Frutarom's Sales in the Fourth Quarter Increased by 9.9%

Frutarom achieved an increase of 9.9% in its sales in the forth quarter of 2009, to US$ 108.5 M. In local currency terms, sales increased by 3.1% compared to the forth quarter of 2008.

17 Mar 2010 --- Frutarom presented its 2009 full year and fourth quarter results. Frutarom, one of the ten largest companies in the world in the field of and flavors and specialty fine ingredients, continues to successfully implement its rapid and profitable growth strategy, combining organic growth and the execution strategic acquisitions.

Frutarom achieved an increase of 9.9% in its sales in the forth quarter of 2009, to US$ 108.5 M. In local currency terms, sales increased by 3.1% compared to the forth quarter of 2008. The strengthening of the European currencies and the NIS in which most of Frutarom's sales are implemented, against the US$, contributed approximately 6.8% to the increase in the Company's sales in US$ terms.

In accordance with its strategic plan, after Frutarom focused during 2008 on the integration and utilization of the many synergies from the seven acquisitions made in 2007, Frutarom resumed its acquisitions strategy in 2009 and has implemented during the first half of 2009 three successful strategic acquisitions: Oxford in UK, FSI in the US and the Savory activities of Christian Hansen (CH) in Germany. The three acquisitions contributed to the sales in the fourth quarter US$ 8.1 M and US$ 25.3 M to the sales in 2009. Frutarom estimates that its strong cash flow, its solid capital structure and the support it has from leading financial institutions will enable it to further realize its acquisition strategy and to execute additional strategic acquisitions.

The global economic crisis made 2009 a challenging year to the global economy and to Frutarom as a leading player in the fields of Flavors and Specialty Fine Ingredients. Frutarom estimates that it maintained its market share with its customers and the stabilization of the global economy in recent months, the moderation in currencies fluctuations, the halt of the destocking trend and the signs of gradual improvement in consumption, including in countries significantly affected by the devaluation in their currency, will contribute to an improvement in its sales level and to future return to a growth trend at rates similar to those characterizing its activities in the past.

Gross profit in the fourth quarter of 2009 increased by 8.6% and reached US$ 39.6 M compared to US$ 36.5 M in the same quarter in 2008; gross margin reached 36.5%. Operating profit increased by 30.1% to US$ 11 M compared to US$ 8.4 M last year and operating margin increased and reached 10.1% compared to 8.5% in the same period in 2008.

EBITDA in the fourth quarter of 2009 increased by 29.2% to US$ 16 M compared to US$ 12.4 M in the same quarter in 2008. EBITDA margin improved and reached 14.8% compared to 12.6% in the same period last year. Profit before taxes in the fourth quarter of 2009 increase at a sharp rate of 86.7% and totaled US$ 10.1 M (9.3% of sales) compared to US$ 5.4 M (5.5% of sales) in the same quarter last year.

Net profit in the period, excluding non-recurring effects for tax gains in 2008 compared to 2009, increased by 38.5% and totaled US$ 7.5 M compared to US$ 5.4 M in the same period last year and net margin improved and reached 6.9% compared to 5.5%. Including the nonrecurring effects net profit in the period increased by 24.1% and totaled US$ 7.5 M compared to US$ 6 M in the same period last year and net margin improved and reached 6.9% compared to 6.1%.

In the fourth quarter 2009, Frutarom further improved its cash flow from current activities, which reached US$ 27 M compared to a cash flow of US$ 15.8 M in the fourth quarter of 2008. In 2009 Frutarom generated a record cash flow from current activities in the amount of US$ 84.9 M compared to US$ 37.0 M in the same period last year. The strong cash flow achieved by Frutarom enables the reduction in the scope of its bank debt in spite of the three acquisitions made this year. Frutarom's strong cash flow, together with financial institutes' support, will enable Frutarom to implement additional strategic acquisitions.

