Givaudan will pass on higher costs to customers after FY profit miss

Swiss fragrance and flavour maker Givaudan on Friday said it would pass higher costs on to customers this year after posting a weaker-than-expected rise in net profit and dividend for 2021.

Net profit rose 10.5% to 821 million Swiss francs ($883.18 million) last year, leading the Geneva-based group to propose a dividend of 66 francs per share. This was short of a forecast for a 863 million franc profit and a 67.1 franc dividend in a Refinitiv poll.

Demand for fragrances used in cosmetics and toothpaste and flavours for food and drinks held up throughout the pandemic and Givaudan benefited from savings provided by its acquisitions, high production volumes and a recovery in its out of home business with products used in restaurants and hotels.

"With higher input costs in 2022, the company is implementing price increases in collaboration with its customers to fully compensate for the increases in input costs", the group said, also mentioning ongoing difficulties in certain parts of the supply chain.

Its operating margin rose to 16.3% last year, from 15.8% in 2020.

Like-for-like sales, which remove the impact of currency changes and acquisitions, increased 7.1% to 6.684 billion francs in the full year, in line with forecasts, with its fragrance & beauty business up 6.6% and taste & wellbeing rising 7.6%, Givaudan said.

Sales growth slowed to 5.3% in the final quarter of 2021, Givaudan said.

It confirmed its 2025 targets of 4-5% organic sales growth and free cash flow of at least 12% of sales.