Swiss scent and fragrance maker Givaudan reported a slowdown in year-end sales on Wednesday, further deteriorating profit margins in a year marked by high production costs and supply chain disruptions.

The group, which has so far shifted rising costs onto clients such as cosmetics companies and beverage manufacturers, was hit by a slowdown in sales in the second half of 2022 due to a downturn in its North American flavors business. .

Group sales rose 5.3% like-for-like to reach 7.1 billion Swiss francs ($7.7 billion) in 2022, but rose just 2.9% in the most recent quarter on the same basis.

Sales in North America fell 5.4% year-on-year to CHF 1.9bn, with flavors down 6.4%.
Givaudan’s chief financial officer, Tom Hallam, said North American customers are reducing safety stocks as supply chains improve, but doubts about consumer confidence in 2023 will continue to weigh on sales in the region.

Hallam added that the group will continue to plan to roll over costs as commodity inflation is expected to be 5% this year.

Givaudan’s underlying earnings (EBITDA) were broadly unchanged from the prior year at CHF 1.48 billion. For its part, the equivalent EBITDA margin fell from 22.5% to 20.9%.

“Compared to Symrise, Givaudan handled a ‘very challenging business environment’ better and became more profit-focused,” Baader Helvea analysts said in a note to investors.

Givaudan and German competitor Symrise rank second to IFF Inc in the market share rankings for flavors, aromas and ingredients in food and cosmetics.

Symrise reported on Monday that its 2022 EBITDA margin was lower than expected due to impairments.

Givaudan’s full-time earnings rose 4.2% to CHF856 million, beating analyst expectations of CHF806 million, but sales and EBITDA margins were slightly below expectations.

The Geneva-based group offered a dividend of CHF67 per share, up 1.5% from last year.


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