Morningstar | Givaudan Reports Solid 1H, but the Market Was Hoping for More; Shares Overvalued
Wide-moat Givaudan reported first-half results that were broadly in line with our expectations. Like-for-like sales growth of 6.3% with a comparable EBITDA margin of 22.3% is tracking slightly ahead of our full-year estimates for like-for-like growth of 5.5% and an EBITDA margin of 21.2%. However, consensus was expecting higher margins in the first half, which has led to the stock trading down 3% intraday. We think consensus expectations are too high for Givaudan, as reflected in our 1-star rating for the stock. We don’t expect to make any material changes to our forecast or CHF 2,000 fair value estimate.In fragrances, first half like-for-like sales growth was a strong 8.6%, although this was boosted by the pass-through of higher raw material costs. The comparable EBITDA margin was 21.3%, down 110 basis points over 2018. Fine fragrances remained strong with 8.5% like-for-like growth. However, we continue to believe increasingly tough comparisons will begin to weigh on growth later in 2019. Active beauty remained a strong performer with git growth.
In flavours, first-half like-for-like sales growth was 4.4%, which was flattered by currency depreciation in Latin America. The comparable EBITDA margin was 23.1%, down 110 basis points over 2018. Asia-Pacific reported a solid 6.2% increase in like-for-like growth while North America was the laggard with a 1% decline in like-for-like growth. In line with our view, growth across the regions is being largely driven by local and regional customers.
Givaudan is engaged in the fragrance and flavour industry. Co. provides its products to global, regional and local food, beverage, consumer goods and fragrance companies. Co. has two principal divisions: Fragrance, which manufactures and sales fragrances into three global business units: Fine Fragrances, Consumer Products, and Fragrance & Cosmetic Ingredients; and Flavour, which manufactures and sales fragrances into four business units: Beverages, Dairy, Savoury and Sweet Goods. In addition, Co. has distribution network in more than 40 countries.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.