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Givaudan Q1 Sales Rise; Expects Growth Ahead - Update

Givaudan AG (GVDBF.PK), a Swiss manufacturer of fragrance and flavour products, on Wednesday said it experienced a strong start to the year, with first-quarter sales increasing 4.7 percent. Both the Fragrance and flavour divisions posted higher sales. The company added that it expects further growth over the medium term.

In the first three months of 2012, Givaudan's sales totaled 1.06 billion Swiss francs, higher than prior year's 1.01 billion francs. In local currencies, sales grew 8.4 percent.

Givaudan noted that it started the year with "a continued strong business momentum with a full project pipeline and win rates sustained at a high level. The company continues to successfully implement price increases in collaboration with its customers to compensate the increases in input costs."

Fragrance division generated sales of 499.1 million francs for the quarter, a growth of 6.8 percent in francs and 10.7 percent in local currencies, led by double digit growth in Consumer Products and strong growth in Fine Fragrances.

In the division, the compounding business of Fine Fragrances and Consumer Products recorded 12.2 percent increase in sales in local currency, helped by strong volume growth as well as the impact of price increases.

In the quarter, Fine Fragrance sales grew 9 percent. A good growth in Latin America and Europe was partly offset by lower sales in North America that mainly reflected the impact of business erosion. The Consumer Products sales increased 13.2 percent and sales for Fragrance Ingredients grew 1.1 percent - both in local currencies.

Sales in Flavour division increased 3 percent in francs or 6.4 percent in local currency to 561.2 million francs. Sales were boosted by double digit increases of existing products in the developing markets of Asia, Latin America and Africa. New wins in Asia Pacific, Latin America and North America, mainly in Beverages and Snacks, also benefited the results.

Looking ahead over the mid-term, the company said its overall objective is to grow organically between 4.5 percent and 5.5 percent per annum, assuming a market growth of 2-3 percent. The company also projects to continue on the path of market share gains over the next five years.

Givaudan also 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 percent and 16 percent of sales by 2015.

The company maintained its intention to return above 60 percent of its free cash flow to shareholders. This will be done when the targeted leverage ratio, defined as net debt, divided by net debt plus equity, of 25 percent has been reached, it said.

In Zurich, Givaudan shares closed Tuesday's trading at 863 francs, down 13.50 francs or 1.54 percent.

by RTTNews Staff Writer

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