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Frutarom Moves Up List of Flavor Leaders

Posted: March 21, 2007

President and CEO Ori Yehudai has declared that Frutarom’s (Haifa) 2006 results show that the organization is now the eighth largest flavor company in the world.

“We believe,” said Yehudai in a conference call, “in reaching our expectation to double sales within the next three years [we will] become number five or number six in the flavor industry [worldwide].”

The comments come as Frutarom reports Q4 2006 sales of $72.6 million, a 38.1% rise. The company’s full-year 06 sales reached $287.2 million, a 17.8% gain over 2005’s $243.8 million. Operating profit for the last quarter rose 56% to $7.8 million. Net profit for Q4 and full-year 2006 jumped 9.1% to $5.3 million and 10.6% to $29.7 million, respectively. Looking ahead, Yehudai said, “We expect to achieve single-digit growth in 2007.”

Frutarom’s core business achieved double-digit organic growth in both the flavor and fine ingredients divisions. Results were affected to some degree by natural raw material prices such as grapefruit and vanilla, as well as sale prices of natural flavors employing those materials. At the same time, Yehudai reported, the Nesse acquisition has gone smoothly, with the operation contributing positively to results. In addition, last year’s Actaris acquisition contributed just over $3 million to Q4 results.

Moving forward, Yehudai sees great potential in the growing launches of natural, healthy, dietary-restricted and functional foods (Yehudai used as an example the recent launch of a calorie-burning green tea product). Yehudai also quoted a 20% increase in organic product launches, which dovetails well with both the company’s traditional activities and the Nesse component. These trends also funnel into the trend of clean labels—food products that are free of synthetics, preservatives and other materials that may be viewed as dubious by health-conscious consumers.