Givaudan Group’s flavor business was impacted during the first six months of the year, as its foodservice segment struggled with COVID-19 pandemic outcomes. However, in its most recent financial overview, the flavor house reports a “strong recovery” in the second quarter due to lifted out-of-home restrictions in certain markets.
Robust growth was achieved across most product segments and geographies, with the mature markets growing at 6.1 percent and the high growth markets at 10.4 percent on a like-for-like basis.
The company’s sales for the first six months of the year were reported at CHF 3.4 billion (US$3.7 billion), an increase of 7.9 percent on a like-for-like basis and 4.7 percent in Swiss francs.
The Taste & Wellbeing segment reported sales of CHF 1.8 billion (US$1.9 billion), an increase of 6.1 percent on a like-for-like basis and 2.5 percent in Swiss francs.
“I am really pleased with our strong performance in the first half of 2021, with all parts of our business contributing to the excellent financial results and a strong contribution from our 2025 strategic growth areas,” says CEO Gilles Andrier.
Among its targets for 2025, Givaudan is aiming to achieve organic sales growth of 4 to 5 percent on a like-for-like basis and free cash flow of at least 12 percent, both measured as an average over the five-year period strategy cycle.
Financial performance
Givaudan’s gross profit increased by 8.9 percent from CHF 1.4 billion (US$1.5 billion) in 2020 to CHF 1.5 billion (US$1.6 billion) in 2021. Due to high operating leverage related to the strong sales volume growth and cost discipline, the gross margin increased to 43.9 percent in 2021 compared to 42.2 percent in 2020.
The EBITDA increased by 10.2 percent to CHF 809 million (US$877.8 million) from CHF 734 million (US$796.4 million) for the same period in 2020, while the EBITDA margin was 24.0 percent in 2021 compared to 22.8 percent in 2020. On a comparable basis, the EBITDA margin was 24.2 percent in 2021 compared to 23.7 percent in 2020.
The company’s operating income increased to CHF 613 million (US$665 million), compared to CHF 532 million (US$577.2 million) in 2020. When measured in local currency terms, the operating income increased by 17.3 percent. The operating margin increased to 18.2 percent in 2021 from 16.5 percent in 2020.
The net income for the first six months of 2021 was CHF 481 million (US$521.9 million) compared to CHF 413 million (US$477.9 million) in 2020, an increase of 16.3 percent, resulting in a net profit margin of 14.3 percent versus 12.8 percent in 2020. Basic earnings per share were CHF 52.19 (US$56.60) versus CHF 44.81 (US$48.59) for the same period in 2020.
Givaudan’s financial position remained solid at the end of June 2021. Net debt at June 2021 was CHF 4.7 billion (US$5 billion), up from CHF 4 billion (US$4.3 billion) at the end of December 2020 and CHF 4.6 billion (US$5 billion) in June 2020. The leverage ratio was 5 percent compared to 50 percent at the end of 2020 and 56 percent in June 2020.
Givaudan Taste & Wellbeing
Taste & Wellbeing sales were CHF 1.8 billion (US$2 billion), an increase of 6.1 percent on a like-for-like basis and an increase of 2.5 percent in Swiss francs.
In the key strategic focus areas, sales increased double-digit in plant-based proteins and high single-digit in the natural health and wellness offerings.
From a segment perspective, the positive sales performance was mainly driven by Beverages, Savory and Snacks.
The EBITDA of Taste & Wellbeing increased to CHF 434 million (US$471 million) from CHF 401 million (US$435.3 million) in 2020, an increase of 8.4 percent, with continuing productivity gains and cost discipline contributing to the increase.
The EBITDA margin increased to 24.0 percent in 2021, from 22.7 percent in 2020. On a comparable basis the EBITDA margin of Taste & Wellbeing was 24.3 percent in 2021 compared to 23.8 percent in 2020.
The operating income increased to CHF 312 million (US$338.6 million) in 2021 from CHF 268 million (US$290.9 million) in 2020, an increase of 16.7 percent. The operating margin increased to 17.3 percent in 2021 compared to 15.2 percent in 2020.
Asia Pacific
Sales in Asia Pacific increased by 5.1 percent on a like-for-like basis. In the high growth markets, China and Malaysia delivered strong double-digit performance, followed by solid single-digit growth in the Philippines and Vietnam, while Indonesia and Thailand were still impacted by the COVID-19 pandemic. In the mature markets, growth was driven by Australia, Korea and Singapore.
From a segment perspective the growth was mainly achieved in Beverages, Dairy, Sweet Goods and Savory.
South Asia, Africa and the Middle East (SAMEA)
Sales in South Asia, Africa and the Middle East increased by 3.5 percent on a like-for-like basis. Double-digit growth was achieved in India, Algeria and Nigeria, which was partially offset by South Africa, where there is still a heavy impact from the COVID-19 pandemic and the Middle East. The sales growth in the region was driven by the Beverages and Dairy segments.
Europe
Sales in Europe increased by 1.7 percent on a like-for-like basis. The mature markets of Germany, Italy, Spain and Sweden all achieved good single-digit sales growth, while in the high growth markets there was excellent business momentum driven by double-digit growth in Russia and Poland.
Throughout the first half of 2021 the region was still impacted by the restrictions related to the COVID-19 pandemic with some relaxation in those measures being seen only more recently in a number of countries. The growth was mainly achieved in the segments of Beverages, Savory and Snacks.
North America
On a like-for-like basis, sales in North America increased by 6.1 percent across all customer segments. The strong performance was a result of new wins, a rebound in Foodservice and the growth of existing business in Beverages, Immunity Products, Savory and Sweet Goods.
Latin America
Sales in Latin America increased 23.4 percent on a like-for-like basis, led by strong double-digit volume growth in Mexico, Brazil, Columbia, Chile and Argentina, and across all segments.
The group has aligned the reporting of the regional performance of Givaudan Taste & Wellbeing with changes in the management structure of the business, effective January 1, 2021. The comparable growth for the first six months of 2020 for South Asia, Africa and the Middle East was 5.1 percent and for Europe 2.2 percent respectively.
