Flavourings and fragrances manufacturer Givaudan has reported sales up 6.9% in local currency for the first half of its financial year. Operating income was 27.7% higher, with EBITDA (earnings before interest, taxes, depreciation and amortisation) up 12%.
However, because the company’s earnings fell below analyst estimates, Givaudan’s shares fell by around 5% immediately after the announcement - the most they have fallen this year.
Gross margins declined as Givaudan used raw materials it had bought when prices were at their highest in 2011.
Higher pension costs, and costs associated with the CHF170 million start up of a new savoury manufacturing facility in Hungary, meant that EBITDA was not as high as analyst estimates. Production is expected to start in the second half of the year, and will support Givaudan’s plans for Eastern Europe.
Flavourings sales increased by 5.6% in local currency, with double digit growth in developing markets. Givaudan noted that all segments experienced gains, with beverages, sweet goods and snacks, and health and wellness sales growing strongly.
In geographic terms, Asia Pacific grew by 6.1%, with developing markets double digit growth driven by India, Indonesia and Thailand. EMEA saw 4.4% growth, again with double digit gains in developing markets. North America grew by 3.9%, and Latin America by 12.8%.