Haifa, Israel, August 19 -Frutarom has announced its rapig growth strategy has continued and its 2Q 2008 results that sales grow 45% to nearly US$ 133 million for the Quarter; Over 100% Growth in Operating and net profit reached US$ 12 million for the Quarter.
SECOND QUARTER HIGHLIGHTS
- 45% leap in sales to nearly US$ 133 M
- 52% leap in gross profit to nearly US$ 50 M - gross
profitability of 37.5% compared with 35.8% in the parallel quarter
- 110% leap in operating profit to nearly US$ 18 M - operating
profit of 13.5% compared with 9.3% in the parallel quarter
- 100% leap in EBITDA to nearly US$ 24 M - EBITDA margin of 17.9%
compared with 12.9% in the parallel quarter
- 104% leap in net profit to US$ 12 M - net margin of 9.1%
compared with 6.4% in the parallel quarter
- Profit per share doubled
- Positive cash flow from current activities of US$ 14.9 M
compared with US$ 3.3 M in the parallel quarter
FIRST HALF:
- 48% leap in sales to nearly US$ 255 M
- 51% leap in gross profit to nearly US$ 95 M - 37.1% of sales
- 76% leap in operating profit to nearly US$ 33 M - 13% of sales
- 75% leap in EBITDA to nearly US$ 44 M - 17.2% of sales
- 61% leap in net profit to US$ 22 M - 8.5% of sales
- Profit per share grew 65.2%
- Positive cash flow from current activities of US$ 8.6 M
Ori Yehudai, Frutarom's President and Chief Executive Officer: "Similar to the results for the first quarter of 2008, our results for the second quarter reflect the continued successful implementation of our profitable rapid growth strategy: We achieved marked growth in sales that is a combination of accelerated organic growth in our core activities at a considerably higher rate than the growth rate in our industry and the contribution of the seven strategic acquisitions made in 2007, which were successfully merged into our global activity. The continued trend of improvement to profitability is firstly due to the completion of most of the merger process of the acquisitions which, according to plan, began contributing already in the first quarter of the year not only to sales growth but also to the improvement in profit and margin; and secondly due
to the steps we took to adjust our products' selling prices to the price rise in raw materials used in our production."
Frutarom today presented its results for the first quarter of 2008.
Frutarom, a leading global producer of flavors and unique fine ingredients, has in recent years been very successful in implementing its strategy for rapid growth and achieves growth rates that are substantially higher than the average for these industries thanks to a combination of profitable organic growth in core activities together with strategic acquisitions. Frutarom is today the seventh largest of the leading global companies in the field of flavors and specialty ingredients. Frutarom's sharp, ongoing growth in sales turnover and the improvement in profit and profitability continued during the second quarter of 2008. Frutarom's record results for the quarter reflect the utilization of the commercial and operational synergy in the seven acquisitions made and the results of the determined actions taken to adjust selling prices to price rises in raw materials. In accordance with Frutarom's expectations and plans, completion of most of the merger process of the companies and activities acquired in 2007 has been contributing already since the first quarter of 2008 not only to considerable growth in sales but also to the Company's profit and profitability.
In the second quarter of 2008 Frutarom reported record results and considerable growth in sales: record income of US$ 132 million, reflecting growth of 44.6% compared with the same quarter in 2007 (growth of 36% excluding the influence of the revaluation of the European currencies compared with the US dollar). In the first half of 2008, Frutarom's sales totaled US$ 254.6 million - growth of 47.8% compared with the parallel quarter in 2007. Excluding the influence of the strengthening European currencies compared with the dollar, the sales growth totaled 39%.
The following factors contributed to the sharp growth in the Company's sales in the second quarter of 2008: organic growth in sales of flavors produced and sold by the Flavors Division; organic growth in the sale of unique ingredients, mainly natural, produced and sold by the Fine Ingredients Division; the acquisitions of Gewurzmuller, Abaco, Raychan, Adumim and Rad during the second half of 2007 and their merger with Frutarom's global activity; extraction of the synergy and cross selling opportunities between Frutarom's divisions and its customers and products; strengthening of the West European currencies against the US dollar; and growth in Frutarom's Trade & Marketing activity in Israel.
