News

Frutarom reports record quarter with net income up 56.9%

26 May 2017

Frutarom has reported another record quarter, with sales growing 17.4% to $302.5 million, gross profit increasing 16.8% to $115.7 million, EBITDA up 38.6% to $55.7 million and net income rising 56.9% to $33.7 million.

Frutarom has reported another record quarter, with sales growing 17.4% to $302.5 million, gross profit increasing 16.8% to $115.7 million, EBITDA up 38.6% to $55.7 million and net income rising 56.9% to $33.7 million.

“We are pleased with our continuing business trends and performance that have led once again in the first quarter of 2017 to record results for sales, for profits, for cash flow and for earnings per share,” said Ori Yehudai, President and CEO of Frutarom. “The results reflect the continued successful implementation of our rapid and profitable growth strategy combining profitable internal growth at higher growth rates than those of the markets in which we operate, together with the successful merger of our strategic acquisitions that contribute to the continuing and consistent improvement in our results.”

“The accelerated 17.4% increase in revenues this quarter results from continued rapid internal growth of our core activities, Flavors and Specialty Fine Ingredients, at a rate of 6.6% this quarter (in pro-forma terms and on a constant currency basis) and from the contribution of the strategic acquisitions we made.”

“We are progressing according to plan with the full merging and integration of the 23 strategic acquisitions we made over the past two years. Since the beginning of the year we made three strategic acquisitions that present us with growth opportunities in new markets: René Laurent provides us an entry into local production activity in the significant French flavors market, WFF constitutes our first penetration into growing Vietnamese flavors market, and Unique Flavors in South Africa which contributes towards significantly strengthening our position in the field of savory products in the rapidly growing areas of Africa. Another important move we completed in February 2017 was exercising our option to acquire the 25% balance of holdings in the Russian flavors company PTI which reflects a significant boost of value for our customers, for our employees, and for our investors.”

“We are continuing to create a strong quality pipeline of future strategic acquisitions to support the fulfilling of our plan for accelerated growth in our core activities while continuing to expand the share of the Flavors activity, including by gaining global market leadership in savory solutions and expanding the portfolio of natural solutions in the fields of flavors, health, colors and the natural antioxidants we offer our customers while accelerating our growth and expanding our market share in North America and in emerging markets with high growth rates.”

“During 2017 we will continue to capitalize on the integration and maximum streamlining, achieving the significant savings made possible from the acquisitions we make. The merger and streamlining processes will also contribute in the years to come towards strengthening our competitiveness and to improving profits and margins with the achieving of operational savings of an annual scope of US$ 20-22 million which will emerge in the course of 2017.”

“We are at the stage of successfully completing the merging of our savory activities in Europe following the acquisition of Wiberg. This move will contribute to a gradual improvement in our profitability during the course of 2017 upon completion of the integration and streamlining processes from combining the management, R&D, sales, marketing, production, operational, logistical and administrative platforms of the savory activity in Europe, which we are carrying out in a gradual and measured manner, with emphasis on retaining key personnel and customers. These actions will, upon their completion by the end of 2017, bring savings projected at over US$ 12 million (on an annual basis) which partly began emerging in the first quarter.”

“The project for substantially streamlining the natural extracts operations of the Specialty Fine Ingredients division, part of an overall move to expand the scope of activity in natural extracts and improve its margins by increasing output and optimizing production lines, is successfully moving forward. These measures are expected to bring savings of over US$ 6 million which will start coming into play during the second half of 2017.”

“We are also continuing to build up and strengthen the global procurement platform while capitalizing on our purchasing power which has increased considerably in recent years, and moving towards purchasing raw materials, particularly those that are natural, in their source countries. The global procurement platform will contribute as well to further improvement in Frutarom’s profitability.”

“We continue to present a strong cash flow from operating activity which has grown this quarter by 134.2% to US$ 42.5 million. Our sturdy equity structure, high level of liquidity and conservative leverage, with a net debt to EBITDA ratio of less than 2, enable us to continue initiating and capitalizing on acquisition opportunities based on our strong and high quality acquisitions pipeline.”

“We are convinced that the rapid and profitable internal growth and the strategic acquisitions we have made, combined with continued improvement in our product mix, our progress with natural and healthy products in step with demand from billions of consumers throughout the world, the geographic expansion in North America and in the emerging markets with high growth rates, the moves we are making to optimize our resources while capitalizing on the abundant cross-selling opportunities and the operational savings brought about by the acquisitions, the building of a global procurement platform and the strong pipeline of further synergetic strategic acquisitions, will support our continuing journey of profitable growth in the years to come as well, and the achieving of our strategic goals: At least US$ 2 billion in sales with an EBITDA of over 22% in our core activities by 2020,” concluded Yehudai.