CSM Plans 9% Sales Growth After Disposal of Bakery Unit

CSM NV (CSM), the Dutch biotechnology company that’s divesting its bakery business to focus on food ingredients and chemicals, said annual sales growth after the disposal will be as much as 9 percent.

CSM will rename itself Corbion amid the reorganization, while the bakery unit’s $1.4 billion sale to Rhone Capital LLC will be completed in the third quarter, Diemen, Netherlands-based CSM said today. Average revenue gains at the remaining Purac and Caravan ingredient units’ existing operations will rise 6 percent to 9 percent through 2016, and “selective” acquisitions will support expansion, it said.

Chief Executive Officer Gerard Hoetmer, a former executive at consumer-goods company Unilever NV (UNA), will outline to investors today his strategy for expanding in the so-called biobased industry, where fermentation techniques are used to derive lactic acids to improve the shelf life and taste of foods and produce non-oil based plastics. As a sweetener for investors, CSM will return 250 million euros ($333 million) to shareholders this year from disposal proceeds.

“There will be sizable investments in lactic acid capacity expansion in 2014-2015, which will drive further growth,” CSM said in a statement.

The name change and transformation culminates about eight years of leadership under Hoetmer, a chemical engineer who oversaw the supply chain and restructuring at Unilever during a 25-year stint at the Anglo-Dutch company.

Earnings Target

CSM is targeting earnings before interest, taxes, depreciation and amortization exceeding 15 percent of revenue by 2016, while expanding beyond existing main market areas of bakery and meat ingredients. It has established links with companies including Cargill Inc. and BASF SE (BAS) to gain a broader platform for its lactic-acid technology.

The tie-up with Minneapolis-based Cargill, announced this month, involves developing a biotechnology-based animal-feed additive to improve chicken and turkey health and lower the level of antibiotics that are administered to promote growth.

CSM will continue to trade under its current name on Amsterdam’s stock exchange “for the time being,” it said. The shares have declined 0.3 percent this year, valuing the company at 1.21 billion euros.

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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