Givaudan's First- half Profits Hit by Operating Headwinds
● The world's largest fragrance and flavors supplier will implement price increases in 2022.
PARIS — Givaudan, the world's largest fragrance and flavors supplier, said that in the first half of 2022 its net income contracted by 8.4 percent on sales that grew 8.3 percent.
As for all companies today, the group's operating environment has been buffeted by headwinds, including higher input costs and inbound supply chain disruptions. So Givaudan is pursuing price increases later this year.
“We are very pleased with our solid performance in the first half of 2022, despite the challenging environment that we continue to operate in,” Gilles Andrier, chief executive officer of Givaudan, said in a statement.
“With higher input costs in 2022, the company is well on track in implementing price increases in collaboration with its customers to fully compensate for the increases in input costs,” Givaudan said.
In January, the Zurich-based company said it would apply price increases during this year.
The group's net profits for the first six months ended June 30 reached 440 million Swiss francs, or $452.4 million. Operating profit was 631 million Swiss francs, a 2.9 percent rise.
Givaudan's sales, meantime, were 3.65 billion Swiss francs, up 6.2 percent on a like-for-like basis.
At 1:05 p.m. CET, Givaudan stock was trading down 1.3 percent at 3,292 Swiss francs.
Its half-yearly gains were notched up across various product segments and geographies. The company's Fragrance and Beauty sales were 1.65 billion Swiss francs, a 5.3 percent uptick. The Taste and Wellbeing division's revenues advanced 10.9 percent to 2.01 billion Swiss francs.
In the Fragrance and Beauty division, strong growth drivers included volume increases in fine fragrance, with an ongoing high level of new business, plus double-digit growth in the Fragrance Ingredients activity. Further, the Consumer Products branch returned to growth in the second quarter, as the demand for Fragrance Ingredients remained strong, according to Givaudan.
On a like-for-like basis, Fine Fragrance sales were up 17.9 percent, while Consumer Products sales rose 0.4 percent and Active Beauty's sales gained 8 percent.
Group sales in mature markets increased 5.4 percent, while high-growth markets' sales were up 7.4 percent on a like-for-like basis.
The company reiterated its goals for 2025, which are fueled by three growth ambitions: expand the portfolio, extend customer reach and focused markets strategies.
By 2025, Givaudan aims for organic sales growth of 4 percent to 5 percent in like-forlike terms and a free cash flow of at least 12 percent — both on an average basis.