Rising costs impact 1H for colours group

- Last updated on GMT

Related tags: Marketing

A rise in product costs clipped half year figures for international
colours and flavours group Sensient Technologies as the firm
reports a 15.8 per cent drop in profit for the first six months.

The Milwaukee-based manufacturer with a 2.8 per cent global share of the fragrance and flavours market said earnings for the second quarter ended 30 June fell to $18.2 million (€14.8m), down from $21.7 million (€17.6m) for the year before.

In a statement the firm that supplies natural and synthetic colours as well as a flavour range that extends from dairy to bakery saw product costs for the six month period up to 30 June rise by a considerable 8.1 per cent on the year before. In addition, selling and administrative costs rose by 5.5 per cent.

But Sensient's chairman and CEO remained upbeat. "We reported strong cash flow again this quarter, and we are strengthening our balance sheet,"​ said Kenneth Manning.

Sales in the flavours and fragrance division, that currently has a 2.8 per cent share of the global market and the number seven world slot, benefited from improved foreign exchange rates as well as increased profit from the sale of traditional flavours in North America and Europe.

But these figures were offset 'by increased costs and continued price competition in the dehydrated flavours product line.'

The colours division saw sales in the second quarter slip six per cent to $95.5 million, down from $101.5 million compared to the same period in the year before.

Created more than 120 years ago, Sensient - that in 2000 changed its name from the Universal Foods corporation - over the past few years has moved from a commodity driven business into value added, more sophisticated products. In the past seven years the 3500 strong firm has secured 20 acquisitions, and more than half of its revenues are from non-US operations. The company is present in 28 locations in Europe, and about a quarter of revenue comes from this geographical zone.

Related topics: Market Trends, Flavours and colours

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