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Bakery ingredients group CSM issues profit warning

11-Oct-2011

Related topics: Business

Dutch bakery ingredients supplier CSM has issued a profit warning, claiming it will not meet its earnings expectations due to lower spending from recession hit consumer.

It plans company-wide restructuring to enable cost cutting in the region of €50m, of which €30m should be realized next year.

CSM said it now anticipates that third-quarter earnings before interest, taxes and amortization (EBITA) will hit the €30m mark.

The Netherlands headquartered group said its goal of gradually recovering volumes through higher selling prices will not offset cost increases as it had hoped: "These two assumptions are overtaken by the current reality, with volume and margin development equally impacting EBITA delivery negatively to an extent that we will not be able to meet our guidance for the full year," said the global supplier.

It reports that higher food costs and in some geographies lower disposable income, is impacting consumer behavior and volumes sold.

"Specifically in North America it is noticeable that reduced spending power, in combination with lower shopping frequencies, is driving lower sales volumes. The artisan channel in Europe faces the challenge of lower cost competition from in-store bakeries impacting their market position," reports CSM.