Frutarom Industries Ltd.'s (Haifa, Israel) full-year 2012 net income surged 23.7%, boosted by growth in emerging markets and its recent string of acquisitions which contributed $115.5 million to sales.
The company also posted strong growth in the fourth quarter amid stability in prices of the raw material the company uses for its products. Frutarom plans to accelerate investment in emerging markets and will transfer some operating activities to countries where operating costs are lower, anticipating further significant yearly savings of $10 million, which is expected for the second half of 2013 and mainly in 2014.
For the full year, Frutarom said its 2012 full-year net profit rose to $52 million from $42 million a year earlier. Revenue jumped 19% to $618 million from $518.4 million a year earlier. The acquisitions made in 2011 and 2012 contributed $115.5 million to sales in 2012.
Frutarom’s flavor activity sales in 2012 surged 29.5%, or 74% of total Frutarom sales, net of currency effects. Organic growth in flavors net of the contribution of the acquisitions and currency effects, reached 3.1% in 2012.
For the fourth quarter, net income jumped 33.1% to $10.5 million and sales, net of currency effects, grew 13.5% to $144.9 million. In dollar terms, sales grew 10.1%. Flavors activity sales for the quarter rose 15.7% to $111.7 million. Organic growth in flavors reached 2% this quarter.
Frutarom said it significantly increased its activities in the flavors segment, its most profitable activity, to 74% of total sales, and accelerated its expansion into target markets with high growth rates, reflected in the 60% growth achieved in 2012 in the emerging markets of China and South East Asia, Central and South America, Central and Eastern Europe and Africa.
At the same time, rapid growth continued in the company’s flavor activities in the U.S., increasing by 43% in 2012.
“We intend to continue investing in growing regions, including in Asia, Central and South America, Central and Eastern Europe and Africa, following the growth of our market share in emerging markets from 27% in 2010 to 36% in 2012, and to 31% this year in the BRIC countries," said Ori Yehudai, Frutarom's president and CEO.
"At the same time and as a result, our share of sales in Western European markets (which also increased), went down from 51% in 2010, to 42% this year."
Still, he added that Frutarom in 2013 stands with strong infrastructures for continued growth and improving margins.