Overall earnings prior to deductions improved to CHF 963m (up 18.4% in local currencies against 2010) allowing the firm to reduce its net debt to CHF 1.353m, and free cash flow totalling CHF 437m.
Within flavours Givaudan saw strong performance, with division sales of CHF 2.251m representing 7.5% growth in local currencies – the firm’s fragrances division posted the same figure – with growth driven by “accelerating momentum” in the US and Europe and continued strong growth in the Asia Pacific and Latin America.
Health and wellness focus central
Givaudan attributed flavours’ good performance (an EBITA increase of CHF 489m from CHF425m last year) to its focus on developing markets, health and wellness initiatives and attention to “targeted key accounts”, and while all units saw gains beverage, snacks and sweet goods saw double-digit growth.
The company said that its briefs pipeline remained strong throughout the year – supported by a continued customer focus on innovative products – while margins grew as a result of higher sales, gross profit and tight controls on expenses.
Health and wellness applications were a key growth area, with Givaudan continuing its successful commercialisation of sweetness and salt replacement solutions by recording double-digit growth in the segment.
Latin American sales lift
Latin America led regional growth for flavours with a 13.5% lift on 2010 figures, with Givaudan winning new regional clients in Argentina, Brazil, Peru and Mexico; beverage, savoury and confectionery led the way.
Asia-Pacific sales grew by 8.4%, driven principally by snacks, beverages and confectionery; sales in the mature Japanese market grew, while China, India and Southeast Asia saw double-digit increases due to business growth with existing and new clients.
Within the EAME (Europe, Africa and Middle East), sales grew by 5.6% in local currencies with Africa, the Middle East and Eastern Europe (Poland and Russia) recording double-digit gains. The US saw 7.2% divisional growth for 2010.
Flavours relocating to Hungary
Givaudan said its phasing-out of savoury flavour production in the UK and Switzerland – with a new CHF 130m plant due to open in Mako, Hungary in 2013 and raise capacity by 50% – is expected to cost CHF 75m when it is completed later in 2011.
The firm said the move will help support future growth, particularly in developing markets where it hopes to increase its presence: Givaudan is targeting organic yearly growth of 4.5%-5.5% (assuming wider market growth of 2-3%) and expects to increase its market share over the next 5 years.
However, after sharp increases in raw material prices last year, Givaudan said it expected costs to rise further in 2011, and said it would have to pass on price rises to customers.