Givaudan’s 2016 results: hit by sluggish emerging markets
Givaudan’s market shares fell last week, according to MarketWatch, on the publication of its 2016 results, which showed that its net income fell to 644 million Swiss francs (USD 647 million).
Revenue rose 6.1% to CHF4.7 billion, MarketWatch notes. On a like-for-like basis, which strips out the effect of currency fluctuations, revenue climbed 4.2%. Analysts at Baader Helvea Equity Research had expected like-for-like growth of 4.3%.
According to Reuters, shares fell 4.5% after its earnings and dividend ‘disappointed investors’.
Analysts also fear that the sluggish demand from emerging markets which beset the company in 2016 could continue into 2017, including in Asia Pacific and in Latin America.
Outline of results
Chief Executive Gilles Andrier reportedly said that he hopes to grow strongly in high-growth markets overall, while expecting there to be ‘ups and downs’ along the way.
He picked out Europe and Russia in particular as likely to remain sluggish and currency withdrawal in India as an action set to slow its progress there for the coming weeks.
However, the company - a competitor of Symrise and of IFF - confirmed its 2020 guidance to grow sales on average 4-5%, and generate free cash flow of 12-17%.
The net income increased to CHF 644 million in 2016 from CHF 625 million in 2015, an increase of 3.1%. This results in a net profit margin of 13.8%, versus 14.2% in 2015. Basic earnings per share increased to CHF 69.95 versus CHF 67.89 for the same period in 2015.
Givaudan asserted that its financial position ‘remained solid at the end of the year’. “Net debt at December 2016 was CHF 930 million, compared to CHF 677 million at December 2015. At the end of December 2016 the leverage ratio was 19%, compared to 15% at the end of 2015.”