Profit at Givaudan rises on cost cuts

The flavours division accounts for 60 per cent of Givaudan sales Keystone

Givaudan, the world’s largest maker of fragrances and flavours, has announced that its net profit jumped by 20 per cent last year to SFr350 million ($300.8 million).

The figure fell short of market expectations, but the company is proposing another bumper dividend to shareholders.

Sales at the company, which is based just outside Geneva, were SFr2.68 billion, or a decline of 0.4 per cent in Swiss francs on the 2003 figure.

The slight decrease mainly reflected the impact of the United States dollar, since the company consolidates its accounts in Swiss francs, Givaudan commented.

It said in a statement on Tuesday that the proposed dividend would be ten per cent higher at SFr9.80 per share.

Additional dividend

An additional dividend of SFr6.50 is being proposed, as Givaudan has sold part of its equity portfolio with the aim of distributing the resulting cash to shareholders.

“In 2004, Givaudan delivered above market growth in both divisions, in a market environment which has not shown the expected economic recovery,” commented CEO Jürg Witmer, who is set to become chairman at the shareholders’ meeting in April.

Consumer goods companies, which are Givaudan’s main clients, have suffered from stiff competition and rising material prices and have also said that wet weather hit sales.

“On sales, I am missing about SFr20 million on each division,” said analyst Patrick Lambert at the Pictet brokerage Helvea.

“One has to recognise that the fourth quarter was pretty weak,” he added.

Share buy-back

Givaudan also reported that it would launch a third share buy-back programme aimed at repurchasing up to 720,000 shares – worth SFr564 million at current market prices – to follow its current programme.

Last year, the company said it planned to repurchase 800,000 shares by mid-2005.

“Operationally, it is slightly lower than expected but the return to shareholders looks very nice,” said Lambert.

For 2005, Givaudan, which last year launched measures including 300 job cuts to boost profit margins, said it expected to deliver “another good result”.

swissinfo with agencies

Key facts

Financial year 2004
Sales: SFr2.68 billion ($2.3 billion)
Operating profit: SFr484 million
Net profit: SFr350 million
Earnings per share: SFr46.36
Proposed dividend: SFr9.80 per share (+10 per cent)
Special dividend proposed: SFr6.50

In brief

Givaudan has two divisions: Flavours (60 per cent of sales) and Fragrances (40 per cent of sales).

The company helps make some of the world’s leading perfumes.

Its address is appropriately: chemin de la Parfumerie.

It employed 5,901 people around the world at the end of 2004.