Press Release
FIRMENICH DELIVERS
RECORD RESULTS DESPITE CHALLENGING MACRO-ECONOMIC ENVIRONMENT
Achieves double-digit Revenue and
Adjusted EBITDA growth, coupled with strong cash generation, while
prioritizing customer service
Geneva, Switzerland,
August 5, 2022 – Firmenich
International SA, the world’s largest privately-owned Fragrance and
Taste company, announces its Full Year Results for the 52 weeks
ended 30 June 2022.
Financial Highlights
- Revenue of CHF 4,723 million, up
+11.1%[1]
- Adjusted EBITDA of CHF 905
million, up +10.9%
- Adjusted EBITDA margin 19.2%, up +10 basis points
- Free Cash Flow of CHF 414
million, down -19.1%, or -5.9% on a comparable basis[2]
- EBITDA to Free Cash Flow conversion ratio of 51.8%
- Record Revenue and Adjusted EBITDA, despite a challenging
global environment for raw materials, logistics and energy
costs
- Outperforming the industry in topline growth and gaining market
share, underpinned by double-digit Revenue growth across both
Perfumery & Ingredients and Taste & Beyond, on the back of
improving customer demand
- Revenue growth across all regions, and strong momentum in our
key geographies, including Europe
(+18.9%), India (+13.1%),
China (+9.4%), and North America (+5.1%)
- Strong cash generation, despite higher safety inventories
linked to prioritizing customer service of supply in a challenging
global environment
“Firmenich’s strong performance in
FY22 is the result of our ongoing commitment to serve and innovate
with our customers and a testament to the strengths of our
offerings across Fragrance and Taste. We are now moving to a new
chapter in our history, with the announced merger with DSM, and I
am pleased to see that our company is entering this new phase from
a position of strength.”, said Patrick
Firmenich, Chairman of the Board.
“Despite the ongoing challenging macro-economic environment,
Firmenich has delivered another year of strong results, with double
digit growth in Revenue and Adjusted EBITDA. We have demonstrated
leadership and excellence in execution. As always, I want to thank
our 11,000 employees who have made this possible. I look forward
with excitement to the coming year, which marks the start of a new
chapter for Firmenich.”, said Gilbert Ghostine, CEO of Firmenich.
Operating Highlights
- Continued to prioritize customer supply, preserving superior
OTIF[3] service levels, in a particularly challenging global raw
material and supply chain environment
- Benefited from our ongoing investment in growing segments and
differentiated offerings, including Sugar Reduction, Naturals &
Renewable Ingredients, Plant-based Foods, Clean & Responsible
Fragrances, e-commerce and digital channels
- Continued investment in strategic markets, highlighted by the
move to majority ownership of ArtSci in April 2022 to better serve the high-growth
Chinese taste market
- Ongoing strategic investment in innovation:
- Announced a Scientific Advisory Board in May 2022 to oversee our R&D strategy
- Inaugurated a state-of-the-art Creation & Development
Centre at Dubai Science Park, to further expand science and
innovation capabilities
- Launched new biodegradable ingredients such as Muguissimo™ and
100% natural ingredients including Muguet Firgood™
- Raising the bar in ESG: improved our industry-leading
Sustainalytics ESG risk score to 7.5, in the top 50 companies rated
worldwide; recognized as one of the 2022 World’s Most Ethical
Companies by Ethisphere; secured a fourth consecutive Triple “A”
rating from CDP; and a second consecutive EcoVadis Platinum
Sustainability Rating, with an industry-leading score of 88/100, in
the top 1% of all companies assessed
FY 2022 Performance
In Fiscal Year 2022, we saw the global economy enter a challenging
raw material and supply chain environment, compounded by high
geopolitical instability, and new waves of Covid-19 in various
regions.
Against this backdrop, we delivered record Revenue growth across
the business, as well as double-digit Adjusted EBITDA growth and
strong cash generation. We navigated this challenging environment
with agility, prioritizing service and safety of supply for our
customers. Our trustworthiness as a commercial partner, combined
with the competitive advantage provided by our supply vertical
integration, has helped us continue to gain market share.
Revenue
Revenue increased +11.1%, reaching CHF 4,723
million. Acquisitions contributed CHF
6 million or +0.1 percentage points to Revenue growth.
Foreign exchange had an unfavorable impact of CHF -29 million or –0.7 percentage points, mainly
due to the appreciation of the US dollar and the depreciation of
the Euro relative to the Swiss Franc. On a reported basis, Revenue
increased +10.5% year-over-year.
Perfumery & Ingredients Revenue increased +11.3%, driven by
the industry-leading growth and market share gains in Fine
Fragrance (+32.5%), and strong customer demand in Ingredients.
Consumer Fragrances grew by low single-digits against a backdrop of
industry-wide softness.
