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Givaudan Reports 2011 Financials

Posted: February 16, 2012

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For its fragrance division, Givaudan recorded sales of CHF1,833 million, an increase of 4.7% in local currencies and a decline of 7.8% in Swiss francs. After a good sales performance in the first half year, sales continued to show strong growth in the second half, helped by price increases. The growth was driven by a strong performance in consumer products, particularly in the developing markets of Latin America and Asia Pacific. Total sales for fragrance compounds (the fine fragrances and consumer products divisions combined) increased 5.3% in local currencies and declined by 7.7% in Swiss francs to CHF1,587 million from CHF1,719 million. Fragrance ingredients sales increased by 0.7% in local currencies.

In 2011, further investments were approved to expand the infrastructure in the developing markets. For example, in Moscow the creative and commercial teams moved into new and expanded offices, while in India Givaudan added additional floor space to expand the creative and development center in order to meet the demands of this high growth market. The year also saw the further expansion of the production capabilities in the fragrance ingredients manufacturing site in Pedro Escobedo, Mexico. In Singapore, a state-of-the art creative, commercial center and a high volume production center was approved during the year, which should be operational in 2013.

Fine fragrances sales grew by 0.2% against the very strong comparables of the previous year. The year started with sales in the first half below 2010 levels. However, growth increased in the second half of the year driven by a strong pipeline of new wins across all major customer categories and distribution channels. Looking at the performance on a regional basis, Latin America delivered the strongest growth, as a result of new wins and volume gains with most customer accounts. In Europe, Africa and the Middle East sales decreased as the new wins were unable to offset business erosion, partially attributed to the restocking impact of 2010.

Sales for the company’s consumer products business unit increased by 6.9% in local currencies against last year's high comparables. This increase was across all customer groups as well as all regions. Sales in developing markets grew faster than sales in mature markets. Asia Pacific reported strong growth led by international customers, especially in the fabric care segment, with China, Indonesia and Vietnam recording the strongest increases. All customer groups contributed to the growth in Latin America, with an excellent performance in Mexico. In Europe, Africa and the Middle East, sales increased across all customer segments, particularly in the developing markets. In North America, sales growth was driven by local and regional customers, with a double-digit increase in both fabric care and home care. On a segment basis, sales in the fabric care and oral care achieved double-digit growth. Home care sales also rose, especially in Asia Pacific, while personal care sales were flat despite the good performance in the hair care and deodorant categories.

Sales in fragrance ingredients increased 0.7% in local currencies. Price increases in all product categories compensated for the decline in volume, compared to the previous year. Sales of specialties showed a modest growth while the remaining product categories recorded slight declines in sales. The performance was mainly dampened towards the end of year, partially driven by destocking. The fragrance ingredients unit on the Naarden site in the Netherlands ceased production at the end of December 2011. Further investments in reaction and distillation capacities have been made in the ingredients manufacturing plant at Pedro Escobedo in Mexico, and they are expected to be fully operational early in 2012.