Good Business Momentum For Givaudan
“In the first half year 2011, we achieved a local currency growth of 4.3%, in line with our mid-term guidance" said Gilles Andrier, Chief Executive Officer.
Aug 4 2011 --- “In the first half year 2011, we achieved a local currency growth of 4.3%, in line with our mid-term guidance. Raw material cost increases have affected our profitability. Givaudan has successfully implemented price increases in collaboration with its customers. These price increases started to become effective in the course of the second quarter. Givaudan's business momentum continues to be strong with a full project pipeline and a further increased win rate. We therefore are confident to achieve our ambitious mid-term targets,” said Gilles Andrier, Chief Executive Officer.
Group sales for the first six months of the year totalled CHF 2,005 million, an increase of 4.3% in local currencies3 and a decline of 8.8% in Swiss francs compared to the previous year.
Fragrance Division sales were CHF 927 million, an increase of 3.9% in local currencies and a decline of 8.8% in Swiss francs versus the same period in 2010.
Flavour Division sales were CHF 1,078 million, an increase of 4.7% in local currencies and a decline of 8.8% in Swiss francs compared to the previous year.
Overview:
* Sales CHF 2 billion, up 4.3% in local currencies
* Comparable EBITDA decreased to CHF 382 million, due to raw material cost increases and translation effects
* Comparable EBITDA margin of 19.1%, affected by raw material cost increases
* Net income CHF 120 million
* Net debt of CHF 1.6 billion, leverage ratio at 33%
Flavour Division
Sales for the Flavour Division were CHF 1,078 million, representing a 4.7% growth in local currencies and an 8.8% decline when measured in Swiss francs. Continued cost increases for key natural ingredients, such as citrus and oil derivatives, impacted the profitability of the flavour business during the first six months of 2011. The division continues to work with customers to compensate this negative impact through price increases and productivity gains. The positive effect of the price increases is expected to materialise in the second half of this year.
Sales growth in the first half was driven both by growth of the existing business and new business in Asia Pacific combined with good growth in North America and the developing markets in Europe, Africa, and the Middle East thanks to additional wins. All segments expanded globally led by the strong performance in Beverages and Snacks.
The operational highlights for the period included an expansion of the TasteSolutions™ Health and Wellness programme which has seen an increase in investment and resources to address market opportunities for sweetness enhancement, salt replacement, and bitter masking. Consumers across both mature and developing markets are demanding products which are healthier but do not compromise on taste. The division's research teams are helping customers meet these consumer expectations.
Construction of the CHF 170 million plant at Makó in Hungary is on target for completion by December 2011, with testing and trials beginning in Q1 2012. This will be a best-in-class savoury manufacturing facility and an integral part of the improved supply chain to support our growth strategy in the developing markets of Eastern Europe and Russia.
The EBITDA decreased by 28.9% to CHF 209 million from CHF 294 million. The EBITDA on a comparable basis decreased by 28.7% to CHF 216 million from CHF 303 million. In local currency terms, EBITDA decreased by 19.4%. The EBITDA margin reduced during the first half, from 25.6% in the corresponding period last year to 20.0%.
Operating income was CHF 137 million on a comparable basis, against the CHF 224 million reported last year, which represents a decline of 38.8%. In local currencies, operating income declined by 28.1%. The operating margin on a comparable basis fell from 19.0% to 12.7%.
