2020 Full year results
Excellent financial performance – 2020 guidance delivered
- Sales of CHF 6.3 billion, up 4.0% on a like-for-like1 basis and 1.9% in Swiss francs
- EBITDA2 of CHF 1,397 million, an increase of 9.6% over 2019
- Comparable EBITDA3 margin of 22.8% compared to 21.5% in 2019
- Net income of CHF 743 million, an increase of 5.8% over 2019
- Free cash flow4 of 12.8% of sales or CHF 811 million
- Proposed dividend of CHF 64.00 per share, up 3.2% year-on-year
- Successful delivery of 2020 guidance: Average 4.9% like-for-like sales growth and 12.6% average free cash flow over the five-year period 2016-2020
Business Performance
Givaudan Group full year sales were CHF 6,322 million, an increase of 4.0% on a like-for-like basis and 1.9% in Swiss francs when compared to 2019.
Fragrance & Beauty sales were CHF 2,924 million, an increase of 5.4% on a like-for-like basis and 4.5% in Swiss francs.
Taste & Wellbeing sales were CHF 3,398 million, an increase of 2.8% on a like-for-like basis and a decrease of 0.2% in Swiss francs.
As the COVID-19 pandemic continues to have an impact on a global level, Givaudan sustained strong business momentum whilst maintaining its operations and global supply chain with minimal disruption. The good growth was achieved across most product segments and geographies, with particularly strong performance in the household, health and personal care segments within Givaudan Fragrance & Beauty, as well as in packaged foods, savoury, snacks and nutraceuticals in Givaudan Taste & Wellbeing. In Fragrance & Beauty the product segments most affected by the COVID-19 pandemic, namely Fine Fragrances and to a lesser extent Active Beauty, showed a solid improvement in the second half of the year, despite continued restrictions on retail and travel retail activity. In Taste & Wellbeing the prolonged restrictions affecting foodservice and out-of-home food consumption impacted the performance throughout 2020.
“I am very pleased that in an unprecedented environment related to COVID-19, we have been able to deliver such a strong financial performance in 2020, as well as successfully delivering on all of our ambitious targets in relation to our 2016-2020 strategy”, said CEO Gilles Andrier. “These excellent results once again demonstrate the strength of our business and our ability to deliver industry leading financial results, whilst successfully executing upon our longer term strategic ambitions.”
From the onset of the COVID-19 crisis and in line with the Company’s purpose, Givaudan continues to be strongly focused on:
- Protecting and supporting all of its employees, be it those on site or those who are still working from home;
- Meeting the demands of its customers, particularly for those products which support consumers throughout the pandemic around the world;
- Taking care of the communities in which it operates.
Gross Margin
The gross profit increased by 5.1% from CHF 2,530 million in 2019 to CHF 2,659 million in 2020.
Due to continued productivity gains and strong cost discipline, the gross margin increased to 42.1% in 2020 compared to 40.8% in 2019.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
The EBITDA2 increased by 9.6% to CHF 1,397 million in 2020 compared to CHF 1,275 million in 2019, whilst the EBITDA margin was 22.1% in 2020 compared to 20.6% in 2019. On a comparable basis3, the EBITDA margin was 22.8% in 2020 compared to 21.5% in 2019.
| in millions of Swiss francs | 2020 | 2019 | ||||
Group | Fragrance | Taste & | Group | Fragrance | Taste & | |
| EBITDA as published | 1,397 | 677 | 720 | 1,275 | 555 | 720 |
| EBITDA as published in % | 22.1 | 23.2 | 21.2 | 20.6 | 19.8 | 21.1 |
| Givaudan Business Solutions (GBS) costsa | -6 | -6 |
| -31 | -31 |
|
| Acquisition and restructuring expensesb | -39 | -7 | -32 | -25 | -11 | -14 |
| Comparable EBITDA | 1,442 | 690 | 752 | 1,331 | 597 | 734 |
| Comparable EBITDA in % | 22.8 | 23.6 | 22.1 | 21.5 | 21.3 | 21.6 |
a. In 2020, the Group incurred costs of CHF 6 million in relation to the finalisation of the implementation of the Givaudan Business Solutions organisation, compared with CHF 31 million in 2019.
b. Acquisition and restructuring expenses incurred of CHF 39 million (2019: CHF 25 million) are largely related to the acquisitions that the Group has undertaken and the ongoing optimisation of the manufacturing footprint.
