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Firmenich Posts Record Full-year Top- and Bottom-line Growth

The Swiss fragrance and flavors supplier’s chief executive officer Gilbert Ghostine talked business pre-DSM merger.

PARIS — Firmenich, the Swiss fragrance and flavors maker, posted a record fiscal year of top- and bottom-line growth.

“We have achieved so many milestones,” Gilbert Ghostine, Firmenich chief executive officer, told WWD.

The sales level was one of those achievements, at 4.72 billion Swiss francs, or $4.91 billion, up 11.1 percent on a like-for-like basis. Another one was the adjusted earnings before interest, taxes, depreciation and amortization of 905 million Swiss francs, with a 10.9 percent gain.

Ghostine attributed the strong turnout to some strategic choices has Firmenich made, the commitment of its people and relationship with the group’s customers.

He said the strategic choices and investments were not always straightforward. The artificial intelligence, digital platforms that the company created starting in 2018 is one example, and it’s yielding positive results.

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“We’ve decided to be the most vertically integrated player in ingredients,” Ghostine continued. “[And] have a business now of ingredients that is four-times bigger than our key competitor. We lead our industry in science, in social and environmental responsibility.”

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Firmenich’s fine fragrance activity, which grew 32 percent, also helped bolster sales in the 12 months ended June 30.

“We won the lion’s share of briefs,” said Ghostine. “This is also a category where we have invested well ahead over the past few years.”

Firmenich’s Perfumery and Ingredients division’s sales gained 11.3 percent, while that of its Taste & Beyond branch rose 10.7 percent.

Firmenich’s three key markets — North America, China and India — also advanced significantly and grew share. Those were up by 5.1 percent, 9.4 percent and 13.1 percent, respectively.

Sales in Europe gained 18.9 percent, mainly driven by fine fragrance.

The group’s third building block is investments in new business models.

“Our e-commerce platform grew by 25 percent, our renewable fragrance business grew by 31 percent, our plant-based business grew 114 percent and our sugar reduction — it’s another area where we are global leaders — grew at 20 percent,” said Ghostine. “All of these are consumer trends of the future.”

The executive fielded some queries about Firmenich’s upcoming merger with DSM, the Dutch science-based health and nutrition company, which was announced at the end of May.

When asked why a merger is important now, and how DSM was chosen for it, Ghostine said: “There is no business and no industry that is static. Our industry has been evolving at a fast pace, driven by consumer needs and by customer demands. And our industry has been consolidating. Over the last four years [within it], there have been 65 acquisitions, 14 of them secured by Firmenich.”

He explained business has shifted, as well. “Our métier that used to be perfumery in the past became beauty,” said Ghostine.

Flavors morphed into taste and nutrition. “So the boundaries also of the industry have stretched significantly. We are always keen to be the industry leader, and had been looking to see who could be the right partner. DSM had been going through the same exercise,” he continued.

Ghostine said the two companies’ businesses and ethos are complimentary.

“These are businesses that have similar values, similar passion for science, similar commitment to help their customers win and similar commitment into social and environmental leadership,” said the executive. “The two companies are going into this merger from a position of strength. So both companies are doing this [merger] as a strategic choice to leapfrog the competition and create the world leader in nutrition, beauty and well-being for decades to come.”

When asked about the phenomenon of inflation and supply chain issues looking ahead, Ghostine said they remain a reality for everyone.

“It is not industry-specific, sector-specific. Everyone is dealing with the same challenges. Now we see this continuing into the next 12 months. So far, we have weathered this crisis well,” he added, giving as an example increasing buffer stocks. “At the same time, we have engaged with our customers to pass on the price increases and so far, conversations are going well. We have passed on the vast majority of the cost increase already this year, and we will continue doing so next year.”

Meanwhile, as the merger with DSM is being hammered out, it’s business as usual for Firmenich.

Ghostine said the group aims to maintain the business momentum, continue gaining market share, and investing behind research-and-development and creative capabilities

“At the same time, we want to make sure that we ensure business continuity in the challenging market environment in which we are operating,” said Ghostine.