Swiss fragrance and flavour maker Givaudan said sales growth slowed in the third quarter, especially in its flavours business in North America.
Givaudan and its peers need to pass steep input cost increases on to consumers, something the Geneva-based group said it was confident it could fully compensate for, although it did not offer an explanation for the drop in sales at the North America flavours unit.
Group sales rose 6.1% on a like-for-like basis and 7.7% in Swiss francs, reaching CHF 5.46 billion (€5.64 billion) in the first nine months of 2022. However, sales in the group's taste and wellbeing unit that makes flavours for food and drinks fell 2.8% in North America, implying an even stronger slowdown in the third quarter.
High Customer Inventories
Vontobel analyst Jean-Philippe Bertschy said the disappointing development in North America might be related to high customer inventories, while Baader Helvea's Andreas von Arx also wondered "if this could be early signs of a (temporary) destocking effect".
Givaudan's shares, down almost 37% so far this year, were 6.4% lower at 08:01 GMT.
Overall sales in its taste and wellbeing unit increased by 6.4% to CHF 2.97 billion (€3.07 billion), while sales at its fragrance and beauty business rose 5.8% to CHF 2.49 billion (€2.57 billion), helped by an almost 15% rise in fine fragrance sales, Givaudan said in a statement.
The fragrance and flavour industry will have a new champion when Dutch DSM completes its merger with Switzerland's Firmenich, but market experts still see Givaudan as No.1 in fine and consumer fragrances and as co-leader in flavours with IFF.
Givaudan confirmed its mid-term target of 4-5% average organic sales growth per year on a like-for-like basis.