Operating Income
The operating income was CHF 996 million compared to CHF 920 million, an increase of 8.3% versus 2019. The operating margin was 15.8% in 2020 compared to 14.8% in 2019.
Financial Performance
Financing costs in 2020 were CHF 86 million versus CHF 79 million in 2019, largely related to the increase in the net debt of the Group in connection with the acquisitions that the Group has made. Other financial expense, net of income, was CHF 34 million in 2020 compared with CHF 33 million in 2019.
The income tax expense as a percentage of income before taxes was 15%, compared to 13% in 2019.
Net Income
The net income was CHF 743 million in 2020 compared to CHF 702 million in 2019, an increase of 5.8%. This results in a net profit margin of 11.8%, versus 11.3% in 2019. Basic earnings per share were CHF 80.59 compared to CHF 76.17 for the same period in 2019.
Cash Flow
Givaudan delivered an operating cash flow of CHF 1,133 million in 2020, compared to CHF 1,136 million in 2019.
Net working capital as a percentage of sales was 24.4%, compared to 24.0% in 2019.
Total net investments in property, plant and equipment were CHF 180 million, compared to CHF 201 million in 2019, as the Group continues to invest in expanding its capabilities in high growth markets. As a reminder, in 2018 the Group completed an agreement to sell and leaseback the Zurich Innovation Centre (ZIC) for a total consideration of CHF 173 million, of which CHF 60 million was received in the first six months of 2019.
Intangible asset additions were CHF 37 million in 2020, compared to CHF 45 million in 2019 as the Company continued to invest in its IT platform capabilities, including those related to the integration of the acquisitions that the Group has made.
Total net investments in tangible and intangible assets were 3.4% of sales in 2020, compared to 4.0% in 2019. Excluding the impact of the ZIC transaction, total net investments in tangible and intangible assets in 2019 would have been 5.1% of sales.
Operating cash flow after net investments was CHF 916 million in 2020, versus CHF 890 million in 2019. Free cash flow4, defined as operating cash flow after investments and interest paid, was CHF 811 million in 2020, versus CHF 787 million for the comparable period in 2019. As a percentage of sales, free cash flow in 2020 was 12.8%, compared to 12.7% in 2019.
Financial Position
Givaudan’s financial position remained solid at the end of the year. Net debt at December 2020 was CHF 4,040 million, compared to CHF 3,679 million at December 2019, with the increase largely driven by the acquisition of Ungerer in the first quarter of 2020. At the end of December 2020 the leverage ratio5 was 50%, compared to 47% at the end of 2019.
Dividend Proposal
At the Annual General Meeting on 25 March 2021, Givaudan’s Board of Directors will propose a cash dividend of CHF 64.00 per share for the financial year 2020, an increase of 3.2% versus 2020. This is the twentieth consecutive dividend increase following Givaudan’s listing at the Swiss stock exchange in 2000.
2020 guidance: Responsible growth. Shared success.
The Company’s 2020 ambition was to create further value through profitable, responsible growth. Givaudan’s 2020 ambition was defined around the three strategic pillars of ‘Growing with our customers’, ‘Delivering with excellence’ and ‘Partnering for shared success’.
As part of the Company’s 2020 strategy, Givaudan also sought to create value through targeted acquisitions, which complemented existing capabilities in providing winning solutions for its customers. Since 2014, Givaudan has completed sixteen acquisitions, which are fully in line with the growth pillars within the Company’s 2020 strategy.
Ambitious financial targets were also a fundamental part of Givaudan’s 2020 strategy, with the Company targeting to outpace the market with 4-5% sales growth and a free cash flow of 12-17% of sales, both measured as an average over the five-year period of the strategy cycle. Givaudan has successfully achieved average sales growth of 4.9% on a like-for-like basis and an average free cash flow of 12.6% of sales for the five-year strategy period 2016-2020.
As part of its 2020 strategy, it was also Givaudan’s intention to maintain its dividend practice and with a proposed increase in the dividend to CHF 64 per share for 2020, Givaudan has increased the dividend each year since its listing at the Swiss stock exchange in 2000.
Givaudan’s purpose
The Company’s purpose, ‘Creating for happier, healthier lives with love for nature. Let's imagine together’, is at the heart of its strategy. Under the purpose, Givaudan has defined bold and ambitious goals in four domains, namely creations, nature, people and communities. These ambitions include doubling its business through creations that contribute to happier, healthier lives by 2030, becoming climate positive before 2050, becoming a leading employer for inclusion before 2025 and sourcing all materials and services in a way that protects the environment and people by 2030.
