Givaudan, a leading fragrance and flavor maker, is forecasting sales growth of 4-5% for this year after a successful performance in 2019. The company’s Chief Financial Officer, Tom Hallam, has expressed confidence in their ability to achieve the projected top-line growth and deliver on their five-year strategy. While there will be no new price increases, Givaudan continues to witness strong demand in high-growth markets. Hallam also expressed optimism about the US market and the resolution of uncertainties in Europe, such as Brexit.

Givaudan’s recent success can be attributed to its emphasis on natural ingredients, health and wellness products, and the need for new flavor innovations like plant-based protein alternatives. However, the company’s business with its largest global customers has slowed down, shifting the focus to local and regional customers who now account for over half of its sales. According to the CFO, major customers are facing challenges in achieving growth in key markets, notably North America.

Following the announcement, Givaudan’s stock prices have faced a decline of 2.1% after reaching a record high last year. Nevertheless, analysts have commended the margin improvement in the second half of 2019 and the positive cash development. In 2019, the company’s net profit rose by 6.0% to 702 million Swiss francs ($725.6 million), and organic growth accelerated to 5.8% compared to the previous year’s 5.6%. However, growth slowed down in the last quarter as the impact of price increases subsided. Givaudan expects raw material prices to stabilize in 2020 after experiencing significant increases over the past two years.

Looking ahead, Givaudan has invested approximately 3.6 billion Swiss francs in acquisitions since 2014 and may explore additional bolt-on acquisitions. The company’s fragrance division witnessed a sales surge of 7.3% driven by strong demand in the Americas. However, the flavors unit faced a weaker performance in North America, resulting in sales growth of 4.5%.

In order to reward its shareholders, Givaudan has announced a 3.3% increase in its dividend to 62 francs per share for 2019 and remains committed to maintaining its current dividend practice. Overall, Givaudan remains optimistic about its prospects for growth, fueled by its strategic emphasis on natural ingredients, new flavor innovations, and continued demand for its products in high-growth markets.

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