July 21, 2020 / 8:35 AM / 15 days ago

UPDATE 2-Givaudan profit up as consumers stock up on snacks, household goods

* Group sales rise 4% in first half

* Operating margin improves to 16.5%

* Company confirms 2020 guidance (Adds CFO, analyst comment, shares)

By Silke Koltrowitz

ZURICH, July 21 (Reuters) - Givaudan said the COVID-19 pandemic boosted demand for soap and packaged snacks, driving the fragrance and flavour maker's sales and profit in the first half and enabling it confirm its guidance.

Many consumers stocked up on packaged foods and household goods like detergent and toothpaste during COVID-related lockdowns in the first half of 2020.

Chief Financial Officer Tom Hallam told Reuters on Tuesday that about 85% of the group's activities were resilient to the COVID crisis, while the remaining 15% - fragrances for perfumes and ingredients for out-of-home foods - had taken a hit.

"We're seeing very strong demand in Latin America at the moment as consumers stock up," Hallam said.

Group sales grew 4.0% on a like-for-like basis to 3.22 billion Swiss francs ($3.43 billion) in the first half, implying a slowdown to 2.8% in the second quarter, notably due to a sharp deceleration in fine fragrances for perfumes, the company said.

First-half net profit rose 8.8% to 413 million francs, and the operating margin improved to 16.5% from 15.9%. Hallam said there were lower expenses on business travel and productivity gains.

"Typically, our margins are lower in the second half ... but all things being equal we should be able to maintain the trends that we see," Hallam said.

The Swiss group confirmed its target of 4%-5% average annual sales growth over a five-year cycle ending this year.

It will reveal new targets for the period to 2025 at its investor day in August, still focusing on high-growth markets, local and regional customers and natural ingredients to drive growth, Hallam said.

The company also said it would maintain its dividend practice and continue its bolt-on acquisitions.

Shares were down 0.4% at 0755 GMT but are still up almost 25% this year.

"Givaudan offers both a highly attractive defensive growth profile and strong cash returns," Vontobel analyst Jean-Philippe Bertschy said, recommending to buy the stock.

$1 = 0.9384 Swiss francs Reporting by Silke Koltrowitz, editing by John Revill

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