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Givaudan reported its 2011 financials, with group sales totaling CHF3,915 million, an increase of 5.2% in local currencies but a decline of 7.6% in Swiss francs when compared to the company’s 2010 numbers. Sales for the fragrance division were CHF1,833 million, an increase of 4.7% in local currencies and a decline of 7.8% in Swiss francs, and sales for the flavor division were CHF2,082 million, an increase of 5.7% in local currencies and a decline of 7.5% in Swiss francs compared to 2010.
Givaudan CEO Gilles Andrier commented, “Our 2011 results are a convincing demonstration of the continued value we bring to our customers. The business achieved a strong sales momentum in a tough environment and a significant profit improvement in the second half of the year. We are well on track for 2012 and to deliver on our mid-term targets.”
The company’s gross profit margin decreased to 42.6% from 46.1% as a result of the sharp and broad-based increase in raw material costs. Givaudan successfully implemented price increases in collaboration with its customers. These price increases started to become effective in the course of the second quarter of the year.
During 2012, the company will continue to work in close collaboration with its customers to make the necessary adaptation of its prices to reflect the sharp increase in input costs. As the company will complete the full roll out of SAP, it will continue to leverage on this investment through initiatives such as shared services, as well as ensuring that its supply chain is efficient and requires reduced working capital levels.
Mid-term, the company’s overall objective is to grow organically between 4.5–5.5% per annum, assuming a market growth of 2–3%, and to continue on the path of market share gains over the next five years. By delivering on the company's five pillar growth strategy—developing markets, health and wellness, market share gains with targeted customers and segments, research and sustainable sourcing—Givaudan expects to outgrow the underlying market and to continue to achieve its industry-leading EBITDA margin while improving its annual free cash flow to between 14% and 16% of sales by 2015. Givaudan confirms its intention to return above 60% of the company's free cash flow to shareholders once the targeted leverage ratio, defined as net debt, divided by net debt plus equity, of 25% has been reached.