U.S. stocks steady; investors focus on quarterly earnings deluge
Investing.com -- Shares of Givaudan SA (SIX:GIVN) fell more than 5% Tuesday after the Swiss fragrance and flavor maker reported a sharp swing to negative free cash flow in the first half of 2025, missing estimates and overshadowing modest growth in sales and profit.
Free cash flow dropped to negative CHF 16 million, compared with CHF 197 million a year earlier, primarily due to the timing of investments and tax payments.
The figure missed Jefferies’ estimate of CHF 123 million and the consensus of CHF 206 million.
Operating cash flow declined to CHF 248 million from CHF 427 million, while capital expenditures rose to CHF 169 million from CHF 127 million. Free cash flow as a percentage of sales fell to negative 0.4% from 5.3%.
Adjusted EBITDA was 1% ahead of consensus at CHF 945 million, with the margin improving to 24.5% from 24.2%, or 25.2% on a comparable basis.
Group sales rose 6.3% on a like-for-like basis to CHF 3.86 billion, or 3.4% in Swiss francs.
Fragrance & Beauty grew 8.6% like-for-like to CHF 1.96 billion, led by 18% growth in Fine Fragrance, 6.1% in Consumer Products, and 5.7% in Fragrance Ingredients and Active Beauty.
Taste & Wellbeing rose 4.1% like-for-like to CHF 1.91 billion, supported by snacks, sweet goods, dairy, and healthcare, though reported growth was flat due to currency effects.
Regionally, South Asia, the Middle East, and Africa led with 12.7% like-for-like growth, followed by Europe at 4.2%, Latin America at 4.1%, Asia Pacific at 2.1%, and North America at 2%.
Gross profit rose 3.4% to CHF 1.70 billion, with the margin stable at 44%. Givaudan cited higher input costs, including global tariffs, and said it is working with customers to implement price increases.
Operating income increased 4.5% to CHF 762 million. Net income rose 0.7% to CHF 592 million, and basic earnings per share climbed to CHF 64.18 from CHF 63.76. EBITDA in local currencies rose 9.7%.
Morgan Stanley (NYSE:MS) reiterated an “underweight” rating and CHF 3,650 price target, pointing to second-quarter like-for-like sales growth of 5.2%, below the consensus of 6.2%.
The brokerage highlighted weak performance in Taste & Wellbeing in Asia Pacific and Europe, as well as CHF 19 million in exceptional items, including CHF 9 million related to the Louisville site accident. It noted raw material inflation is now guided at 3%, down from 4%.
Both brokerages expect the upcoming earnings call to focus on second-half order trends and the achievability of roughly 5% like-for-like sales growth for the remainder of the year.