. Hoetmer added Corbion will continue to focus on innovation, such as the Ultra Fresh line of ingredients, in its bakery market unit.

“We have a very good pricing power in this business,” he said. “So there’s not substantial need to lower prices, but instead to deliver our innovations, like Ultra Fresh, as you’ve seen, into the marketplace, which is giving, I would say, quite valuable benefits toward our customers.”

Also within Biobased Food Ingredients, meat and food market units continued to improve in volumes sold.

Biochemicals had EBITDA of €3.9 million in the third quarter, down from €4.9 million in the previous year’s third quarter. Third-quarter net sales of €43.5 million were down from €44.7 million.

Through the first nine months of the year, Corbion had EBITDA of €71.5 million, up from €68.1 million in the same time period of the previous year. Excluding one-off costs, nine-month EBITDA was €76.9 million, down from €77.9 million. Nine-month net sales were €559 million, down from €571.2 million.

In the conference call Koos Kramer, chief financial officer for Corbion, said capital expenditures for the company this year should be between €70 million and €80 million.

“For the coming years, we guided for around, on average, €100 million a year,” Mr. Kramer said. “We still think that this is very, very necessary for the growth that we foresee in our business, and the opportunities we see also for cost reductions in our business, and the introduction of new specialties.”
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