Givaudan: Strong Volume Growth Continues

Wide-moat Givaudan reported 14.1% organic growth in the third quarter, well ahead of company-compiled consensus of 10.4%. Volume growth for the first nine months of 2024 was robust at 10.2%. While raw material-driven pricing remained muted, foreign-exchange pricing adjustments in Latin America contributed 2.5% to the group’s revenue, fueling the region’s 29% organic growth. The volume performance was bolstered by a resurgence in innovation demand from consumer packaged-goods clients as they drive efforts to accelerate their own volume growth. Management anticipates more normalized growth rates—typically in the mid-single-digit range—for the fourth quarter, although they caution that visibility is limited. Nevertheless, 2024 is shaping up to be an exceptional year for Givaudan with a solid recovery in volume and EBITDA margins after a challenging 2023 marked by widespread customer destocking. We don’t expect to make a material change to our CHF 3,200 fair value estimate. At current levels, the shares look overvalued.