Givaudan: Stellar Underlying Performance Clouded by Negative Currency Effects

Wide-moat Givaudan reported like-for-like sales growth of 12.6% in the first quarter of 2024, substantially ahead of the company-compiled consensus of 6.9%. The growth was primarily volume-driven (volume up by 8.5%) as customers’ appetite for innovation was rekindled and destocking measures are now more firmly a thing of the past. Price contributed 4.1% to top-line growth, mainly as a result of foreign exchange-driven pricing actions taken in countries like Argentina or Turkey. Input cost inflation-driven pricing was marginal, only related to some natural raw materials such as citrus. Despite the strong underlying performance, the strong Swiss franc continued to weigh on the top line, with reported sales in Swiss francs up only 2.8%. With this, we don’t expect to make any material change to our 2024 full-year forecast that calls for top-line growth of 4.5% or to our CHF 3,050 fair value estimate. At current levels, shares look significantly overvalued.