Frutarom reported continued growth and record revenues for the first nine months of 2011 and for the third quarter. In 2011, Frutarom has made five acquisitions, and the company reported 21.9% in revenues for the third quarter of 2011, a record of $135.3 million compared to sales of approximately $111 million in the same quarter last year. This growth in sales stems from a healthy rise in flavor activities, which grew at a rate higher than the market’s growth rate. This growth is also the result of continued, fast expansion of flavors activities in the US, strengthened following the acquisition of Flavor Systems International (FSI) in October. The rise in sales in the third quarter was also positively impacted by the contribution of the successful acquisitions completed over the year to date, contributing $10.3 million to sales this quarter. Also, the strengthening of European currencies and the Israeli shekel versus the dollar also contributed 9.6% to sales in dollar terms.
Over the first nine months of 2011, Frutarom’s revenues grew by 14.2%, reaching a record high of $386.9 million dollars in revenues, compared to $338.7 million during the same period last year. The strengthening of European currencies and of the Israeli shekel versus the dollar contributed 7.5% to sales in dollar terms, and acquisitions performed during 2011 contributed $17.2 million.
Profitability during the third quarter was affected by the global trend of rising raw material prices, which Frutarom uses for the manufacture of its products. However, this trend has recently leveled off, and over the last few weeks of the quarter prices began stabilizing, some even decreasing. Frutarom expects its future profitability to improve in light of a number of factors, including the combination of raw material price stabilization and the impact, not yet fully realized this quarter, of Frutarom’s continued adaptation of sales price, and the constant efforts to increase operational efficiency in existing activities.
Gross profit during the third quarter of 2011 grew by 10.5%, reaching a third quarter record high of $47.7 million, compared to $43.2 million during the same quarter last year; gross profitability during the third quarter of 2011 reached 35.2%. Operating profit during the third quarter of 2011, after excluding one-time expenses for acquisitions, came to $14.2 million, compared to $15 million during the same quarter last year. Operating profitability, after excluding one-time expenses, came to 10.5% for the third quarter of 2011, and EBITDA for the third quarter of 2011, after excluding one-time expenses for acquisitions, came to $19.9 million, compared to $19.8 million during the same quarter last year. The EBITDA rate after excluding one-time expenses came to 14.7%. Net profit for the third quarter of 2011 totaled $8.7 million, compared to approximately $11.1 million dollars for the same quarter last year, and the rate of net profit for the third quarter reached 6.4% of total revenues. Gross profits for the first nine months of 2011 totaled $34.1 million, (64.6% of the total balance sheet), compared to approximately $35.3 million during the same period last year. The rate of gross profits reached 8.8% of total revenues.
Ori Yehudai, the company’s president and CEO, commented, “Frutarom continues to successfully combine internal growth with strategic acquisitions. Despite challenging market conditions, we created successful internal growth, higher than the market’s growth rate. We believe that the combination of the moderation and stabilization of the trend of increasing prices of raw materials, the actions we take to adapt our product prices, operational streamlining and successful integration of activities acquired this year will improve Frutarom's future profits and profitability. We have completed five acquisitions since the beginning of this year, which fit in with Frutarom’s rapid growth strategy and global expansion program: strengthening and expanding activities in the United States, the largest flavors market in the world, entering into savory activities in this market, as well as into the fast-growing area of food service and of innovative flavored-coffee products, promoting our penetration into a very large market where we were previously not players. We also expanded our savory activities in Europe, and established and increased our market share in other markets such as in Scandinavia, Italy and emerging markets. The integration of the acquired activities is successfully progressing, and is expected to contribute to the improvement of our future profits and profitability. We have a strong pipeline of additional strategic acquisitions opportunities supporting our rapid and profitable expansion strategy, and by using this, together with the internal growth, which we are achieving, we will continue to strengthen our position.”