Givaudan on track despite difficult environment
Published: Thursday, Jan 25th 2024, 13:30
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In 2023, Givaudan had to contend with further rising input costs, declining volumes and the Swiss franc crisis. Thanks to price increases and cost savings, it nevertheless managed to grow organically and become more profitable.
"Despite the strong franc, dwindling consumer spending and increased input costs, we are ahead of our strategic target," said Givaudan CEO Gilles Andrier in an interview with the news agency AWP on Thursday at the presentation of the figures.
And yet, after years of growth in Swiss francs, the Group suffered a decline in sales. The decline amounted to 2.8 percent to 6.92 billion. Luxury perfumery continued to prove crisis-proof. In the flavor business, however, several segments suffered from declining volumes, such as health, culinary flavors and dairy products.
Strong final quarter
The fact that organic growth of 4.1% was ultimately even in line with the company's own target range (4-5%) was thanks to a fullmiantent final quarter (organic growth of 7.9%). After only 2.8% in the first nine months, analysts had not believed this beforehand.
Profitability also increased thanks to price increases and cost measures. Despite lower sales, operating profit (EBITA) was just maintained at 1.47 billion Swiss francs and the corresponding margin increased from 20.7 percent to 21.3 percent. This resulted in a 4.3 percent higher net profit of 893 million. The dividend will now be increased by one franc to 68 francs.
Strategy on track until 2025
In the new year, CEO Andrier even believes an EBITDA margin of 23% to 24% is possible with a return to volume growth thanks to the improved cost structure. He also expects only a very moderate increase in input costs in 2024 following the sharp rises of the last two years. Accordingly, there should no longer be any significant price increases.
In addition, Givaudan is well equipped against the strength of the Swiss franc thanks to its broad geographical base, the Givaudan CEO continued. Due to the Houthi attacks on the Red Sea, the CEO expects longer delivery times in the future. However, he does not expect additional costs for the time being.
All in all, he believes the company is well on track to achieve its strategic goals by 2025. In the five-year strategy cycle that has been running since 2020, the company has so far achieved organic growth of 5.5%, which is above the target range (4-5%).
Applause on the stock market
The figures are correspondingly well received by analysts. The experts are particularly positively surprised by the organic growth. However, some analysts also see profitability and net profit exceeding their forecasts.
There is also applause on the stock exchange. By 12.35 p.m., the Givaudan share had gained 6.2 percent to 3523 Swiss francs.
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