During the second quarter of 2008, Frutarom presents sharp growth of 51.6% in gross profit, which totaled US$ 49.7 million compared with US$ 32.8 million in the parallel quarter. Gross margin reached 37.5% compared with 35.8% in the parallel quarter. Frutarom's operating profit more than doubled, growing 110.2% in the second quarter of 2008 to US$ 17.9 million compared with US$ 8.5 million in the second quarter of 2007. Operating margin during the second quarter of 2008 reached 13.5% compared with 9.3% in the second quarter of 2007. In the second quarter, Frutarom achieved EBITDA that grew 100.7% to total US$ 23.8 million, compared with EBITDA of US$ 11.8 million in the second quarter of 2007. EBITDA margin for the quarter reached 17.9% compared with 12.9% in the parallel quarter.
During the first half of 2008, gross margin rose by 50.9% to total US$ 94.5 million compared with US$ 62.6 million during the parallel period, and gross margin reached 37.1% compared with 36.4% during the parallel half year. Operating profit grew 75.9% during the first half of the year to US$ 33.2 million compared with US$ 18.9 million in the parallel half year and operating margin totaled 13% compared with 11% during the parallel period. EBITDA showed improvement of 75.2% during the first half of 2008, reaching US$ 44 million, compared with US$ 25.1 million in the first half of 2007. EBITDA margin improved considerable during the first half of 2008 to reach 17.3% compared with 14.6% during the parallel first half.
Frutarom's net profit for the second quarter of 2008 doubled to reach a record US$ 12 million, growing 104.3% compared with profit of US$ 5.9 million in the parallel quarter. Net profit margin improved considerably to reach 9.1% during the second quarter of 2008 compared with 6.4% in the parallel quarter. During the first half of 2008, Frutarom had net profit of
US$ 21.7 million compared with US$ 13.5 million in the parallel quarter - growth of 60.9%. Net profit margin during the first half of 2007 reached 8.5% compared with 7.8% in the parallel half year in 2007.
Profit per share doubled and rose during the second quarter to US$ 0.21 compared with US$ 0.10 per share in the parallel quarter. During the first half of the year, profit per share reached US$ 0.38 compared with US$ 0.23 during the first half of 2007, an increase of 65.2%.
The sharp growth in profit created considerable growth in Frutarom's cash flow from current activities. During the second quarter of 2008, Frutarom created cash flow from current activities of US$ 14.9 million compared with US$ 3.3 million during the second quarter of 2007. In the first half of the year, the Company created cash flow from current activities of US$ 8.6 million compared with US$ 0.7 million during the parallel period.
The accelerated growth in activity, together with the resolute actions that Frutarom took to adjust the selling prices of the Company's products to the price rises in raw materials used in its production and the completion of most of the merger process of the companies and activities acquired during 2007, led the Company to present improvement in gross, operating and EBITDA profit margins.
Ori Yehudai, President and Chief Executive Officer of Frutarom, summed up the quarter, noting "Frutarom will continue to act resolutely to achieve ongoing high, profitable organic growth of our core activities; to adjust the Company's selling prices to price increases, in raw materials used in production, if they should occur; and to concentrate on guarding and
improving margin levels. Frutarom will also continue to strive to achieve optimal efficiency from the seven acquisitions made in 2007 and to extract and maximize the many cross selling opportunities in the acquisitions made in recent years. We are satisfied with the rate of organic growth and the seven acquisitions that we made in 2007."
Yehudai added, "Frutarom will continue to invest considerable effort and resources in the continued implementation of our rapid growth strategy and in seeking and performing additional strategic acquisitions in order to continue strengthening our position as one of the global leaders in the field of flavors and unique ingredients."
Background on the Company
Frutarom is a global company active in the world markets for flavors and ingredients. Frutarom has significant production and development centers on three continents and markets its products on five continents to over 10,000 customers in more than 120 countries. Frutarom's products are intended mainly for the food, beverage, flavor, fragrance, pharmaceutical, nutraceutical, health food, functional food, food additive, and cosmetic industries.
Frutarom operates through two Divisions:
- The Flavors Division, which develops, produces and markets flavor compounds and food systems.
- The Fine Ingredients Division, which develops, produces and markets natural flavor extracts, natural functional food ingredients, natural pharma/nutraceutical extracts, specialty essential oils and citrus products, and aroma chemicals.
Frutarom's products are produced at its plants in the United States, England, Switzerland, Germany, Israel, China, and Turkey. The Company's global marketing organization includes branches in Israel, the United States, England, Switzerland, Germany, Belgium, Holland, Denmark, France, Hungary, Romania, Russia, Ukraine, Kazakhstan, Belarus, Turkey, Brazil, Mexico, China, Japan, Hong Kong, India and Indonesia. The Company also works through local agents and distributors worldwide. Frutarom has about 1,500 employees worldwide.