Givaudan sees mixed results for first half of 2018
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Givaudan sees mixed results for first half of 2018

Scent and flavour kingpin Givaudan reported earnings for the first half of 2018 at the end of last week, demonstrating a strong business. The company is likely to face headwinds going forward in the form of increasing raw materials prices, but with 25% market share and an accelerating pace of growth, it is well positioned to weather that storm. Despite this, the company’s share price took a hit on the back of the release – largely due to a supply disruption that caused its fragrance division to experience a sharp margin decline.

Givaudan’s share price has increased by 5% over the last 3 months

graph 2307 givaudan

SOURCE: Yahoo Finance

Givaudan saw sales increase by 5.6% on a like-for-like basis, and 7.7% in base currency from the year-ago quarter. The company said that its project pipeline and win rates were “sustained at a high level”. Despite this, net income took a hit of 3.4%, and free cash flow dropped by 1%, both against the same period in the previous year. Regarding the supply incident that dented margins, Dominion analyst Christian Cole described it as appearing to be “one-time in nature” and suggested it shouldn’t alter the company’s “underlying structural growth.”

The big news, however, for Givaudan so far this year is its acquisition of Naturex, which it describes as “an international leader in plant extraction and the development of natural ingredients and solutions for the food, health and beauty sectors”.

Following announcements in March and June, Givaudan has now acquired 40.5% of Naturex, and considers it a strategic play for the “natural” trend in scents and flavours that is driving sales, and is predicted to continue driving them, as organic-loving Millennials come further to the fore.


Dominion holds Givaudan in its Global Trends Managed Fund.

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