Record growth for Sensient as demand for natural colors continues to rise

By Elaine Watson

- Last updated on GMT

Record growth for Sensient as demand for natural colors continues to rise

Related tags Natural colors Color

Continued demand for natural food colors has helped to drive record top and bottom line growth in the first quarter for colors, flavors and fragrances giant Sensient Technologies.

The Milwaukee-based firm posted a 23.4 percent rise in operating profits to $22.3m on sales up 16.4% to $125.7m in its colors division in the three months ended March 31, said chief executive Kenneth Manning in a conference call with analysts.

“Sensient had a record-breaking year in 2010. We have followed that with record results in the first quarter of 2011, and we expect this exceptional performance to continue going forward. The Color Group continued its strong performance ​[in the first quarter of 2011], as it set new all-time quarterly highs for both revenue and operating income. Sales of food and beverage colors were particularly strong, driven by strong demand for natural colors”.

Higher operating margins

Meanwhile, operating margins in the color group were also up 100 basis points to 17.8% in the first quarter, said chief financial officer Dick Hobbs.

“Revenue and operating income were up in all product lines, with particularly strong results from sales of natural colors, cosmetic colors, and inks.”

BGB Securities analyst Sam Yake told that Sensient was well-positioned to cash in on growing demand for natural colors and while sustaining double-digit growth could prove tough, mid- to high- single-digit growth was certainly feasible for some time given the size of the opportunity in natural colors.

Investment in natural colors

Sensient, which pumped $16m into a project to extend its natural color production facilities in St. Louis, Missouri last year, has recently extended its natural colors portfolio with a new pearlescent pigment range.

The customizable colors, which boast “luster effects, color shifts and iridescent shimmers​”, can be labeled as natural on ingredient lists, and are FDA-approved for use in cereals, confectionery, frosting and gelatin desserts.

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