Avebe focuses on potato starch to boost results

By Anthony Fletcher

- Last updated on GMT

Related tags: Potato starch, Starch, Potato, Avebe

Starch group Avebe believes that its programme of focussing on its
core business, potato starch, will help boost the firm's economic
performance.

Avebe reported on Friday increased net results for the second year running. But the net turnover of €7 million for the 2005/2006 financial year does not include substantial reorganisation costs, and is a non-audited figure.

The group has conceded that with further restructuring costs to be taken into account, the final net result for 2005/2006 will likely be negative.

"In order to realise stable positive results, further cost reductions are required,"​ said chairman of the board Okke Koo.

"Even more so, since this seasons poor potato harvest is expected to put the financial household under pressure."

Nonetheless, consecutive growth at least represents a break from previous years. The net operating cash flow was also positive, and includes costs for staff redundancies.

Avebe believes that it can now build on this through its 2006-2011 Policy Plan. This plan is based on three foundations: a focus on the key activity, potato starch, cost price leadership and innovation.

Waxy potato starch sales alone, which have a higher added value, have quadrupled compared with 2004/2005, and the firm has also opened a new dextrin plant in Ter Apelkanaal.

The group also claims that the targets set by the board for the past financial year have all been realised.

These included a reduction of the Dutch organisation by more than 300 staff to 1,068. The organisation outside of the Netherlands has also been reduced from 900 to 550.

In addition, the company has carried through the disinvestment of non-core activities outside of Europe, such as the sale of the interest in tapioca starch in Thailand and the sale of production companies in Brazil and China, though part of this deal remains subject to approval from the Chinese government.

Last year in fact, Avebe was awarded growth strategy leadership of the year for its expansion into China, Indonesia and Brazil.

Avebe has also simplified the structure of the organisation, with the head office moved to Foxhol, and the former head office in Veendam has been sold. The board plans to continue its reorganisation plans in order to further enhance the efficiency of its operations.

"If all parties concerned continue to put their weight behind this and we stick to the course we have chosen, Avebe will once again be able to present good operating results for the 2006/2007 financial year,"​ said Koo.

The definitive annual account will be established in January 2007.

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