By Rafal Wojciech Nowak
(Reuters) -Givaudan reported slower than expected quarterly organic sales growth on Tuesday, fuelling concerns over moderating demand and sending its shares 6% lower in morning trade.
Its organic or like-for-like sales, which are adjusted for currency effects and other one off costs, grew 5.2% in the second quarter, while analysts polled by the company had expected growth of 6.4%.
“The miss was primarily driven by the Taste & Wellbeing division, where organic growth was 3.2%,” J.P.Morgan analysts said in a note. The Fragrance & Beauty division’s 7.4% growth was also slightly below expectations, they added.
Givaudan’s group sales were 1.89 billion Swiss francs ($2.37 billion) in the quarter, narrowly missing analysts’ forecast.
“The continued strength of the Swiss franc is a headwind for us,” Chief Financial Officer Stewart Harris told Reuters.
The company’s unadjusted results face significant pressure from the strengthening of the Swiss franc, which is seen as a safe haven amid economic turmoil. Givaudan generates most of its sales in foreign currencies that lose value when converted.
Harris, however, underlined the company’s resilience, which he said was built on its “very broad-based” exposure across businesses, geographies and client segments.
He added Givaudan was confident about its pricing power, after the company said in the earnings statement that it was continuing to implement price increases to offset higher input costs from U.S. President Donald Trump’s tariffs.
Givaudan reiterated its 2021-2025 organic growth target of 4-5% and said it was “highly likely” to exceed it. It will unveil a new strategy until 2030 during its investor day on August 27.
($1 = 0.7969 Swiss francs)
(Additional reporting by Jagoda Darlak in Gdansk, editing by Milla Nissi-Prussak)
