Food supplier CSM hit by rising raw materials costs

CSM NV, the world’s largest bakery products supplier, said a higher than expected surge in raw material costs would lead to lower first-half earnings, even as it stepped up price hikes to compensate.

Food companies have been trying to pass on rising costs for commodities such as grains, sugar and edible oils, as well as increasing plastics and packaging costs. Shares in the Dutch firm dived 10 per cent at one point while Associated British Foods also fell as the sector struggled. The company, which owns the Kingsmill bread brand, dipped 1.6 per cent at one stage.

“Exactly where the cost/pricing problem – finished goods, ingredient supplies or both – lies is not known. But it may not be easy to persuade customers to pay for historic input cost increases when current prices are falling,” Davy analyst John O’Reilly said in a note to investors.