Profit at CSM (CSM) NV, the world's largest supplier of ingredients to bakeries, fell 38 percent in 2005's second half because of costs for cutting jobs and closing factories. The drop was smaller than analysts had estimated.
Net income declined to 58.4 million euros ($70 million) from 94.3 million euros a year earlier, according to Bloomberg calculations based on annual profit reported today by Diemen, Netherlands-based CSM. Analysts surveyed by Bloomberg expected second-half earnings of 31.1 million euros.
CSM is selling assets and eliminating jobs in an effort to boost profitability at its bakery-supplies business. The company cut 696 full-time jobs last year, or 7 percent of its workforce, and aims to save 55 million euros this year as part of a plan to double those savings by 2008. CSM said today it's ``confident'' about improving results at continuing operations this year.
``The results look good and give confidence for the restructuring program going forward,'' said Paul Linssen, an analyst at Petercam in Amsterdam with an ``add'' recommendation on CSM.
Annual net income increased to 423.4 million euros, or 5.72 euros a share, from 159.7 million euros, or 2.01 euros, in 2004, CSM said today in an e-mailed statement. Sales from continuing operations fell 4.2 percent to 2.62 billion euros.
The shares rose 38 cents, or 1.5 percent, to 25.44 euros. They were almost unchanged in 2005 after climbing 32 percent in the prior year. CSM has a market value of about 2 billion euros.
The company said earlier this month it may sell its sugar unit as the European Union prepares to lower protection of the industry and said today it will decide on that sale by this year's second half. Changes in the EU sugar regime are expected to lower the operating result at that business this year, CSM said. Sales at that business fell 14 percent last year while profit before one-time items was ``stable'' at 40.8 million euros.
CSM is ``committed'' to returning up to 250 million euros to shareholders this year through dividends and share buybacks. The company plans to pay a dividend of 80 cents a share, unchanged from last year. That implies CSM may buy back up to 200 million euros of shares, according to Rabo Securities estimates.
Annual operating earnings at CSM's European bakery-supplies business fell 44 percent to 43.2 million euros as the company paid to close factories and sales to independent bakeries slid in Germany. Profit rose 14 percent to 63.5 million euros on that basis at the North American bakery-supplies unit.
CSM said today it will start pursuing ``bolt-on'' acquisitions after restoring profitability at its bakery supplies business. The company expects sales growth at the unit of as much as 2 percent more than the market and aims to save an additional 70 million euros at that business by 2008.
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