Givaudan reports ‘resilient’ six months

05-Aug-2008 - Last updated on 06-Aug-2008 at 11:42 GMT

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Givaudan has reported a good first half to 2008 despite the economic environment, seeing above-market growth and hassle-free integration of its recent Quest acquisition.

The flavour and fragrance heavyweight, which claims a 25 per cent of the global market, has reported overall sales of CHF 2095m (c €1286m at current exchange rates) for the six months ended June 30 – up 4.4 per cent on last year’s period.

EBITDA was CHF 444m (€272.6m), compared to CHF 338m (€207.5m) last year, and operating profit CHF 238m (€146.1m), up from CHF 186m (€114.2m).

The company said its business has “proven resilient” in the face of global economic slump. However is also maintaining close control over costs and efficiency.

“As a result of increasing raw material, energy and transportation costs, Givaudan will continue to pursue price increases, while maintaining tight cost control and pursuing further efficiency gains,” it said.

Givaudan’s acquisition of Quest in March 2007 for CHF 2.8 billion was a huge move for the Swiss firm – and indeed was game-changing for the flavours and fragrance market as a whole.

The good set of H1 results are said to “reflect the strong complementarities of the combined business, as well as the effective integration process”.

Thus far, the integration has caused “practically no disruption”. The first major phase, including commercial and administrative areas, has now been completed. Integration of purchasing, supply chain and IT are now underway.

Flavours

Givaudan’s flavours division accounted for 54 per cent of overall sales in H1, that is, CHF 1133m (€695.8m). This represents growth of 12.6 per cent in local currencies and 3.4 per cent in Swiss francs.

However Givaudan has been working to streamline its commodity ingredients, in order to focus on more specialised, high value-adding products. In addition, it has recently divested its facility in St Louis, USA.

When the impact of these two factors were taken out, on a pro forma basis the sales increase was 4.6 per cent in local currencies, and sales declined 3.9 per cent in Swiss francs.

EBITDA for flavours was CHF 241m (€148m), up 11.6 per cent; operating profit rose from CHF 136m (€83.5m) to CHF 140m (€86m).

Fragrances

Sales for Givaudan’s fragrance division were CHF 962m (€590m), up 14.7 per cent in local currencies and 5.7 per cent in Swiss francs.

Again the growth was less when taken on a pro forma basis, however – that is, excluding the impact of discontinued ingredients: 1.1 per cent in local currencies and a decrease of 7 per cent in Swiss francs.

The company said that the positive drivers were a “solid performance” for consumer products and double-digit growth in speciality ingredients.

“Sales in fine fragrances declined compared to the prior year particularly due to heavy de-stocking in the earlier part of the year,” it said – but added that the decline was largely compensated for by 2Q growth, which was driven by new launches.

EBITDA for the fragrance division was CHF 203m (€124.7m), up from CHF 122m (€75m) last year. Operating profit increased from CHF 50m (€30.7m) to CHF 98m (€60.2m).