Givaudan gains significant momentum in the final quarter
Published: Thursday, Jan 25th 2024, 07:30
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Last year, Givaudan suffered from the strong Swiss franc and gloomy consumer sentiment. In the final quarter, however, the Geneva-based group regained considerable momentum. In addition, price increases and cost measures led to improved profitability.
In Swiss francs, sales fell by 2.8 percent to 6.92 billion francs. In organic terms, i.e. excluding acquisitions and disposals and adjusted for currency effects, sales increased by 4.1 percent, as the manufacturer of flavors and fragrances for food, household and personal care products announced on Thursday.
Organic growth thus remained just within the medium-term target range of 4% to 5%. This is thanks to a strong upturn in momentum towards the end of the year. At 7.9%, organic growth in the final quarter was again well above the target range. After nine months, it was still well below this at 2.9%.
Luxury perfumery strong
The Geneva-based Group performed significantly better in the fragrances segment than in the flavors business. Once again, the luxury fragrances business was particularly strong. Fine fragrances grew organically by 14 percent. All in all, organic sales of fragrances were 7.6 percent higher. In Swiss francs, sales grew by 1.7 percent to 3.31 billion.
In addition to the strong perfumery business, Givaudan attributes the growth to accelerating volume growth in the consumer goods business in the second half of the year. It was also possible to implement price increases in all business areas.
By contrast, the somewhat larger flavors segment only grew organically by 1.1 percent. And in Swiss francs, the Geneva-based group even suffered a decline of 6.7 percent to 3.60 billion. According to the information provided, the business suffered from weaker volumes in the health, culinary flavors and dairy segments, while snacks and confectionery performed well.
Profitability improved ___
As a result of lower sales, operating profit (EBITDA) was also slightly lower. However, thanks to price increases and improved cost management, the decline amounted to just 0.2% to CHF 1.47 billion. The EBITDA margin thus rose from 20.7 percent to 21.3 percent.
The bottom line was a 4.3 percent higher profit of 893 million. Shareholders can look forward to a dividend per share increased by one franc to 68 francs.
Analysts' forecasts for organic growth were thus clearly exceeded. According to the AWP consensus, they had assumed that Givaudan would remain below its own target range. The EBITDA margin, on the other hand, was slightly below expectations, while net profit was slightly above.
Medium-term target confirmed
The medium-term targets were confirmed as usual. Givaudan aims to achieve organic growth of 4 to 5 percent per year within the five-year cycle, which runs until 2025, and thus grow faster than the market. In addition, the free cash flow return on sales should exceed 12 percent.
According to the figures, free cash flow rose to a record level of 920 million in 2023. This represents an increase of 92% compared to 2022. Expressed as a percentage of sales, it amounted to 13.3% after 6.7% in the previous year.
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