Haifa, Israel, May 21, 2007 /PRNewswire-FirstCall via COMTEX/ -- Frutarom (UK:FRUT: news, chart, profile) today presented its results for the first quarter of 2007.
Continuing the growth trend of the past seven years, Frutarom achieved growth in sales during the first quarter of 2007 through the implementation of its rapid growth strategy, combining organic growth in core activities with strategic acquisitions of activities and knowhow in its main business segments and in strategic geographic regions.
As part of implementing its rapid growth strategy, and further to the acquisition in the beginning of 2006 of 70% of the share equity of the Nesse group and of Acatris Health in October 2006, following the end of the first quarter of this year Frutarom acquired two English companies: Belmay Limited, a leading flavor house that develops, produces and markets flavors, with a particular focus on natural flavors, for the food and beverage industries; and Jupiter Flavours Limited, which also develops, produces and markets flavors. The acquisitions of Belmay and Jupiter join the acquisitions made by Frutarom in recent years, and contribute to Frutarom's becoming the leading flavors producer in the British market.
Frutarom's sales in the first quarter of 2007 grew 13.4% to total US$ 80.5 million. The following main factors contributed to the growth: (1) Growth in the sales of flavors produced and sold by the Flavors Division; (2) The integration of Acatris's activity, which was acquired and consolidated as of October 2006 with the Frutarom Group's global activity; (3) Utilization of the synergy and cross selling opportunities between Frutarom's Divisions, existing customers and products and those added through the acquisitions made in recent years; and (4) The strengthening of the European currencies (in which most of Frutarom's sales are made) against the dollar (excluding the currency effect, sales grew 10%).
Gross profit for the first quarter rose 10.2% to reach US$ 29.8 million compared with US$ 27.0 million last year. Gross margin reached 37.0% in the quarter compared with 38.1% in the same quarter of 2006. Frutarom continues working to adjust the selling prices of its products to the increased prices of raw materials used in production, in order to improve its gross margin.
Operating profit for the quarter totaled US$ 10.4 million, similar to the same quarter in 2006. Operating margin reached 12.9% compared with 14.6% in the same period of last year.
Profit before tax for the first quarter totaled US$ 10.1 million, compared with US$ 10.7 million in the same period last year. Taxes on income for the first quarter grew to US$ 2.5 million compared with US$ 1.8 million in the same quarter in 2006, when the Company recorded a one time tax benefit in the amount of US$ 1.3 million upon receiving approval as a plant characterized by high technological turnover.
Net profit for the first quarter totaled US$ 7.6 million compared with US$ 8.8 million in the same quarter of 2006, when the Company recorded the one time tax benefit in the amount of US$ 1.3 million mentioned above. Net margin reached 9.5% compared with 12.5% in the same quarter of 2006.
Frutarom's shareholders equity as at March 31, 2007 totaled US$ 223.6 million (65.1% of the balance sheet) compared with US$ 186.1 million (68.6% of the balance sheet) at March 31, 2006. The growth in shareholders' equity is mainly due to the profit for the period.
According to Ori Yehudai, Frutarom President and Chief Executive Officer, "Frutarom expects to achieve internal profitable growth in our core activities, while continuing implementing our rapid growth strategy, at higher rates than the industry." With respect to the recent acquisitions, Yehudai commented that Frutarom expects to complete the integration of the recently acquired activities of Belmay and Jupiter with its own activity into Belmay's site within the next quarter in order to achieve the greatest possible operational efficiency and savings, and estimates that this will reach over US$ 3 million annually. Yehudai added that after Frutarom established its position in 2006 as one of the leading flavor and fine ingredient producers in the world, and became one of the top ten flavor companies in the world, it continued to strengthen its position mainly in the field of natural products with health and dietary values and functional food ingredients. As part of Frutarom's research and development activity and in order to expand its offering of natural, innovative and unique products, Frutarom is working to establish cooperation with academic institutions, research institutes and start-ups in Israel and worldwide. Over the last year, Frutarom initiated several such collaborations, including with D-Herb, to produce and market a unique herbal extract from the Portulaca plant that is used to reduce and stabilize glucose levels in diabetes patients; with Magnetika Interactive Ltd., to produce, market and sell products enriched with Omega-3 fatty acid produced from the Salvia sclarea plant; and most recently with CapsiVit Biotechnology Ltd., to commercialize unique knowhow developed by the Vulcani Institute to produce a natural extract from the Capsicum annuum L. plant as a highly bio-available source of carotenoids and particularly capsanthin.
Frutarom continues working to implement the Company's strategy for rapid growth and to utilize the synergy and many cross selling opportunities in the acquisitions of recent years, which will help to sustain organic growth in Frutarom's core activities. Frutarom invests considerable resources in identifying and executing additional strategic acquisitions, mainly in countries and markets where it has substantial activity.
Background on the Company
Frutarom is a global company active in the global markets for flavors and raw materials. Frutarom has significant production and development centers on three continents and markets its products on five continents to over 5,000 customers in more than 120 countries. Frutarom's products are intended mainly for the food, beverage, flavor, fragrance, pharmaceutical, nutraceutical, health food, functional food, food additives, and cosmetic industries.
Frutarom operates through two Divisions:
- The Flavors Division, which develops, produces and markets flavor compounds and food systems.
- The Fine Ingredients Division, which develops, produces and markets natural flavor extracts, natural functional food ingredients, natural pharmaceutical/nutraceutical extracts, specialty essential oils and citrus products, and aroma chemicals.
Frutarom's products are produced at its plants in the United States, England, Switzerland, Germany, Israel, Denmark, China, and Turkey. The Company's global marketing organization includes branches in Israel, the United States, England, Switzerland, Germany, Belgium, Holland, Denmark, France, Hungary, Romania, Russia, Ukraine, Kazakhstan, Belarus, Turkey, Brazil, Mexico, China, Japan, Hong Kong, India and Indonesia. The Company also works through local agents and distributors worldwide. Frutarom has about 1,150 employees worldwide.