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Frutarom Q2 Profit Rises on Flavors Unit Acquisitions

Posted: August 22, 2012

Frutarom Industries Ltd.'s (Haifa, Israel) second-quarter profit climbed on a 43.2% boost in flavors segment sales, thanks to its trail of recent acquisitions which helped the company integrate production sites and lower operating costs. 

For the first half of 2012, Frutarom said its net profit rose 6.3% to $27 million as sales rose 31.4% to $316 million. 

“We have made eight acquisitions since 2011, and integration of these is moving ahead successfully according to plan, already contributing in this quarter not only to growth in sales but also to improved profits," said Ori Yehudai, Frutarom’s President and CEO, who added that recent acquisitions allowed the company to expand in its flavors business, which is growing organically above market rates. 

Frutarom's second-quarter net profit rose 10% to $13.5 million from $12.3 million a year earlier. Sales for the quarter jumped 35.2%, net of currency influence, to $164.8 million, compared to $130.6 million for the same the year-ago period. Flavor segment sales, net of currency effects, surged 43.2% during the recent quarter to $122.5 million, reflecting 74.3% of the company's total sales.

Acquisitions made in 2011 (including Flavor Systems International, AromcoRieber & Søn, British East Anglian Food Ingredients, Christian Hansen Italia) and in the 2012 first quarter (including Etol, Savoury Flavours and Mylner) contributed $38.6 million to total sales, with $33.5 million in sales related to flavors unit acquisitions. 

Yehudai said Frutarom strengthened its presence in strategic markets mainly in North America, Asia, Latin America, Africa and Central and Eastern Europe, which are currently considered the fastest growing food markets in the world. "We continue to invest great resources in accelerating growth in these markets in order to utilize the great potential and opportunities there," he added. 

The company expects more benefits to evolve over the next year since its acquisitions have helped optimize supply and logistics through the integration of production sites in the main countries where Frutarom operates. The company also said the deals have improved its global purchase capacity due to the strengthening of purchase sources. In addition, Frutarom is considering transferring other activities to countries where operating costs are lower.