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Material Prices Affect Frutarom’s Profit

Posted: November 26, 2007

Frutarom (Haifa, Israel) has announced third quarter 2007 (ended Sept. 30) sales of US$ 87.7 million, a growth of 23% over the same period 2006. The company cites the following factors as the main contributors to the growth in sales: growth in the sales of flavors; integration of Acatris’ and Abaco’s activities; merger of Belmay and Jupiter; the merger of Raychan’s and Adumim’s activities; and strengthening of the European currencies and New Israeli Shekel against the dollar. While the company’s results and margins were significantly influenced by the acquisitions made this year, they have not contributed to profit but have affected profitability. Frutarom estimates that as of the first quarter 2008, the acquisitions will not only contribute to the continued trend of sales growth, but also to growth in profit. 

Gross profit for the third quarter rose 17.1% to reach US$ 31.5 million, while gross margin reached 36.0%, compared with 37.8% in the same quarter 2006. Operating profit totaled US$ 8.3 million, compared with US$ 9.2 million, while operating margin reached 9.5%, compared with 13.1% in the same period last year. Net profit for the quarter totaled US$ 5.9 million, compared with US$ 7.0 million in the same quarter last year.

Nine-month results: Sales in the first nine months of 2007 grew 21.1% to total US$ 260.0 million. Operating profit dropped to US$ 27.2 million from US$ 29.3 million in 2006. Net profit for the nine months totaled US$ 19.4 million, compared with US$ 24.4 million in the same period 2006.

Of the rise in material prices, Frutarom president and CEO Ori Yehudai said, “Similar to many of our customers in the global food market, we are working determinedly to raise the selling prices of our products in order to adjust them to the continuing rise in raw materials prices.”