Givaudan Builds for the Future

Despite a rocky economy, Givaudan is intent on building a solid foundation for growth.

“Following the successful integration of Quest, we are entering the next era of profitable growth for the business,” stated Gilles Andrier, chief executive officer of the Swiss flavors and fragrance supplier. “The overall objective is to grow organically between 4.5 percent and 5.5 percent per annum, based on an assumed market growth of 2 percent to 3 percent, and to continue on our path of market share gain over the next five years.”

To do this, Givaudan said it will continue focusing on certain strategies, such as leveraging its business in fast-growing developing markets so they generate 50 percent of company sales by 2015, versus the approximate 41 percent today. Givaudan also plans to expand its sustainable raw material sourcing strategy with a focus on naturals.

The company will streamline its savory flavors manufacturing in the U.K. and Switzerland, as well. This includes partially closing its operations in Kemptthal, Switzerland, resulting in about 120 job cuts, and shuttering its factory in Bromborough, U.K., which employs 150.

At 170 million Swiss francs, or $167.1 million at current exchange, savory flavors production facility is to be opened in Hungary.

“This investment will be spread over three years and is in accordance with the overall capital expenditure target of approximately 4 percent of sales per year,” the company stated.

Overall, restructuring costs are estimated at about 75 million Swiss francs, or $73.7 million, including a projected cash component of 55 million Swiss francs, or $54 million.

Approximately two-thirds of the charges are expected to be booked against 2010 results and the remainder against 2011’s. Givaudan said the anticipated payback for the savory manufacturing investment is seven years and three years for the efficiency projects.

As reported, Givaudan’s net profits for the first half of 2010 increased 108 percent to 200 million Swiss francs, or $185 million at average exchange for the period. The firm posted revenues of 2.2 billion Swiss francs, or $2.03 billion, up 10.2 percent versus the same prior-year period. In local currencies, sales increased 10.5 percent.