Frutarom Sales Up 23% in Q3

22/11/07 Frutarom’s sales in the third quarter of 2007 grew 23.0% to total US$ 87.7 million, the company has reported. Excluding the influence of the strengthening Western European currencies, Frutarom's sales for the quarter grew 20.0%.

The main contributors to the growth in sales were: (1) growth in the sales of flavors produced and sold by the Flavors Division; (2) the integration of Acatris’s and Abaco's activities, which were acquired and consolidated as of October 2006 and July 2007, respectively, with the Fine Ingredients Division's global activity; (3) the merger of Belmay and Jupiter, which were acquired and consolidated with the Flavors Division's activity as of April 2007; (4) the merger of Raychan's and Adumim's activities, which were acquired and consolidated with the Flavors Division's activity in Israel as of September 2007; (5) utilization of the synergy and cross selling opportunities between Frutarom’s Divisions, existing customers and products and those added through the acquisitions made in recent years; (6) the strengthening of the European currencies and New Israeli Shekel (in which most of Frutarom’s sales are made) against the dollar; and (7) growth in the activity of Trade & Marketing in Israel.

Frutarom said that its results and margins were significantly influenced by the acquisitions made this year. The acquisitions have contributed to sales growth but at this point in time, during the merger of the acquired activities with Frutarom's existing activity they have not contributed to profit and have affected profitability, as expected. Upon completion of the merger process, savings will be made in many expenses and substantial operational improvement achieved.

Completing the merger of the three sites in England into one, following the acquisition of Belmay and Jupiter will, in Frutarom's estimation, lead to annual operational savings of over US$ 3 million as of the beginning of 2008. Completion of the merger of Abaco with the Fine Ingredients Division's activity in the USA and the merger of Raychan's and Adumim's activity with the Flavors Division's activity in Israel and its transfer to Frutarom's plants in Israel, while achieving considerable operational savings, is also expected to contribute to improved margin in 2008. Frutarom estimates that as of the first quarter of 2008, each of the acquisitions will not only contribute to the continued trend of sales growth, but also to growth in profit through improved margin.

An additional, important influence on the results of Frutarom's activity and margin is the ongoing upward trend in most raw materials prices used by Frutarom in its production, with an even more significant increase in the prices of many natural raw materials, which are the majority of the raw materials used by Frutarom. During the third and fourth quarters Frutarom has and will continue to act determinedly to raise the selling prices of its products in order to adjust them to the continued rise in raw materials prices, just as many of its customers in the global food industry are doing, the company said.