Job cuts for Swiss flavours giant
the weight of acquisitions, currency conversions and higher raw
material costs, taking a SF68 million (€43m) charge in 2003 and
axing 300 jobs.
Integrating FIS, the food ingredients unit bought from Nestle a year ago, and the US dairy flavours company IBF purchased shortly afterwards, has knocked operating margins for Givaudan.
'Since the FIS acquisition, programmes have been underway to bring back the savoury margins to pre-acquisition levels,' said the Swiss company in a statement on Thursday.
Strategies announced this week to improve profit include axing 300 jobs and 'a number of non headcount related initiatives'.
The firm said that the restructuring costs would total SF68m, reflected in 2003 results. Looking forward, savings from the initiatives are likely to save SF67m annually, of which a SF47m slice will be reflected in 2004 results, said the number one flavours supplier.
With around a third of sales in North America, where it competes with leading flavours player International Flavours and Fragrances, Givaudan has suffered from the rise in the franc. Reflecting a current trend across the ingredients and additives industry, the company said that rising raw materials had also had an impact on the bottom line.
The Swiss firm will be keen to guard its number one global flavours slot -recently grasped from IFF. According to UK market analysts IAL Consultants, in 2001 the world market for flavours tipped $5.45 billion (€4.2bn).
"The flavours and fragrances industry is a thoroughly global business, where the largest nine players are responsible for 75 per cent of the world market and are present in virtually all the national markets," Fabio Albertario, senior analyst at IAL Consultants told FoodNavigator.com.
Competition in the European flavours arena has just got hotter with the entry this month of US agri-giant Cargill. A first flavours acquisition in Europe, the US billion dollar company purchased UK flavours company Duckworth. Leading Danish ingredients firm Danisco also has ambitions in flavours, with clear aims to become one the top five global flavours players.