Frutarom will not shy away from redressing raw material rises

By Jess Halliday

- Last updated on GMT

Related tags Organic growth

Frutarom has reported a strong start to the year as the recovering economy and restocking trend brought organic sales growth, but has warned that it will continue to “act determinedly” over its selling prices when raw material costs require.

The Israeli flavours and ingredients powerhouse has had a “rapid growth strategy”​ in place for several years that has seen it snap up a clutch of other players in the flavours and fine ingredients sector. It is aiming to double its turnover in the next four years.

Its 6.1 per cent revenue growth in Q1, reaching US$121m, is due to a combination of organic growth from existing business and the effect of two acquisitions completed in the quarter – the savoury activities of Norway’s Rieber & Son and the assets and activity of UK company EAFI.

Currency winds also blew in the favour of its reporting currency, the US dollar. Operating profit was similar to last year, at $16.6m.

CEO Ori Yehudai was forthright about the pricing of the company’s products in the quarter – and the likelihood of future price shifts.

"In recent months, we have witnessed a global trend of raw material price increase, including in many of the raw materials used by Frutarom in the manufacture of its products,”​ he said. “We have acted determinedly, and shall continue to do so as long as this trend prevails, to prevent future influences on the results of our activity including by adjusting the selling prices of affected products.”

Yehudai added that the company constantly acts to expand its sources of supply and optimally use the diverse capabilities of production sites around the wide.

Acquisitions pipeline

Frutarom's solid capital structure and strong cash flow in the last two years have significantly contributed to the reduction of debt, the CEO pointed out. He said that this, combined with the strong support of leading financial institutions, it will allow us to continue implementing persistently its rapid growth strategy.

“We are acting to further realizing our excellent acquisition pipeline, both in developed markets such as the US and Europe and in emerging target markets in Asia, Central and South America, and Eastern Europe.

“Alongside the acquisitions, we will continue to act for achieving profitable, organic growth, to achieve our goal and again double our turnover within the next 4 years."

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