Frutarom continues growth

25/03/05 Frutarom has reported its fifth consecutive year of record results. Frutarom's sales in 2004 totaled US$ 196.8 million, a 41.2% increase compared with 2003, when sales reached US$ 139.3 million. Gross profit during the period rose by 49.1% to reach US$ 74.3 million compared with US$ 49.9 million last year. Gross margin grew from 35.8% to 37.8%. Operating profit grew sharply by 75.2% to US$ 22 million compared with US$ 12.6 million in 2003, while operating margin improved to 11.2% compared with 9.0% last year. Net profit grew significantly by 96.1% to US$ 15.8 million compared with US$ 8 million in 2003. Net margin also grew from 5.8% in 2003 to 8.0% in 2004.

During the second half of 2004, Frutarom completed the acquisition of IFF's Food Systems activity in Europe. The Food Systems business develops, produces and markets unique compounds of fruit and other natural ingredients used in a wide variety of food products.

During the fourth quarter of 2004 the first phase of the integration of the Food System activity with Frutarom's existing activities ended, including transferring the production activity previously conducted by IFF in France to Frutarom's Food Systems production sites in Switzerland and Germany, and the integration of Frutarom's existing Food Systems activity in England. In addition, the sales and marketing and research and development teams in Europe were fully integrated. Following the completion of this first phase, Frutarom started the second phase of leveraging the many cross selling opportunities between the new customers and products and Frutarom's existing customers and products.

In 2004, Frutarom achieved a cash flow from operations of US$ 17.3 million compared with US$ 10.1 million in 2003. The cash flow was used to reduce debt, finance investments and grow the Company's cash balances.