CSMs commodity costs have increased more than expected

CSM's commodity costs have increased more than expected

Shares in CSM tumbled this morning (5 July) after a jump in commodity costs forced the Dutch food group to issue a profit warning.

CSM's stock was down 8.99% at EUR19.80 at 11:35 CET after the bakery ingredients maker said first-half EBITA before one-off costs would be "around EUR80m (US$115.8m)".

Last year, the company posted EBITA - minus costs linked to its acquisition of Best Brands in the first half of 2010 - of EUR102.5m.

In February, CSM said it expected its raw-material costs to rise by EUR200m in 2011. Today, it admitted the spike in costs would be EUR240m.

The company said it had upped its prices during the second quarter but had not been able to fully offset its higher costs. Furthermore, the price increases it had successfully introduced had weighed on volumes, the firm explained. 

"We have stepped up the level of price increases to compensate. However, we have not yet been able to fully compensate the increased raw material cost in the quarter and also we have had some loss of volume as the market adjusted to higher prices," CSM said. "The EBITA trend was further exacerbated by the weaker US dollar."

The company said it expects its first-half sales to be higher. Last year, CSM's half-year sales were EUR1.42bn.

CSM will publish its half-year results on 10 August.