Givaudan shares fall as sales growth stabilises in Q2
Recasts with sales growth and share reaction, adds analyst comments in paragraphs 3 and 8, CFO comment in paragraph 5
By Matteo Allievi and Jagoda Darlak
July 23 (Reuters) -Shares in Swiss fragrance and flavour maker Givaudan GIVN.S fell as much as 6% on Tuesday as its second-quarter sales growth showed signs of stabilisation after a strong start to the year.
From January to June, its sales rose 12.5% to 3.74 billion Swiss francs ($4.20 billion) on a like-for-like basis, roughly in line with analysts' consensus. But its second-quarter growth slowed slightly to 12.3% from 12.6% in the first three months of the year.
"Even though the consensus collected by the company was met, some investors were probably expecting a bit more in terms of growth in the second quarter," Vontobel analyst Arben Hasanaj said, pointing to some "deceleration" in the business growth.
Sales at Givaudan's Taste & Wellbeing business, which makes up more than a half of its revenue, were up by almost 10% from a year earlier, while sales at the Fragrance & Beauty unit rose 15.3%, both on a like-for-like basis.
The group's fine fragrance business has grown 60% since pre-COVID times thanks to great demand over the past four years, particularly in the Middle East, Chief Financial Officer Tom Hallam told Reuters in an interview.
Givaudan's half-year earnings before interest, tax, depreciation and amortization (EBITDA) rose 18.7% to 906 million Swiss francs on a reported basis, ahead of analysts' average forecast of 875 million francs.
Its core profit margin rose to 24.8% on a comparable basis, from 22.7% a year earlier, helped by higher cost absorption thanks to higher volumes.
"From here, we expect volume growth to start to ease as comparisons get tougher, and margin to come down in 2H on seasonality and higher growth investments," Citi analysts said in a note.
A wave of destocking amid softer demand hit Givaudan's volumes last year, but strong sales growth has boosted its profitability since then.
The group also said its current head of corporate finance and business development, Stewart Harris, would take over as the CFO from Aug. 1, succeeding Hallam who will retire.
($1 = 0.8898 Swiss francs)
Reporting by Matteo Allievi and Jagoda Darlak in Gdansk; editing by Milla Nissi
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