Firmenich H1 Sales Rise 10.5 Percent
PARIS — Firmenich’s sales rose 10.5 percent in the first half of its current fiscal year, spurred by growth in its Perfumery and Ingredients, and Taste and Beyond divisions.
Sales at the world’s largest privately owned fragrance and flavors supplier were 2.44 billion Swiss francs, or $2.65 billion, in the six months ended Dec. 31. Those were up 8.9 percent on-year on a reported basis and 11.5 percent in constant-currency terms, with about 6 percent coming from volume and 5 percent from price.
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This likely marks the last time Firmenich independently releases financial results before it merges with DSM, the Dutch science-based health and nutrition company. As previously reported, that deal is expected to close in the first quarter of this year.
Geneva-based Firmenich reported adjusted earnings before interest, taxes, depreciation and amortization of 440 million francs, a 7.3 percent rise at constant currencies.
“This is the second consecutive calendar year that Firmenich is growing its business organically at double digits,” Gilbert Ghostine, chief executive officer of Firmenich, told WWD.
The fragrance and flavors industry has been growing at around 4 percent, so Firmenich gained market share, he said.
“This is driven by the confidence and trust that our customers have in us,” Ghostine said. “We are not only raising the bar on performance, but we also raise the bar on science and innovation.”
He highlighted that for the second consecutive year, LexisNexis recognized Firmenich in its annual “Innovation Momentum: The Global Top 100” report.
“We are the only company in our industry that reaches the top 100,” said Ghostine, adding just two of Firmenich’s customers appear on the list — Nestlé and Procter & Gamble.
He said Firmenich keeps raising the bar, as well, on social and environmental responsibility, and noted the company and L’Oréal are the only two to have received a triple A from the CDP for the last five consecutive years.
Ghostine characterized today’s market environment as “very volatile,” with the convergence of three major crises — the coronavirus pandemic, geopolitical issues and economic challenges — taking a toll on the supply chain, logistics, cost of energy and inflation.
Firmenich foresees the volatility will be ongoing for the remainder of its fiscal year.
“We have been proactive at increasing prices with our customers,” Ghostine said. “We didn’t let them down on supply.”
In the half, Firmenich’s Perfumes and Ingredients division’s sales were up 9.1 percent, with fine fragrance increasing 20.2 percent. Consumer fragrances, meanwhile, returned to a mid-single-digit increase.
Firmenich’s Taste and Beyond division’s sales grew 13.3 percent, powered by a balanced contribution of volume and mix, and pricing across all segments, as well as initiatives.
The group registered sales gains in all regions. They increased 23.6 percent in India; 18.3 percent in China, and 16.6 percent in Europe on a constant-currency basis.
Firmenich maintained its research-and-development expenses at 8.6 percent of sales.
As previously reported, in November 2022, the Dutch Authority for Financial Markets, or AMF, approved the offering circular related to the DSM-Firmenich deal.
On Jan. 23, DSM shareholders green-lighted the merger at an extraordinary general meeting. Its approval is still pending in three key markets — the European Union, India and China.
“There is lots of progress that has been done on integration planning,” Ghostine said.
In the first half, Firmenich’s reported free cash flow was at minus 17 million francs, including 28 million francs of one-off cash expenses related to merger, versus plus 162 million francs in the prior year. Free cash flow, adjusted for the impact of the non-recurring expenses linked to the merger, came in at 11 million francs.
Ghostine said the new fiscal quarter has begun with “good momentum.”
Separately, on Feb. 8, Firmenich announced two high-level executive changes. The group appointed a new leadership team for its integrated Perfumery and Ingredients organization. Current perfumery head Ilaria Resta will be its president, and Amaury Roquette is to become senior vice president, Ingredients.
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