Zurich, April 3 - Swiss flavours and fragrances maker Givaudan AG missed forecasts with a 7.3 percent fall in first quarter sales as customers ran down stocks, and warned that perfume demand would stay weak this year.
Givaudan, which makes ingredients for soaps, confectionery, soft drinks and designer perfumes, said destocking which had started in the fourth quarter of 2008 was the main reason for the sales fall to 976.1 million Swiss francs ($854 million).
Despite the weak economy, it said the market should remain resilient for the rest of the year, with the exception of fine fragrances and some consumer products and flavours.
Its fragrance division reported a fall in sales of 10.4 percent to 438.4 million francs in the quarter, while its flavours business had a smaller decline of 4.6 percent to 537.7 million.
Analysts polled by Reuters on average predicted first-quarter sales of 999 million francs, with 460 million coming from fragrances and 539 million from flavours.
It said perfume sales fell sharply in Europe and North America due to destocking from high inventory levels and weak consumer demand, although Latin America saw solid growth.
"Lack of consumer confidence and reduced travel activity is likely to continue impacting fine fragrance sales throughout 2009," it said in a statement.
Givaudan's flavours business was also hurt by destocking in mature markets, which was compensated for by strong sales in most developing markets.
The Geneva-based group said it should outgrow the underlying market for the full year, although it said it was hard to give a precise forecast. It added it should meet a savings target of 200 million francs by 2010.
Givaudan's shares have been underperforming the European chemicals sector, falling almost 30 percent this year against 4.5 percent drop for the DJ Stoxx European chemicals index <.SX4P>.
($1=1.143 Swiss Franc)