Perfumery & Ingredients revenue rises 11.7% with solid growth for fine fragrances, says Firmenich
11 Feb 2022 --- Firmenich released its performance results for the first half of the fiscal year 2022. Revenue rose to US$2.41 billion, up 12.3% compared to this time last financial period. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were US$495 million, up 25.3% year over year.
The flavor and fragrance giant saw growth across all regions, especially in its critical areas, including Europe (+22.2%), India (+12.9%), China (+10.4%) and North America (+7%).
Surpassing pre-pandemic levels
Firmenich’s Taste & Beyond category had an significant growth of 13.4% at constant currency, with double-digit growth across all segments.
“We made strong progress in our drive to establish strategic partnerships with key customers, to help them win the hearts and minds of consumers through our strengths in innovation, consumer insights, naturals and ‘beyond flavors’ solutions,” says the company.
The fragrance giants performed well despite constraints.Perfumery & Ingredients revenue increased by 11.7% at constant currency, which Firmenich says was driven by solid growth in the categories of Fine Fragrance and Ingredients. The Fine Fragrance category, in particular, was able to surpass pre-pandemic levels, despite constraints.
Firmenich says it secured this result through a combination of restocking and “new business wins.” The Ingredients category performed strongly as a result of sustained consumer demand. However, the Consumer Fragrance category decreased marginally following a comparable period the previous year.
The company chalked this up to “end-market softness” affecting global customers, in addition to shortages of raw materials and logistical challenges impacting production capacity for some mid-to-small customers.
“Like the rest of the industry, we are facing an increasingly challenging global environment with raw material shortages and cost increases, logistical difficulties and rising energy prices. We will continue to act proactively to navigate this volatile and inflationary environment,” Firmenich explains.
Adjusted EBITDA margin, as a percentage of revenue, was 20.5%, up 2.1% year over year. Firmenich says this was driven by top-line growth across businesses and a “favorable product mix.”
Meanwhile, the company’s free cash flow hit US$174.6 million, down 10.7% year over year. Firmenich explains that this was driven by the “working capital impact of higher safety inventories to preserve customers services levels” and support customers in a tumultuous global supply chain environment.
This was explained by profit growth being offset by “unfavorable working capital, linked to higher safety inventories,” which Firmenich says it increased to ensure the preservation of customer service
Foreign exchange reportedly had a negligible impact on revenue. levels in the volatile global supply chain environment.
Creativity, digitalization, customer service and innovation
Firmenich continued to benefit from its investment in its offerings in categories such as Sugar Reduction, Naturals & Renewable Ingredients, Plant-Based Foods, Clean & Responsible Fragrances, Digital Channels and eCommerce.
“Our focus on creativity, digitalization, customer service and innovation has paid off, as we have delivered double-digit top and bottom-line growth despite global challenges in raw materials, supply chains, and new waves of COVID-19,” says Firmenich CEO Gilbert Ghostine.
Continued investments were made in strategic growth markets, including the opening of an end-to-end fragrance and taste co-creation center for customers in South China, and the launch of construction for a “state-of-the-art production hub” in Turkey.
Sustainability is now key to raising profit
Progress was also made regarding Firmenich’s Environmental Social and Governance (ESG) targets for 2025 and 2030. The advances meant the company was able to secure its fourth consecutive triple “A” rating from the Carbon Disclosure Project and a Sustainalytics ESG risk score of 7.5, placing it in the top-scored 50 companies globally.
Firmenich also received its second consecutive EcoVadis score of 88/100, placing it in the top 1% of all evaluated companies.
By Olivia Nelson
