Frutarom (Haifa, Israel) has reported sales of $ 98.4 million in the first quarter of 2009, a drop of about 5.5% in local currency terms compared to the first quarter of 2008.
According to the company, “In dollar terms, the sales in the quarter decreased by 19.3% compared to the same quarter last year. The global economic crisis, which has already materially affected the North American economy in the beginning of the fourth quarter last year, was noticed more intensely in Europe during the first quarter this year. As a result of the crisis, many customers acted and acting intensively to reduce their inventory levels.”
And while the company has lately reported weakness from food manufacturing customers in Russia, Ukraine, Turkey and Korea, the trend is abating. Meanwhile, the recent acquisitions of Oxford and FSI have contributed $ 3.5 million in sales for the quarter. Frutarom expects to make further acquisitions this year.
For the period, gross profit reached $35.2 million, down from $44.8 million the year before. Operating profit totaled $10.2 million, compared to $15.3 million in the same period last year. However, Frutarom is reporting Q1 2009 cash flow of $ 10.7 million, a significant increase over the negative 6.4 million for Q1 2008.
Of the results, Frutarom head Ori Yehudai said, “During the last months of 2008, the economic atmosphere in the world, which permeated to the global economy, materially changed the growth trend characterizing most of the world's economies in recent years. Frutarom entered this challenging and crisis-related economic period, as a leading, global, stronger-than-ever company, with a solid capital structure, experienced global management and varied and diversified customer base. Our core businesses are mostly geared for the food industry which is considered stable and defensive. We are partners in the creation process of essential products, which answer the basic human needs of consumers around the world. And indeed, analyzing previous economic crises tells us that the food industry and industries related usually demonstrate relatively low sensitivity to the effects of slowdown and instability in the macro-economic environment, especially in comparison to other industries. We estimate that with the stabilization of the global markets, the moderation of the fluctuations in currencies, the discontinuation of the inventory reduction trend and the gradual improvement in consumption, mainly in countries significantly affected by the devaluation in their currency rate, Frutarom will return to growth rates similar to those characterizing its activities in the past … We are convinced that we will be able to achieve our goals and double Frutarom's turnover, so that it will reach $1 billion by 2012.”