Swiss manufacturer of flavours, fragrances and cosmetics Givaudan Group reported sales for the first six months of the year were US$3,665 million, an increase of 7.9 percent on a like-for-like basis and 4.7 percent in Swiss francs.
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Givaudan Fragrance & Beauty sales were US$1,699 million, an increase of 10.1 percent on a like-for-like basis and 7.4 percent in Swiss francs.
Givaudan Taste & Wellbeing sales were US$1,965 million, an increase of 6.1 percent on a like-for-like basis and 2.5 percent in Swiss francs.
As the COVID-19 pandemic continued to have an impact on a global level, Givaudan sustained good business momentum whilst maintaining its operations and global supply chain at a high level. The strong 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.
In Fragrance & Beauty the product segments most affected by the COVID-19 pandemic, namely Fine Fragrances and to a lesser extent Active Beauty, showed a strong improvement in the first half of 2021 as retail activity picked up and as customers and consumers maximised the availability of other channels, including direct selling and e-commerce.
In Taste & Wellbeing the foodservice segment was still impacted by COVID-19 pandemic however experienced a strong recovery in the second quarter, as restrictions in relation to out of home food and beverage consumption started to be lifted in certain markets.
“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,” said CEO Gilles Andrier.
“In an environment which still contains many uncertainties related to the COVID-19 pandemic, we have shown our resilience, our focus on supporting our customers and our ability to capture opportunities to assert our market leadership,” continued Andrier.
The gross profit increased by 8.9 percent from US$1,476 million in 2020 to US$1,608 million 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 US$879 million from US$797 million for the same period in 2020, whilst 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 operating income increased to US$666 million, compared to US$578 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.
Financing costs were US$49 million in the first half of 2021, versus US$42 million for the same period in 2020, largely related to the increase in net debt of the Group in connection with the recent acquisitions. Other financial expense, net of income, was US$1.08 million in 2021 versus US$14 million in 2020.
The interim period income tax expense as a percentage of income before taxes was 15 percent in 2021, compared with 14 percent for the same period in 2020.
The net income for the first six months of 2021 was US$522 million compared to US$448 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 US$56.72 versus US$48.7 for the same period in 2020.
Givaudan delivered an operating cash flow of US$451 million for the first six months of 2021, compared to US$422 million in 2020.
Net working capital was 28.3 percent of sales compared to 27.9 percent in 2020, with temporarily higher accounts receivable and inventory levels related to the good business momentum and continuing COVID-19 pandemic.
Total net investments in property, plant and equipment were US$85 million, compared to US$132 million in 2020, when there was the impact of the completion of the new Fragrance & Beauty facility in China.
Intangible asset additions were US$44 million in 2021, compared to US$18 million in 2020, as the Company continues to invest in its IT and digital platform capabilities and in bringing all acquired entities on to the Givaudan operating platforms.
Total net investments in tangible and intangible assets were 3.6 percent of sales, compared to 4.3 percent in 2020.
Operating cash flow after net investments was US$320 million versus US$271 million recorded in 2020, an increase of 18.0 percent. Free cash flow was US$202 million in the first half of 2021, versus US$193 million for the comparable period in 2020, an increase of 4.5 percent. As a percentage of sales, free cash flow in the first six months of 2021 was 5.5 percent, compared to 5.5 percent in 2020.
Givaudan’s financial position remained solid at the end of June 2021. Net debt at June 2021 was US$5,137 million, up from US$4,390 million at the end of December 2020 and US$5,032 million in June 2020. The leverage ratio was 54 percent compared to 50 percent at the end of 2020 and 56 percent in June 2020.
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, whilst 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 Savoury.
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.
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, whilst 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, Savoury and Snacks.
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, Savoury, and Sweet Goods.
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.