CSM B.S.N.A. earnings ease in fiscal year

by Eric Schroeder
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DIEMEN, THE NETHERLANDS — EBITA of the Bakery Supplies North America division of CSM n.v. in fiscal 2011 was $118.4 million, down 12% from $135.2 million in fiscal 2010. Excluding integration and acquisition costs, EBITA in the division fell 19% to $132 million from $163.6 million. Sales in the division totaled $2,263.8 million, up 9% from $2,077.3 million in the same period a year ago.

During the fourth quarter of fiscal 2011, EBITA at Bakery Supplies North America totaled $28.1 million, down 19% from $34.6 million. Excluding one-off costs, EBITA in the fourth quarter totaled $32.4 million, down 27% from $44.6 million. Net sales were $579.1 million, up narrowly from $574.2 million.

Reported in euros, CSM said EBITA at Bakery Supplies North America fell 17% and sales rose 4% in fiscal 2011. For the fourth quarter, EBITA was down 18% while sales rose 1%.

Bakery Supplies Europe EBITA in 2011 was €35.8 million ($47.4 million), down 42% from €61.8 million in fiscal 2010. Sales were €1,077.8 million ($1,427 million), up 5% from €1,022.6 million. For the fourth quarter, EBITA fell 35% to €10.2 million ($13.5 million) while sales rose 1% to €274.2 million ($363 million).

Overall, CSM EBITA was €130.2 million ($172.4 million) in fiscal 2011, down 33% from €193.8 million in fiscal 2010. Excluding one-off costs, EBITA in fiscal 2011 was €150.8 million ($199.6 million), down 30% from €215.2 million. Sales were €3,112.6 million ($4,120.4 million), up 4% from €2,990.1 million. For the fourth quarter of fiscal 2011, EBITA totaled €27.4 million ($36.3 million), down 44% from €48.6 million in the same period of 2010. Sales for the fourth quarter climbed 2% to €802.5 million ($1,062.4 million) from €790.6 million.

“2011 was a very challenging year for us,” said Gerard Hoetmer, chief executive officer of CSM. “We faced substantial raw material cost inflation in a difficult consumer environment impacting our volumes in an intensified competitive landscape. This put our 2011 results under severe pressure and led to a disappointing EBITA level.

“During this year, we have seen an accelerating structural shift from the European traditional artisan bakery channel toward in-store-bakery and out-of-home channels. We had to recognize that our European Bakery Supplies business, based on its portfolio and positioning in 2011, would no longer have the cash flow generating capacity that justified the carrying value of its assets. This has unfortunately led to a non-cash impairment charge of €249 million. This does not reflect the strengthening of the strategic position of our European Bakery Supplies activities as addressed in our business review.

“We are committed to turning the challenges we face into opportunities by strengthening our competitiveness, lowering our cost base, improving our agility and making clear choices how we allocate our resources. As a consequence we have initiated a restructuring program and have done a business review, which we believe will result in a more focused business for the future.”

CSM said it its restructuring program, initiated in October 2011, is expected to deliver net savings of €30 million in 2012, rising to €50 million in 2013. The savings is expected to be offset partly by some cost inflation and increased production expenses as the company’s new lactide facility in Thailand begins production.

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