Swiss fragrance and flavour maker Givaudan (GIVN.S) on Tuesday said sales growth slowed in the third quarter, especially in its flavours business in North America, sending its shares down by more than 6%.
Givaudan and its peers need to pass steep input cost increases on to consumers, something the Geneva-based group said it was confident it could fully compensate for, although it did not offer an explanation for the drop in sales at the North America flavours unit.
Group sales rose 6.1% on a like-for-like basis and 7.7% in Swiss francs, reaching 5.458 billion Swiss francs ($5.45 billion) in the first nine months of 2022. However, sales in the group’s taste and wellbeing unit that makes flavours for food and drinks fell 2.8% in North America, implying an even stronger slowdown in the third quarter.
Vontobel analyst Jean-Philippe Bertschy said the disappointing development in North America might be related to high customer inventories, while Baader Helvea’s Andreas von Arx also wondered “if this could be early signs of a (temporary) destocking effect”.
Givaudan’s shares, down almost 37% so far this year, were 6.4% lower at 0801 GMT.
Overall sales in its taste and wellbeing unit increased by 6.4% to 2.969 billion francs, while sales at its fragrance and beauty business rose 5.8% to 2.489 billion francs, helped by an almost 15% rise in fine fragrance sales, Givaudan said in a statement.
The fragrance and flavour industry will have a new champion when Dutch DSM (DSMN.AS) completes its merger with Switzerland’s Firmenich, but market experts still see Givaudan as No.1 in fine and consumer fragrances and as co-leader in flavours with IFF (IFF.N).
Givaudan confirmed its mid-term target of 4-5% average organic sales growth per year on a like-for-like basis.