CSM Bakery Supplies North America EBITA dips 10%

by Eric Schroeder
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DIEMEN, THE NETHERLANDS — EBITA of the Bakery Supplies North America division of CSM n.v. in the second quarter of fiscal 2011 was $35.8 million, down 10% from $39.6 million in the second quarter last year.

Excluding the integration and acquisition costs related to the March 19, 2010, acquisition of U.S. premium bakery products manufacturer Best Brands, EBITA in the division fell 18% to $37 million from $45.1 million. Sales in the division totaled $575.3 million, up 5% from $547.9 million in the same period a year ago.

For the first half of fiscal 2011, EBITA at Bakery Supplies North America totaled $66.6 million, up from $62.1 million. Excluding costs related to Best Brands, EBITA in the first half totaled $73 million, down 4% from $76.1 million. Net sales were $1,112.4 million, up 16% from $962.2 million.

Reported in euros, CSM said EBITA at Bakery Supplies North America fell 18% and sales decreased 6% in the second quarter. For the first half, EBITA was up 1% and sales rose 9%.

Bakery Supplies Europe EBITA was €6.2 million ($8.8 million), down 65% from €13.8 million in the second quarter last year. Sales were €262.8 million ($372.5 million), up 8% from €244.1 million. For the first half, EBITA fell 38% to €18.6 million ($26.4 million) while sales rose 7% to €526.9 million ($747.2 million).

Overall, CSM EBITA was €36.6 million ($51.9 million) in the second quarter, down 29% from €51.4 million in the second quarter last year. Excluding costs related to Best Brands, EBITA in the quarter was €36.4 million ($51.6 million), down from €55.8 million. Sales were €765.5 million ($1,086 million), down narrowly from €771.7 million. For the first half, EBITA totaled €74.5 million ($105.6 million), down 19% from €91.9 million in the same period of 2010. Sales for the first half climbed 8% to €1,525.3 million ($2,164 million) from €1,415.8 million.

“Although increasing prices in the current market is challenging, all our businesses have implemented very significant price increases, the only option to maintain a healthy business,” said Gerard Hoetmer, chief executive officer. “We took responsibility as market leader by moving first. We have seen some short-term shifts in volumes in the market while the market was migrating to higher pricing levels. This has led to some loss of volume across our businesses, mainly in the U.S., and has unfortunately led to a second-quarter result lower than last year. We have now completed the required additional pricing actions to balance our raw material costs for the second half.”

Mr. Hoetmer said the first half of the year CSM focused on increasing prices while balancing volume development. In the second half the focus will shift to growth, which will be supported by innovation.

“We see the Bakery Supplies markets remaining volatile,” he said. “In Europe, volume pressure in the artisan channel has been compensated by growth in Out-of-home/In-store, resulting in a stable volume development overall. We achieved further success in strengthening our presence in this strategically important channel by winning a number of retail customers, particularly in continental Europe.

“In North America we have clearly seen the effect of the steep, but necessary, price increases reflected in the volume development. We see encouraging signs of recovering volumes as the market absorbs the higher prices. We also continued our expansion to new markets. We have invested in our organization to accelerate growth in the selected strategic regions. We have built a production facility in China to accommodate growth in greater China in May, and we further developed our businesses in Turkey and Japan and our joint venture in Tunisia.”

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