Frutarom Sales Up 26.8%

22/08/07 Frutarom has reported that sales in the second quarter of 2007 grew 26.8% to total US$ 91.7 million. Even when excluding the acquisitions made and the influence of currency exchange rates, Frutarom achieved accelerated double digit growth in its core activities.

Sales in the first half of 2007 grew 20.1% to total US$ 172.2 million.

Gross profit for the second quarter rose 25.0% to reach US$ 32.8 million compared with US$ 26.3 million last year. Gross margin for the second quarter reached 35.8% in the quarter compared with 36.3% in the same quarter of 2006. The gross profit and margin in the second quarter were influenced by the continued global trend of rising prices for raw materials used in Frutarom's production. Frutarom continues working to adjust the selling prices of its products to these price rises in order to improve its gross margin.

Operating profit for the second quarter totaled US$ 8.5 million, compared with US$ 9.7 million in the same quarter in 2006.  Operating margin reached 9.3% compared with 13.4% in the same period of last year. Both gross and operating margin for the quarter were influenced by:
Belmay and Jupiter's current margin, which, as expected, is lower than Frutarom's. This margin does not reflect the profitability expected once the reorganization process in the UK activity is completed, the synergy is utilized and the expected savings are achieved.

The company said that the trend of sales growth that has characterized Frutarom's activity in the past seven years continued in the second quarter of this year while achieving double digit growth in core activities that is considerably higher than the growth rate in Frutarom's field of activity.  This growth was achieved through the implementation of Frutarom's rapid growth strategy, combining organic growth in core activities with strategic acquisitions of activities and knowhow in its main business segments and in strategic geographic regions.  In implementing this strategy for rapid growth in recent years, Frutarom has established its position as one of the ten leading global companies in its field.  Frutarom's current global dispersal enables it to make acquisitions where the Company is already active and enjoy quick utilization of the considerable synergy inherent in these acquisitions by making substantial improvement to the acquired activities' margins by achieving maximum operating savings:

Belmay Limited – was acquired on April 1, 2007, in consideration for US$ 17.1 million.  Belmay is a leading flavors company in the English market that develops, produces and markets flavors for the food and beverage industry.

Jupiter Flavours Limited – which develops, produces and markets flavors, in England, on April 19, 2007.  In consideration, Frutarom paid US$ 2.8 million.

The Belmay and Jupiter acquisitions established Frutarom’s position as the leading flavors producer in the British market.  Frutarom is in the process of integrating the three sites—Belmay's, Jupiter's, and Frutarom's in England—into one in order to achieve the greatest efficiency and annual operational savings of over US$ 3 million.