Natural focus helps Frutarom widen its margins

By Guy Montague-Jones

- Last updated on GMT

Related tags Marketing Generally accepted accounting principles

New, mainly natural, products with higher than average margins have helped flavour and specialty ingredient firm Frutarom to widen its overall margin performance in the third quarter.

The Israel-based company reported a net profit of $11.1m in Q3 on sales totalling $110m. In local currency terms, sales revenue was up 4.8 per cent on the equivalent period last year and net profit rose 11.1 per cent.

Margin improvements

The boost in profits came on the back of improvements in the product mix that have contributed to a widening of profit margins in recent times.

In Q3 operating profit stood at 13.5 per cent compared to 11.9 per cent in the same period last year. And for the first nine months of the year, during which sales revenue rose 8.2 per cent in local currency terms, operating profit was 15 per cent as opposed to 11.5 per cent in 2009.

Commenting on the margin growth, Ori Yehudai, president and CEO of Frutarom, said: “We put efforts in developing new and innovative, value-added products with higher than average margins and witness fine results from the further improvements in our product mix.”

Geographical target

To accelerate top-line growth, Frutarom is also looking to develop its sales performance in Asia, Central and South America, and Asia.

Yehudai said the company intends to increase the share of total sales coming from outside Europe to 50 per cent within the next four years. To do so it is increasing investment in target countries and looking out for strategic acquisition opportunities.

Meanwhile the company continues to work on opportunities in the European market. Yesterday Frutarom launched UniK2, a Vitamin K2 product, produced in Japan by J-Oil Mills that it is marketing and distributing. The company hopes that recently gained Novel Foods approval and the securing of a European Food Safety Authority (EFSA) health claim for bone health will provide a platform for the commercial success of the product in Europe.

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