By John Revill
ZURICH--Givaudan SA (GIVN.VX) Thursday said it will concentrate
its investment on India, China and other fast-growing developing
markets that are driving growth at the world's biggest maker of
fragrances and flavors.
Givaudan said 45% of its revenue came from emerging markets in
the first half of 2013, up from 43% a year earlier. Sales of
flavors and fragrances to emerging countries grew 9.4% in the first
six months of 2013, more than three times the pace of mature
markets.
The Geneva-based company, which makes flavorings for Nestle SA
(NESN.VX), Kraft Foods Group Inc. (KRFT) and other large food
groups, is likely to get half of its sales from these countries by
2015, Chief Executive Gilles Andrier told The Wall Street Journal
in an interview Thursday. Indonesia, China and Brazil exhibited no
signs of slowing down and Givaudan will continue to invest in the
countries, he said.
"We have had a good pipeline of contract wins" in China, Mr.
Andrier said. He added the company is gaining momentum with smaller
clients, which have significant growth potential.
Givaudan's Chinese sales increased in the high double-digit
range in the first half, Mr. Andrier said, while Brazil and
Southeast Asia were also doing well.
Givaudan will spend around 4% of its sales revenue on capital
expenditure. Four- fifths of that will be earmarked for developing
markets.
The company has begun work on a new fragrance production site in
Singapore and a food flavorings factory in China, which will be its
second factory in the country.
"For the past five years growth in developing markets has been
five times that of mature markets and that is going to go on," Mr.
Andrier said. "We have to continue to invest in them."
Mr Andrier's comments came as Givaudan reported
stronger-than-expected first-half profit and sales.
In the six months ended June, revenue rose 4.7% to CHF2.23
billion ($2.38 billion), beating forecasts of CHF2.2 billion, while
net profit of CHF271 million beat expectations of CHF223
million.
The Swiss company, which makes perfumes for brands such as
Prada, Yves St Laurent, and Nina Ricci, said it was benefiting from
the higher prices it introduced last year to combat raw material
price inflation.
For 2013, Mr Andrier said he expected raw material prices to be
flat, down from his previous forecast of a 1% to 3% increase. He
expects a similar development in 2014.
Write to John Revill at john.revill@wsj.com
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