CSM cuts costs at German bakery unit

- Last updated on GMT

Related tags: Bakery supplies, Marketing, Csm

European bakery ingredients leader CSM will chip away at its German
subsidiary as the firm announces job cuts and restructuring efforts
to bring about savings and underline its focus on becoming an
international bakery supplies player.

The move follows a 22 per cent fall in group profits for the first half of the year, in particular hit by a 34 per cent drop in operating profits at the European bakery supplies business.

The Amsterdam-based business said about 100 jobs will go and over €4.5 million will be spent on restructuring costs, including "reorganising its management structure and tailoring its sales force to meet the changing market conditions and new customer demands."

This latest announcement marks another move by 9,500 strong CSM to generate cost savings, giving it space to drill down into core bakery supplies business, a clearly defined goal for the company.

As part of the drive, CSM said recently that it was "investigating the possibility of selling"​ its sugar confectionery unit that together with biochemicals, sugar and bakery supplies completes the CSM stable.

Selling the business would allow the company to focus on areas where growth is perhaps more likely in the longer term, according to Jaap Vink, CSM chairman. He stressed recently that the biochemicals division in particular would benefit from the new focus.

This unit, which covers a wide range of products such as lactic acids and food preservatives sold mainly under the Purac brand, saw a slight drop in turnover for the half to €138.9 million, although like-for-like growth would have been a more impressive 18 per cent - highlighting why the company also wants to focus increasingly on this particular market segment.

Although sales at the European bakery supplies arm (which operates under the BakeMark and Caravan Brill brands, among others) rose in the first half to €554.0 million, this was largely due to the effect of acquisitions (€21.3 million). On a like-for-like basis, sales dropped by 2.1 per cent as the poor showings from the artisanal sector in Germany and the in-store segment in France took their toll.

But the new cost-cutting programme from which the announcement this week stems, is in place to help redress the balance. CSM claims the European operations of the bakery supplies unit has about 12 per cent of the market share, with number one positions in Germany, Italy, the UK and France.

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