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Givaudan Releases 2018 Full Year Results

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The Givaudan Group has released its 2018 full year results. For the year, Givaudan’s sales were CHF 5,527 million, an increase of 5.6% on a like-for-like basis and 9.4% in Swiss francs when compared to 2017.

“Our strong performance in 2018 demonstrates our continued ability to deliver on our short-term objectives, whilst at the same time investing for the long-term future success of our business,” said CEO Gilles Andrier. “I am very pleased with the results we have achieved in 2018 and with the significant progress that we have made towards our strategic objectives under the 2020 strategy.”

Across segments and geographies, the company saw strong business momentum, while strategically focusing on naturals, health, well-being, active beauty and integrated solutions. This resulted in gross profit margins increasing by 3.5% from CHF 2,250 million in 2017 to CHF 2,329 million in 2018. Despite productivity gains and cost measure, gross margin declined to 42.1% in 2018 compared to 44.5% in 2017, due to the impact of a sharp and broad-based increase in raw material costs. For the year, Givaudan’s EBITDA was CHF 1,145 million in 2018 compared to CHF 1,089 million in 2017, an increase of 5.2% in Swiss francs and 4.3% in local currency, while its EBITDA margin was 20.7% in 2018 compared to 21.6% in 2017.

Operating income rose CHF 883 million compared to CHF 869 million, an increase of 1.7% versus 2017 and operating cash flow was CHF 916 million in 2018, compared to CHF 861 million in 2017. However, for the year financing costs were CHF 55 million versus CHF 42 million in 2017, largely due to the acquisition of Naturex. Other financial expense totaled CHF 56 million in 2018 compared with CHF 32 million in 2017 due to increased foreign currency losses in markets where currencies could not be hedged like Argentina. Operating cash flow rose to CHF 916 million in 2018, compared to CHF 861 million in 2017. Working capital increased to 26.3% of sales compared to 24.5% in 2017, largely due to increased inventory from the Naturex acquisition.

Fine Fragrances Flourish

For its fragrance division, sales rose to CHF 2,525 million, an increase of 6.6% on a like-for-like basis and 7.8% in Swiss francs. Total sales for fragrance compounds (fine fragrance and consumer products) reached CHF 2,199 million, a 7% increase on a like-for-like basis. In 2018, the company boosted its fragrance capabilities with the acquisition of Expressions Parfumées and French natural ingredients company Albert Vieille SA.

Fine fragrances sales grew by 10.7% on a like-for-like basis against a strong prior year comparable of 7.2% in 2017.  Growth was achieved across all geographies and customer groups, complemented by high levels of new business, recent launches and volume growth among key customers. Givaudan’s perfumes were also recognized at major award ceremonies in Latin America, the USA and Europe across men and women’s categories.

For its consumer products business, sales increased by 6.1% on a like-for-like basis with growth across all customer groups and geographies. In Latin America, all customer groups grew against a strong prior year comparable with local and regional customers recording double-digit growth. Asia recorded strong increases with balanced growth across all customer groups and double-digit growth in the South Asia sub-region. For Europe, Africa and the Middle East, sales increases were spread across all customer groups and sub-regions. Strong double-digit growth was achieved in African and the Middle East sub-region. In North America, sales increased slightly due to the performance of local and regional customers.

Health and Natural Lead Flavors

Strong gains in the fragrance segment were complemented by wins in its flavor division. For 2018, the company saw flavor sales reach CHF 3,002 million, an increase of 4.6% on a like-for-like basis and 10.8% in Swiss francs. Sales from its Centroflora Nutra division were CHF 9 million and its Naturex business attributed CHF 146 million in sales.

Focus areas like health and well being and naturals grew at double-digit and high single-digit levels respectively, while overall sale performance was driven by new wins and strong business momentum across all regions. Per segment, beverage, dairy, sweet goods and snacks were the main contributors to the division’s growth. Despite the growth, the operating income for the division decreased slightly to CHF 470 million in 2018 from CHF 473 million in 2017, and the operating margin was 15.7% in 2018 compared to 17.5% in 2017.

Related: Givaudan Launches Innovation 'Optimizer'

Per region, Asia Pacific grew by 6.2% on a like-for-like basis with India delivering double-digit growth and China, Indonesia and Thailand delivering strong single-digit increases. Singapore saw strong double-digit growth and there was positive momentum in Japan. For Latin America, sales increased by 14.7% on a like-for-like basis across all markets and segments in the region with strong double-digit growth led by Brazil and Colombia and good sales momentum in Argentina. Sales in Europe, Africa and the Middle East increased by 3% on a like-for-like basis with strong double-digit growth in Egypt and South Africa, offset by challenging market conditions in Central & Eastern Africa, Maghreb and the Middle East. North American markets grew by 1.8% against a strong comparable growth of 8.5% in 2017 with gains across beverages and sweet goods.