Swiss fragrance and flavor group Givaudan reported lower-than-expected first-half net profit on Thursday, July 23, as the strong Swiss franc and one-off costs weighed on earnings, sending its shares sharply lower.
For the January-to-June period, the Geneva-based group recorded CHF 103 million (EUR 110 million or USD 126) in non-recurring costs — ranging from restructuring charges to litigation provisions — which dragged down net profit by 19.8% to 475 million francs.
Revenue fell 1.7% from the same period last year to nearly CHF 3.8 billion, as the persistent strength of the Swiss franc offset underlying business momentum. On a like-for-like basis, excluding currency effects and acquisitions, sales rose 3.6%, according to the company’s half-year results statement.
While revenue was in line with forecasts, profit fell well short of the expectations of analysts surveyed by the Swiss agency AWP, who had projected an average of 541 million francs.
Excluding currency effects and acquisitions, sales in its fragrance and beauty division rose by 6.5% — following several years of double-digit growth in fine fragrances — while sales in its flavors and food ingredients division grew by 0.5%.
Givaudan is a favorite among investors on the Swiss stock exchange due to its consistent growth, even during economic downturns, leaving little room for disappointment.
The group manufactures fragrances for laundry detergents, hygiene products, and fine perfumery, as well as flavors and ingredients for the food industry. It has also built a robust business in the development and production of cosmetic ingredients (Givaudan Active Beauty), notably through the acquisitions of Soliance in 2014, Induchem in 2015, and Naturex in 2018.
In contrast to the negative market reaction, Vontobel analyst Arben Hasanaj described Givaudan’s first-half performance as “solid in a volatile environment,” supported by the resilience of its fragrance business, while noting that the flavors division is “recovering slowly.”
“Despite ongoing geopolitical and macroeconomic challenges, our business continued to display good growth momentum and industry leading profitability,” highlighted Givaudan CEO Christian Stammkoetter.
