Record Year for Flavor Experts Frutarom with 31% Sales Surge
24 Mar 2017 --- Flavor and fine ingredients specialists Frutarom has reported its full year financial results for 2016 with sales jumping 31.4% to a record US$1.14 million and gross profit for the company increase 31.4% to US$448 million. The company says this is another record year where it has successfully implemented its rapid growth and profitable strategy.
Sales from core business of special flavors and raw materials reached US$1.07 billion.
Flavors activity sales rose 39.3% to a record US$ 846.5 million, while specialty fine ingredient activity sales rose 23.2% to a record US$ 227.9 million.
Frutarom has been making a series of acquisitions which it contributes hugely to its success. Since the beginning of 2016, the company has completed nine strategic acquisitions for approximately US$255 million.
Ori Yehudai, president and CEO of Frutarom, explains how Frutarom is moving ahead with integrating the management, R&D, sales and marketing, operations, procurement and production platforms and fulfilling the plant amalgamation and resource optimization projects that are expected to bring operational savings at an annual rate of US$20-22 million, which will gradually be reflected over the course of 2017.
We are pleased with the additional leap forward we achieved in 2016 in which we again registered record results in sales, profits and cash flow. Over the past four years we have doubled Frutaroms revenues and profits, reflecting the successful implementation of our rapid and profitable growth strategy combining profitable internal growth, at growth rates higher than those of the markets in which we operate, together with strategic acquisitions that contribute to the continuing and consistent improvement in our results.
The 31.4% accelerated growth of our activity in 2016 stems from continued rapid internal growth of our profitable Flavors activity at the rate of 6.1% (on a constant currency and pro-forma basis) and from the contribution of the strategic acquisitions we made.
Further to the 11 acquisitions we made in 2015, since the beginning of 2016 we made another 9 strategic acquisitions and we progressed according to plan in fully merging and integrating them. We are continuing to create a strong quality pipeline of future acquisitions to support the fulfilling of our plan for accelerated growth in our core activities while expanding the share of the Flavors activity, including by gaining market leadership in the field of savory solutions and expanding the portfolio of natural solutions in the fields of flavors, health, colors and the natural antioxidants we offer our customers, and accelerating our growth and expanding our market share in North America and in emerging markets with high growth rates.
He adds that how since the beginning of the fourth quarter, the company has completed the acquisition of Piasa, a leading local player in Mexico’s savory market, deepening Frutarom’s market share in emerging markets. In addition, there also the acquisition of Nardi Aroma in Brazil which operates in the field of natural extracts and flavors for beverages, and in February Frutarom acquired Unique Flavors in South Africa.
Another important move Frutarom completed in February 2017 was exercising its option to acquire the remaining 25% holdings in the Russian flavors company PTI.
The projects of combining and integrating activities and production sites and achieving maximum efficiency are moving ahead successfully. This year these mainly included the merger of activities and significant streamlining in the savory operations in Europe following the acquisition of Wiberg, adds Yehudai.
I am pleased that the main and most important part of the project, the transfer of production from the main savory site at Stuttgart, Germany to Wibergs modern and efficient site in Germany, along with the closing of the plant in Stuttgart, has been successfully completed, and that further to completing this move we are busy these days completing the merging of the marketing, R&D, and administration of the savory activity in Europe in a gradual and measured manner with emphasis on retaining key personnel and customers.
These actions are expected to bring savings projected at over US$12 million (on an annual basis) which partly already started to be seen in the first quarter of 2017 with the balance to gradually come into play over the course of 2017.
Also, we are pushing forward on substantially streamlining the natural extracts operations of the Specialty Fine Ingredients division as part of an overall move to expand the scope of activity in natural extracts and improve its margins by increasing output and optimizing production lines. These measures are expected to bring savings of over US$ 6 million which will start coming into play during the second half of 2017.
