• Revenue: CHF7.4 billion, a 12.3% increase on a like-for-like basis and 7.2% in Swiss francs.
• EBITDA: CHF1,765 million, an increase of nearly 20% with a margin of 24.5% compared to 22.4% in 2023.
• Net Income: CHF1,090 million, a 22% increase over 2023, with a net profit margin of 14.7%.
• Free Cash Flow: CHF1,158 million, representing 15.6% of sales.
• Dividend Proposal: CHF70 per share, marking the 24th consecutive increase.
• Fragrance and Beauty Sales: CHF3,660 million, up 14.1% like-for-like and 10.5% in Swiss francs.
• Taste and Wellbeing Sales: CHF3,752 million, up 10.7% like-for-like and 4.1% in Swiss francs.
• Gross Margin: Increased to 44.1% from 41.2% in 2023.
• Net Debt to EBITDA Ratio: Improved to 2.3 times from 2.9 times in December 2023.
• R&D Investment: Almost 8% of sales.

• Warning! GuruFocus has detected 3 Warning Signs with BOM:532772.

Release Date: January 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Givaudan SA (GVDBF) reported a strong top-line growth with sales amounting to CHF7.4 billion, marking a 12.3% increase on a like-for-like basis.
• The company achieved a record free cash flow of CHF1,158 million, representing 15.6% of sales.
• Net income increased by 22% over 2023, reaching CHF1,090 million, with a net profit margin of 14.7%.
• Fragrance and beauty division sales grew by 14.1% on a like-for-like basis, driven by a significant 18.4% increase in fine fragrances.
• Givaudan SA (GVDBF) has made substantial progress in its non-financial targets, including a 48% reduction in Scope 1 and 2 emissions compared to the 2015 baseline.

Negative Points

• The effective tax rate increased to 17% in 2024 compared to 10% in 2023, due to one-time effects of tax changes in Switzerland.
• Taste and wellbeing division's EBITDA margin is still below the target range of 22% to 24%, despite improvements.
• The company faces a firmer outlook for input costs in 2025, with an expected increase of around 4% at the group level.
• There was a tragic accident at the Kentucky facility, resulting in a CHF10 million financial impact in 2024.
• The mature markets in Asia Pacific, including Japan and Korea, showed low single-digit growth, indicating slower performance in these regions.

Q & A Highlights

Q: Can you explain the drivers behind the strong growth in consumer products despite a slower Q4? A: The perceived slowdown in Q4 is due to comparables. Overall, growth is driven by increased fragrance dosage and innovation, with no significant inventory build-up. We also gained market share, particularly with local and regional (L&R) clients, which make up 57% of our sales. (Gilles Andrier, CEO)

Q: How is Givaudan positioned to benefit from the ban on red dye number 3 in the US? A: We are well-positioned as leaders in natural colors, with a natural replacement for red dye number 3. This presents an opportunity to grow our colors business and reformulate products to meet consumer demand for natural ingredients. (Gilles Andrier, CEO)

Q: What are the expectations for volume growth and FX-driven pricing in 2025? A: We expect volume growth to continue at around 3.6%, similar to the past strategic cycle. FX-driven pricing is projected to be slightly above zero but below 1%, mainly due to currency fluctuations in Latin America. (Gilles Andrier, CEO)

Q: Can you provide an update on the financial implications of the Kentucky accident? A: We recorded a CHF10 million impact in 2024, including CHF9 million in asset impairments and CHF1 million in inventory losses. The investigation is ongoing, and it's too early to assess future financial impacts. (Stewart Harris, CFO)

Q: How sustainable is the growth in fine fragrances, and what are the market trends? A: Fine fragrances have seen double-digit growth for several years, driven by new consumer interest, e-commerce, and regional expansion, particularly in SAMEA. We are gaining market share and expect continued momentum without significant inventory build-up. (Gilles Andrier, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.