Taste & Beyond Revenue increased +10.7%, driven by our
innovation portfolio and our commercial focus on strategic
partnerships with key customers. Our differentiated offering in
Sugar Reduction, Naturals & Renewable Ingredients, Plant-based
Foods, and Clean & Responsible Fragrances continued to drive
growth. We continued to outperform our key competitor, as a leader
in our industry.
In the second half of the Fiscal Year, we delivered double-digit
Revenue growth of +10.0%, maintaining the momentum that we had at
the beginning of the year.
During FY22, on a geographical basis, we achieved strong Revenue
growth across all regions and strong momentum in our key
geographies, including Europe
(+18.9%), India (+13.1%),
China (+9.4%), and North America (+5.1%).
Gross Profit and Adjusted EBITDA
Like the rest of the industry, we have witnessed significant
inflationary pressure on raw materials, energy and transportation
costs, which accelerated in the second half of the year, as well as
new waves of Covid-19 affecting various geographies. We have also
faced an unfavorable evolution of foreign exchange rates, linked
primarily to the strengthening of the Swiss franc against the Euro
and other trading currencies.
We took proactive actions to mitigate the negative effect of
these challenges, including pricing in partnership with our
customers, and cost discipline. Gross Profit reached CHF 1,847 million, up +5.0% on a reported basis.
Gross Margin, as a percentage of Revenue, decreased by -210 basis
points compared to the previous year, to 39.1%.
Adjusted EBITDA increased by double-digits to CHF 905 million, up +10.9% year-over-year.
Excluding the impact of acquisitions and foreign exchange Adjusted
EBITDA would have increased by +13.1%. Including the 12-month
impact pro-forma impact of acquisitions, Adj. EBITDA was
CHF 916m.
Adjusted EBITDA margin, as a percentage of Revenue, increased to
19.2%, up +10 basis points compared to the previous year. Excluding
the impact of acquisitions and foreign exchange, Adjusted EBITDA
margin would have increased by +30 basis points.
EBITDA was CHF 798 million, down
-8.6% year-over-year, due to the impact of non-recurring expenses
linked to the DSM-Firmenich merger. Excluding the impact of
acquisitions, foreign exchange and non-recurring expenses related
the DSM-Firmenich merger, EBITDA would have increased by +3.2%.
Free Cash Flow
We delivered strong free cash flow generation, reaching an EBITDA
to Free Cash Flow conversion ratio of 51.8%, while prioritizing
customer service levels and security of supply in a challenging
global raw material and supply chain environment.
Free Cash Flow decreased by -19.1% year-over-year to
CHF 414 million. On a comparable
basis, excluding CHF 72 million of
exceptional items that positively affected Free Cash Flow in the
previous year, Free Cash Flow decreased by -5.9%. Profit
growth was offset by unfavorable working capital, linked to
CHF 242 million of higher
inventories, as a result of higher safety stocks to preserve
customer service, as well as raw material cost inflation.
We will continue balancing customer service with cash generation
in line with our commitment to maintaining a strong investment
grade credit rating.
Leader in Responsible Business
We are proud to be the industry leader in ESG. Being a responsible
business is at the core of our values and is a source of trust and
differentiation for our customers, our investors and across all our
stakeholders.
To reinforce our Company’s commitment to sustainability, in
March 2022 we have formally embedded
ESG at our highest level of governance, through the creation of a
Governance and Sustainability Committee of the Board of
Directors.
Our ESG performance continues to receive best-in-class
evaluation. We received an enhanced rating from Sustainalytics,
with a score of 7.5, improving on our already industry-leading
score of last Fiscal Year. This not only places us among the ESG
leaders in our industry and the broader Chemicals sector, but also
in the global top 50 of approximately 15,000 companies.
For the fourth year in a row, Firmenich was one of only two
companies in the world to have received a triple “A” rating from
CDP, in Climate, Water and Forests. This is a testament to our
efforts to address environmental issues across our operations.
In addition, we also achieved a second consecutive Platinum
sustainability rating from EcoVadis, with an industry-leading score
of 88% that also places us in the top 1% of all companies assessed
worldwide.
At Firmenich, we believe in business for good, and in a world
with rising inequalities and social divides, we stand and act for a
fairer and more equitable society. Firmenich is now one of only two
companies in the world, and the first in our industry, to be
globally Living Wage Certified by Fair Wage Network.
Firmenich was ranked 10th out of 350 companies in the
World Benchmarking Alliance Food & Agriculture Benchmark. The
Food and Agriculture Benchmark measures and ranks keystone
companies on key issues underpinning the food systems
transformation agenda in line with the United Nations Sustainable
Development Goals (SDG).
Consumer demand for natural, sustainable and renewable products
is a structural growth trend in our industry. Our leadership in
natural ingredients, our strong vertical integration and our
innovation in this space, as well as leading ESG credentials, have
remained important for retaining and attracting customers as they
progress with their own sustainability roadmaps.
