CSM passes on higher raw material costs
after increased raw material costs were successfully passed on to
customers.
"Like in Europe, the buying market in the US was characterized by a considerable rise in the prices of raw materials. Unprecedented price increases during 2007 caused a sharp rise in the costs of our main raw materials, which went up more than 100 per cent," said the company. However, "the impact on results from the rise in raw material costs was lower than CSM had indicated in October 2007, reflecting CSM's success in increasing prices in both Europe and North America". The company also said that the increase in raw material costs in North America was limited because of "effective and timely buying transactions and the lower price of sugar. For the North American market, we anticipate a total increase in costs of 20 per cent in 2008. We are confident we will be able to pass on the increased costs of raw materials in our selling prices." Net sales increased from €2,421m to €2,486m (at constant exchange rates: €2,596m, up 7.2 per cent). For bakery supplies in Europe net sales before exceptional items were €1,059.4m in 2007, compared to €1,041.9m in 2006. Net sales before exceptional items for bakery supplies in North America were €1,116.1m, compared to €1,084.1m in 2006. Bakery Supplies Europe In its European bakery supplies division, CSM noted that 2007 saw the transition from a country-based structure to a European organization with three business units focused on the artisan, industrial and food service/out-of-home markets. In addition, the company started up four innovation centres, acquired UK-based Kate's Cakes, as a basis for the company's European food service/out-of-home strategy, and opened a new doughnut plant in Germany. The year also saw CSM close one of its factories in Italy and sell Délices de la Tour in France. The company said that it intends to join forces with artisan bakers, offering produce range innovations and operational support. In recent years there has been a limited decline in the number of independent smaller bakeries in the artisan segment, the most important sales channel in Europe. The trend is towards larger bakeries with more branches. CSM's growth in the industrial bakery segments was due mainly to supermarket customers. The company says it plays a key role in supplying materials to large industrial bakers in this segment. The in-store bakery segment saw growth in all countries and with out-of-home it constitutes the growth segment in frozen products. Bakery Supplies North America In its North American bakery supplies division, CSM noted the acquisition of ADM Speciality Bakery Ingredients, as well as the opening of two innovation centres. The firm also acquired Titterington's as a basis for the its American food service/out-of-home strategy. Other highlights included: 'Market-first' launch of transfat-free products; sales of QA Products, specialist in food decorations; and the closure of Elk Grove Village Factory and sale of property and plant. The company said that in general there has been "limited growth, except for the food service and out-of-home segment which saw the strongest growth. Demand for frozen products, including cakes, cookies and almost-ready items increased in particular." The demand for high quality bread is also increasing, driven by a trend towards healthy eatting and the desire for European-style bread. The company says it is well equipped to meet this demand through its innovation centres and interaction with the European division. There is also a strong demand for transfat-free products, it said. Despite increased raw material prices CSM is confident about growth for the European and North American bakery supplies sectors in 2008.
