CSM CEO Gerard Hoetmer on the Corporate Strategy and the Results
"The results show that the large number of measures we have taken to implement our tighter strategy are having positive effects. All business units have been affected by the changes in market strategy, organizational structure, or personnel capacity. That's why I am very pleased that the organization and its people managed to realize a marked improvement in the results in all divisions – despite all those changes. Understandably, and in line with our expectations, this caused some pressure on turnover growth at PURAC and Bakery Supplies Europe. We have made good progress with our restructuring program and the implementation of the various projects. The 3S savings amounted to € 23 million in the first half-year, up € 16 million compared to the same period in 2005. Of these savings around € 3 million has been spent on projects to realize future growth through innovation and market development. The savings also enabled us to offset rises in the price of fuel and sugar in particular which, for market-strategic reasons, have not been fully passed on to the customers.
Bakery Supplies North America continued its healthy growth in turnover and profit. Most of the restructuring projects are well underway. This is the signal to start reinforcing the organic growth with bolt-on acquisitions. The acquisition of CGI is a clear step in this direction underscoring our commitment to strengthen our positions in selected segments.
Bakery Supplies Europe has made good progress. As planned, fundamental strategic improvements are being resolutely implemented through restructuring and optimization.
BakeMark UK successfully implemented its restructuring initiatives and performed well in the first half of the year. Délices de la Tour however, showed disappointing results. Despite significant efforts by all parties involved and the measures taken in past years, we must face the fact that there is no prospect of sustainable improvement especially in the viennoiserie market. The impairment charge taken in HY1 is the consequence. We cannot afford to have long-term underperformers in our portfolio, therefore we are investigating the possibility of a more permanent solution for Délices de la Tour. Each business unit has to contribute to achieving our 2008 targets.
PURAC has made progress in implementing its strategic plan..Prices in a number of segments have been increased to offset the rise in the price of raw materials, the restructuring program is on schedule, and savings of € 5 million have been realized. Acceptable volume growth has been generated in this phase of restructuring. The combination of PURAC as a new market-oriented organization and innovation will enable us to leverage profitable growth opportunities in the various markets.
The innovation activities at all our business units are part of the company-wide Inno-Engine network, for which we are currently setting up a number of innovation centers due to be operational by the end of 2006. This constitutes a key in our strategy to enhance organic growth, financed through our 3S savings. The intended sale of CSM Sugar to Cosun is in line with our strategy to concentrate on CSM's market leadership positions in Bakery Supplies and the PURAC portfolio. The sale of CSM Sugar is a historical step for CSM and all the parties involved.
Sugar was CSM's sole business between the establishment of the company in 1919 and the start of diversification in 1978. The sale of CSM Sugar to Cosun will enable the two organizations to join forces and will bolster the entire chain. It will also secure long-term continuity for the Dutch sugar sector in the rapidly changing European sugar market.
In short, though the visible recovery still has to gain further momentum, the company is well on track with the strategic initiatives we have taken. I am fully confident that we will achieve the targets set for 2008."