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Givaudan Announces 2010 Financials

Posted: February 8, 2011

Givaudan (Vernier, Switzerland) announced its full year 2010 financial results, with sales totaled CHF 4.2 billion, an increase of 8.9% in local currencies and 7.1% in Swiss francs compared to the previous year. Sales of the fragrance division were CHF 1.99 billion, an increase of 10.5% in local currencies and 9.0% in Swiss francs, and sales of the flavor division were CHF 2.25 billion, an increase of 7.5% in local currencies and 5.4% in Swiss francs compared to the previous year. Gilles Andrier, Givaudan CEO, commented, “I am proud that we have successfully achieved all our integration targets and delivered excellent 2010 results. As the clear market leader, we now enter with confidence into the next era of profitable growth. It is our continuous aspiration to be the essential partner to our customers in developing sustainable fragrance and flavor creations.”

Fragrance Division

The fragrance division recorded sales of CHF 1.99 billion, an increase of 10.5% in local currencies and 9.0% in Swiss francs. After a double-digit performance in the first half year, sales continued to show a strong growth in the second half on top of stronger comparables. Total sales for fragrance compounds—fine fragrances and consumer products combined—increased 10.5% in local currencies and 9.0% in Swiss francs to CHF 1.7 billion. Fragrance ingredients sales increased by 10.7% in local currencies thanks to an overall high level of demand, particularly for specialties. All three business units performed very well in 2010. Fine fragrances, which was particularly affected by the reduction of inventories at retail level last year, rebounded strongly with an annual sales growth of 18.3%. The less-cyclical consumer products business delivered an increase in sales of 8.3%. A certain element of restocking has been seen in both fine fragrances and fragrance ingredients sales.

Fine Fragrances. Sales in fine fragrances had a continued strong growth momentum throughout 2010, delivering 18.3% growth compared to 2009. Customers increased their inventories at the beginning of the year and returned to more normalized order patterns towards the end of the year. This performance was strongly supported by an inflow of new wins, in all key segments including prestige, mass, specialty retail and direct sell.

On a regional basis Europe and North America delivered strong double-digit gains. In Latin America, the business delivered solid volume gains building on the exceptionally strong growth of 2009. The pipeline of briefs and new wins continuously improved throughout the year. Fragrances created by Givaudan also won a significant number of awards for its clients’ products in 2010.

Consumer Products. The consumer products business grew by 8.3% in local currencies, driven by sales increases across all customer groups. Development, as well as mature markets, contributed to this achievement. Asia-Pacific reported strong double-digit sales growth, spread across all customer groups and all product segments, especially in India, Thailand and China. Latin America posted significant growth driven by sales in the fabric care segment, led by Mexico and Venezuela. Local and regional customer sales showed double-digit growth followed by international customers. Europe, Africa and the Middle East reported a sales increase across developing and mature markets, driven by international customers. Local and regional customer sales reported strong growth in the developing markets of the region. Sales in North America increased, supported by the good performance in the air care category and solid sales volumes with international customers.

On a worldwide basis, all product segments posted a sales increase versus prior year. Fabric care sales showed the strongest performance followed by a significant growth in household. Within the household segment, the air care category delivered a strong double-digit increase, especially in North America and Asia-Pacific. Sales in the personal care segment were also significantly above last year across all regions.

Fragrance Ingredients. Sales for fragrance ingredients increased by 10.7% in local currencies, a performance achieved across all product categories. Givaudan specialties have shown a particularly strong sales increase thanks to a sustained high level of demand for innovative ingredients. The multipurpose production unit in its ingredients manufacturing site of Pedro Escobedo, Mexico, became fully operational in early 2010. To ensure the competitiveness of its ingredients, several key products were transferred to Pedro Escobedo. The fragrance ingredients manufacturing unit in Naarden, Netherlands, is scheduled to be closed by 2012, and products will be transferred to other Givaudan plants. By the end of 2010, all ingredients manufacturing sites were using SAP.

Flavor Division

The flavor division reported sales of CHF 2.25 billion, representing a growth rate of 7.5% in local currencies and an increase of 5.4% in Swiss francs. The strong momentum experienced in the first six months across all regions and segments continued on top of strong comparables in the second half of 2010. Growth has been strong due to the continued successful execution of the divisional growth strategies such as the focus on developing markets, health and wellness initiatives and with targeted key accounts.

The flavor division saw an accelerating momentum in North America and Europe and continued strong growth across Asia-Pacific and Latin America. All major segments posted gains with beverage, snacks and sweet goods delivering double-digit growth. The briefs pipeline was strong throughout the year, supported by the continued focus of our customers on innovative products.

Throughout all regions and segments, the flavor division worked closely with its customers on growth and innovation opportunities. In health and wellness applications, the division continued its successful commercialization of sweetness and salt replacement solutions, translating into double-digit growth rate in this market segment.

Asia-Pacific. Sales in Asia-Pacific achieved 8.4% growth in local currencies, a solid performance on top of high comparables. The developing markets of China, India and Southeast Asia recorded double-digit increases coming from successful new wins and further customer penetration. Sales in mature markets increased with solid growth in Japan. Growth was well balanced across all segments as new wins and organic customer growth helped each segment, with particular strength coming from snacks, beverages and confectionery.

Europe, Africa, Middle East (EAME). Sales grew at 5.6% in local currencies with the developing markets of Africa and the Middle East, as well as Eastern Europe (driven by Poland and Russia), delivering double-digit growth throughout the year. The mature markets of Western Europe also showed solid growth. The region recorded growth across all segments supported by stronger customer collaboration translating into new wins and innovative flavor solutions. Expanded health and wellness offerings in the areas of salt, sugar, fat and umami helped drive increased volumes as well. Double-digit growth was recorded in the beverage and snacks segment. In August 2010, the Givaudan board approved the investment for a new centralized savory flavors production facility. In line with the company's strategy, the new site will be located in Makó, Hungary, close to the fast-growing markets of Eastern Europe.

North America. After a solid start in the first half, sales continued to accelerate and recorded double-digit growth in the second half, resulting in a 7.2% growth for the full year. Growth was realized across most segments with sweet goods and beverages posting double-digit gains. The dairy and savory segments delivered solid performance. Supported by the economic recovery, customers increased their emphasis on the development of innovative products and technologies.

Latin America. Sales increased at a strong double-digit growth rate of 13.5% in local currencies against high comparables. Organic growth at key customers as well as new wins from local and regional customers helped drive the results with the markets of Argentina, Brazil, Peru and Mexico leading the way. Increased sales can be attributed to beverage, savory and confectionery segments. The region successfully also implemented the new global enterprise system based on SAP during the second half of the year while still delivering this outstanding result.