Givaudan flavour growth hit by ongoing streamlining

By staff reporter

- Last updated on GMT

Related tags: Local currencies, Swiss franc, Switzerland, Iso 4217, Givaudan

Swiss flavour giant Givaudan has reported growth in the first of
2006, despite the ongoing streamlining of commodity ingredients in
both flavour and fragrance divisions.

Although raw material prices continued to rise, the gross profit margin was maintained at previous years level though growth within the flavour division was less than impressive.

The flavours sector currently accounts for 59 per cent of business, but in the first half of 2006, growth stood at 2.6 per cent in local currencies to reach CHF 868m.

The group's fragrance division performed better, with sales growing by 5.4 per cent in local currencies to reach CHF606m.

However growth slowed down significantly in the second quarter, coming in slightly below market expectations. This caused the company's shares to slip slightly following the announcement, although the trend is still up for the year-to-date, with shares increasing by about 14 per cent since January.

Nonetheless, the company beat market expectations by announcing a 28 per cent jump in first-half net profits compared to the same period in 2005, to reach CHF215.7m (137.2m) on the back of first half sales that were up 3.7 per cent in local currencies and 7.8 per cent in Swiss Francs, to reach CHF1.47bn.

Givaudan argued that the results therefore provide a solid platform for the group. The firm said that it will continue to outpace average growth within both the fragrance and flavours sectors on the strength of strong sales comparables and continued improvements in operation margins.

The company has worked hard to better streamline its operations. At the end of 2005, the company successfully completed the transfer of the liquid and dry flavour production from Barneveld (Netherlands) to Dortmund (Germany) and Zurich (Switzerland).

The French market commercial team was moved from Tremblay (France) to the newly refurbished facilities in Argenteuil (France).

And in August 2005, the final phase of the Savoury Development Centre in Kemptthal (Switzerland) was completed with the inauguration of a fully dedicated pilot plant, capable of handling a wide range of food manufacturing processes. The firm said at the time that this will allow the development of flavours together with customers in a realistic setting.

Speciality ingredients also showed strong results, with five ingredients in this category proving to be amongst the company's top-selling ingredients.

Related topics: Market Trends, Flavours and colours

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