Givaudan Reports Sales Increase

20/02/07 Leading flavour and fragrance supplier Givaudan has said that its total sales increased to CHF 2,909 million in 2006, representing a 4.7% rise in Swiss Francs and a 3.5% rise in local currencies. Despite the continued ingredients streamlining in both divisions, the company continued to deliver above market sales growth for the sixth consecutive year. This streamlining impacted annual sales by CHF 33 million. Without this effect, sales in local currencies would have increased by 4.9%

The Fragrance Division recorded sales of CHF 1,223 million, resulting in a growth rate of 6.9% in local currencies and 8.2% in Swiss francs. This result was based on the strong performance of all three core businesses namely Fine Fragrances, Consumer Products and speciality ingredients. Fine Fragrance sales grew at a double-digit rate following last year’s flat development. Consumer Products again significantly outgrew the market. In Fragrance Ingredients, commodities continued to be streamlined whilst specialties delivered a double-digit growth rate.

The Flavour Division recorded sales of CHF 1,686 million, representing a growth rate of 1.2% in local currencies and 2.4% in Swiss Francs. The streamlining of commodity ingredients impacted flavour sales by CHF 16 million, mainly in North America and in Europe, Africa and Middle East (EAME).

Without this effect, the underlying sales growth would have been 2.3% in local currencies. Latin America, EAME and China continued to show strong growth, whilst sales in the mature markets of North America and Japan declined. The Confectionery, Dairy and Savoury segments continued on their solid growth paths, whereas Beverage sales suffered, primarily in North America and Japan.

Givaudan’s gross profit margin further improved to 49.4% from 48.9% in 2005. This sound performance underlines Givaudan’s continuous efforts to improve efficiency and productivity in the supply chain and allowed the company to offset the increase in raw material costs. The Group’s net profit after tax rose to CHF 412 million, up 1.5% compared to the very strong previous year’s result.

Earnings per share rose to CHF 58.62 from CHF 56.57, due to a lower number of outstanding shares and the increase in net profit. Cash flow generation continued to be strong, amounting to CHF 449 million at the end of 2006. The equity-to-asset ratio further improved to 59%.

The Board of Directors will recommend at the next Annual General Meeting, which takes place on 30 March 2007 in Geneva, to increase the ordinary dividend to CHF 18.80 from the CHF 17.60 paid in 2006. This represents the sixth successive total dividend per share increase since the company went public in 2000.

In 2006, several new initiatives and projects were launched to maintain and further expand Givaudan’s market position. The Accelerated Sales Growth Strategies for both divisions were developed over several months and introduced in July. Givaudan’s management identified specific growth opportunities in key strategic areas, respective initiatives were developed and action plans are being implemented.

At its meetings in 2006, the Board of Directors analysed and discussed in depth various options to complement Givaudan’s strategy of profitable organic growth by value adding acquisitions. As a result, an announcement was made on 22 November 2006 to acquire Quest International, a division of Imperial Chemical Industries PLC. This acquisition is complementary to Givaudan’s organic growth strategy and will enable Givaudan to implement its growth initiatives even faster.

Givaudan said it is well positioned for another good result in a transition year.