Givaudan profit stays steady as group expands
The world's largest flavours and fragrances group, Givaudan, on Tuesday reported a slight increase in its 2006 net profit to SFr412 million ($334.2 million).
The result was just below market expectations but the Swiss company, which is based near Geneva, said it was "well positioned" for another good result in 2007.
Sales increased by 4.7 per cent in Swiss francs to SFr2.91billion, in line with forecasts of SFr2.9 billion.
Analysts polled by Reuters had expected net income to increase by four per cent to an average SFr423 million.
"It's a good result considering that 2005 was a record year for Givaudan. We managed actually to improve [our position] with strong sales growth especially in fragrances but also in flavours," company CEO Gilles Andrier told swissinfo.
"We are managing to grow in the market and in terms of profitability we were able to sustain and slightly improve."
Givaudan said its Fragrance Division recorded sales of SFr1.22 billion, an increase of 8.2 per cent compared with 2005.
A statement said the result was based on the "strong performance" of all three businesses – Fine Fragrances, Consumer Products and speciality ingredients.
New perfumes it created last year included Midnight Fancy by Britney Spears, Old Spice Signature and Enchanted by Céline Dion.
The Flavour Division recorded sales of SFr1.686 billion, a growth of 2.4 per cent.
The company also noted that several new initiatives and projects were launched in 2006 to maintain and expand its market position.
These included the SFr2.8 billion acquisition in November of rival Quest International, a division of Imperial Chemical Industries.
Based in the Netherlands, Quest has been described by Givaudan as "one of the leading players" in the global flavour and fragrance market with a turnover of about SFr1.3 billion in 2005.
"2007 is going to be a transition year... This is going to be a year in which we will integrate the 3,500 employees of Quest combining both companies' strengths and really making sure that we keep a strong business momentum.
"We'll have a formidable opportunity then to really create a strong innovation platform, a real powerhouse... to create unique flavours and fragrances to build success in the consumer products of our clients," Andrier commented.
He confirmed there would be some job cuts as a result of the Quest acquisition but said it was too early to say how many would be lost.
"We have articulated a figure of SFr150 million of savings and synergies. Some will come with job cuts but others will come from the purchasing side so it's too early to state any numbers there," he said.
Andrier ruled out any major acquisitions in the near future.
"We will increase our turnover by 50 per cent so we will busy for the next two or three years integrating both companies. I don't see any major acquisitions on the short-term horizon."
swissinfo, Robert Brookes
Sales: SFr2.909 billion (SFr 2.778 billion in 2005)
Operating profit: SFr514 million (17.7% of sales). In 2005, the figure was SFr514 million (18.5%).
Net profit: SFr412 million (+1.5%)
Dividend proposal: SFr18.80 (SFr17.60 for the 2005 business year)
Employees at end of 2006: 6,056
Givaudan commented that it was the sixth successive total dividend per share increase since the company went public in 2000.
Léon Givaudan founded the company in 1898, but it can trace roots back to the French Revolution.
The Roche pharmaceutical company of Basel acquired Givaudan in 1963.
Givaudan was spun off from Roche in June 2000 and is now an independent Swiss company.
In 2002 the company acquired Nestlé's flavour business FIS.
It announced the deal with ICI for Quest International in November last year.
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