Cerestar to focus on cost reduction programme

French starch company Cerestar, recently purchased by US agribusiness Cargill, reported a drop in sales but increase in operating income for the period of three months ending 31 March 2002.

Net sales dropped from €460.9 million to €439.8 million for the same period in 2001 and operating income rose from €1.3 million to €14.0 million.

The company reported that in a poor economic environment, the European market for starch products grew slowly during the first quarter of 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 first quarter with considerable pressure on volumes and prices, especially in basic products. Compared with the first quarter 2001, Cerestar sales for the first quarter 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 Zuelpich plant on 31 December 2001 and the continuing progress of cost reduction programmes are, according to Cerestar, giving important reductions of costs compared to those of the same period last year, despite relatively significant inflation in some European countries.

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

In a statement, the French starch producer said that an improvement in economic conditions was predicted for the second half 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 merger with Cargill.