2025 guidance: Committed to Growth, with Purpose
The Company’s 2025 ambition is to deliver sustainable value creation for all stakeholders.
Givaudan’s 2025 strategy is fully in line with its purpose and places customers at the heart of its business, supporting them to grow and create products that are loved by consumers.
The 2025 strategy is focused around three growth drivers, ‘Expand the portfolio’, ‘Extend customer reach’ and ‘Focussed market strategies’ and is supported by four growth enablers, which are aligned with the Company’s purpose domains, namely creations, nature, people and communities. These three growth drivers and four enablers are all underpinned by a commitment to ‘Excellence, Innovation & Simplicity – in everything we do’.
Ambitious targets are an integral part of Givaudan’s 2025 strategy, with the Company aiming to achieve organic sales growth of 4-5% on a like-for-like basis and free cash flow of at least 12%, both measured as an average over the five-year period strategy cycle. In addition the Company aims to deliver on key non-financial targets around sustainability, diversity and safety, linked to Givaudan’s purpose.
Key Figures
| For the twelve months ended 31 December, in millions of Swiss francs except per share data | 2020 | 2019 |
| Group Sales | 6,322 | 6,203 |
| Fragrance & Beauty sales | 2,924 | 2,799 |
| Taste & Wellbeing sales | 3,398 | 3,404 |
| Gross profit | 2,659 | 2,530 |
| as % of sales | 42.1% | 40.8% |
| EBITDA 2 | 1,397 | 1,275 |
| as % of sales | 22.1% | 20.6% |
| Operating income | 996 | 920 |
| as % of sales | 15.8% | 14.8% |
| Income attributable to equity holders of the parent | 743 | 702 |
| as % of sales | 11.8% | 11.3% |
| Earnings per share − basic (CHF) | 80.59 | 76.17 |
| Operating cash flow | 1,133 | 1,136 |
| as % of sales | 17.9% | 18.3% |
| Free cash flow | 811 | 787 |
| as % of sales | 12.8% | 12.7% |
| in millions of Swiss francs, except for employee data | 31 December | 31 December |
| - Current assets | 3,299 | 3,242 |
| - Non-current assets | 7,359 | 7,154 |
| Total assets | 10,658 | 10,396 |
| - Current liabilities | 1,796 | 1,830 |
| - Non-current liabilities | 5,354 | 4,907 |
| - Equity | 3,508 | 3,659 |
| Total liabilities and equity | 10,658 | 10,396 |
| Number of employees | 15,852 | 14,969 |
Sales performance – January to December
| in millions of Swiss francs | 2019 |
| 2020 | Change |
|
| 2020 | Change |
Sales | Like-for-like | Sales | on like‑ | Acquisition | Currency | Sales | in | |
| Group | 6,203 | 247 | 6,450 | 4.0% | 306 | -434 | 6,322 | 1.9% |
| - Fragrance & Beauty | 2,799 | 151 | 2,950 | 5.4% | 191 | -217 | 2,924 | 4.5% |
| - Taste & Wellbeing | 3,404 | 96 | 3,500 | 2.8% | 115 | -217 | 3,398 | -0.2% |
- Acquisition impact
in millions of Swiss francs
| Acquired Company | Sales included from | Group | Fragrance & Beauty | Taste & Wellbeing |
Albert Vieille | May 2019 | 5 | 5 | ||
Golden Frog | September 2019 | 8 | 8 | ||
drom | September 2019 | 83 | 83 | ||
Fragrance Oils | September 2019 | 42 | 42 | ||
Ungerer | February 2020 | 190 | 58 | 132 | |
Cosmetic business of Indena | May 2020 | 3 | 3 | ||
Discontinued and disposed business | (25) | (25) | |||
Total | 306 | 191 | 115 |
Sales performance – October to December (quarter only)
| in millions of Swiss francs | 2019 |
| 2020 | Change |
|
| 2020 | Change |
Sales | Like-for-like development1 | Sales | on like-for-like basis1 | Acquisition impact | Currency effects | Sales | in | |
| Group | 1,539 | 74 | 1,613 | 4.8% | 36 | -117 | 1,532 | -0.5% |
| - Fragrance & Beauty | 710 | 57 | 767 | 8.1% | 15 | -57 | 725 | 2.0% |
| - Taste & Wellbeing | 829 | 17 | 846 | 2.1% | 21 | -60 | 807 | -2.6% |