Frutarom growth strategy boosts strong performance

By Lorraine Heller

- Last updated on GMT

Related tags Frutarom Investment

Frutarom today reported its sixth consecutive year of strong
results, as the flavours and extracts firm continues with its rapid
expansion strategy.

On the back of a good performance last year, the company also set off to a strong start in 2006, signing an agreement to acquire a share in flavours and functional ingredients firm Nesse.

"This strategic acquisition is an additional milestone in realizing Frutarom's strategy for rapid growth. It strengthens the technological capabilities and product portfolio offered by Frutarom to customers in the savoury field, and supports Frutarom's growing strength and position in West and East Europe as a leading flavours supplier,"​ said the companys president and chief executive officer Ori Yehudai.

"Frutarom intends to use its global sales and marketing infrastructure to realize the cross selling possibilities created by this acquisition through the expansion of both our customer base and product portfolio,"​ he added.

In addition, in June 2005 the company acquired the natural extracts division of the American firm A.M. Todd Botanical Therapeutics. This marks the continuation of a strategy that has served Frutarom well in recent years.

In June 2003 Frutarom paid 20m for the Swiss flavours firm Emil Flachsmann (now Frutarom Switzerland), providing it with an increased stake in the botanical extracts market. And the 2004 acquisition of IFF's fruit and vegetable extract business has also given Frutarom a firm foothold in the growing natural ingredients market.

But the acquisitions will not stop there, said Frutarom. The Israeli company, which has invested considerable resources in finding and executing strategic acquisitions, is currently in contact with several potential candidates for acquisition, mainly in countries and markets where the firm already has substantial activity.

Frutarom has also been looking at emerging markets. The company opened a sales and marketing office in Indonesia earlier this year to capitalise on Asian market growth, emphasising once again its aim of becoming one of the world's top ten flavour players.

And its acquisition march seems to have paid off, with the company reporting almost $244m(186m) in sales for the year ended December 31 2005, a 24 per cent increase compared with $196.8m(163.6m) in 2004.

Operating profit during the period rose by around 53 per cent to almost $34m(28.2m), compared with last years figure of $22m(18.2m).

And according to Yehudai, the company has more growth plans ahead.

"The sales target that we have set as part of the strategic process for the next several years, is to surpass the half billion dollar sales threshold in 2008 while continuing to improve profitability,"​ he said.

"Frutarom will continue to focus on both large multinational customers as well as on mid-size and local customers, providing superior, high quality and tailor-made service. We will persevere in strengthening our presence in developed markets, such as Western Europe and the United States, and in intensifying our activities in the fast growing emerging markets where we currently operate, as well as entering new emerging markets where the growth rate is higher than the global average,"​ he added.

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