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Givaudan profit beats estimates on U.S. fragrance demand

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Givaudan SA, the world’s largest flavors and fragrance company, reported first-half profit that beat analyst estimates on increased demand for perfumes.

Givaudan profit beats estimates on U.S. fragrance demand

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Earnings before interest, taxes, depreciation and amortization rose 13 percent to 638 million francs ($649 million), the Vernier, Switzerland-based company said in a statement on Monday. Analysts had predicted 576 million francs. Sales gained 6.2 percent on a like-for-like basis to 2.33 billion francs.

Chief Executive Officer Gilles Andrier, in his 12th year at the helm, reiterated a target for average sales growth of 4 percent to 5 percent excluding any purchases through 2020. Givaudan, maker of the fragrances for Tom Ford Noir Pour Femme and Prada Infusion d’Oeuillet, benefited from contact wins in North America and elsewhere.

While Givaudan is “cautious” on the second half, it expects good sales and profitability this year, Andrier said on a call, without being specific. Raw-material costs are largely benign, with little change expected for 2016, he said.

Andrier said in an interview he could supplement growth with acquisitions and partnerships. The Swiss company is expanding into active ingredients for cosmetic and personal-care products, buying Soliance and Induchem to broaden its offering. Another growth area is natural ingredients and the purchase of ConAgra Foods Inc.’s spices and flavors business for $340 million is expected to close in the coming weeks, he said.

Givaudan shares traded 2.5 percent higher at 2,108 francs as of 4:00 p.m. in Zurich.

“The strong first-half results and the acceleration in topline growth once again shows the strength of the Givaudan business model,” Andreas von Arx, an analyst at Baader, said in a note. “It is therefore another example why Givaudan should be a key holding in a defensive, high quality, growth portfolio.”

Anne Tayac will join the executive board on Aug. 1 and be head of Givaudan’s business solutions to provide services to customers, Givaudan said. Adrien Gonckel will retire.

By Sheenagh Matthews and Andrew Marc Noel (Bloomberg)

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