Diemen / NL. (csm) Dutch CSM N.V. reports higher sales and Ebita before one-off costs for Q4 and for full year 2012. Ebita excluding one-off costs was up by 40 percent in Q4, with higher sales, further cost savings and overall margin improvements as the main contributors. The strategic transformation of CSM is progressing in line with original expectations. In order to facilitate the divestment process of the Bakery Supplies business, and in anticipation of the definitive results to be published on 13 March, CSM announces its unaudited trading results for 2012. Key facts:
- Sales for the fourth quarter increased to 854,7 million EUR from 802,5 million EUR in 2011. Organic sales growth was 2,5 percent, a combination of higher prices (2,0 percent) and higher volumes (0,5 percent). Currency movements had a positive impact of 25,4 million EUR (3,2 percent) due largely to the stronger US Dollar. The year-on-year increase in Q4 attributable to acquisitions amounted to 6,6 million EUR (0,8 percent).
- Sales for the full year increased by 6,5 percent. Sales in constant currencies increased by 1,2 percent. Organic sales growth was 0,4 percent, a combination of lower volumes of 2,2 percent, partly offset by a positive price effect of 2,6 percent. The acquisition effect was 0,8 percent.
- Ebita excluding one-off costs in the fourth quarter amounted to 56,3 million EUR, an increase of 16,0 million EUR or 39,7 percent compared with the same period in 2011. The strong organic improvement in North America of 12,9 million EUR, at constant currency, was the main contributor.
- Ebita year-to-date excluding one-off costs amounted to 170,4 million EUR, an increase of 13,0 percent compared with 2011. Currency movements positively impacted Ebita by 12,1 million EUR compared with 2011.
- One-off costs in Q4 2012 amounted to 19,5 million EUR of which 5,9 million EUR was related to the Relevance restructuring program. Full year Relevance savings amounted to 39,0 million EUR, exceeding the 2012 target of 30 million EUR.
- The remaining one-off costs of 13,6 million EUR in Q4 were related to the divestment process, comprising mainly incentive accruals and costs for advisors. The divestment process is progressing in line with original expectations. The related costs of 33,3 million EUR are included in the full year one-off costs.
Chief Executive´s Commentary
CEO Gerard Hoetmer: «I am very pleased we have achieved a further recovery in our underlying results for the whole of 2012 and particularly in Q4 2012, despite having to contend with the ongoing challenging market environment at the same time as pursuing the strategic transformation of CSM. Numerous initiatives have been deployed throughout the organization to improve volumes and to increase profits. The success of these initiatives is evidenced by the resumption of volume growth in Bakery Supplies in Q4. The positive momentum will continue to deliver growing benefits in the coming quarters».
«The performances of our North American Bakery Supplies businesses, Bakery Products, Caravan Ingredients and BakeMark, continued to improve in a market impacted by lower consumer spending. Volumes were almost stable in Q4, and good margin management combined with strong cost control boosted profits compared to last year. In Bakery Supplies Europe, volumes increased in Q4 compared to last year, the first increase since 2010. The decline in the artisan channel was not as pronounced as in the previous quarters. In line with our strategy, Bakery Supplies Europe successfully compensated this with significant growth in the in-store bakery channel».
«The opportunities to exploit our biotechnology capabilities in downstream products (such as lactides and bio-plastics) and adjacent new organic acid platforms (for example succinic acid) continue to be very promising. We are making good progress in these long term innovation cycles. At the same time, we are developing one, new operating company on the foundations of both Caravan Ingredients and Purac that will be able to execute our bio-based ingredients strategy. The performance of Future CSM has to be seen in this perspective and against the background of an ongoing tough market situation. Volumes in the Food segment of Purac remain under pressure due to the subdued food market in general and low cost preservation substitutes in the US specifically, offsetting good growth at Chemicals and Pharma. Caravan Ingredients increased its market share and its overall performance was robust».
«The savings from our Relevance restructuring program have significantly exceeded our original target, while the costs of this program have remained below the initial plan. The preliminary closing of our books indicates that a significant improvement in our net debt level, compared to the level of end 2011, was achieved».
«2012 was an eventful year for CSM. Following a comprehensive review of the group´s strategy, CSM announced in May a major next step in the evolution of our company: the transformation of CSM into a bio-based ingredients company and the divestment of our Bakery Supplies businesses. The strategic transformation of CSM is progressing according to the original expectations. I am proud of the way our people have responded to this change and are continuing to focus on serving our customers and driving our results».
Strategic transformation of CSM
The strategic transformation of CSM is progressing in line with original expectations. We have received initial non-binding offers for our Bakery Supplies activities and given a selected group of potential buyers access to our data room. In both Europe and North America management presentations have been held for the benefit of these selected potential buyers.
- We have decided to issue this trading update of our unaudited 2012 results so as to be able to inform the selected potential buyers of the unaudited full year results of our Bakery Supplies businesses.
- We will use the balance sheet at the end of 2012 as the closing balance sheet for the divestment. To allow sufficient time to prepare for this we have set the date for the release of our full 2012 figures to March 13, 2013. Post balance sheet events, if any, resulting from the divestment process will be evaluated in the full 2012 figures.
- Our annual General Shareholders Meeting will take place on May 6 2013.
Bakery Supplies North America
In the strong fourth quarter, Bakery Supplies North-America was able to increase sales by 17,7 million USD (2,8 percent) in a market showing a stabilizing trend. Caravan Ingredients was faced with some temporary disruption in sales as one of its larger customers filed for bankruptcy. Due to improved margins and good cost control, Ebita excluding one-off costs in the fourth quarter increased more than 50 percent compared to 2011 to 50,4 million USD. The largest improvement came from our in-store bakery activities where margins recovered to more acceptable levels. Cost savings from Project Relevance more than compensated for inflationary cost increases. The one-off costs consist largely of incentive accruals related to the divestment, and to a lesser extent costs related to Project Relevance.
Bakery Supplies Europe
Sales in Bakery Supplies Europe in the fourth quarter increased by 7,5 percent. Organic growth was 3,6 percent, with contributions from both from volume (2,2 percent) and price/mix (1,4 percent). In addition, acquisitions (2,4 percent) and currencies (1,5 percent) contributed positively. In line with our strategy, increased sales to retail/ISB were the main driver of this growth; the rate of decline in the artisan channel slowed down in Q4 versus earlier quarters. Ebita excluding one-off costs increased by 32,8 percent compared to 2011. Cost savings from the Relevance program supported the increased Ebita. The last part of the costs for Project Relevance were recorded as one-off costs in Q4. The larger part of the one-off costs is related to divestment incentive accruals.
Purac sales in the fourth quarter were almost flat compared to 2011. Within Purac, volume growth in Chemicals and Pharma almost fully compensated the volume pressure in Food. The price/mix effect was positive 0,2 percent. Volumes in food increased in Asia but were lower in the US, as a result of the impact of low cost in use, chemical substitutes in the meat preservation market. Ebita excluding one-off costs in Q4 was 3,5 million EUR lower than Q4 2011. This reflected additional costs of several growth initiatives (such as PLA, Biomass and Succinic acid). The new lactide factory in Thailand increased costs by 1,6 million EUR in Q4 2012. The finalization of Project Relevance resulted in some one-off costs.