Givaudan posts a rise in sales, but earnings decrease
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Givaudan posts a rise in sales, but earnings decrease

Swiss scent and flavour specialist Givaudan, the company behind numerous everyday products with which we come into contact, reported figures for 2018 last week, showing a rise in sales even as earnings declined. Explaining this dichotomy, the company said that it booked higher financing costs throughout the year due to the debt it took on purchasing Naturex in September. Currency effects also worked against it over the twelve-month period.

Givaudan’s share price has appreciated by 3% so far this year

 graph 31 givaudan

Source: Yahoo Finance

Givaudan reported sales of 5.53 billion Swiss francs for 2018. That’s a 9.4% increase from the previous year’s 5.05 billion Swiss francs. However, net profit in the period came in at 663 million Swiss francs – a decline against the previous year’s 720 million Swiss francs. This demonstrates a strong underlying business that’s making headway – and the costs incurred throughout the year are, in part, due to a quest for growth which is beginning to pay off.

On the company’s earnings call, CEO Gilles Andrier said that “the integration of Naturex and the Givaudan Business Solutions implementation are making good progress as planned.” He also added that the company was “satisfied” with its performance in 2018, and on track to deliver against its 2020 midterm targets.

Andrier sees high-growth markets as an on-going growth driver for the business, saying: “Midterm, the demographics, the ever-growing middle class and the strong globalization trends will continue to support the growth of these markets, especially in Asia, where globalization and the middle class are still below the average. Our size and our operations footprint give us a unique exposure to the diversity of these high-growth markets in which we continue investing, both with additional talent and new facilities to service the wide diversity of our clients locally.”

Disclosure

Dominion holds Givaudan in its Global Trends Managed Fund.


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