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May 17, 2002

FRANCE: Cerestar sees slow growth in Q1

Paris-based Cerestar has announced a slow start to 2002, with the unaudited fiscal results for the three-month period ended 31 March. Key figures (in millions of €)       03/31/01 (pro forma)   03/31/02 Net sales    460.9    439.8

Paris-based Cerestar has announced a slow start to 2002, with the unaudited fiscal results for the three-month period ended 31 March.

Key figures (in millions of €) 

    			03/31/01 (pro forma)  	03/31/02 
Net sales    460.9    439.8
Operating income   1.3    14.0
Pre-tax income from    (6.7)    9.6
 continuing operations
Net income- group share 0.2    2.3
Shareholder’s equity   1,069.8    1,075.4
Net financial debt   440.3    440.5
Debt-to-equity ratio  0.41    0.41

Europe

(in millions of €) 	03/31/2001 		03/31/2002
Net sales   355.1   338.4
   – 4.7%
Operating income  24.1   32.4
   + 34.6%

In a poor economic environment, the European market for starch products grew slowly during the Q1 2002. The first signs of recovery are visible in the Paper and Corrugating sector  which had experienced a slow-down in 2001. Improved utilisation of relevant capacities can be expected to result from a pick-up in this area.

Competition remained strong during the Q1 with considerable pressure on volumes and prices especially in basic products. Compared with the Q1 2001, which was particularly good, Cerestar sales for the Q1 2002 were slightly down.

During this time, raw material prices were slightly lower than in the same period of last year.

The new wheat processing facility for glucose production in Sas-van-Gent is now fully operational. The closure of the Zülpich plant on 31 December 2001 and the continuing progress of cost reduction programmes are giving important reductions of costs compared to those of the same period last year, despite relatively significant inflation in some European countries.

North America

(in millions of €) 	03/31/2001 		03/31/2002
Net sales   104.7   98.9
Operating income  (22.6)   (14.6)

The Q1 2002 continued to show the improvement already established at the end of 2001 and all efforts were concentrated on strengthening the important cost reduction programme in the Hammond plant resulting from recommendations made by the “Task Force” put in place in October, 2001.

During this quarter a headcount reduction of 75 employees was made, representing 15% of the workforce in Hammond and 10% of Cerestar USA personnel overall.

Asia

During the Q1 2002, CJMI, the Cerestar joint-venture in China, continued to penetrate the market and accelerate production at the industrial facility at Song Yuan. Full capacity trials are almost completed and all production channels are operational. Market conditions are very depressed for basic products, however, due to overcapacity and low sugar prices.

The net income – Group share reached €2.3m, representing an increase of €2.1m compared with the same period of 2001. It reflects a better pretax income from continuing operations, and it also includes non recurring expense of €(7.8)m, compared with €(2.9)m in 2001, and an income tax credit of €0.1m as against €11.4m in the previous year.

The net debt-to-equity ratio has remained stable at 0.41 since 31 December 2001.

Outlook 2002

An improvement in economic conditions is predicted for the H2 of the year. The cost reduction programme remains the most important element of activity for 2002 which will be further strengthened, particularly in the US, in maximising the synergies created by the firm’s merger with Cargill.

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