Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Costs take bite out of flavour maker Givaudan's profit

Stock MarketsJan 28, 2022 03:55AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A vegan rice tartar on toasted bread is seen at flavour maker Givaudan's innovation centre in Kemptthal, Switzerland October 29, 2020. REUTERS/Arnd Wiegmann/File Photo

By Silke Koltrowitz

ZURICH (Reuters) -Swiss fragrance and flavour maker Givaudan on Friday said it would pass higher costs on to customers this year after rising supply chain costs dented its profit more than expected during 2021.

Demand for fragrances used in soap and toothpaste slowed last year from the very high levels seen at the height of the pandemic in 2020, but sales of perfumes, cosmetics and food and drink consumed outside people's homes recovered.

The Geneva-based group expects a 9% increase in raw material costs this year and intends to pass the increases to customers via price hikes.

It is also facing supply chain issues, including higher distribution and manufacturing costs as surging COVID-19 cases keep essential workers at home.

"We're not missing sales, but it comes with a cost," Chief Financial Officer Tom Hallam told Reuters in an interview.

"We produce what we want to produce, but we have to bring in extra people to do it. We're paying overtime, we're bringing in temporary people," he added.

Oreo cookie maker Mondelez (NASDAQ:MDLZ) said on Thursday it expected a larger impact from supply chain snags in its key North American segment in the current quarter.

Givaudan posted a 10.5% higher net profit of 821 million Swiss francs ($883.18 million) for 2021 and a 3% higher dividend of 66 francs per share, both falling short of forecasts in a Refinitiv poll.

Shares, down 15% so far this year, were trading 5.2% lower at 0807 GMT.

Vontobel analyst Jean-Philippe Bertschy said the comparable EBITDA margin of 22.5% was below expectations, especially in fragrance & beauty areas as higher supply chain costs hit.

"We are not particularly concerned ... Givaudan successfully passed on 100% of the cost increases to customers in 2018 and 2019, albeit with a certain time lag," Bertschy said.

Like-for-like sales, which strip out currency changes and acquisitions, increased 7.1% to 6.684 billion francs, in line with forecasts. Sales growth slowed to 5.3% in the final quarter of 2021, Givaudan said.

It confirmed its 2025 targets of 4-5% organic sales growth and free cash flow of at least 12% of sales.

($1 = 0.9296 Swiss francs)

Costs take bite out of flavour maker Givaudan's profit
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email