Givaudan's organic sales growth in the third quarter nearly doubled market expectations, as demand for luxury perfumes lifted its Fragrance & Beauty division.
The fragrance and flavour group reported like-for-like sales growth of 8.6% in the quarter, against analyst expectations of 4.7%. In the first nine months, Fragrance & Beauty generated CHF 3.15 billion (US$3.78 billion), up 8.8% like-for-like (LFL) and ahead of the 8% growth recorded in the same period a year earlier. The division accounted for roughly 53% of group sales in that period.
Fine fragrance leads growth
In the third quarter alone, Fragrance & Beauty sales reached CHF 1.14 billion (US$1.37 billion), with 13.5% LFL growth, up from 6.8% in the same quarter a year earlier. Group sales for the first three quarters totalled CHF 5.89 billion (US$7.08 billion).
On a business-unit basis, Fine Fragrance sales rose 15.3% LFL, set against a competitive prior-year comparable of 18.7%. Analysts at Vontobel and Jefferies estimated Fine Fragrance sales grew about 31% organically in the third quarter alone, according to Reuters. Consumer Products sales increased 9.3% LFL, compared with prior-year comparable growth of 5.9%, suggesting fragrance demand extends into personal, oral, home and fabric care. Fragrance Ingredients and Active Beauty declined 2.5% in the nine-month period, against a 1.5% LFL increase a year earlier.
Currency and acquisitions
Givaudan's LFL figures exclude acquisitions. Acquisitions contributed 2.8% to Fragrance & Beauty growth over the nine months, while currency translation had a negative impact of 3.8%; at group level, acquisitions contributed 1.4%. The company highlighted two deals: Belle Aire Creations for CHF 62 million (US$74.48 million) and Vollmens Fragrances for CHF 20 million (US$24 million).
Regional divergence
Asia Pacific was the fastest-growing geography, with sales up 10.6% LFL over the nine months, compared with 4.6% a year earlier. Taste & Wellbeing in the region rose 7.1% LFL, against a 0.5% decline in the prior-year period. South Asia, Africa and the Middle East grew 4.1% LFL, down from 8.8%. Europe rose 1.5% LFL, compared with 3.8%, and Latin America increased 1.1% LFL, against 3.1%. High-growth markets rose 7.9%, versus 2.7% in mature markets.
North America was the most challenging region, with a 3.3% LFL decline in Taste & Wellbeing, compared with 3.9% a year earlier, though the region overall grew 1.1%. Givaudan attributed the decline primarily to continued weakness in its Health and Functional business unit and to US tariff refunds made to the company's customers during the third quarter.
Market reaction
The results lifted Givaudan shares by nearly 7% to a 15-month high. Reuters reported that peers including dsm-firmenich, Novonesis and Symrise saw their shares rise between 1.6% and 3.1% in early trading.
Vontobel analyst Arben Hasanaj said the acceleration should reinforce confidence in Givaudan's growth profile and resilience, according to Reuters. The company said the figures point to continued potential in fine fragrances, fragrance ingredient differentiation and premiumisation, and underlined the consistency of its growth despite geopolitical and macroeconomic volatility.