21 Nov 2017 --- Flavor and fragrance specialists Frutarom has posted third-quarter earnings which show a record US$358.8 million in sales, up almost 20 percent, which has prompted the company to raise its 2020 sales target to US$2.25 billion. 
In Q3 2017, there was constant currency pro-forma growth of 6 percent, sales from core activities grew by 20.2 percent to a record US$336.6 million and constant currency pro-forma growth of 7.4 percent.

Sales from flavor activities grew by 21.3 percent to US$272.9 million and sales from the Natural Specialty Fine Ingredients activities grew by 19.4 percent to a record US$67.1 million.

Meanwhile, gross profit grew by 21.5 percent to US$138.4 million, EBITDA grew by 27.2 percent to US$ 71.1 million, net income grew by 26.7 percent to US$ 40.8million; 11.4 percent and earnings per share grew by 26.5 percent. 

Cash flow from operating activity grew by 52.7 percent and reached a record US$ 63.5 million. 

“We are pleased with the results achieved in the third quarter and the first nine months of 2017 in which we again set ourselves new records in sales, profits and cash flows,” says Ori Yehudai, President and CEO of Frutarom.

“The results reflect the successful implementation of the rapid and profitable growth strategy in our core businesses, Flavors and Natural Specialty Fine Ingredients, combining profitable internal growth at higher growth rates than those of the markets in which we operate, together with the successful merger of the strategic acquisitions we have made which are contributing to the continuing and consistent improvement in our results.”

“Following the accelerated internal growth and ten acquisitions made since the beginning of 2017, Frutarom’s run rate in sales is approaching US$1.5 billion. After examining our strong competitive position, accelerated rate of internal growth, our latest acquisitions, our pipeline for future acquisitions and the contribution of the streamlining and global procurement activity, we are raising our target sales for 2020 to US$2.25 billion and EBITDA margin from our core businesses to 23 percent.”

Adds how thee accelerated internal growth rates in recent years and the company’s optimism concerning the continued realization of high future profitable growth is due to its strategy plan which focuses on six key areas.

“The continued improvement in the product mix with continued rapid growth in both our flavors activity and our specialty fine ingredients activity, while focusing on unique and innovative natural products that combine taste and health and address the current and future preferences of billions of consumers throughout the world,” adds Yehudai.

“Number two is developing and furnishing unique added value solutions to our large multinational customers while providing our local, medium-sized and private label customers a full and comprehensive portfolio of solutions in the areas of taste and health. Number three; capitalizing to the utmost on the many cross-selling opportunities between our varied activities to which are also contributing the acquisitions we have and will carry out.”

“Number four; Continued improvement to margins and profits by exploiting our resources to the fullest, following the acquisitions as well, with the generating of significant operational savings and the strengthening of our global procurement and supply chain platform. Number five; Continued improvement of our geographic sales mix by significantly increasing the percentage of sales in North America and in the growing emerging markets.”

“And number six; Building global market leadership in natural herbal extracts while adopting a vision that includes global collaborations with research institutes and growers for developing strains and crops of strategic natural raw materials in taste and health to ensure quality and competitive supply of raw materials and supporting the stepping up among our customers in switching from the use of raw materials that are synthetic to those that are natural.”

Net income in the third quarter of 2017 climbed 26.7 percent to US$40.8 million (net margin of 11.4 percent) compared with US$32.2 million (net margin of 10.7 percent) in Q3 2016. Net income in Q3 2017 adjusted for the non-recurring expenses grew by 22.3 percent to US$43.0 million (12.0 percent net margin) compared with US$35.1 million (11.7 percent net margin) in Q3 2016.

Earnings per share in the third quarter of 2017 climbed 26.5 percent to US$0.68 compared with US$0.54 in the same quarter last year. Earnings per share in Q3 2017 adjusted for the non-recurring expenses rose 22.0 percent to reach US$0.72 compared with US$0.59 for the same quarter last year.

Net income in the first nine months of 2017 climbed 33.0 percent to reach US$111.8 million (net margin of 11.1 percent) compared with US$84.0 million (net margin of 9.8 percent) in the same period last year. Net income in the first nine months of 2017 adjusted for the non-recurring expenses grew by 21.2 percent to reach US$ 115.5 million (11.5 percent net margin) compared with US$ 95.3 million (11.1 percent net margin) in the same period last year.

Earnings per share in the first nine months of 2017 climbed 32.3 percent and reached US$1.86 compared with US$1.41 in the same period last year. Earnings per share in the first nine months of 2017 adjusted for the non-recurring expenses rose 20.4 percent to reach US$1.92 compared with US$1.60 in the same period last year.

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