CSM announces strategic transformation
Following a comprehensive review of the group’s strategy, instigated by the earlier Business Review, CSM announced yesterday that it intends to transform into a bio-based ingredients company focusing on the Purac and Caravan Ingredients businesses.
Bakery Supplies requires funding to participate in the market consolidation, and bio-based ingredients also has attractive opportunities to invest in value creating, high growth activities.
In the longer term CSM does not have sufficient financial resources to exploit both. CSM therefore proposes to start a major divestment process for the North American and European Bakery Supplies businesses that will enable the group to redeploy capital into activities better able to deliver higher growth and enhanced shareholder value.
In total, the combination of Purac and Caravan Ingredients in 2011 had sales of € 704 million, EBITDA before central costs and one-off costs of € 123.5 million, and EBITA before central costs and one-off costs of € 93.0 million; a margin of 13.2%.
The combination will be a leading supplier of innovative, bio-based ingredients for preservation, nutrition, fortification and stabilization, serving end markets in food, chemicals and polymers.
The combination will target growth opportunities in new lactic acid applications such as bio plastics, animal health and nutrition, as well as next generation, bio-based alternatives for oil-based materials, all with superior performance and environmental credentials.
Geographically, the combination will be better balanced than CSM is today.
Purac is an innovative biotechnology company. It is the world market leader in lactic acid and its derivatives. Purac is leveraging its fermentation capabilities to expand beyond lactic acid into other bio-based alternatives for petrochemically based products.
Caravan Ingredients has leading positions in the North American markets for specialty ingredients including lactic acid based emulsifiers, functional blends containing enzymes, and fortification ingredients.
Approximately 40% of Caravan Ingredients’ sales are in non-bakery applications in both food and non-food markets.
The Bakery Supplies businesses to be divested had sales in 2011 of € 2,409 million, EBITDA before central costs and one-off costs of € 127.5 million, and EBITA before central costs and oneoff costs of € 86.3 million.