Creating value with our partners
Givaudan finished a successful second year of its 2020 strategy with strong business momentum. In 2017 we delivered solid topline growth and free cash flow generation, in line with our projected average 2020 financial targets.
On the basis of Givaudan’s healthy performance in 2017, and its continued solid financial position, the Board of Directors will propose an increase in the dividend to CHF 58.00 at the Annual General Meeting on 22 March 2018. This is the seventeenth increase since our listing on the Swiss stock exchange.
The second year of our five-year strategy cycle was marked by one of persistent external challenges in the market, requiring us to remain agile and adaptable. Raw material volatility continued, leading to higher prices in certain categories. In addition, consumers continued to demand more natural products, increasing expectations from our customers to develop more complex natural solutions. We take every challenge as an opportunity to expand and deliver long term value to our stakeholders. I have been impressed by the way in which the business is able to respond to these challenges, and continuously perform to remain the market leader.
The global economy is expected to continue to strengthen next year, with forecasts predicting 2.9% growth in 2018-2019¹. Set against a more positive economic outlook, there will be continued headwinds from ongoing political, policy and economic uncertainties in many parts of the world. The widely documented global megatrends of a growing global population, increasing urbanisation and rising life expectation continue to have implications for the flavour and fragrance industry. Our 2020 strategy has been developed with these trends in mind, and I am confident we are in a strong position to take advantage of these opportunities afforded to us.
Being responsive to our customers’ needs remains crucial, and in 2017 we made a number of investments to evolve our business. We started on our journey to implement Givaudan Business Solutions, the foundation of our ‘delivering with excellence’ pillar, which will allow us to deliver a superior customer experience. As part of our 2020 strategy to strengthen our offering for customers we acquired Vika B.V. and Activ International, and are successfully integrating these businesses into our portfolio. We also announced the acquisition of the Nutrition Division of Centroflora Group and are in exclusive negotiations with Expressions Parfumées. In line with our strategic ambition for high growth markets, we also continued to expand our footprint in India, Mexico, China and Singapore.
To support our growth ambitions, we focused many of our activities on our own innovation programmes, particularly in the areas of naturals and biotechnology. Through ongoing connections and partnering with innovation ecosystems, we want to strengthen our external collaborations to identify new opportunities and innovative solutions. Going forward, we will focus on exploring new business and engagement models with our partners, such as accelerators and incubators, to bring innovation faster to market. The impact of digitalisation provides many new opportunities to change the way we do business. In this area, we see ever more opportunities to harness the power of big data, and artificial intelligence to provide new products and new engaging experiences. The digital world also poses challenges around cyber security, so we must respond by ensuring our systems are robust, and keeping pace with the rapid developments in these areas.
“I have every confidence that Givaudan will continue its path of value creation in the years to come. We will continue with our strong focus on people development, ensuring we have a strong team at every level.”
In 2017, Joe Fabbri, Head of Environment, Health and Safety (EHS) and Sustainability retired from the Executive Committee. Taking forward his responsibilities, Simon Halle-Smith, Head of Human Resources is now also responsible for EHS and Willem Mutsaerts will lead on Sustainability in addition to his Head of Global Procurement role. We also announced further changes to the Executive Committee in January 2018, as following a distinguished 23-year career at Givaudan, Mauricio Graber, President of the Flavour Division will leave Givaudan to take up the role of CEO at Chr. Hansen. We are fortunate to have a strong group of senior leaders and an excellent talent and succession programme at Givaudan, which has allowed us to appoint Louie D’Amico, currently Head of Flavours Americas, as the new President for the Flavour Division and a member of the Executive Committee, effective 1 April 2018. I’d like to extend my warmest thanks to both Joe and Mauricio for their significant contributions and many achievements at Givaudan. We will continue with our strong focus on people development, ensuring we have a strong team at every level.
Looking forward, I have every confidence that Givaudan will continue along its successful path, growing with its customers, and delighting consumers with inspiring taste and scent experiences. Through organic growth, our active acquisition approach to find opportunities in adjacent spaces, and at the same time keeping our costs well managed, we are well positioned for the future and long term success.
Throughout the year, I’ve had the opportunity to meet many of our employees around the world, and I am very proud of the daily contributions made by each and every one of them to the success of Givaudan. My thanks and gratitude goes to my fellow members of the Board of Directors, the Executive Committee and all employees worldwide, for all of their hard work and support.
Finally, I would like to express my thanks to our shareholders and to you for your trust. Givaudan will continue with its long term value creation for all stakeholders in the years to come.