Morningstar | Steady Growth for Givaudan in 3Q; Maintaining FVE
After reviewing wide-moat Givaudan’s third-quarter sales update, we are maintaining our CHF 2,000 fair value estimate. At current levels, shares look moderately overvalued. Third-quarter like-for-like sales increased 5.7% for the group, 6.8% for the fragrance segment, and 4.7% for the flavours segment. These growth rates are in line with year-to-date performance. We expect growth in the fragrance segment to decelerate in the fourth quarter due to a tough comparable, while flavours should remain steady.We still see evidence of our sector themes playing out. In particular, we expect high growth to be found in local and regional customers, naturals, and key adjacent markets like active beauty. Year-to-date, Givaudan reported double-digit growth from local and regional customers for consumer product fragrances in Europe, South Asia, Latin America, Africa, and the Middle East. Growth from local and regional customers was also strong on the flavour side in Asia-Pacific. In naturals, growth is tracking in the high single digits. Finally, growth in Givaudan’s active beauty business continued to be in the double digits.
Givaudan management is participating at the Management Behind the Moat conference, which will be held at Morningstar’s Chicago office on Nov. 7-8, 2018. If you are interested in attending the conference, please reach out to your sales representative for registration information.
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.
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