Corbion’s bakery sales struggle in H1 2017

Corbion's overall sales increase for H1 2017 was slightly impacted by the weak performance in its Bakery division as sales for frozen dough dipped. Pic: ©iStock/joxxxxjo

Corbion reported its Food division’s performance in H1 2017 ‘fell short of ambition’, mainly due to lower volumes in Bakery, but it remains optimistic for H2.

Net sales in the company’s Biobased Ingredients division – which encompasses Food, Biochemicals and central costs – decreased organically by 1.1% in H1 2017, mostly driven by lower volumes in the Food business due to weak performance in Bakery.

Organic sales in Bakery dipped 0.9%, mostly due to sales losses in frozen dough and challenges in executing its Bakery channel strategy.

The Food business segment reported net sales of €336.4m in H1 2017, down from €336.8m in 2016.

The company regained some of the volume it lost last year in Meat, while sales in Beverages and Dairy increased slightly and Confectionery saw “particularly good growth”.

Overall sales increase

However, the Netherlands-based food & biochemical ingredient supplier reported overall company sales increased by 1.4% to €461.9m due to a positive currency impact, compared to H1 2016.

The company’s Biobased Innovation division saw a 3.4% increase in sales, mostly reflecting the higher volumes sold to the Total Corbion PLA joint venture, which was founded in 2016 to develop bioplastics.

"Top-line development in the first half of the year fell short of our ambition level, mainly due to a shortfall in Bakery,” said Tjerk de Ruiter, CEO of Corbion, noting actions to recover sales in Bakery became visible in the second quarter.

“As expected, our margins in the second quarter were adversely affected by rising sugar prices,” he added.

YA outlook

Major capital expenditure projects taking place this year are investments in Corbion’s US emulsifiers plant to start the production of PGME, an emulsifier mostly used in sweet goods, and investments in the PLA plant.

The company reported its outlook for 2017 remains unchanged, which expects full year organic net sales growth in Biobased Ingredients to end up below the multi-year guidance bandwidth of 2-4%.

“We continue to project our total Corbion EBITDA for 2017 to be slightly below that of 2016 (€170.1m), as our business mix continues to improve,” said De Ruiter.

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