Diemen, the Netherlands, August 5, 2009 - Our initiatives to reduce costs, improve efficiency and drive innovation together with a more favorable raw material and currency impact have led to an improvement in the second quarter EBITA. This improvement in results has been achieved despite the ongoing effects of the recession that negatively impacted volume growth.
Key facts
• Sales for the second quarter were € 647.6 million compared with € 629.0 million in 2008; organic growth was 3% negative due to lower sales volume. Currency effects had a positive impact of € 37.2 million mainly due to the stronger US dollar. For the first half year sales were € 1,283.7 million compared with € 1,247.2 million in 2008. Currency effects amounted to € 69.9 million. Organic sales growth was 2.9% negative driven by lower sales volume.
• EBITA before exceptional items in the second quarter amounted to € 40.6 million, up € 4.4 million compared with the same period in 2008. EBITA before exceptional items for the first half amounted to € 60.7 million (€ 68.8 million in the first half-year of 2008). Currency effects positively impacted results by € 3.7 million and € 5.9 million for the second quarter and the first half-year respectively. Furthermore, a recovery of our margins mostly as a result of current raw material contracts, cost savings and improvements at H.C. Brill were the main drivers of the higher results.
• Working capital improved by € 10.2 million (including negative currency effects of € 3.2 million) compared with year-end 2008. This is the balance of an improvement of € 43 million in inventories and an improvement of € 10.3 million in receivables offset by lower payables of € 39.9 million.
• Net debt at the end of the second quarter amounted to € 500 million, a reduction of € 28 million compared with year-end 2008. Our net debt/EBITDA ratio is 2.7x, comfortably within our financing covenant of 3.5x.
Gerard Hoetmer, CEO of CSM, on results, strategy and market:
Although market circumstances remained very difficult in the first half of this year, I am very pleased to see that our results for the second quarter showed a considerable improvement compared with the first quarter. We were able to improve second quarter EBITA versus last year. Our continuous focus on running an effective and efficient company is paying off, of which H.C. Brill is a major example.
The transformation we have undergone in the past few years has made us more resilient. We have been able to improve our margins and our innovation power has increased substantially.
Our strategic investments in innovation and customer intimacy, initiated in 2007 and 2008, are showing increased momentum. Product offerings that include products which respond to health trends in bakery, our growing position in preservation, and of course the increasing interest in bio-plastics clearly strengthen our position in our markets. Despite declining volumes as a result of the economic downturn, we have successfully reinforced our bakery and PURAC market positions.
We continue to strengthen our underlying business with targeted investments in marketing and innovation with the consistent aim to become the first partner of choice, especially in this period of recession. Being the first partner of choice where customers can rely on globally and strategically is important to build a sustainable business for both sides. This strategy is bringing us additional market share. In addition to organic growth, we aim to strengthen our position by strategic acquisitions in important product categories and geographical regions.
Despite the good performance in the second quarter of 2009, we remain cautious for the second half of 2009. Expectations are that an economic recovery will not occur in the remaining part of 2009, resulting in an unchanged market and a still very competitive environment. Amidst the current economic climate, we will continue our cost savings program without jeopardizing our long term strategy building on innovation and service. Our ongoing emphasis on working capital management and our careful capital expenditure policy will enable us to keep making the necessary investments for the future. The improved profitability in the second quarter and the fact that we strengthened specific market positions in these difficult times show that our strategy and the actions taken are paying off.