CSM Focuses on New Acquisitions

Food group CSM NV claims to have the cash flow to finance more acquisitions and was focusing on North America and Germany, according to a Reuters report. The firm saw enough targets to continue growth that will see CSM's turnover rise to about six billion guilders next year from 2.5 billion five years ago, CEO Jaap Vink said. Vink added that CSM was looking at bakery ingredients companies in North America and sugar confectionery firms in Europe, especially in Germany.

Those two divisions, together with the Purac lactic acid unit, presented the strongest growth opportunities, but the latter already had a 70% world market share. Purac was seeing healthy growth of 10% to 15% while there was big scope for both acquisitions and underlying expansion in sugar confectionery and bakery ingredients.

CSM's sugar refining operations and niche food business would continue to make up a smaller proportion of total sales, but they were generating a robust cash flow.

In the bakery ingredients sector, there are major consolidation opportunities in the U.S. where concentration is low. CSM's number two position translates into a market share of only 5% to 6%, according to Vink. In sugar confectionery, the acquisition of Leaf will propel CSM into the number two position in Europe with a 10% stake, but CSM does little business in Germany.