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Supply Chain

Givaudan To Accelerate Price Increases In Second Half

Swiss fragrance and flavour maker Givaudan will accelerate price increases in the second half of the year to offset higher costs, it said on Thursday after reporting improving sales growth despite squeezed margins.

In addition to price increases, Givaudan's half-year results benefited from rising perfume sales as airport travel recovers and a pick-up in the food segment as more people eat out.

Like-for-like sales rose 7.9% year on year in the second quarter, compared with 4.6% growth in the first quarter, the company said.

Givaudan and its peers are having to contend with higher input costs, supply chain disruption and delays in implementing price increases.

"For the inbound supply chain, we see a doubling of lead times from Asia," finance chief Tom Hallam told Reuters.

"Price increases are expected to accelerate in the second half," he added, confirming input costs are expected to increase by about 9% this year.

First-Half Performance

First-half net profit fell to CHF 440 million ($453.5 million), with the operating margin falling to 17.3% from 18.2% a year earlier, Givaudan said.

Shares in the company, which have slumped by 30% this year, were down 2% at 07:13 GMT.

"The performance should be put into the context of ongoing tight supply chain and significant headwinds in China," said Vontobel analyst Jean-Philippe Bertschy.

Hallam said Givaudan had no intention of changing its strategy because of recent consolidation in the industry, but would keep focusing on its growth categories.

He said the company would keep strengthening its business in active beauty, health and nutrition and with local and regional customers through bolt-on acquisitions.

Givaudan reiterated its mid-term targets of 4-5% annual organic sales growth on average until 2025.

Read More: Rising Supply Chain Costs Dent Givaudan's 2021 Profit

News by Reuters, edited by ESM. For more Supply Chain news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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