CSM, the Dutch food group, has reported a fall in first-quarter profits due to lower volumes and the lag in securing price increases to absorb higher costs.
The company, the world’s largest supplier of bakery products, booked underlying EBITA of EUR43.8m (US$64.3m) for the three months to the end of March, compared to EUR46.7m a year earlier.
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EBITA including the one-off costs of integrating its 2010 acquisition of US baker Best Brands and a fire at a packaging unit in Brazil reached EUR37.9m – down from EUR40.5m in the first quarter of 2009.
CSM booked an 18% rise in first-quarter revenues to EUR759.8m as the company benefited from its acquisition of US bakery Best Brands, a stronger US dollar and some price increases.
The acquisition of Best Brands boosted sales by EUR82.5m, while CSM’s prices – despite the lagging effect – rose 6.2%. The price increases achieved helped push down volumes by 2.8%. On an organic basis, sales were up 3.4%.
CEO Gerard Hoetmer said CSM’s performance in its first quarter was “consistent with our expectations”.
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By GlobalDataHoetmer said sales and EBITA were impacted by “a slow start of the year and reflect the anticipated short term lagging effect in passing on increased costs in selling prices”. He noted, however, that the price increased secured “affected our volume growth”.
The CSM chief said the company had increased the prices on its bakery products by an average of 6.4% and on products from its Purac packaging unit by 5.2%. “We expect to further recover increased input costs through price increases in the coming quarters,” Hoetmer insisted.
Hoetmer said that the company was “looking forward to 2011 with confidence despite the fact that we see a persisting volatile year ahead of us”. He added: “We are optimistic to improve our results in 2011, although it is too early to give a specific forecast for the year.”
