Givaudan says on track despite profit drop

ZURICH - Swiss fragrance and flavour maker Givaudan said it was still on track to meet medium-term growth targets after posting a fall in 2011 net profit due to the appreciation of the Swiss franc and higher raw materials prices.

Givaudan said in a statement on Thursday that a delay in passing on to customers last year's rise in prices for essential oils, extracts and concentrates had hit margins.

But it said it was seeing strong growth in emerging markets in their two divisions, fragrances and flavours.

"During 2012, the company will continue to work in close collaboration with its customers to make the necessary adaptation of its prices to reflect the sharp increase in input costs," the company said.

Net profit at Givaudan, which makes flavours for foods and drinks as well as perfumes for groups such as Dior and Calvin Klein, fell to 252 million Swiss francs in 2011 from 340 million francs in 2010, just short of estimates in a Reuters poll.

Its margin on comparable earnings before interest, tax, depreciation and amortisation (EBITDA) declined to 20.2 percent in 2011 from 22.7 percent in 2010.

Givaudan has said price rises would help mitigate half of the total input cost hit, estimated at 200 million Swiss francs, in 2011 and the remainder in 2012.

Sales rose 5.2 percent in local currencies in 2011 but fell 7.6 percent in Swiss francs to 3.9 billion francs, in line with market expectations.

"The business achieved a strong sales momentum in a tough environment and a significant profit improvement in the second half of the year. We are well on track for 2012 and to deliver on our mid-term targets," Chief Executive Gilles Andrier said in the statement.

The group is aiming for 4.5-5.5 percent organic sales growth per year over the medium term. It is proposing to pay a dividend of 22 francs per share, just below market expectations.

U.S. rival International Flavors & Fragrances posted a 6 percent rise in full-year sales last week and confirmed its long-term targets despite the uncertain economic environment. (Reporting by Silke Koltrowitz; Editing by Will Waterman)