As part of Firmenich’s program to develop sustainable new
ingredients, in the last year we launched Muguissimo™: a new
biodegradable lily-of-the-valley ingredient, developed through
Green Chemistry, that brings elegant and fresh natural floral notes
to fragrances, highly appreciated by perfumers.
Furthermore, we have accelerated our innovation in plant-based
protein solutions by launching our latest portfolio of
SmartProteins® innovations for the rapidly growing plant-based
dairy space.
To help consumers achieve better nutrition and well-being with
less sugar, we have continued to develop our NutriGem Nutrition
Innovation program, with ready-to-use integrated solutions using
fibers, vitamins, minerals, and natural extracts.
Merger with DSM
On 31 May 2022, Firmenich announced
that it had entered into a business combination agreement with DSM
to establish the leading creation and innovation partner in
nutrition, beauty and well-being: DSM-Firmenich.
The combination will bring together Firmenich’s unique leading
Perfumery and Taste businesses, its world-class science platforms
and associated co-creation capabilities with DSM’s outstanding
Health and Nutrition portfolio and renowned scientific expertise.
The merger of DSM-Firmenich will further accelerate innovation for
the industry and generate new growth opportunities for
customers.
All materials relating to the announcement can be found on the
transaction website www.creator-innovator.com.
Disclaimer
This document and the related results contain forward-looking
statements related to Firmenich International SA (the “Company”)
and its future business and financial performance and future events
or developments, including statements regarding: trends; exchange
rates; plans, strategies and objectives of management; anticipated
production; capital costs and scheduling; operating costs and
supply chain issues; provisions and contingent liabilities; tax and
regulatory developments. Forward-looking statements can be
identified by the use of terminology such as ‘intend’, ‘aim’,
‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’,
‘may’, ‘should’, ‘will’, ‘continue’, ‘annualised’ or similar words.
These statements discuss future expectations concerning the results
of operations or financial condition, or provide other
forward-looking statements. These forward-looking statements are
not guarantees, or predictions of future performance, and involve
known and unknown risks, uncertainties and other factors, many of
which are beyond the Company’s control, and which may cause actual
results to differ materially from those expressed in the statements
contained in this presentation. Readers are cautioned not to put
undue reliance on forward-looking statements. Other than in
accordance with its legal or regulatory obligations, the Company
does not undertake to update or revise any forward-looking
statement to reflect any changes in events, conditions or
circumstances on which any such statement is based.
Non-IFRS measures have not been subject to audit or review and
should not be considered as an indication of, or alternative to, an
IFRS measure of profitability, financial performance or
liquidity.
Nothing in this presentation should be construed as either an
offer to sell, or a solicitation of an offer, to buy or sell
securities in any jurisdiction, or be treated or relied upon as a
recommendation or advice by the Company.
This document has been prepared for, and only for, the
shareholders of the Company, as a body, and no other persons. The
Company, its directors, employees, agents or advisers do not accept
or assume responsibility to any other person to whom this document
is shown or into whose hands it may come, and any such
responsibility or liability is expressly disclaimed.
Disclosure
This information is provided by Firmenich International SA pursuant
to the EU Market Abuse Regulation 596/2014 and the Swiss FMIA. The
information was submitted for publication, through the contact
persons set out below, at 7:00 CEST
on 5 August 2022. Further information
is available for investors on https://investors.firmenich.com.
Contacts
Firmenich
Diego Chantrain, Investor Relations
Email: investor_relations@firmenich.com |
Firmenich media
enquiries:
Brunswick Group
Edward Brown / James Moss
Email: firmenichir@brunswickgroup.com
Telephone: +44 20 7404 5959 |
About Firmenich
Firmenich, the world’s largest privately-owned fragrance and
taste company, was founded in Geneva,
Switzerland, in 1895, and has been family-owned for 127
years. Firmenich is a leading business-to-business company
specialized in the research, creation, manufacture and sale of
perfumes, flavors, and ingredients. Renowned for its world-class
research and creativity, as well as its leadership in
sustainability, Firmenich offers its customers superior innovation
in formulation, a broad and high-quality palette of ingredients,
and proprietary technologies including biotechnology,
encapsulation, olfactory science, and taste modulation. Firmenich
had an annual turnover of 4.7 billion Swiss
Francs at end June 2022. More
information about Firmenich is available at
www.firmenich.com.
[1] Unless otherwise stated, Revenue growth comparisons are made on
an organic basis at constant currency, as defined in the
Alternative Performance Measurements section in the Annual Report,
versus the same period in the prior year.
[2] Excluding CHF 72 million of
exceptional items that positively affected Free Cash Flow in
FY21
[3] OTIF – On Time In Full