Givaudan reports sales growth post Quest buy
geographic markets bar North America, with Q1 results including
revenues from Quest since the acquisition was finalised in early
March.
The group, which has its headquarters in Switzerland, reported a 10.9 per cent increase (in Swiss francs) in sale for its flavour division for the three months ended 31 March to CHF488.7m (€300m). When measured in local currencies, the increase was 13.2 per cent. Givaudan competed the CHF2.8bn (€1.7bn) acquisition of erstwhile competitor in the flavours and fragrance field Quest from ICI in March, following EC approval on the grounds that the merged companies would not become the leading player in the market and would still face stiff competition from other established multinationals. The latest set of results is the first indication of the Quest business' impact of Givaudan's financial performance. However on a pro rata basis, had Givaudan been able to count Quest sales since the start of Q1 2006, like-for-like growth for the fragrance division would have been just 0.7 per cent in CHF (2.4 per cent in local currencies). The acquisition is in line with Givaudan's strategy of focusing on developing markets and capturing opportunities in key segments. The company has worked hard to streamline its operations, and in 2005 successfully completed the transfer of the liquid and dry flavour production from Barneveld (Netherlands) to Dortmund (Germany) and Zurich (Switzerland). In addition, the final phase of the Savoury Development Centre in Kemptthal (Switzerland) was recently completed with the inauguration of a fully dedicated pilot plant, capable of handling a wide range of food manufacturing processes. The acquisition is designed to build on this focus, and also strengthen growth in important growth markets such as Asia Pacific, Latin America and Eastern Europe. The Asia Pacific markets of Thailand, Malaysia, Korea and the Indian subcontinent posted double digit growth, while China high single digit growth and Japan "a renewed growth as a result of new wins". Confectionery, dairy, beverages and savoury were the best-performing segments in Asia Pacific. Latin America also posted double-digit growth, and the Brazilian market in particular gained due to a strong savoury segment. Europe, Africa and the Middle East reported high single digit growth, with particularly good sales for beverages (carbonated beverages and tea) and savoury flavours. The emerging markets of CIS, Poland and South and East Africa saw high double-digit growth. Only North America saw flat sales for the quarter (although the news from the savoury, confectionery, dairy and beverage segments was quite positive). The company is presently streamlining its commodity ingredients in the market, with the closure of its New Milford operations. It closed its Oconomowoc facility in February, and transferred production to its Devon site. The Quest acquisition should also have positive implications for Givaudan's technology portfolio. The company said that the transaction would enable the company to significantly increase its research and development investments. The results for the flavours division are against an overall sales growth story for company's Q1 of 18 per cent (CHF) or 19.8 per cent (local currencies), to CHF890m (€546m).
