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UPDATE 1-Givaudan sales hit by emerging market currency slide
October 10, 2013 / 6:25 AM / 4 years ago

UPDATE 1-Givaudan sales hit by emerging market currency slide

* Q3 sales 1.09 bln Sfr vs 1.14 in Reuters poll

* Reiterated mid-term target sales growth of up to 5.5 pct

* Does not see slowdown in emerging markets - spokesman

ZURICH, Oct 10 (Reuters) - Sales at Swiss fragrance and flavour maker Givaudan fell unexpectedly in the third quarter hit by a weaker U.S. dollar and sliding currencies in some key emerging markets.

The company, which makes fragrances for Dior and Prada perfumes, said sales fell 1.1 percent to 1.09 billion Swiss francs ($1.2 billion) compared to 1.1 billion a year ago.

This fell short of the average analyst forecast for a 3.3 percent rise to 1.14 billion in a Reuters poll.

A spokesman for the company said the fall was attributed to a weaker U.S. dollar as well as the depreciation of some emerging market currencies, such as the Indonesian rupiah and the Brazilian real

The rupiah is down almost 20 percent against the dollar so far this year, while Brazilian real has shed 8 percent of its value.

Givaudan and its peers have benefited from the growing prosperity of emerging markets consumers, including in Africa and Latin America, who are able to afford ready-to-eat meals, cosmetics and detergents that use their scents and flavours.

But earlier this month Unilever - a customer of Givaudan - warned that a slowdown in emerging markets had accelerated and would drag on sales growth in the third quarter.

The spokesman said Givaudan, which will soon make more than half of its sales in emerging markets where the fast-growing middle classes are driving demand, had not noticed any slowdown.

The company said volume growth in all markets was consistent with levels seen in the first six months of the year, when strong demand in Europe, North America and emerging markets pushed first-half sales up 5.7 percent on a like-for-like basis.

The Geneva-based firm confirmed its mid-term guidance of between 4.5 and 5.5 percent underlying annual sales growth, against average growth of about 2 to 3 percent for the market as a whole.

Givaudan, which competes with Germany’s Symrise, American International Flavors & Fragrances, also confirmed its goal to return over 60 percent of its free cash flow to shareholders once it has met its target for a leverage ratio of 25 percent.

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