Dutch food ingredients and confectionery company CSM has reported lower first-half profit and said it was looking into the possibility of selling its sugar confectionery division.
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The company reported net profit of €46.2m (US$55.9m) for the first six months of 2004, compared to €66.5m in the first half of 2003. CSM said the lower profit was partly attributable to the low exchange rate of the US dollar and the “very disappointing” results of the company’s European bakery supplies division.
Net turnover slipped to €1.68bn from €1.70bn a year earlier. At unchanged exchange rates turnover would have risen 2.6% to €1.74bn.
Sharply higher raw material prices and the rapid decline of the artisan segment in Germany led to disappointing results for CSM Bakery Supplies Europe. However, CSM Bakery Supplies North America improved its results through the successful introduction of low-carb ingredients by Caravan and BakeMark West.
CSM said that given the disappointing results of CSM Bakery Supplies Europe and the continuously low exchange rate of the US dollar, it now anticipates a fall of 10-15% in earnings per share for 2004 as a whole.
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By GlobalDataJaap Vink, chairman of the board of management of CSM, said the company had chosen a new course in which it intends to focus on its business-to-business activities and is exploring the possibility of selling its sugar confectionery unit.
“In order to grow further – also in terms of new products, customers, and geographical markets – we need to bring a sharper focus to the portfolio. In this connection we will be able to accelerate the growth in Biochemicals and substantially improve the profitability of Bakery Supplies,” Vink said.
“The market for bakery ingredients and products in Germany and France in particular faced a heavy setback in the first half of 2004. This resulted in disappointing figures for Bakery Supplies Europe. We are confident, however, that we can deal with the changing market circumstances by introducing various measures. The first steps have already been taken. Before the end of 2004 we shall make further announcements about farther-reaching production rationalisations and/or the sale of non-strategic or non-profitable operations,” he added.
