CSM: Q3/2010 Interim Management Statement

Diemen / NL. (csm) CSM N.V. delivered a 19 percent increase in underlying Ebita in Q3/2010 compared to Q3/2009. All three divisions posted organic sales growth in a challenging market. The integration of Best Brands is progressing according to plan. Key Facts:

• Sales for the 3rd quarter were 783,7 million EUR compared with 634,5 million EUR in 2009. The increase of 149,2 million EUR is attributable to the Best Brands acquisition with an effect of 95,2 million EUR, positive currency effects of 45,1 million EUR and organic growth of 8,9 million EUR realized by all three divisions.
• Ebita in the 3rd quarter, excluding one-off integration costs, amounted to 56,7 million EUR, up 9,1 million EUR compared with the same period in 2009. Currency effects impacted results positively by 3,8 million EUR.
• The Best Brands acquisition impacted Ebita in the 3rd quarter by 3,8 million EUR, including integration costs of 3,4 million EUR.

CEO Gerard Hoetmer: «We have delivered another quarter with substantial Ebita growth; an increase of 19 percent in the 3rd quarter 2010 against the strong comparison base of last year. I am even more pleased to report organic sales growth for all our activities, demonstrating CSM´s ability to show positive momentum in a challenging market environment, in which our continued innovation investments proved to be valued by our customers. The acquisition of Best Brands and ongoing strict cost management also contributed to these improved results. Across all our divisions we see raw material markets increasing substantially. We have taken the first steps to increase the selling prices to compensate for this.

At Bakery Supplies we continue our strategic journey to deliver ROS targets of eight to ten percent and above market growth. In Europe the strategic investments in frozen products are delivering increased volumes. Together with cost management, these higher volumes contributed to the improvement in Ebita.

At Bakery Supplies North America we remain focused on the swift integration of Best Brands, allowing the organization to maximize its combined potential as soon as possible. We have put our focus and energy on integrating the commercial organization to best serve our customers and enabling revenue synergies. In parallel, we are integrating our operations to deliver on our cost synergies. With the swift integration we are aware that we are stretching our organization. Our focus is on achieving long term synergies and getting the fundamentals right, rather than focusing on short term gains. Best Brands proves to be a perfect strategic fit and we see the integration effects becoming more visible, on which we will give an update in the presentation of our full year 2010 results.

Purac retains its long term focus on volume growth, whilst maintaining healthy margins. We are continuing to invest in our bio-plastic capabilities and strengthening our partnership approach. Much progress has been made, but the long-term strategic nature of the projects and partnerships has given no opportunity for new announcements, other than our partnership with Arkema».

Prospects

CSM remains cautiously optimistic for the 4th quarter of 2010. The company expects the investments in its organization and innovation to continue to create growth opportunities. The main contributor to market growth is consumer confidence, which is still weak in a number of markets. The raw material positions are carefully managed by CSM´s procurement organization and are sufficiently covered, although at a somewhat higher price level for the remainder of the year.

At Purac CSM expects to see continuing growth whilst investing in the organization to support future growth as previously announced, this will as a consequence have a moderating impact on our short-term Ebita. Overall, CSM expects again a substantial Ebita increase in the 4th quarter over the 4th quarter compared with the same quarter last year.

Organic sales growth in the 3rd quarter was 1,0 percent driven by a positive price/mix effect of 1,4 percent, which was partly offset by a negative volume effect of 0,4 percent. Overall sales growth was 31,4 percent, largely due to the consolidation of Best Brands.

Ebita showed an increase of twelve percent in the 3rd quarter compared with a very good quarter last year and is largely attributable to the Best Brands acquisition.

The integration of Best Brands within the existing Bakery Supplies North America companies is proceeding rapidly and is well on track, asking for an enormous effort from the organization. Our efforts are on realizing the combined potential, focusing on the long term synergies.

The sharply increased raw material market prices have not been fully absorbed yet by increased selling prices or reformulations of our products. CSM is working diligently to address this. The effect of the Best Brands acquisition in the 3rd quarter was 5,1 million USD which includes one off integration costs of 4,4 million USD.

Bakery Supplies Europe

Sales in Bakery Supplies Europe increased in the 3rd quarter by 5,2 million EUR (2,0 percent) compared to last year. Organic growth was 1,0 percent, driven by higher volumes in frozen products. Currency effects, due to a stronger pound sterling, had a positive effect on sales of 2,7 million EUR (1,0 percent).

Bakery Supplies Europe delivered an increase of 31 percent in Ebita compared with the 3rd quarter in 2009. Higher volumes and cost control were the main contributors to the improved performance.

CSM is pleased to announce that Herman Verstraeten will head the European businesses as the new president of Bakery Supply Europe. Marco Bertacca, as Vice President Global Bakery Expansion Strategy, will support the Board of Management in CSM´s expansion in new regions. Herman Verstraeten joins the company from Unilever where he has built a great track record in driving growth strategies across Eastern-Europe and Russia, bringing many years of management experience in food, including bakery.

Purac

Purac increased its sales by 13 percent in the 3rd quarter. Currency effects, mainly the stronger US Dollar, contributed positively to sales by 8,4 million EUR. Purac showed an organic sales growth of 3,9 percent, driven by higher volumes sold (7,9 percent) and offset by a negative price/mix effect (four percent).

Purac´s Ebita increased by 0,2 million EUR compared with a very strong quarter in 2009, driven by the volume increase and offset by mix-effects and lower pricing. In addition, raw material costs increased against last year. CSM is actively working to translate this into its pricing with the intention to fully compensate for higher input costs.

Info: The press release «CSM Q3/2010 Interim Management Statement» (PDF; five pages) on the company´s server includes several (seven) tables.