Frutarom reports record sales and profits

28 Mar 2017

Frutarom has reported another record year. In 2016, sales rose 31.4% to a record US$1,147 million. Gross profit rose 31.4% to US$448.0 million, with EBITDA rising 27.9% to a record US$217.3 million.

Frutarom reports record sales and profits

Frutarom has reported another record year. In 2016, sales rose 31.4% to a record US$1,147 million. Flavours activity sales rose 39.3% to a record US$846.5 million. Specialty Fine Ingredient activity sales rose 23.2% to a record US$227.9 million.

Gross profit rose 31.4% to US$448.0 million, with EBITDA rising 27.9% to a record US$217.3 million. Net income rose 16.6% to US$129.2 million.

“We are pleased with the additional leap forward we achieved in 2016 in which we again registered record results in sales, profits and cash flow,” said Ori Yehudai, President and CEO of Frutarom. “Over the past four years we have doubled Frutarom’s revenues and profits, reflecting the successful implementation of our rapid and profitable growth strategy combining profitable internal growth, at growth rates higher than those of the markets in which we operate, together with strategic acquisitions that contribute to the continuing and consistent improvement in our results.”

“The 31.4% accelerated growth of our activity in 2016 stems from continued rapid internal growth of our profitable Flavors activity at the rate of 6.1% (on a constant currency and pro-forma basis) and from the contribution of the strategic acquisitions we made.”

“Further to the 11 acquisitions we made in 2015, since the beginning of 2016 we made another 9 strategic acquisitions and we progressed according to plan in fully merging and integrating them. We are continuing to create a strong quality pipeline of future acquisitions to support the fulfilling of our plan for accelerated growth in our core activities while expanding the share of the Flavors activity, including by gaining market leadership in the field of savory solutions and expanding the portfolio of natural solutions in the fields of flavors, health, colors and the natural antioxidants we offer our customers, and accelerating our growth and expanding our market share in North America and in emerging markets with high growth rates.”

“Since the beginning of the fourth quarter we completed the acquisition of Piasa, a leading local player in Mexico’s savory market that reflects the continued implementation of our strategy to deepen our market share in growing emerging markets. In addition, we acquired Nardi Aroma in Brazil which operates in the field of natural extracts and flavors for beverages. In February 2017 we also acquired Unique Flavors in South Africa which will contribute towards significantly strengthening our position in the rapidly growing areas of Africa while capitalizing on the arising synergies with our existing activity in the region. Another important move we completed in February 2017 was exercising our option to acquire the remaining 25% holdings in the Russian flavors company PTI which reflects a significant enhancement of value for our customers, our employees, and our investors.”

“The projects of combining and integrating activities and production sites and achieving maximum efficiency are moving ahead successfully. This year these mainly included the merger of activities and significant streamlining in the savory operations in Europe following the acquisition of Wiberg. I am pleased that the main and most important part of the project, the transfer of production from the main savory site at Stuttgart, Germany to Wiberg’s modern and efficient site in Germany, along with the closing of the plant in Stuttgart, has been successfully completed, and that further to completing this move we are busy these days completing the merging of the marketing, R&D, and administration of the savory activity in Europe in a gradual and measured manner with emphasis on retaining key personnel and customers. These actions are expected to bring savings projected at over US$ 12 million (on an annual basis) which partly already started to be seen in the first quarter of 2017 with the balance to gradually come into play over the course of 2017.”

“Also, we are pushing forward on substantially streamlining the natural extracts operations of the Specialty Fine Ingredients division as 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. These measures are expected to bring savings of over US$ 6 million which will start coming into play during the second half of 2017.”

“The merging and streamlining measures will also contribute in the coming years to strengthening our competitiveness and improving profits and profitability with the attainment of operational savings in an annual range of US$ 20-22 million which will come into play gradually over the course 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.”

“Frutarom continues to maintain a high level of liquidity and conservative leveraging, with a ratio of net debt to EBITDA of 1.9, based on a strong cash flow from operating activity which has grown this year by 36% to a record US$ 124.6 million. Our sturdy equity structure and the strong cash flow we generate 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 organic 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.