Solid Growth for Givaudan in the First Half; Margin Decline in Fragrances Is a Temporary Issue
Wide-moat Givaudan shares are trading off 2%-3% after reporting first-half results, which is somewhat surprising given that organic growth of 5.6% and EBITDA of EUR 601 million were slightly ahead of consensus estimates. Potential negative items were a decline in free cash flow for the group and a sharp drop in margins in the fragrance segment. We don’t find either concerning and therefore don’t expect to materially change our CHF 1,900 fair value estimate. At current levels, shares are trading ...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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