Givaudan (Vernier, Switzerland) announced its first quarter financial report for 2011, with recorded sales of CHF1012.3 million, representing an increase of 3.1% in local currencies and a decline of 5.1% in Swiss francs. The company is working to implement price increases to offset the impact of higher raw material costs, and these increases will become effective in the course of the second quarter, making them set to show a full impact in the second half of the year.
Givaudan’s fragrance division recorded sales of CHF467.4 million, an increase of 1.7% in local currencies and a decline of 5.7% in Swiss francs. Total sales for fragrance compounds, which is a combination of the fine fragrances and consumer products markets, increased 1.2% when measured in local currencies and declined by 6.6% in Swiss francs to CHF402.0 million from CHF430.2 million. Fine fragrance sales grew 3.1% in local currencies against strong comparables in 2010, and the business delivered strong growth in Latin America as a result of higher volume on existing business and new product launches. In Europe and North America, Givaudan did see an overall slight decline. Meanwhile, sales in the consumer products business unit increased by 0.7% in local currencies, with sales in developing markets remaining steady to slightly growing, balancing good growth in North America with small declines in Europe, the Middle East and Africa. On a worldwide basis, sales increased in fabric care, home care and oral care, followed by fragrances for deodorants. In particular, the air care category delivered a good performance in Europe, Africa and the Middle East. Additionally, overall sales for fragrance ingredients grew by 5.2% in local currencies, achieved as a result of a good growth in the developing markets and the introduction of Givaudan’s Paradisamide, a new, long-lasting, fresh tropical fruit note.
In the flavor division, reported sales were at CHF544.9 million, a growth of 4.2% in local currencies and a decline of 4.5% in Swiss francs. In Asia-Pacific and Latin America, the existing business was the main contributor to this growth, while in North America and the developing markets of Europe, Africa and the Middle East, new market growth also complemented development. Good innovation on the customer’s side resulted in wins in beverages, savory and confectionary, as well as in health and wellness applications. Sales in Asia-Pacific achieved 5.9% growth, driven by both the developing markets, mainly India and Thailand, and the mature markets of north Asia and Australia. While all segments reported growth, savory and confectionary grew particularly strong. Sales in Europe, Africa and the Middle East grew 0.5%, and the developing markets of the region continued their good performance with solid gains, particularly in Africa, Russia, Turkey and the Middle East. The mature markets of Germany and Iberia also recorded solid growth. In North America, sales increased 6.9%, with double-digit growth in savory and snacks, while dairy saw a mid-single digit increase. Additionally, food service growth was encouraged by some key beverage wins. During the first quarter of 2011, SAP was implemented in flavors North America, and Latin America delivered a growth of 7.5%, continuing on its success in prior years. Growth was mainly realized in Brazil and Argentina, with existing products in beverages, confectionary and savory acting as segment drivers.
For the company’s outlook, Givaudan’s overall objective is to grow organically between 4.5–5.5% per annum, assuming a market growth of 2–3%, and to continue on the path of market share gains over the next five years. The company also confirms its intention to return above 60% of its free cash flow to shareholders once the targeted leverage ratio—defined as net debt, divided by net debt plus equity—of 25% has been reached.