Jul 25, 2013
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Givaudan perfumes recovery drives sales lift

Jul 25, 2013

ZURICH, Switzerland - Fragrance and flavour maker Givaudan said first-half sales grew 5.7 percent, ahead of its own mid-term guidance, as demand for its fine fragrances used in perfumes picked up.

Givaudan and its peers have benefited from the growth in emerging markets consumers able to afford ready-to-eat meals, cosmetics and detergents that use their scents and flavours.

Photo: Givaudan

The Geneva-based group said on Thursday it wanted to grow sales by 4.5-5.5 percent each year over the mid term, assuming underlying market growth of 2-3 percent, and continue to gain market share.

In the first half of the year, its fine fragrance unit returned to sales growth of 2.5 percent, after a decline of 5.5 percent in the first quarter, boosted by new business in Latin America, Givaudan said.

Group sales reached 2.225 billion Swiss francs, just ahead of forecasts in a Reuters poll. Net profit jumped a better-than-expected 36 percent to 271 million francs, helped by lower financing costs and a lower tax rate.

Givaudan said developing markets accounted for 45 percent of its sales and grew 9.4 percent in the first half.

The group's earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved to 22.9 percent from 20.6 percent a year ago, Givaudan said.

Vontobel analyst Jean-Philippe Bertschy said results were excellent, noting double-digit growth in fine fragrances in the second quarter, the improvement in profitability and the "very healthy" free cash flow.

Givaudan shares, which have gained more than 31 percent so far this year, trade at 21.4 times forward earnings, at a premium to Germany's Symrise at 19.1 times and U.S.-based International Flavors & Fragrances at 16.8.

IFF will publish its second-quarter results on August 6 and Symrise will follow suit on August 7.

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