Frutarom acquisitions fuel strong results

By Anthony Fletcher

- Last updated on GMT

Related tags: Frutarom, Profit

Frutarom's continuing trend of increased sales and profitability
vindicates the Israeli flavour firm's rapid expansion within
certain strategic geographic regions.

Profits for the third quarter of 2005 increased for the twenty-fourth consecutive quarter, despite rocketing raw material prices and energy costs.

"Frutarom achieved good results, and profitability continued to improve despite the relatively weak period experienced by processed food manufacturers in Western Europe,"​ said Frutarom president Ori Yehudai.

"The results were achieved due to the integration of the Food Systems activity, acquired from IFF during the second half of 2004, with the Frutarom Group's global activity."

Buying into IFF's fruit and vegetable extract business has given Frutarom a firm foothold in the growing natural ingredients market: a market currently enjoying success as it profits from the booming consumer trend for health and wellness products and to due to break the billion euro barrier by 2009.

The company has certainly invested considerable resources in finding and executing strategic acquisitions. The company is currently in contact with several potential candidates for acquisition, mainly in countries and markets where the firm already has substantial activity.

This marks the continuation of a strategy that has served Frutarom well in recent years. The company recently bought the flavouring extracts business of AM Todd Botanical Therapeutics, and in June 2003 paid €20 million for the Swiss flavours company Emil Flachsmann (now Frutarom Switzerland), providing it with an increased stake in the botanical extracts market.

The company has also been looking at emerging markets. The company opened a sales and marketing office in Indonesia earlier this year to capitalise on Asian market growth, emphasising once again Frutarom's aim of becoming one of the world's top ten flavour players.

Such ambitious behaviour appears to have paid off. Frutarom's sales in the third quarter of 2005 totalled $59.4 million, a 15.6 per cent increase compared with the same quarter of 2004. Sales during the first three quarters of the year totalled $191.2 million, a 36.7 per cent increase compared with the same period of 2004.

Gross profit for the third quarter of 2005 rose 18.3 per cent to reach $23 million compared with $19.5 million in the same quarter last year. During the first three quarters of the year, gross profit grew 38.5 per cent to reach $75 million compared with $54.1 million during the same period in 2004.

During the third quarter of 2005, Frutarom achieved cash flow from operating activities of $13.2 million, compared with $7.1 million in the third quarter of 2004. During the first three quarters of 2005, Frutarom achieved cash flow from operating activities of $26.8 million, compared with $15.5 million in the first three quarters of 2004.

"Frutarom continues to be focused on realizing its rapid growth strategy, combining organic growth of core activities at rates above the industry average with strategic acquisitions of activities and know-how in its main fields of business and in strategic geographic regions,"​ said Yehudai. Israel-based Frutarom has production and development centres on three continents and markets its products to over 3,500 customers in more than 100 countries.

Related topics: Market Trends

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