Swiss fragrance and flavour maker Givaudan has reported better-than-expected earnings in a year characterised by high input costs and supply chain disruptions.
The group, which has so far passed the steep cost increases on to customers including cosmetics firms and drinks makers, suffered from slowing sales in the latter half of 2022, driven by a decline in its flavours business in North America.
Group sales increased by 5.3% on a like-for-like basis to CHF 7.1 billion (€7.06 billion) in 2022, but grew only 2.9% on the same basis in the final quarter.
North American sales fell 5.4% to CHF 1.9 billion (€1.89 billion) in the year, with a 6.4% drop in the flavours division.
Givaudan's finance chief Tom Hallam said North American customers were cutting their safety stocks as supply chains improved, but doubts about consumer sentiment in 2023 still had an impact on sales in the region.
Hallam added the group planned to keep passing on costs, with raw material inflation expected to be 5% this year.
Givaudan's core earnings (EBITDA) were broadly flat against the prior year at CHF 1.48 billion (€1.47 billion), while its comparable EBITDA margin fell to 20.9% from 22.5%.
"Especially compared to Symrise, Givaudan managed better through the 'very challenging operating environment' with more a focus on the bottom-line," Baader Helvea analysts said in a note to investors.
Competitors
German rival Symrise on Monday reported a lower-than-expected 2022 EBITDA margin due to an impairment.
Givaudan and Symrise are the runners-up behind IFF Inc in the market share ranking for fragrances, flavours and ingredients for food and cosmetics.
The industry, which has been expanding into functional food and health ingredients, typically offers strong growth, driven by consumers in emerging markets, with few cyclical swings.
Givaudan said it achieved good growth across the board in the year, with emerging markets increasing 9.9% organically.
It confirmed its mid-term target of 4-5% average organic sales growth per year on a like-for-like basis.
News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.
