04 August 2006 09:40 [Source: ICIS news]
LONDON (ICIS news)--Swiss flavours and fragrances producer Givaudan delivered on Friday an 11% rise to SF313m ($254m/€199m) in first half operating profits, as product price rises and a one-off disposal gain outweighed higher raw material costs.
Net profits from the world's largest maker of scents for fine fragrances beat expectations by about SF40m, rising 28% to SF266m from SF208m in January to June last year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 8.3% to SF367m.
Sales were up 7.8% (3.75% in local currencies) to SF1.47bn despite on-going streamlining of commodity ingredients in both its flavours and fragrances divisions.
"Although raw material prices continued to rise, the gross profit margin was maintained at the previous year's level," said Givaudan. "The operating performance remained strong. This, together with a positive non-operating result, led to an improvement in the net profit."
Givaudan said it remained confident of outperforming the market in the full year and sustaining its 2005 operating margin despite increasing raw material prices.
The SF31m improvement in first half operating profits resulted in a margin of 21.2%, up from 20.6% in H1 last year. Operating profits in January to June this year were boosted by a SF18m gain from the disposal of land in Switzerland. Givaudan also booked a SF4m charge against the closure of its US flavours sites at New Milford, Connecticut and Oconomowoc, New Mexico.
Flavour division first half operating profits rose 4.5% to SF208m on sales 6.8% (2.6% in local currencies) up at SF868m. Givaudan said sales margins, however, declined to 24% from 24.5%. It said the streamlining of commodity ingredients reduced sales by SF7m and were expected to have a full year impact on flavour sales of SF25m.
Givaudan said first half flavour sales were up strongly in Latin America, exceeded prior year period sales in Europe and North America but were down in Asia Pacific due to a decline in demand from the Japanese beverage sector.
First half operating profits from the fragrance division were up 26.5% at SF105m on sales 9.3% (5.4% in local currencies) ahead at SF606m. Givaudan said fine fragrance sales enjoyed double digit sales growth supported by new product launches and a regained momentum in US specialty retail demand.
Consumer products delivered strong growth, while in fragrance ingredients the specialties business enjoyed a double digit rise in sales despite a SF9m reduction due to discontinued commodities. The full year impact was estimated at SF17m.
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