Despite strategies announced at the beginning of the year to boost profit, figures released yesterday show sales for the first quarter only slightly creeping up to CHF701m (€451m) from CHF685.3m (€441m) for the same time frame in 2003.
Stronger sales in the savoury, confectionery and beverage segments helped the flavours area perform better than fragrances division which actually saw sales falling by 1.8 per cent to €278.4m. By contrast, sales for the flavours division rose 5.4 per cent in Swiss francs to CHF 423.2 million.
According to the Swiss company, that last year leapfrogged US firm International Flavours and Fragrances (IFF) into the number one global flavours and fragrance slot, North America saw single digit growth while the emerging markets in Latin America recorded double-digit increases, notably thanks to the beverage, dairy and savoury segments.
"Sales in Asia Pacific were stable compared to a strong prior years comparative. Sales in China and India continued to develop well with confectionery and dairy performing particularly well in the whole region," said Givaudan in a statement yesterday.
Turning to Europe, Africa and the Middle East (EAME), Iberia, and the Scandinavian countries recorded 'particularly good growth' with strong figures coming from the savoury segment.
At the beginning of the year Givaudan felt the weight of acquisitions, currency conversions and higher raw material costs, taking a SF68 million (€43m) charge in 2003 and axing 300 jobs.
Integrating FIS, the food ingredients unit bought from Nestle the previous year, and the US dairy flavours company IBF purchased shortly afterwards, knocked operating margins for Givaudan.
"Since the FIS acquisition, programmes have been underway to bring back the savoury margins to pre-acquisition levels," said Givaudan in January.
Looking at the first quarter results released this week, while the flavours division is creeping forward, programmes to improve profit - that included axing 300 jobs in January - are not showing the benefits in the fragrance division.
With around a third of sales in North America, where it competes with IFF, Givaudan has suffered from the rise in the Swiss franc against the dollar. Reflecting a current trend across the ingredients and additives industry, the company also said that rising raw materials had had an impact on the bottom line.
According to UK market analysts IAL Consultants, in 2001 the world market for flavours tipped €4.2bn.
"The flavours and fragrances industry is a thoroughly global business, where the largest nine players are responsible for 75 per cent of the world market and are present in virtually all the national markets," Fabio Albertario, senior analyst at IAL Consultants told FoodNavigator.com.