Cost control props up CSM results in Q2

The Dutch supplier of bakery ingredients and lactic acid has reported Q2 sales of €647.6m, up from €629m in the same period of 2008 – but organic growth was down 3 per cent due to lower sales volumes.

After a difficult start to the year, when it was hampered by pre-negotiated raw material contracts, margin recovery has been helped by new contracts, cost savings and efficiency improvements, such as at its HC Brill bakery business in the US.

Gerard Hoetmer, CEO, said the innovation and customer relations foundations laid in recent years have stood the firm in good stead.

“​Product offerings that include products which respond to health trends in bakery, our growing position in preservation, and of course the increasing interest in bio-plastics clearly strengthen our position in our markets,”​ he said. “Despite declining volumes as a result of the economic downturn, we have successfully reinforced our bakery and Purac market positions.”​

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Since recovery from recession is not anticipated before 2009 is through, CSM is continuing its cost reduction and efficiency strategy for the foreseeable future.

Purac ​

At the Purac division, which supplies lactic acid and lactates, strikes at potassium mines in 2008 are still having an affect on Purac’s potassium lactate sales. Higher sales prices increases have more than compensated for the volume decline, however, resulting in organic sales growth of 1.5 per cent in the first half of the year. Q2 net sales were €89.3m.

Due to the strikes in Canada, Purac was unable to supply customers with potassium lactate, its major product for the meat industry, in the second half of 2008. Although the strikes are now over, the effect on Purac is longer term.

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“Although the negative effect…will continue in the foreseeable future, it is becoming less, as we have seen in the second quarter compared to the first quarter,”​ the company said.