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Chairman’s introduction

Dr Jürg Witmer, Chairman of the Board of Givaudan

2015 proved to be a challenging year for Givaudan, our industry and our customers as the global economy experienced a slower than expected recovery. However, Givaudan’s growth momentum picked up in the second half of the year and we ended 2015 having successfully achieved the mid-term financial targets set forth in our 2011-2015 strategic plan.

 

    Considering Givaudan’s encouraging performance in 2015 and our solid financial position, the Board of Directors will propose a cash distribution of CHF 54.00 at the Annual General Meeting to be held on 17 March 2016. This dividend will be partly paid out of reserves for additional paid-in capital. This cash return will be the fifteenth consecutive increase in earnings distributed to shareholders since our listing on the Swiss stock exchange.

    Looking back over the last five years, we are reminded of the challenges of operating in the midst of a global economic crisis, the 2011 raw materials price increases and a slowdown in the emerging markets during the course of 2015. More importantly, however, we see our business solidly performing as we turn challenges into opportunities, make advances in product and technology innovation and uphold our market leadership position. Our progress over the last five years culminated at the end of 2015 with the delivering of our ambitious mid-term financial targets, a defining moment for our business.

    While we are proud of our achievements over the past five years, we are committed to delivering value to our stakeholders in the long term. The economic outlook for 2016 remains uncertain. Slow growth is expected to persist in the emerging markets in Asia, given the significant macro economic changes in the region, notably in China. Latin America will continue to be influenced by factors such as volatile currency fluctuations and the political instability in the Middle East and Eastern Europe makes the region an ongoing challenge. Mature markets will remain a source of limited growth in the coming year with North America continuing to outperform Europe and Japan.

    To overcome the slower pace of growth in an unpredictable economy, particularly in the parts of the world that have been a significant source of growth for Givaudan in the past, we approach the next five-year period with a fresh perspective on our business as recently articulated in the announcement of our 2020 ambitions. This roadmap will enable us capture the growth that will come as purchasing power shifts from West to East and North to South and rapid urbanisation continues to drive consumption. In the five years to come we commit to continue to strengthen our core business activities while also broadening our portfolio of offerings to customers, thus creating incremental value.

    Following the acquisition of the French active cosmetic ingredients company Soliance SA in 2014, Givaudan has continued its progression in the attractive cosmetics space by acquiring Swiss-based Induchem AG, specialised in innovative functional ingredients. This move is complementary to our existing activities and underlies our ambition to become a key player in this fast-growing business.

    We are conscious of our need to continuously adapt our business to best manage the volatility of the external environment and the shifting market dynamics. In the coming years we will drive a business that is ever more agile, customer-centric and efficient.

    In line with our focus on responsible operations, the Givaudan Foundation completed its second full year of operations in 2015. It continues to facilitate much of the charitable work that the Company undertakes. With key areas of focus including family nutrition, blindness and communities at source, we have had the opportunity to positively impact the lives of those in need in the communities within which we are active.

    Succession planning for both the Board of Directors and the senior management continues to be of critical importance to the Board. Two longstanding directors, André Hoffmann and Peter Kappeler, will not stand for re-election at the 2016 Annual General Meeting. Both have been instrumental in shaping the strategy of Givaudan over many years and I would like to extend my gratitude for their commitment and friendship. I am pleased that André Hoffmann has accepted a new role as the Chairman of the Board of Trustees of the Givaudan Foundation. He will act in his new function on a non-remunerated basis.

    In line with the new strategic direction of the Company, our Executive Committee was expanded in 2015 to include dedicated Human Resources, Procurement and Innovation roles. To fulfil these positions we were able to draw from our internal pool of talent that has been nurtured over the years in order to provide experienced and capable candidates who can ensure the continuity of our culture as well as our business principles.

    Givaudan’s more than 9,500 employees globally remain the foundation of our success. I thank them for their enthusiasm and commitment to our Company.

    I am confident that the continued solid execution of our strategic choices will continue to deliver value to our shareholders also in the years to come.

    Dr Jürg Witmer

    Chairman