Givaudan reports fair Q1 before price increase

By Jess Halliday

- Last updated on GMT

Related tags: Local currencies, Iso 4217, United states, Swiss franc

Givaudan’s has reported fair growth in Q1 in local currencies but a decline in Swiss Francs, but the second half of the year promises greater protection against raw material cost rises as a series of price increases will come into effect in Q2.

The world’s largest flavour and fragrance firm reported sales of CHF1066.4m between January and March. This was down 5.1 per cent in CHF on 2011, but in local currencies it spelled 3.1 per cent growth.

However the company has emphasised that it was competing “against strong comparables”. ​Q1 2011, with CHF 1,066.4 m sales representing a 9.2 per cent increase on the prior year period (10.6 increase in local currencies) laid down a tough measuring stick.

Now that the integration of the Quest business is complete, following Givaudan’s CHF 2.8 billion acquisition in 2007, Givaudan says it is entering the next era of growth.

“The overall objective is to grow organically between 4.5 per cent and 5.5 per cent per annum, assuming a market growth of 2-3 per cent, and to continue on the path of market share gains over the next five years.”

Price increases

The flavour division reported the highest gains in the most recent three months, with CHF 570.7m, down 4.5 per cent in CHF but up 4,2 per cent in local currencies. In fragrances revenue was CHF467.4m, up 1.7 per cent in local currencies but down 5.7 per cent in CHF.

As many suppliers in the food sector, Givaudan has been renegotiating prices with its customers as the higher cost of raw materials nibble at its margins.

“Givaudan is successfully implementing price increases in collaboration with its customers to offset the impact of higher raw material costs. These price increases will become effective in the course of the second quarter and will show its full impact in the second half of the year.”

No indication is given in the Q1 statement about which ingredients are subject to increases, and what raw materials are behind it.

New wins

In the flavour division the quarter was marked by new business wins in the developing markets of Europe, Africa and the Middle East, while in Asia Pacific and Latin America existing business made the greatest contribution to growth.

Latin America reported the greatest growth rate, of 7.5 per cent, while Asia Pacific, where the savoury and confectionery businesses were particularly strong, saw 5.9 per cent growth.

In EMEA, where the company was competing against a high single digit comparable, a 0.5 per cent increase in revenues was reported.

Revenues from North America, meanwhile, indicated a certain new confidence in food and beverage innovation, as sales increased 6.9 per cent on last year’s Q1. Top performers were savoury and snacks, followed by dairy.

Related topics: Business, Flavours and colours

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