Earning per share in the fourth quarter of 2009 excluding the non-recurring effects increased by 37.5% and totaled US$ 0.13 compared to US$ 0.09 per share in the same period last year. Including the non-recurring effects earning per share in the period increased and totaled US$0.13 compared to US$ 0.10 in the same period last year. In 2009, Frutarom's sales totaled US$ 425.2 M – a decrease of 2.7% in local currency terms compared to 2008, where Frutarom achieved record results.

The strengthening of the US$ against the European currencies and the NIS, where most of the Company's sales are implemented, in sharp rates of up to 16% during the three first quarters of the year caused a decrease in sales in 2009 at a rate of approximately 7.5%. In US$ terms, sales decreased in 2009 by 10.2% compared to 2008. Frutarom's sales in 2009 were also affected from the ongoing effects of the economic crisis and the global slowdown trend, which temporarily changed the growth trend characterizing most of the global market in recent years and the business environment in which Frutarom operates.

As a result of the crisis, many of Frutarom's customers in the world vigorously acted to reduce their inventory levels. The destocking trend became moderate and the Company's estimates that it ended during the fourth quarter of 2009. In addition, a decrease in the Trade and Marketing activity in Israel (an activity which is not of Frutarom's core activities) partially arising from the focus on products with higher profit margins, contributed approximately 1.3% to the decrease in sales.

Annual gross profit reached US$ 155.5 M compared to US$ 176.3 M in 2008. The decrease in gross profit arises from the decrease in sales. The actions taken by Frutarom to improve its compatibility and to reduce its expenses, moderated the effect of the decrease in sales on the gross profit and enabled the Company to maintain the gross margin level in the period which reached 36.6% compared to 37.2% in 2008.

During 2009 non-recurring costs of US$ 1.4 M for the restructuring plan of the Company's activities in Germany and UK, mainly for the acquisition of the Savory activity of CH and of Oxford were recorded. Excluding these non-recurring effects, the operating profit achieved by Frutarom in 2009 totaled US$ 48.7 M compared to US$ 56.6 M in 2008; operating margin reached 11.4% compared to 12% in the same period last year; and the EBITDA achieved by Frutarom in 2009 totaled US$ 67.6 M which comprise 15.9% of sales, compared to US$ 76.3 M which comprise 16.1% of sales in 2008. Including the non-recurring effects, the operating profit in 2009 totaled US$ 47.3 M; operating margin reached 11.1%; and the EBITDA totaled US$ 66.2 M which comprise 15.6% of the sales.

Operating profit and EBITDA in 2009 were affected by the strengthening of the US$ against the European currencies at a rate of 7.5% and reduced the US$ translation of the sales and the profits arising from Frutarom's activities in Europe (which comprise approximately 70% of Frutarom's activities).

Profit before taxes in 2009 excluding the non recurring effects totaled US$ 44.3 M compared to US$ 46.1 M in 2008 and the profit before tax margin improved and reached 10.4% compared to 9.7% in 2008. Including the non-recurring effects, profit before tax totaled US$ 42.9 M (10.1% of sales) compared to US$ 46.1 M (9.7% of sales) in 2008.

Excluding the net non-recurring effects in the total amount of US$ 2.4 M, for the restructuring plan of the acquired activities and for the excess tax benefits in 2008, the net profit in 2009 totaled US$ 33.4 M compared to US$ 34.9 M in the same period. Net margin in 2009 improved and reached 7.8% compared to 7.4% in 2008. Including the non-recurring effects the net profit reached US$ 33.2 M compared to US$ 37.2 M in 2008 which reflect net margin rate of 7.8%, similar to the net margin of 7.9% reached in 2008. Frutarom's shareholders equity as at December 31, 2009 totaled US$ 318.5 M (60.5% from the total balance sheet) compared to US$ 278.3 M (54.5% of the total balance sheet) as at December 31, 2008. The main increase in shareholders' equity arises from the profit in the period.