Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; Bulletin Board: FRUTF), which makes flavors and fine ingredients for the food and beverages industry, today published its 2016 results. The company reported a 31.4% rise in sales to $1.15 billion. Sales from Frutarom's core business of special flavors and raw materials grew 35.4% to a record $1.07 billion, while retail and marketing proceeds dipped 6% to $80 million. The company's operating profit was up 15% to $149 million, with a similar rise in net profit, which reached $109 million.
In recent years, Frutarom has become a serial acquirer of companies in the sector of flavors and raw materials for the food industry. After completing the acquisition of 11 companies in 2015, the company completed eight acquisitions totaling $245 million in 2016, thereby boosting its sales and profits. The company's sales totaled $289 million in the fourth quarter, 28% more than in the corresponding quarter in 2015. Its operating profit rose 26% to $40.5 million, and its net profit was up 15% to $27 million.
The company share price responded to the reports with a 3.67% gain today. Frutarom's market cap has reached NIS 12 billion, following an increase of nearly 150% in its share price over the past three years. Together with its reports, Frutarom announced the distribution of a NIS 26 million dividend to its shareholders, to be paid at the beginning of May.
Target: $2 billion in sales by 2020
Frutarom president and CEO Ori Yehudai today said, "We are continuing to create a strong quality pipeline of future acquisitions to support the fulfilling of our plan for accelerated growth in our core activities while expanding the share of the Flavors activity, including by gaining market leadership in the field of savory solutions… The projects of combining and integrating activities and production sites and achieving maximum efficiency are moving ahead successfully.
"Also, we are pushing forward on substantially streamlining the natural extracts operations of the Specialty Fine Ingredients division as part of an overall move to expand the scope of activity in natural extracts and improve its margins by increasing output and optimizing production lines. These measures are expected to bring savings of over US$ 6 million which will start coming into play during the second half of 2017.
"The merging and streamlining measures will also contribute in the coming years to strengthening our competitiveness and improving profits and profitability with the attainment of operational savings in an annual range of US$ 20-22 million which will come into play gradually over the course of 2017."
The target that Frutarom has set for itself, which Yehudai repeated today, is at least $2 billion in sales by 2020. "We are convinced that the rapid and profitable organic growth and the strategic acquisitions we have made, combined with continued improvement in our product mix, our progress with natural and healthy products in step with demand from billions of consumers throughout the world, the geographic expansion in North America and in the emerging markets with high growth rates, the moves we are making to optimize our resources while capitalizing on the abundant cross-selling opportunities and the operational savings brought about by the acquisitions, the building of a global procurement platform and the strong pipeline of further synergetic strategic acquisitions, will support our continuing journey of profitable growth in the years to come as well, and the achieving of our strategic goals: At least US$ 2 billion in sales with an EBITDA of over 22% in our core activities by 2020,” Yehudai said.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 23, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017