SWITZERLAND – Givaudan’s 2018 sales increased to US$5.54 billion, a 5.6% increase from the previous year as the company continues with the integration of Naturex, a botanicals company it acquired in September 2018.
Net income decreased to US$668 million from US$725 million in 2017 while financing costs increased as a result of the debt burden related to Naturex.
The company completed the acquisition of 40.5% stake in Naturex last year for a total consideration of US$648 million, expanding its capabilities in natural flavor solutions as well as becoming a market leader in natural extracts and ingredients.
The division contributed US$151.16 million of sales, US$147.13 million coming from the flavor category.
Givaudan said it aims to achieve sales growth of the Naturex portfolio of 10% 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.
Group flavor sales were US$3.02 billion an increase of 4.6% while the fragrances category witnessed a 6.6% increase to US$2.54 billion, achieving good growth across all product segments and geographies.
“Our strong performance in 2018 demonstrates our continued ability to deliver on our short term objectives, whilst at the same time investing for the long term future success of our business,” said CEO Gilles Andrier.
“I am very pleased with the results we have achieved in 2018 and with the significant progress that we have made towards our strategic objectives under the 2020 strategy.”
Partially impacted by increased costs of raw materials, gross profit increased by 3.5% to US$2.34 billion while the gross margin declined to 42.1% in 2018 compared to 44.5% in 2017.
During the period, the company agreed to sell leaseback the Zurich Innovation Center for a total consideration of US$174.31 million.
Financing costs increased to US$55.41 million compared to US$42.32 in 2017, attributed to currency losses in markets where currencies could not be hedged, most notably in Argentina.
Consumer Products sales increased by 6.1%, recording double-digit growth in Latin America while Asia recorded balanced growth across all customer groups.
Sales in Europe, Africa and Middle East increased by 3.0% strong double-digit growth was achieved in Egypt and South Africa, offset by the challenging market conditions in this region.
In the mature markets of Western Europe, double-digit growth was achieved in Sweden and high single-digit growth performance in the UK and Spain.
Sales in Latin America increased by 14.7% with strong double-digit growth led by Brazil and Colombia, as a result of improved economic situation, as well as continued good sales momentum in Argentina.
In Asia Pacific, beverages, dairy, snacks and Sweet Good contributed significantly to the growth, led by India, China, Indonesia and Thailand.
Givaudan is looking to deliver on its 2020 ambition focusing on the three strategic pillars of ‘growing with our customers’, ‘delivering with excellence’, and ‘partnering for shared success’.
According to the company, this would be through targeted acquisitions to create value with an aim to achieve 4-5% growth in sales by 2020.
