Givaudan AG (GVDBF.PK), a Swiss manufacturer of fragrance and flavor products, Tuesday reported a modest growth in sales for the first quarter with marginal improvement in both divisions. The company backed its mid-term goals.
First-quarter sales grew 2.7 percent from last year to 1.088.9 billion Swiss francs and were up 3.9 percent on a like-for-like basis.
Fragrance Division sales grew 3.6 percent from last year to 517.1 million francs, driven by the good growth in Consumer Products, whereas sales in Fine Fragrances and Fragrances Ingredients declined from last year. On a like-for-like basis, sales for the division grew 4.2 percent.
According to the company, the continued excellent performance of the Consumer Products business led to a 5.7 percent growth on a like-for-like basis of the compounding business - Fine Fragrances and Consumer Products.
Fine Fragrance sales fell 5.5 percent on a like-for-like basis against strong prior-year comparatives. While new business remained strong, that strength was not sufficient to offset comparably higher levels of erosion in Europe and North America.
Sales of the Consumer Products Business increased 8.8 percent on a like-for-like basis on top of the double digit growth reported in the same period last year, with improvement spread across all customer groups.
Givaudan noted that performance in Asia was driven by international customers.
Flavour Division sales for the quarter totaled 571.8 million francs, up 1.9 percent from the prior year and advanced 3.7 percent on a like-for-like basis.
The division's sales increased in the developing markets of Africa, China, India, Indonesia and Eastern Europe owing to existing product growth and new wins. However, growth in North America and Western Europe was offset by declines in Australia, Japan and Korea.
Sales for Asia Pacific increased 3.7 percent on a like-for-like basis, with good performance in the developing markets of China, India and Indonesia.
Mid-term, the overall objective is to grow organically between 4.5 percent and 5.5 percent per annum, assuming a market growth of 2-3 percent, and to continue on the path of market share gains.
Givaudan still expects to outgrow the underlying market and continue to achieve its industry-leading EBITDA margin while improving annual free cash flow to between 14 percent and 16 percent of sales by 2015.
Givaudan also confirmed its intention to return above 60 percent of the company's free cash flow to shareholders while maintaining a medium-term leverage ratio target below 25 percent.
The stock fell 0.26 percent on Monday to close at 1142 francs.
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