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Givaudan Annual Profit Rises, Hikes Dividend, Backs Mid-term Goals - Update

Givaudan AG (GVDBF.PK), a Swiss manufacturer of fragrance and flavor products, Thursday reported increased profit for the full year, amid a slight improvement in revenues. The company also reaffirmed its mid-term goals and proposed to hike its dividend.

Full year income attributable to equityholders of the parent climbed to 490 million Swiss francs ($546.6 million) from 410 francs in the prior year. The company attributed the increase to an improved operating performance, stable financial expenses and a lower income tax rate. Prior-year results have been restated.

Gross margin increased to 44.7 percent from 42.4 percent, driven by the residual price increases over the last two years and strong volume gains. Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA increased 9.1 percent to 970 million francs.

Group sales increased 2.6 percent to 4.369 billion francs from 4.257 billion francs. The increase was 5.5 percent on a like-for-like basis.

Fragrance Division sales rose 3 percent to 2.083 billion francs and increased 5.1 percent on a like-for-like basis. Fine Fragrance witnessed strong growth in Latin America, while Consumer Product saw strong performance in developing markets.

Flavour Division sales were 2.3 percent higher at 2.286 billion francs and improved 5.8 percent on a like-for-like basis. All major business segments grew favorably, led by Beverages, Dairy and Snacks.

Givaudan's Board of Directors will propose a cash dividend of 47.00 francs per share for 2013 at the Annual General Meeting on March 20. This is up 30 percent from 2012.

Further, the company backed its mid-term goals. The company's overall objective is still to grow organically between 4.5 and 5.5 percent per annum, assuming a market growth of 2-3 percent, and to continue to gain market share.

Givaudan expects to outgrow the underlying market and to continue to achieve its industry-leading EBITDA margin while targeting an annual free cash flow of between 14 and 16 percent of sales in 2015.

The company also confirmed its intention to return above 60 percent of its free cash flow to shareholders while maintaining a medium term leverage ratio target below 25 percent.

The stock fell 1.4 percent on Wednesday to close at 1,262.00 francs.

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