Switzerland's Givaudan Sweetens Dividend After Profit Jump

ZURICH-—Switzerland's Givaudan SA has reported a 13% increase in full-year profit as growth in developing markets and cost savings helped the flavors and fragrance maker counter the impact of the strong Swiss franc.

Geneva-based Givaudan said on Tuesday that net profit for the 12 months to Dec. 31 rose to 635 million Swiss francs ($623million) from 563 million francs a year earlier, ahead of the average analysts' estimate of 611 million francs.

The company proposed an 8% increase its dividend to 54 francs from 50 francs a share in 2014.

Givaudan--a supplier of flavors to food companies such as Nestlé SA, Mondelez International Inc. and Unilever NV--said sales remained roughly flat at 4.4 billion francs, slightly ahead of market expectations.

On a like-for-like basis, discounting the effect of currency movements, Givaudan's sales increased by 2.7%.

The company's performance bears out confidence among the Swiss authorities that high levels of investment in research and development at Swiss companies gives them a competitive edge to offset the impact of the rapid appreciation of the Swiss franc last year. The currency soared after the central bank scrapped a long-standing cap on its value against the euro in January 2015.

The eurozone is Switzerland's largest export market. The higher value of the currency reduces the number of francs Swiss companies get from their eurozone sales and makes their products more expensive in euro terms.

Givaudan said it had made savings by transferring products to its new flavors manufacturing factory in Mako, Hungary, from its site in Kemptthal, Switzerland. The company also increased its operating profit margin by what it called "a continued focus on internal costs."

Chief Executive Gilles Andrier described the results as solid, saying he was particularly happy with sales growth in emerging markets during the second half of the year.

Sales of fragrances for consumer products like shampoo and washing powder, increased by 2.7% on a like for like basis, driven by developing markets, while fine fragrances—the business which makes perfumes like Tom Ford's Velvet Orchid—reported "strong double digit growth" in Asia and the Middle East.

In the company's flavor division, all regions reported increases in sales on a constant currency basis, led by Latin America.

Looking ahead, the company said it aimed to grow faster than the market and increase annual sales in line with the 4% to 5% average range over the next five years that it had outlined last year.

Write to John Revill at [e-mail]

(END) Dow Jones Newswires

February 02, 2016 03:25 ET (08:25 GMT)

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