Swiss fragrance and flavour maker Givaudan said its sales volumes were stabilising after it reported higher-than-forecast 2023 organic sales growth on strong performance in its fragrances business.
"It looks like the de-stocking has finished (...) and we have relatively stable volumes now," finance chief Tom Hallam told Reuters.
Throughout 2023, the Geneva-based group had to offset steep hikes in input cost amid weak volumes due to inventory reductions and lower demand, but the de-stocking trends began to normalise towards the end of the year.
Asked about shipping disruptions in the Red Sea, Hallam said Givaudan had stocks to mediate any impact, but added it was difficult to assess what the impact will be for the full year.
Vontobel analyst Arben Hasanaj said that Givaudan's production is highly localised, which means it does not necessarily need to ship products, and believes the group could be less affected than other chemical firms from the Red Sea disruptions.
Annual Performance Highlights
Full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 0.7% to CHF 1.47 billion ($1.70 billion), matching analysts' average forecast in a poll provided by the company.
On a like-for-like basis, 2023 sales rose 4.1% to CHF 6.92 billion (€7.4 billion), which was above analysts' estimates, with the fragrance unit growing 7.6% and the taste-and-wellbeing business rising 1.1%.
The fine fragrance segment was the main driver of growth, with a 14% sales increase.
The company, whose customers include cosmetics firms and drinks makers, still expects to achieve average organic sales growth of 4% to 5% on a like-for-like basis and free cash flow growth of at least 12% until 2025.
It expects minor increases in raw material costs in 2024, in low single digit.
Givaudan proposed a dividend of CHF 68 per share for 2023, 1.5% higher than a year earlier.
