Bakery division of CSM to see greatest number of job cuts

By Jane Byrne

- Last updated on GMT

Related tags Cost Remainder Csm

Bakery division of CSM to see greatest number of job cuts
Bakery ingredients supplier CSM’s planned restructuring programme to offset weak consumer demand will result in 500 job losses, revealed the company when releasing its Q3 interim statement yesterday.

A spokesperson for the global group told FoodNavigator.com that the bakery sector, which accounts for 85% of the CSM’s output, will see the greatest number of staff cuts.

The current staffing levels at the Dutch supplier are 9,700. Asked whether the job losses will be implemented gradually or will take effect immediately, the spokesperson said the company would be reporting on the timings only after internal communication with staff had taken place.

The job losses are part of a company-wide cost savings programme announced on 10 October, which is aimed at achieving a total cost reduction of
€50m by end of 2013 on a run rate basis. Savings in the line of €30m are targeted for 2012.

In relation to the rationalisation plans, Gerard Hoetmer, CEO of CSM, said: “The restructuring programme will also entail that we need less people, which I highly regret but which is inevitable in order to achieve a more lean and agile operating model.”

He said that CMS will intensify its focus on a reduction in working capital and cash generation across the group. “Furthermore, in the short term, the timing of capital expenditure and capital allocation decisions will be considered carefully in the light of the group’s priorities, such as bio-plastics.”

Plant closures

The planned restructuring, reported the ingredients group, will also involve measures such as the closure of a number of plants and offices.

Management at CSM yesterday revealed that the group’s EBITA amounted to €30.3m, as against the figure of €56.7m achieved in the same period last year.

Sales for the 3rd quarter were €784.8m compared with €783.7m in 2010 with an organic growth of €40.7m. “Compared to Q3 2010, pricing increased by 10.8% while volumes declined by 5.6%,”​ reported the group.

Limited short-term recovery expected

And the group said they do not expect any improvement in the trading environment for the remainder of the year, given that consumer confidence and demand continue to be severely hit by the current turbulence on worldwide markets.

Bakery manufacturers can continue to expect price increases on its ingredients portfolio, continued the spokesperson, who explained that such a strategy was necessary to recover margins.

She also confirmed that management has no regrets about any of the recent acquisitions within the bakery segment.

The CSM spokesperson said that while Purac’s food activities have seen the same trends in relation to weak consumer demand as its bakery business, that division’s chemical and pharma interests have been able to compensate for losses elsewhere.

“But the Purac division still faces challenges in terms of hikes in raw material costs going forward,”​ she cautioned.

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