Givaudan reports buoyant 2019 half-year results

22 Jul 2019 --- Givaudan has reported a sustained “good business momentum” and project pipeline in its 2019 half-year results. Excellent growth was said to have been achieved across all product segments and geographies, through a key strategic focus on business segments of Naturals, Health and Wellbeing, Active Beauty and Integrated Solutions. The company states its progress is further complemented by its recent acquisitions and will continue to implement price increases in collaboration with its customers to compensate for the increases in input costs this year.

Givaudan Group sales for the first six months of the year were reported at CHF3.09 billion (US$3.14 billion), an increase of 6.3 percent on a like-for-like basis and 15.7 percent in Swiss francs. Flavour Division sales were CHF1.7 billlion (US$1.8 billion), an increase of 4.4 percent on a like-for-like basis and 19.4 percent in Swiss francs.

Fragrance Division sales were CHF1.36 billion (US$1.38 billion), an increase of 8.6 percent on a like-for-like basis and 11.3 percent in Swiss francs.

The company’s gross profit increased by 7.8 percent from CHF1.18 billion (US$1.2 billion) in 2018 to CHF1.27 billion (US$1.3 billion) 2019. Despite continued productivity gains and cost discipline, the gross margin declined to 41.2 percent in 2019 compared to 44.2 percent in 2018. This was mainly due to the impact of higher input costs and the lower margin of Naturex.

Givaudan’s EBITDA increased by 9.9 percent to CHF660 million (US$672 million) from CHF601 million (US$612 million) for the same period in 2018, while the EBITDA margin was 21.3 percent in 2019 compared to 22.5 percent in 2018. On a comparable basis, the EBITDA margin was 22.3 percent in 2019 compared to 23.4 percent in 2018.

Operating income was stable at CHF491 million (US$500 million), compared to CHF489 million (US$498 million) in 2018. When measured in local currency terms, the operating income increased by 2.3 percent. The operating margin decreased to 15.9 percent in 2019 from 18.3 percent in 2018.

The net income for the first six months of 2019 was CHF380 million (US$387million) compared to CHF371 million (US$377 million) in 2018, an increase of 2.3 percent, resulting in a net profit margin of 12.3 percent versus 13.9 percent in 2018. Basic earnings per share were CHF41.24 (US$41.95) versus CHF40.26 (US$40.95) for the same period in 2018.

In 2019, the group incurred costs of CHF19 million (US$19.3 million) in relation to the implementation of the Givaudan Business Solutions organization, compared with CHF25 million in 2018.

“Our strong performance for the first half of 2019 confirms the resilience of our business and our ability to consistently deliver industry leading financial performance,” says CEO Gilles Andrier. “I am very pleased with our results and with the continued progress we have made in delivering against our strategic goals under the 2020 strategy.”

Hot on the acquisitions trail
Givaudan completed the acquisition of Naturex in September 2018 and has consolidated the financial results of Naturex from September 1, 2018. Naturex is an international leader in plant extraction and the development of natural ingredients and solutions for the food, health and beauty sectors.

In the first six months of 2019, Naturex contributed CHF235 million (US$239 million) in sales, CHF229 million (US$233 million) in the Flavour Division and CHF6 million (US$6.1 million) in the Fragrance Division. The integration of Naturex into Givaudan is progressing as planned and the business of Naturex has returned to growth in the first six months of 2019, compared to the same period in 2018.

Givaudan aims to achieve sales growth of the Naturex portfolio of 10 percent per annum from 2021 and at the same time return the profitability and other key financial indicators of the combined business to pre-acquisition levels by 2021 for the Flavour Division.

As part of the company’s 2020 strategy, Givaudan is seeking to further create value through targeted acquisitions. Since 2014, Givaudan has announced eleven acquisitions. 

 By Benjamin Ferrer