Givaudan Earnings: Performance Improvement Program Is Propping Up Margins Despite Lower Volumes

Wide-moat Givaudan reported mixed first-half 2023 results, with lower-than-expected sales growth but a stronger-than-expected EBITDA margin. Like-for-like sales growth was 2.4% (versus 3.4% in the company-compiled consensus) and the EBITDA margin was 21.6% (compared with 20.7% in the consensus). The strong Swiss franc continued to weigh on the top line, leading to reported half-year growth of negative 3.2%. We don’t expect to change our CHF 2,900 fair value estimate at this time as the lower sales, yet stronger margin delivery, largely offset each other in our forecast. We believe shares are fairly valued.